COMPETITIVE BIDDING 08 - WHEELCHAIRJUNKIE.COM

If you're like most consumers, you shopped around quite a bite the last time that you made a major purchase. Maybe you compared three or four online stores, then visited several local stores before buying your most recent computer? Or, maybe you determined the exact model and trim level of your new car purchase, then quoted it at three car dealers? Or, maybe you recently remodeled your bathroom, and had several contractors bid the job?

Indeed, as a savvy consumer, no matter what you were purchasing, you likely sought the lowest cost – or, in a way, you were “competitive bidding” your purchase among several sources.

Certainly, finding the lowest possible cost on a specific item – assuming that quality or service isn't sacrificed – is a wise economic decision. In fact, even the government, itself, recognizes this principal, toward its purchases, and strives to practice it in many areas. However, while most consumers succeed by shopping around, finding it as a straight-forward process, the government currently struggles with the process – at least when it comes to programs like Medicare.

As demonstrated by the government's current implementation of “competitive bidding” toward durable medical equipment like wheelchairs, its use of competitive bidding is a term that's not only misleading, but it also disguises a program that jeopardizes Medicare and Medicaid beneficiaries' access to mobility products and services in the long term.

How Competitive Bidding Works
Competitive bidding is easy to understand in the way that it's currently being practiced toward durable medical equipment, including wheelchairs, to ideally lower costs. The Centers for Medicare and Medicaid Services (CMS), had Medicare providers in 10 metropolitan statistical areas (MSAs), across the U.S. submit bids on a range of products, from walkers to complex rehab power wheelchairs, and is currently is preparing to announce the winners for each geographic MSA based on the provider with the lowest bid. The winning low-bidders for each region will have the exclusive contract to provide the bid products and related services in their regions, with all other local providers excluded from selling bid items to new Medicare and Medicaid beneficiaries. If all goes as scheduled, winning providers will assume control of areas like Kansas City, Pittsburgh, and Miami, to name a few geographic MSAs, beginning on July 1, 2008, with the potential of blanketing the country with 70 more competitive bidding areas – literally from San Diego to Long Island – by the summer of 2009.

On the surface, competitive bidding seems like a wise step for the government. After all, CMS will presumably pay lower prices for wheelchairs, and decrease paperwork by eliminating the majority of its current vendors over time, all of which will save CMS money. However, are the benefits truly this simple?

Of course not. In fact, not only aren't the benefits of competitive bidding truly as simply as they sound, but the program will almost certainly end up harming consumers, and likely lead to skyrocketing costs for the government, as well.

Sounding the Alarm
From the start, removing consumer choice by assigning beneficiaries a single provider, with no ability to seek out another, is alarming – it literally creates a monopoly and a captive market. Currently, beneficiaries have the ability to purchase and service their mobility products at any provider who accepts Medicare and Medicaid. What's more, if service is poor, beneficiaries presently have the right to seek another provider. Similarly, clinicians and therapists are often instrumental toward advising their clients of the best providers in town, steering them clear of poor service. All of these options are hallmarks of a free market at practice, where beneficiaries have control over their mobility decisions.

Yet, competitive bidding removes all choices. Under competitive bidding, beneficiaries are forced to rely on one provider, and if service is inadequate, there's no alternative. The beneficiary's choice doesn't matter, and neither does the therapist's – one can only go to the single provider that CMS dictates.

To take such rightful concerns farther, isn't it reasonable to presume that while most providers are honest, the competitive bidding process by nature might encourage bad behavior by some winning low-bid providers, such as not maintaining meaningful standards needed for after-the-sale service? For example, if one provider staffs three service techs for around-the-clock service, and another provider only staffs one, clearly the provider with less service staff has less overhead, and can place a lower bid, winning the contract – potentially at the expense of beneficiaries in the long run. Or, what about low-bidders who simply decide to go against all ethics, and disregard responsible servicing altogether, playing the competitive bidding game wise enough to maintain the contract while neglecting beneficiaries' needs? In either of these cases, a winning bid for an disreputable provider means a loosing bid for beneficiaries – and, with no consumer recourse.

Still, even if a meaningful provider wins the bid, it can cause havoc on a beneficiary's mobility. In Kansas, for example, the competitive bid region is 1,400 square miles. When competitive bidding contracts go into effect in July, it could be that beneficiaries are nowhere near the winning provider, forced to use one who's hours away, all but unaccessible. And, again, there's nothing a beneficiary can do about it – he or she can only use the single contracted provider for specific products.

Now, surely there's no way at this point to know whether the majority of exclusive providers will be good or bad, near or far from any one beneficiary when competitive bidding takes effect – and, certainly, CMS has various quality standards for providers. However, unquestionably, there's tremendous risk to beneficiaries, where competitive bidding could cause a lot of harm, very quickly, through captive-market dynamics.

When the Risks are Reality
Beyond service concerns, some beneficiaries with complex disabilities can expect dramatic cuts in the types of mobility technologies that they receive. Under competitive bidding, rehab power wheelchairs, for example, are bid just like walkers, as standardized as possible. Of course, rehab power wheelchairs are highly-customized products, where no two are alike, where one beneficiary's seating is radically different than another's. However, competitive bidding disposes of this concept, only accounting for products specified on the winning bid, with no way to account for a beneficiary's specific needs. If a beneficiary has specific needs, he or she has to make due with the closest offered configuration (and with competitive bidding based on the lowest dollar amount, it's a real possibility that higher-end technologies and components won't be available in any form).

