Designing Competitive Bidding for Medicare

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By

Andrew Whitford

Alexander M. Crenshaw Professor of Public Policy

aw@uga.edu

John Cawley

Professor, Department of Policy Analysis and Management; Professor, Department of Economics; Co-Director, Institute for Health Economics, Health Behaviors and Disparities

Cornell University (607)255-0952 JHC38@cornell.edu

This report provides a case study of how one government agency--the Centers for Medicare & Medicaid Services (CMS) in the U.S. Department of Health and Human Services--has been mandated by Congress to begin competitive bidding in 2006. The mandated bidding process is a market-based approach to setting payments for the managed-care portion of Medicare. The report describes the basic features of any competitive bidding process, and outlines lessons from three systems of competitively bidding healthcare markets by the U.S. government: for health insurance for federal employees, for military dependents and spouses, and for durable medical equipment. The report offers strategies that federal agencies can use as they move to market-based government. HHS, health and human servicesMarket-Based Government

Designing Competitive Bidding for Medicare