A report just released by the National Minority Quality Forum has found that Medicare is increasing mortality among seniors. It describes how the Centers for Medicare & Medicaid Services’ (CMS’s) new reimbursement strategy for medical supplies puts the lives of Medicare beneficiaries at risk by disrupting access to those supplies.
Medicare currently covers a wide variety of medical supplies if they are medically necessary and prescribed by a physician. Historically, Medicare has paid for these supplies on the basis of fee schedules, but several studies have found that Medicare was overpaying for certain items on those schedules. The Competitive Bidding Program (CBP) is being initiated to remedy these overpayments.
The core idea behind the CBP is to use a bidding process to create a small number of high-volume, low-margin suppliers. The calculation is that by severely restricting where Medicare beneficiaries can purchase medical supplies, winning suppliers would be handed millions of new customers who are bound by law and regulations to purchase from them. In return for a monopoly contract, CMS plans are to reimburse the winners substantially less than allowed for by the fee schedules. It is anticipated that the selected few “could adapt to the potential for increased market share by advertising, opening new locations to fill in geographic gaps left by unapproved suppliers, or improving service, thereby increasing beneficiary access.” CMS also recognizes that alternatively these bid winners “may respond to lower prices by offering lower quality products, delaying routine maintenance, or employing fewer service technicians and customer service representatives, thereby increasing the need for service calls, extending waiting times, and decreasing access.”
The Forum’s brief calls attention to the fact that the five laws that create CBP do not mandate safety monitoring to ensure that health risks for beneficiaries are not elevated by suppliers’ incentive to reduce quality and access as a reaction to lower reimbursements. The brief also notes that the authorizing statutes and other federal regulations combine to limit judicial and administrative oversight of the CBP, which restricts official safety monitoring of CBP by agencies and branches of government other than CMS.
CMS is under no statutory obligation to report the health impact of the CBP, but it is monitoring the program for harm to beneficiaries. CMS regularly issues assurances to the public and to Congress that the CBP has not disrupted access and has not resulted in negative healthcare consequences, but its monitoring has been inadequate to support those assurances. The inadequacies include flawed methodology, lack of transparency and failure to measure health risk. A May 2012 Government Accountability Office report found that CMS’s methods for “assessing the impact of competitive bidding did not show directly whether beneficiaries received the durable medical equipment needed on time or whether adverse health outcomes were caused by problems accessing CBP-covered equipment.” The Forum’s report concludes that CMS’s assurances of no disruption of access to medical supplies and no adverse health outcomes are misleading and not supported by the facts. A large longitudinal study conducted recently by the Forum assessed the CBP’s impact on beneficiaries with insulin-treated diabetes who need diabetes-testing supplies to monitor their blood glucose. It found that beneficiary access to diabetes-testing supplies was disrupted by the CBP and that this disruption was linked to reductions in use of testing supplies, doubling of inpatient admissions, higher associated costs, and, ultimately, increases in mortality.
Because of the inadequacies of CMS’s monitoring of CBP safety and the adverse health consequences associated with the CBP, the Forum’s report recommends that the program be suspended until credible monitoring of the program’s safety is initiated.
When President Lyndon Johnson signed the law that created Medicare in 1965, he proudly announced, “No longer will older Americans be denied the healing miracle of modern medicine.”5 Regulations, laws and reimbursement schemes that deny access to best modern therapy can defeat Johnson’s vision.
Puckrein is the president and CEO of the National Minority Quality Forum and a founding partner of the Diabetes Care Project.