Thursday, February 28, 2002

Playing to the doc's strengths

Q: President Bush's federal budget contains a Medicare competitive bidding proposal for all HME. What are the chances that it will become law?

A. Regardless of the party in the White House, an HME competitive bidding proposal has become a yearly ritual for the President's budget. CMS now routinely presents it as a cost-saver despite questionable supporting data. In a "normal" election year, competitive bidding's chances of surviving the budget process are small - but this is not a normal election year.

The President's budget, guaranteed to run a deficit, is emphasizing national security and defense spending and is using every trick to cut domestic spending. In this environment the anticipated savings from competitive bidding are tempting. The budget shows competitive bidding as providing the largest Medicare savings - $240 million in the first year (FY'03) and $5 billion over 10 years. In addition to fiscal responsibility, competitive bidding also plays to the agenda for Medicare reform. Proponents will argue: "Why are we still paying for HME on a non-market based fee system almost 20 years old? It costs the program money; is based on outdated assumptions, methods and information; and doesn't reflect the current state-of-the-art HME services?" Using competitive bidding as a replacement for the fee setting methodology will sound attractive.

Given the arguments and the political environment, competitive bidding has a good chance of surviving the budget process and becoming part of a Medicare reform package in an omnibus budget bill. The industry could continue to oppose competitive bidding, but instead should ride the wave. This is the time to offer a changed homecare benefit that simplifies payment and increases consumer choice and control. That's real reform.

Michael DeCarlo is a Washington, D.C., healthcare attorney. Reach him at 202-775-4736 or