The Hidden Costs of a Flawed Medicare Auction

In the fall of 2010, 167 auction experts from top universities around the country sent a letter to Congress expressing concern regarding the Centers for Medicare and Medicaid Services (CMS) planned implementation of the durable medical equipment (DME) competitive bidding program which was scheduled to be begin in nine cities beginning January 2011. In June of 2011, 244 economists, computer scientists, and engineers from top universities across the country, including four Nobel laureates, wrote the White House warning that continued implementation of the current CMS competitive bidding program would lead to market failure and thereby deny seniors access to this critical health care benefit while increasing health care costs. Pursuant to a Freedom of Information Request (FOIA), CMS has now released startling new data which demonstrates how destructive the current competitive bidding program was in its first year of implementation. The following is an analysis of this recently released data and recommendations of how Congress can address these problems before the program is expanded to 91 cities across the country.