Abstract Rationale The Medicare Competitive Bidding Program (CBP) is an initiative to reduce spending on durable medical equipment (DME). Since its phased implementation starting in 2011, there have been concerns that lowering DME prices through competitive bidding may decrease care quality or access, especially for supplemental oxygen, a therapy that depends on regular delivery, service, and maintenance of equipment by DME suppliers. Previous research found a decreasing number of DME suppliers of supplemental oxygen between 2013 and 2019, potentially leading to decreased market competition. However, whether this trend was associated with CBP implementation has not been evaluated. Methods We conducted an interrupted time series analysis evaluating whether the final phase of CBP implementation on July 1, 2016 was associated with changes to the DME supplier market. We evaluated ZIP codes where bid prices were newly introduced in 2016, and not part of previous CBP phases in 2011 and 2013. We used Medicare fee-for-service claims data for patients with chronic obstructive pulmonary disease (COPD) who used supplemental oxygen from July 1, 2009 to June 30, 2017, with data aggregated to the ZIP-month. Our primary outcome was market concentration of DME suppliers in a ZIP measured using the Herfindahl-Hirschman Index (HHI), calculated using oxygen equipment charges. Our secondary outcome was the number of unique DME suppliers in a ZIP. We used a generalized estimating equation model adjusting for month fixed effects and ZIP-level confounders including mean beneficiary demographics (age, gender, race and ethnicity, rurality), comorbidities, and local socioeconomic factors (per capita income, poverty, unemployment). Results We identified 12,239 ZIP codes included in the 2016 implementation, representing a total of 2,708,197 Medicare beneficiaries. The average HHI in July 2009 was 3,747, indicating a highly concentrated market, and the HHI increased to 4,779 in June 2017. The 2016 CBP implementation was associated with a 53.5 unit increase in the HHI 95% confidence interval (CI) 34.7, 72.3 immediately following implementation and a 7.5 unit monthly increase thereafter 95%CI 4.3, 10.8. For number of DME suppliers, the CBP was associated with a -0.031 decrease 95%CI -0.044, -0.018 and a -0.016 change in trend 95%CI -0.019, -0.014. Conclusion We found that the supplier market for oxygen is highly concentrated and the CBP was associated with a further increase in market concentration, which raises concerns for competition. Further work is needed to determine the effect of these changes in market concentration on care quality for patients using supplemental oxygen. This abstract is funded by: National Heart, Lung, and Blood Institute (NHLBI)
Chee et al. (Fri,) studied this question.