FROM THE EDITORS

When Congress voted to override President Bush's veto of a Medicare bill in July, it was a testament to the power of persuasion that the medical industry has, when it wants to use it. In the coming year, industry will have to use its political weight a lot more.

Most of the coverage about the Medicare Improvement for Patients and Providers Act of 2008 focused on the repeal of proposed payment cuts to physicians. But it also affected two competitive-bidding programs in ways favorable to the medical device and clinical laboratory industries.

First, the bill delayed a competitive-bidding program for durable medical equipment. Industry had complained that the bidding process was flawed, and that a price-based system would cause quality to suffer.

Second, the bill repealed a clinical laboratory competitive-bidding project that had been halted by a federal judge in April. Industry had complained that its requirements were unworkable and that patients would suffer as a result.

Now, you might think that arguing against a pair of programs touted to save significant costs to the healthcare system would be unpopular at best and a losing proposition at worst.

But it's not that simple. It never is when the federal government is involved.

In theory, competitive-bidding programs save the government money by having vendors bid against each other rather than having the government pay a set fee for each product.

In practice, however, there have been serious problems with implementation—some of which had the potential for a negative influence on patient care. The agency implementing these programs is CMS (the same agency that was aware of but chose to do nothing about some vendors using dead physicians' names to collect $77 million worth of fraudulent payments over seven years).

There were several problems with the competitive-bidding program for durable medical equipment. The most significant problem was that because winners were chosen almost exclusively on price, some winners had no history of serving the patient populations whose services they bid for. That meant there was no assurance that patients received consistent quality of care. The program was poorly constructed, failing to distinguish between inexpensive commodity items and expensive complex ones. In addition, CMS botched the vetting of potential vendors. It disqualified some for submitting insufficient financial information, without telling them of the shortcoming until it was too late. And small firms expressed concern that the program would force them out of business because they couldn't compete on price and volume alone.

For similar reasons, a federal judge put a stop to the clinical laboratory competitive-bidding program, saying it could cause “irreparable injury” to laboratories and patients. Again, it was sloppily put together, making no distinctions among the various types of tests in use.

Industry advocacy groups, including AdvaMed and the American Clinical Laboratory Association, did an excellent job of making members of Congress see the flaws in the way the programs were set up without denigrating their positive aspects. Without such persuasion, Congress may have continued to buy the hype and not paid attention to the unintended consequences.

This sort of dialogue will be even more important after the presidential election, as broad reform of the healthcare system will be on the table. Industry associations need your support in order to remind Congress that whatever form change takes, it shouldn't inflict undue punishment on device companies or the patients they serve.

Erik Swain for The Editors