White House and Congress pushing competitive bidding
By MATTHEW HAY
HHBR Washington Correspondent
WASHINGTON The Clinton administration is hoping to offset the price tag associated with its prescription drug benefit by dramatically expanding the use of competitive bidding for Medicare. Details of the Clinton proposal released earlier this month would authorize use of competitive bidding, otherwise known as competitive pricing, and price negotiations to set payment rates for Part B items and services, except for physician services. According to the proposal, Medicare would be granted broad authority to select the items and services, as well as the geographic areas to be included in a bidding or negotiation process "based on the availability of providers and the potential to achieve savings."
The proposal says protections would be built in for rural areas where this competition may be difficult along with safeguards for providers. For example, the plan specifies "median bid" rather than "best price" or "winner takes all." Medicare would also be given authority to selectively contract with providers who accept negotiated or bid prices and other contractual terms. The proposal argues that providers would have an incentive to participate to potentially secure a larger market share.
But the Clinton administration is not alone in seeking the expanded use of competitive bidding. Last week, Rep. Pete Stark (D-CA), the ranking Democrat on the House Ways and Means Health Subcommittee, seized on information just released by the Health Care Financing Administration (HCFA; Baltimore) that shows significant reductions in HCFA's fee schedules for durable medical equipment (DME) through its competitive bidding demonstration in Polk County, FL.
The Balanced Budget Act of 1997 gave HCFA authority for several competitive bidding demonstrations for DME, which the agency had been seeking for years. But opposition to competitive bidding has also been the DME industry's highest priority for years. One of its greatest fears has been that HCFA would use the information gathered from a limited number of demonstrations around the country to ratchet down Medicare reimbursement nationwide. There is some evidence that this might be happening.
"The results are coming in and show that in Polk County, FL, the test-savings are dramatic," Stark declared. He said Congress should adopt Clinton's competitive bidding proposal and move to broad-based competitive bidding as soon as possible.
Earlier this year, Stark introduced legislation that would give HCFA permanent authority to use competitive biding. It is unclear how much support that bill currently has in Congress, however.
The results Stark was referring to came in a letter HCFA sent to providers in Polk County earlier this month that included the following reductions for Medicare fee schedules effective Oct. 1, 1999: 18% cut for oxygen, 30% cut for hospital beds. 31% cut for enteral nutrition supplies, 20% cut for urological supplies, and 13% cut for surgical dressings.
Roughly one-third of the 161 items included in the demonstration will see an increase in reimbursement.
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