Dear Senators Grassley and Baucus,
We are writing to express our opposition to the inclusion of provisions to establish national competitive bidding for durable medical equipment (DME) in Medicare legislation this year. You will recall that there were such provisions in last year's Medicare bills, S3018 and HR 4954.
These legislative proposals were opposed by the United Cerebral Palsy Association, the American Association of People with Disabilities, the Paralyzed Veterans of America, the United Ostomy Association, the National Home Oxygen Patients Association, and the Consortiums of Citizens with Disabilities Health Task Force. A national competitive bidding program could threaten quality and access for essential medical equipment and services ranging from the simple to the highly complex devices used by the chronically ill.
Consumers oppose competitive bidding for durable medical equipment because it will limit choice. By its very nature, competitive bidding will significantly reduce the number of suppliers available to serve beneficiaries. Although proposals for national competitive bidding call for the establishment of quality standards, beneficiaries much prefer the ability to choose from a wide range of providers to ensure quality, just as they do among physicians. Relying on government defined and enforced standards is no substitute for the ability to move to another provider.
The Balanced Budget Act of 1997 authorized demonstration projects for competitive bidding in five locations. CMS achieved only two demonstrations, and only one of those had two rounds of bidding. Those demonstrations concluded at the end of last year, but their analysis has not been completed by CMS. Indeed, in preliminary reviews of the demonstration projects, CMS concluded that "it is premature to declare that competitive bidding is either an appropriate or inappropriate reimbursement mechanism." As recently as June 12, 2002, the GAO stated "the results achieved may be neither applicable or practical on a wider scale for many products."
Further, Medicare is a dominant purchaser of DME and related services, and few companies can survive without the ability to serve Medicare beneficiaries. Competitive bidding will force many small suppliers out of business. Competitive bidding will also place enormous pressure on remaining suppliers to reduce or eliminate high quality product lines or more intensive beneficiary services, simply because they can not afford to lose a bid. This will have an immediate impact on the quality of care for beneficiaries. It will also stifle the development of new medical technology, which often costs a bit more than existing alternatives.
We believe that establishing a beauracracy to administer a national program of this size without additional evidence of the success of the two demonstration projects is not prudent. There is serious question as to whether competitive bidding is feasible at all in rural or highly urbanized areas. We simply do not know enough to go forward with a national program at this time.
Thank you for considering our concerns.