Why does CMS persist in overpaying for durable medical equipment?

Durable medical equipment (DME) has been fertile ground for fraud for decades because Medicare pays far above the market price. In two recent examples, DME supply companies were convicted of fraudulently billing $3.3M and $3.5M. Fraud is so attractive because companies are buying wheelchairs for $900 and selling them to Medicare for $6000. In another case, the Dept of Health and Human Services Office of the Inspector General called out Medicare for overpayment of $251 million dollars for portable infusion devices because they have not updated their market price list since 2003. This kind of systematic over payment has been going on for many years.
Having a large discrepancy between the amount Medicare will reimburse for equipment compared to the market price for obtaining that equipment creates a big incentive for fraud. Every piece of equipment sold scores a big profit. Not surprisingly, DME has been a fertile area of Medicare fraud for decades. If the prices Medicare paid reflected  true market prices there would not be such an incentive for fraud. Prices that better reflected market pricing would also mean that DME items could be made available to more patients who would actually benefit from them.
To combat DME fraud, the Center for Medicare and Medicaid Services (CMS) has enacted detailed documentation requirements that physicians must complete before a patient can receive DME items. Certificates of Medical Necessity must be completed and often additional patient visits must be scheduled for the sole purpose of documenting specific items on the physical exam. As a result, DME fraud prevention has become a substantial administrative burden on primary care physicians, and completing CME paperwork is one the least favorite activities of any primary care provider. Believe me, been there done that. All this time spent completing fraud prevent paperwork is a significant drain on primary care provider time, moral and productivity. There are numerous studies saying that we have and face an increasing shortage of primary care physicians. Dealing with fraud prevention paperwork is one of the things that makes primary care an unattractive career choice for physicians. A better solution would be to pay for DME at market prices eliminating most of the incentive for fraud and relieving physicians of much of the fraud prevent paperwork burden.
While Medicare can be criticized for overuse of services, Medicare is very efficient at procuring healthcare services and pays lower costs than most private insurers. It seems like CMS should be well-positioned to negotiate favorable pricing from DME suppliers, but this never seems to happen.  Why? In 2003, Congress mandated that CMS develop a system for market based pricing of DME equipment, but thirteen years later, the system that they devised does not seem to be working very well.
DME is a $30 billion plus market here, and Medicare is paying a substantial fraction of that. Medicare pricing also sets the market for private insurers. As Everett Dirksen once said “A billion hear a billion there, pretty soon we’re starting to talk about real money.”

How journalists dupe the public with scary sounding headlines when there are many other and reasonable explanations

Recently, a feature appeared with  the title ‘How researchers dupe the public with a sneaky practice called “outcome switching”‘ accompanied by a truly scary graphic shown below. The article went on to claim only 9 of 62 clinical trials analyzed had faithfully reported the outcome of the trial.

Vox.com graphic shared under fair use for comment
Vox.com graphic shared under fair use for comment

Yes, there have been abuses, but before we all run out and say 53 out of 62 clinical trials are trying to mislead us, let’s slow down and think about things. Every clinical trial must specify a primary outcome. The FDA very rarely allows a trial to change the primary outcome, and in the few instances when this does occur, it is only after extensive and critical review. If the primary outcome does not achieve statistical significance, the FDA will reject the trial. Period, end of the game.

Trials also include secondary outcomes. Maybe the primary outcome was improvement in overall survival. Secondary outcomes might be improvement in time to disease progression, improvement in time to next treatment, improvement in patient life style, is the treatment more effective in one subset of patients or another, etc. Often these secondary outcome measures are somewhat redundant, and may not all be included in a publication. Or maybe they just did not achieve P<0.05 statistical significance even though the trend in the data supports the hypothesis. Lots of reasons a publication may not present every last one of the secondary analyses listed in the original protocol.

More importantly, it typically is years, often many years, between the time a clinical trial protocol is approved and the time when the trial is complete and the results are ready for publication. During that time a lot can happen. Science advances, new technologies and new drugs come on the scene. The investigators may notice patterns in the data that they did not anticipate when the protocol was submitted. Should they ignore all of this and limit the publication strictly to the outcomes listed in the original protocol? No, that would slow science and be a disservice to the participants of the trial. Are there multiple hypothesis testing issues associated with looking for interesting patterns in data, absolutely. The issue is not were analyses not listed on the original protocol included in a publication but rather how these new analyses are presented.

Bottom line, clinical research is hard, takes a long time and is very expensive. We need to get the most out of every study which means looking at the data in as many ways as possible and being critical in our thinking when we do.