The Centers for Medicare & Medicaid Services (CMS) is implementing a bidding program that it hopes will lead to lower-priced devices and drive down Medicare costs for the homecare patients.  However, auction bidding experts have overwhelmingly found that the current program will lead to below-cost pricing, which would adversely affect supply.  The resulting decrease in the supply of medical devices for homecare patients, as this study shows, would create significant increases in other medical costs for some Americans. 


As an example of this problem, this paper analyzes a high-tech solution for wound treatment – Negative Pressure Wound Therapy (NPWT) – and finds its upfront cost to be indeed higher than traditional care.  However, this analysis shows that NPWT devices produce about seven times more benefits than costs to society and superior patient outcomes compared to standard care.  Therefore, if the CMS bidding process reduces supply and homecare patient access to NPWT devices, total medical costs will increase as patients experience longer stays in hospitals, and will see increased risks of reinfections and complications, such as increased amputation, ambulatory care and prosthetics. 


Ironically, an auction bidding program that seeks to minimize Medicare costs could lead to significantly higher medical costs to society as a whole, as well as worse outcomes for Medicare patients.  Thus, the objective of minimizing CMS budget dollars could raise the cost of medical care in the U.S., particularly for non-commodity devices, such as innovative and complex medical equipment.



For a full copy of the study click here — final-study