A 165-page study of data from Round 1 of the Centers for Medicare & Medicaid Services (CMS) Competitive Bidding Program has been completed by Peter Cramton, PhD, a University of Maryland, College Park, economics professor whose research interest is auction theory and practice. The study reveals what Cramton calls “the hidden costs” of competitive bidding-specifically, that the competitive bidding program sharply reduced the number of durable medical equipment (DME) suppliers and prices paid to the suppliers, making it increasing difficult for Medicare beneficiaries to secure the quality supplies they need. These results suggest that, more beneficiaries end up in the emergency room or the hospital, incur longer hospital stays at much greater cost to CMS and the American taxpayer, and face a higher risk of death.
Cramton accessed the data pursuant to a Freedom of Information Act (FOIA) request.
Rather than the current program, Cramton suggests an auction recommended by experts that selects the efficient suppliers and pays least-cost sustainable prices will reduce Medicare total costs and avoid expensive cost shifting from low‐cost services to high‐cost services.
