A Federal Auction In Desperate Need Of Reform

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By Reginald Nesbitt, MD, MBA

On the hit A&E cable show “Storage Wars,” competing buyers take a peek inside foreclosed self-storage lockers, guess what might be hidden inside, then bid for the salvage rights. It’s entertaining television. But it’s a terrible model for the federal government acquire life-and-death treatments for Medicare patients.

Yet that’s almost exactly what’s happening. The Centers for Medicare and Medicaid Services (CMS) is expanding its new bidding process to an advanced therapy for chronic wound healing. CMS won’t require suppliers to prove competency with the therapy. If bidding goes forward as planned, millions of public insurance beneficiaries could have their health jeopardized.

The 2012 auction is for the increasingly popular healthcare therapy, “Negative Pressure Wound Therapy” (NPWT). NPWT uses a vacuum to expedite wound healing, removing contagions and protecting against infection.

NPWT has proven particularly effective for treating complex and chronic wounds and diabetic ulcers. Best of all, with appropriate clinical support, it can be administered at home, saving patients the hassle and cost of hospital visits.

Applying CMS auction models to bulk purchases of NPWT could ensure that competition from different suppliers gets taxpayers the best price. This is critical as CMS is the administrator of the country’s largest insurer — Medicare. But that’s only if every bidder offers the same medical device and the same necessary level of service support. As presently structured, CMS bidding ignores these realities.

Due to the compromised nature of patients with complex or chronic wounds, physicians know patients need competent technical support. Without this support, the therapy could be used inappropriately, resulting in complications, infections, and re-hospitalization.

The Food and Drug Administration has advised use be guided by home healthcare professionals with specialized training, the device include safety alarms, and patients have access to 24/7 medical support.

Oddly, CMS isn’t including quality standards in its NPWT auction. Suppliers will be selected on lowest price alone. They won’t be required to include these basic safety controls.

Improperly treated wounds will only get worse. In the extreme case, a patient could require amputation.

Subpar NPWT equipment would exact a particularly heavy toll on minorities. Latino and African Americans are each about 1.5 times more likely to suffer from diabetes. If diabetic minority patients have to use ineffective versions of the therapy, or have difficulty getting access, they could be at greater risk of loss of limb.

Failure to treat these injuries properly will also lead to bigger hospital bills. And because so many patients are covered by public insurance, the government will be picking up the tab.

CMS hasn’t set standards to ensure suppliers can make good on their NPWT bids. Officials are taking a company’s word that it can deliver the specified number of units at the bid price by a certain date.

That’s no easy task. If inexperienced suppliers are selected because they underbid more experienced suppliers, patients won’t get the needed NPWT units. Again, the health consequences could be severe.

These problems have occurred before. In 2007 and 2008, the agency took bids for NPWT and awarded 10 of the 17 contracts to companies with no experience.
Some were simply unable to deliver the promised units. Medicare beneficiaries in two major cities got stuck with no access to NPWT for the home.

When the program was cancelled due to beneficiary access problems, 12 of the 17 companies abandoned the NPWT market.

This most recent move by CMS tries to revive the old model. Evidently, officials haven’t learned their lessons and have yet to ensure competency of suppliers.

The solution to this problem is clear: Require all suppliers to meet preset accreditation standards. Doing so will ensure patient access to quality equipment and requisite clinical support, while still deploying competitive market forces to keep prices down.

This approach provides patients with quality product, service and clinical support to facilitate healing while ensuring taxpayer dollars are most cost effectively utilized.

Reginald Nesbitt, MD, MBA, is the Chief Integration Officer of ApolloMD, a privately held physician practice that specializes in providing Emergency Medicine, Anesthesia, and Radiology Services to hospitals nationwide. Additionally, he is currently the Medical Director for Emergency Services for University Health Care System in Augusta, Georgia.

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