ACR Prepares for More Discussion of Competitive Bidding
During last year's Medicare debate, the ACR's government relations staff successfully excluded imaging services from a plan to use competitive bidding for Medicare-covered procedures. However, ACR officials are preparing themselves should the issue come up again when the new Congress resumes Medicare deliberations.
"This seems to be a perennial issue as Congress looks for more ways in which they can save money in the Medicare program," says ACR Senior Director of Government Relations Josh Cooper. "I imagine that this will come up again, but in what form and what the specifics are, we don't know yet."
Competitive bidding for Medicare-covered services, where providers bid to obtain a contract rather than operate on an automatic renewal basis from year to year, is not a new issue, but has long been a hotly contested one. In fact, when a competitive bidding plan was first proposed nearly 20 years ago, opposition was so strong that Health Care Financing Administration officials were prohibited from even initiating a pilot project. However, fueled by an ongoing emphasis on reining in rising Medicare costs, interest in a competitive bidding concept has never fully abated.
"Competitive bidding uses the dynamics of the marketplace to provide incentives for suppliers to provide items and services in an efficient manner," maintains the Centers for Medicare and Medicaid Services on its Web site. "These changes should also help reduce Medicare fraud and abuse by screening out suppliers who do not operate with ethical business practices."
The Balanced Budget Act of 1997 ultimately authorized 3 competitive bidding projects and, in 1999, the first project was launched in Polk County, Fla, that covered only durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). This was followed by a second DMEPOS-only competitive bidding project in the counties around San Antonio, Tex, in February 2001 and another competitive bidding project in Polk County in October 2001. Each project was evaluated on 5 critical areas: Medicare expenditures, access, quality, competitiveness, and implementation of the bidding system.
Under the project guidelines, Medicare paid 80% of the new lower prices, and beneficiaries paid 20% of the lower amount. However, CMS officials were quick to point out that while testing competitive bidding as a method to reduce prices was a key factor in these pilot programs, "it is not CMS' intent to achieve cost reduction at any price."
"Great care has been taken to ensure continued beneficiary access to services and the maintenance of quality of products and services," according to CMS' Web site. "In a competitive environment, CMS expects that suppliers will respond in ways to strengthen their competitive position."
In a 2004 report to Congress, former Health and Human Services Secretary Tommy Thompson declared the pilot programs a success and reported they "saved significant expenditures, nearly 20% overall in each site." Moreover, Thompson maintained that data indicate that "beneficiary access and quality of services were essentially unchanged."
"Medicare's policy objectives in terms of savings, access, quality, competition, and administrative feasibility were largely realized under the competitive bidding demonstration," Thompson noted in his report. "The program design, calling for multiple winners to maintain quality-based competition, appears to be a critical element."
Questions, Critics Remain
Despite Thompson's claims that the competitive bidding projects were a success, detractors insist that the same process is not viable for expansion to many other medical services, including radiology.
When it was proposed that imaging services be included in the competitive bidding process, ACR government relations staff immediately met with proponents of the plan and pointed out the negative impact of such a move.
"We advised them that subjecting imaging services to the lowest bidder would not only lower image quality, but it also would reduce patient safety," Cooper notes. "In fact, we explained that this plan would ultimately cost the Medicare system more money since poor quality images would have to be repeated."
As a result of the ACR's vigorous opposition, imaging services ultimately were removed from consideration for competitive bidding last year. And while it is likely the issue will be raised again in the new Congress, the ACR's point of view remains the same.
ACR officials note you cannot regard an MRI or a CT scan in the same manner that you consider a wheelchair or another piece of durable medical equipment when considering a competitive bidding system for Medicare reimbursement. Moreover, they note that if competitive bidding resulted in reduced payments, many radiologists would likely forgo investments in more costly, top-of-the-line equipment, thus depriving Medicare beneficiaries from the highest quality service. This, in turn, would have a crippling effect on the demand for development of new and better technologies.
"We recognize that steps must be taken to bring Medicare's rapidly rising costs under control and we as a profession are willing to do what is necessary," says John A. Patti, MD, chair of the ACR Commission on Economics. "However, a competitive bidding system for any physician service places too much emphasis on rock-bottom prices at the expense of high-quality medical care. In this scenario, it could ultimately drive costs higher, through limited patient access and delayed diagnosis.
The ACR's position on the issue was supported by a September 2004 study titled, "Will Competitive Bidding Decrease Medicare Expenditures?" The study's authors, Kerry A. McGeary, PhD, and Brett E. Katzman, PhD, maintain that the process used by CMS for the projects is flawed.
"In fact, a variety of bidding behavior can result, leading to inefficiency in the choice of Medicare providers, a wide array of possible prices (including drastic increases), and the strong possibility that the quality of Medicare provision will suffer," the authors contend. "We show that price increases are not just possible, but occur often, and that the gains from the auctions may not be as large as CMS had hoped."
The Next Step
ACR officials maintain that if the competitive bidding issue is raised again, they will continue to advocate the same set of arguments and data that was successfully used last time to ensure that imaging services are not included. Moreover, Thompson's assertion that the pilot projects were a success will not influence the ACR's stance on the issue.
"Secretary Thompson is welcome to his opinion and his interpretation of the project's results," Cooper said. "However, you can't evaluate DME items and medical physician services in the same way; it just doesn't work."
"We will continue to insist that including imaging services in any competitive bidding program for Medicare will result in more expenditure, not less, and will severely compromise the quality of health care patients will receive," Cooper added.