Healthy competition
Fairer bidding process for supplying equipment to Medicare would have benefit

The Atlanta Journal-Constitution
Published on: 07/01/08

Competitive bidding is a bedrock of capitalism. Bidding often drives prices lower and improves efficiency as companies cut costs in an effort to win new business.

Unfortunately, the virtues of competitive bidding seem lost on the U.S. House, at least when it comes to Medicare and suppliers of medical equipment.

Under Medicare's current fee schedule — set by Congress rather than through competitive bidding — the federal government today pays 83 percent more for walkers than Wal-Mart charges on its Web site. Because of such discrepancies, Medicare wants to start a competitive bidding pilot program for so-called durable medical equipment, known as DME items.

However, under a House bill approved last week, that pilot program would be delayed by at least 18 months. Sponsors claim the delay is needed to revamp the bidding process to make it more fair and open.

At first glance that might seem an admirable goal, but the proposed bidding process already seems open and fair. Furthermore, if reforms are needed, they can surely be implemented in less than 18 months. In these days of deficits and rapidly escalating health care costs, Congress should dramatically shorten that time frame. Otherwise, it stands open to criticism that the delay serves only to maintain the status quo, preserving profits for private companies at the expense of taxpayers. (To their credit, the bill's sponsors do try to recoup the cost of delaying competitive bidding by halting inflation adjustments and reducing current payments for medical devices.)

Legislators say they acted to delay bidding because of complaints that the bid process was unclear. Many companies were unfairly excluded from the process, says U.S. Rep. Pete Stark (D-Calif.), a sponsor of the bill.

The bidding process should of course be fair, clear and as simple as possible, especially since many bidders are small businesses with limited resources to unsnarl red tape. However, the House should have more faith in the ability of suppliers large and small to adapt quickly to government bid systems. More important, it should have the fortitude to withstand howling by vendors seeking to prevent the demise of a lucrative system. Private enterprise has been selling goods and services to Washington for a long time, no matter how much labor-intensive paperwork is required.

The goal of the bidding system isn't to make private companies happy but to provide quality goods to Medicare beneficiaries at the lowest possible prices.

Free enterprise drives successful companies to be efficient and innovative to survive. Medical supply businesses can rise to the challenge of rigorous competitive bidding, and do so in a lot less than 18 months.

Andre Jackson, for the editorial board

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