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Will competitive bidding decrease medicare prices?
Please use this identifier to cite or link to this item:
http://hdl.handle.net/1860/2747
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| Title: | Will competitive bidding decrease medicare prices? |
| Authors: | Katzman, Brett
McGeary, Kerry Anne |
| Issue Date: | 2008 |
| Publisher: | Southern Economic Association |
| Citation: | Southern Economic Journal, 74(3): pp. 839-856. |
| Abstract: | Recent measures to reduce Medicare spending include the use of competitive bidding in
determining reimbursement prices. Several competitive bidding experiments have been
conducted by the Centers for Medicare and Medicaid Services (CMS) to determine
reimbursement prices. This paper investigates the use of competitive bidding to set
reimbursement prices for durable medical equipment, prosthetics, orthotics, and supplies.
First, the competitive bidding process is examined on a theoretical level. It is shown that the
CMS competitive bidding process (auction) is inefficient, leads to price increases, and may
cause decreases in the quality of services. Next, data supporting the theoretical predictions are
presented. Finally, we suggest that a descending variant of the Ausubel, Cramton, and Milgrom
(2006) clock-proxy auction be used. |
| URI: | http://hdl.handle.net/1860/2747 |
| Appears in Collections: | Faculty Research and Publications (Economics & International Business)
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