Congressional briefing on Medicare auction program

I wish to announce an important event on the Hill on Tuesday, discussing the Medicare DME Competitive Bidding Program:

Competitive Bidding Congressional Update—What You Need to Know, 11-12:30, 24 May 2011, 1539 Longworth House Office Building, sponsored by U.S. Representative Sue Myrick (R-NC).

The event is organized by former Congresswoman Nancy Johnson and myself, and includes an excellent and broad panel of experts:

Peter Cramton, Professor of Economics, University of Maryland

Tom Milam, Member, Program Advisory and Oversight Committee (PAOC), Former COO, AmMed Direct

Barbara Rogers, PAOC Member and President/CEO National Emphysema/COPD Association

Paul Gabos, Chief Financial Officer, Lincare, Round One Re-Bid Winner [on Video]

Robert Brandt, Owner, City Medical Services, Round One Re-Bid Winner

Congresswoman Sue Myrick (R-NC) will provide comments.

The event will present a frank and honest assessment of the DME competitive bidding program. Hill staffers and Representatives will learn about the fatal flaws in the program. The briefing will include a diversity of viewpoints. Barbara Rogers, a PAOC member, is a knowledgeable and articulate advocate for Medicare beneficiaries, a voice that too often goes unheard until there’s a train wreck. Paul Gabos and Robert Brandt both represent DME providers who were winners in the Round One (Rebid). We chose winners to speak to be clear that the remarks are not “sour grapes” from auction losers.

Over the last nine months, I have learned that CMS requires more direction from Congress on the DME program. Congress must insist, through legislation, that CMS conduct efficient auctions consistent with best practice and science. The auctions must be transparent and an Independent Market Monitor must observe all aspects of the market and report directly to the Secretary of Health and Human Services about potential problems and solutions.

The current CMS auction approach is a scandal now and ultimately will be a train wreck. The only reason we have not seen the train wreck yet is that CMS has almost complete flexibility to set prices in the current system. But make no mistake: these prices are arbitrary and unrelated to providers’ costs. It is absurd for CMS to claim that “all is well” given such a process. Yet that is what they have done in the nine months since I first looked at the Medicare competitive bidding program.

The stakes are enormously high. Congress must insist on fundamental reform. Fortunately, auction experts in collaboration with industry and other stakeholders can easily develop an efficient auction process in this setting. This was demonstrated at the Medicare Auction Conference held at the University of Maryland on 1 April 2011. Congress simply needs to insist that CMS use efficient auction methods.

Later in the afternoon, I will give a briefing for Senate staff:

Briefing for Senate Staff on the Impact of the CMS Competitive Bidding Program for Durable Medical Equipment, Russell Senate Office Building, 24 May 2011.

My presentation for both events are available here:

Medicare Auction Update, University of Maryland, 24 May 2011 [pptx with animation]

As background you may want to see the video that provides some highlights from the Medicare Auction Conference that was held at the University of Maryland on 1 April 2011:

Summary video of conference highlights (35 minutes)

A wealth of additional background information is available at http://www.cramton.umd.edu/papers/health-care/.

For those who cannot attend, the briefing will be posted on my web site later in the week.

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