NATIONAL COMPETITIVE BIDDING (NCB) Legislation Status and Comparison

2. NATIONAL COMPETITIVE BIDDING (NCB)Legislation Status and Comparison

3. Aftermath of CMS takeover • In the demonstration sites, fewer than 25% of providers won Medicare contracts • Of non-participants, only 20% can survive long-term without Medicare patients • National chains will dominate • Negative impact on beneficiaries, including rural areas Industry – post NCB

4. Aftermath of CMS Takeover • 60% of the nation’s independent dealers out of business • Severe change in seniors’ access to their preferred provider • Providers forced to reduce the quality of product service to become lower cost providers • Halting of innovation in home care products

5. CBO Estimates for NCB • CBO estimated gross 10 year savings of competitive bidding at $7.7 billion • $5.8 million of this “savings” reverts to the US Treasury

6. Cost of Bureaucracy? CMS administrative costs for the demonstration were 56% of the gross savings Demonstration sites

7. Questions on the rate of growth The future growth rate of homecare spending is subject to estimates. CBO’s growth estimate results in 33% greater homecare expenditures as compared to CMS’s estimated growth rate Growth in Homecare ($B)

8. Behind the numbers • Administrative costs at demonstration sites were 56% of gross savings • CBO analysis assumed higher growth rate than CMS. Splitting the difference reduces gross savings by $1 billion • This does not even include the reduction in income tax collections • Little “savings” left for federal government

9. Conclusions • The costs and likely “savings” from competitive bidding are still unknown • No objective analysis performed to date • Significant uncertainties in the assumptions • Huge negative impact on access, service, quality and innovation • Canada tried it and it failed • Fails the smell test – eliminates many businesses, increases the size and control of federal government