Does Anyone Win?
It's clear that beneficiaries have nothing to gain from competitive bidding, and risk losing a lot. But, what about the government?

In the immediate, one would expect that unit costs will decrease for CMS solely based on the competitive bidding process. Logically speaking, if the government currently funds $5,200 for a certain level of power wheelchair, for example, then it's reasonable to anticipate some providers bidding below that – say, $4,900 – to gain the volume contract. In this way, the government has nothing to lose, right?

Wrong. Through establishing competitive bidding, CMS is creating a monopoly to its own detriment. A critical factor in this process is that competitive bidding contracts last for three year terms. The three-year dynamic is important because it permits enough time for the “perfect storm” to occur in each geographic MSA – one that may very well escalate costs, not reduce them.

As competitive bidding goes into effect in each geographic MSA, there will be only one exclusive provider allowed to supply products to new Medicare and Medicaid beneficiaries. The reality is, while other providers could retain sales through existing beneficiaries and private insurers, Medicare is a substantial piece of the overall mobility market (namely because those with disabilities are among the most impoverished minority groups, heavily dependent upon governmental insurance). As a result, it's very likely that many non-winning-bid providers will soon go out of business, unable to support themselves without the ability to compete for Medicare and Medicaid beneficiaries as customers. Therefore, through competitive bidding, CMS is creating an environment that will turn a free market into a monopoly, literally eliminating competition from the marketplace, putting all of Medicare's business in one provider's hands within each geographical MSA.

And, this is where the potential of escalating costs become very likely. Over the course of the initial three years, the competitive market may be so dramatically reduced in some geographic MSAs that the current contract holder could rebid at a higher price without competition. As time goes on – after three, then six, then nine years – the likelihood of eliminating all competition increases, and it's foreseeable that one, two, or three competitive bidding giants could emerge, entirely monopolizing the mobility market funded by Medicare, with no valid competition remaining in 10 to 20 years.

It's at this point that the perfect storm could occur: Tens of billions of Medicare dollars being funneled to only a handful of providers, where consumers have absolutely no choice in their service providers, unable to receive the technologies they need, with a true monopoly controlling prices. That is a scary scenario.

The Ultimate Question
If competitive bidding is so obviously flawed – if it eliminates a free market, creates captive consumers, removes checks and balances, restricts medical products, and potentially escalate costs – then why is it currently going into effect?

Short-sightedness on the part of the government via CMS – it's that simple. To use an analogy, CMS is buying a car based on only considering the monthly payment, oblivious to the true long-term costs and consequences. However, as hard as it is to understand why CMS is creating such a flawed distribution model – one that is putting tax dollars at risk in the long term – it's impossible to understand why CMS, via competitive bidding, is jeopardizing beneficiaries' access to medical necessities. After all, it's clear that CMS hasn't given any consideration to the ramifications of competitive bidding toward the ultimate stakeholders: The Medicare and Medicaid beneficiaries who will lose competitive choice, who will lose access to local providers, and who will lose the ability to obtain specialized technology. In this way, we must ask ourselves, with such an extraordinary number of Americans at risk because of CMS' move toward competitive bidding, how have we let this happen – or, more aptly, why do we, as conscientious citizens, continue letting this happen?

Last year, legislation was introduced to allow any Medicare provider to serve beneficiaries at the lowest bid amount – the intention being that CMS could achieve immediate cost savings without removing beneficiaries' freedom of choice. Additionally, it was sought to remove rehab products from competitive bidding, allowing beneficiaries to continue accessing higher-end, necessary technologies.

Unfortunately, these initiatives have been recently declared cost-prohibitive by those in Washington, stating that, if enacted, these exemptions to competitive bidding would unacceptably inflate Medicare spending above the set budget that includes competitive bidding. Of course, this places beneficiaries back at the beginning of the unquestionably correct position that access to meaningful mobility technologies and service must come before short-sighted attempts to reduce Medicare spending.

In the present, it's vital that you send your Congressional Representative and Senators a letter expressing your concern that CMS' competitive bidding of mobility products unquestionably harms beneficiaries by removing choice and restricting access to vital medical goods and services. Several advocacy groups are currently considering the next legislative move toward minimizing the threat of competitive bidding to beneficiaries' lives, and it's important that you use your voice as a political primer to inform your elected officials today of your opposition to CMS' detrimental plan. Fortunately, while 10 geographic MSAs are set to enact competitive bidding as of July 1, 2008, the policy isn't scheduled to go into effect in the rest of the country until the summer of 2009 – so there's still time to make a difference with your voice. Even if you're not a Medicare or Medicaid beneficiary, please support your fellow wheelchair users by contacting your elected officials, and help stop this alarming health care trend.

No, we can't always control what governmental agencies due to us as those with disabilities; however, we can control how we react to it. And, it's important that we let our elected officials know that CMS' shift to competitive bidding is unacceptable.

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