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Please use this identifier to cite or link to this item: http://hdl.handle.net/1860/2747

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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