A recent study by the American Consumer Institute (ACI) concluded that the Centers for Medicare and Medicaid Services (CMS) new bidding program would likely lead to higher medical costs and reduced outcomes.  The study’s findings are consistent with the conclusions of many auction experts who have pointed to flaws in the CMS program that would lead to low-ball pricing for medical devices and significant shortages, thereby reducing homebound patient access to medical devices.  These shortages would force some patients to do without these devices, thereby affecting their quality of care, as well as sending patients into hospitals and other medical facilities for access to these devices, thereby increasing healthcare costs. 


As an example of the problem, the study analyzed the costs and benefits for just one medical device – negative pressure wound therapy (NPWT) and found the device to produce $7 of benefits for every $1 of costs.  If shortages of NPWT for home use occurred, total medical costs would increase and patients would likely be facing reinfections, re-admittance into hospital and, in some cases, limb amputations.  Specifically, the study estimates the current nationwide benefit for NPWT to be $7.1 billion ($2.3 billion for home use only) with the potential benefit of 14.8 ($6.6B billion for home use only), if NPWT were more widely used.  In contrast, CMS estimates that their total bidding program will save only $2.9 billion – across all medical devices.  Thus, the CMS bidding program, if not fixed, would likely lead to more costs and reduced outcomes for patients.  The chart on the next page shows the 10-year benefit of potential benefits from NPWT, estimated to be $146 billion, in terms of present discount value.  


The ACI study also concluded that the CMS bidding program has a bias against higher quality, innovative products, and that bias would ultimately increase medical costs and produce worse outcomes for some Medicare patients.  The study noted that the CMS bidding program could bar new products from auctions for up to three years, and the discrete nature of product categorization would undoubtedly penalize higher quality, multifunctional and innovative medical equipment in favor of cheaper but lower quality devices.  For example, as broadband-driven tele-health devices are being trialed for homebound patients with congestive heart failure, diabetes, high blood pressure and other conditions, the CMS bidding program could have a chilling effect on research and development on these innovative devices for homebound patients.  Besides reducing high-tech investment, patients will be more dependent on expensive hospital care, instead of less expensive homecare with these devices.  Therefore, while the auction bidding program that seeks to reduce the CMS budget, total medical costs in the US will likely increase and produce worse outcomes for patients.  It’s pennywise and pound foolish,” according to Steve Pociask, ACI president and the study’s author.



If this can happened for NPWT devices, then it can happen for other tech-related devises – like transcutaneous electronic nerve stimulators, lymphedema pumps and infusion pumps – whereby bidding would select lower-quality and less functional devices.  This would leave patients with limited access to higher-quality devices for homecare use, and lead physicians to move patients away from homecare to hospital care, thereby increasing medical costs.


To see the table or have a printable version, please click here … potential-npwt-10-by-state.