CRE Uncovers Discriminatory Actions by CMS on Medical Equipment Competitive Bidding
CRE has compared the rules covering competitive bidding in the Medicare Advantage program with the competitive bidding rules governing the medical equipment program.
CRE concludes in correspondence to the Deputy Director of OMB that the competitive bidding proposal in the Medicare Advantage program is similar to that recommended by CRE in that it would be used to set prices but would not be used to determine which companies are eligible to compete within the program.
22 responses to “CRE Uncovers Discriminatory Actions by CMS on Medical Equipment Competitive Bidding”
I am very concerned about this plan. It seems it will limit the number of suppliers that my parents can use. And I can tell you that they are not all the same. The quality of care suffers tremendously when you limit suppliers. It seems the larger the more impersonal and the longer the wait. Please don’t limit my choice. Thank you for consideration of this matter
While I am a firm believer in free enterprise, competative bidding simply isn’t competative. If it were, there would not be a cap.
Think for a moment about one of your dearest family members. Imagine if you will that the were the unfortunately suddenly in grave neeed for a wheelchair. They would be unable to be independent without this equipment. Due to lack of sensation your loved one develops pressure uclers where the bones in their tailbone break through the skin. They are in depserate need of a custom molded seating system and pressure mapping. (Lets keep in mind that pressur mapping is not reimbursable to a vendor. The cost for a system is $12,000).
You are concerned about the ability for a new wheelchair to fit into the various rooms of the house for baths etc.
Competative bidding happens. You call your clinical facility. You live in Boston. A winning bidder in Seattle contracts another company an hour away in Methuen Ma. to come and do your wheelchair. The person that shows up tells you that you can only have a basic chair because the cost is prohibitive. No mold is done as it costs more to do the mold than the company is reimbursed. You have problems after the sale and are directed to call Seattle office. Seattle office tells you to call the Methuen office. You take a day off from work to wait for the technician to come repair your chair. They never show. Meanwhile your loved one is trapped in bed until the chair is fixed.
Now you could have called the company 10 miles away that has an excellent reputation in the industry. They have qualified, trained ATP’s on staff. They have always been an above board Medicare provider. But you cant call them for your new chair because they didnt bid low enough in a bidding process that attempts to drive reimbursements to a price that is lower than what the dealer pays for the equipment.
We all agree that Healthcare costs are outpacing our ability to contain them. DME and Rehab represents less than 1% of the total Healthcare pie, yet no other arena of the healthcare community has suffered such Draconian measures.
It is my strong belief that competative bidding will have the following negative results:
1. Ethical Small businesses will be driven out of business.
2. Failure of such businesses will have an adverse impact on client choice and client care.
3. Inferior quality of care will result in higher costs for procedures such as myocutaneous skin graft surgeries, ER visits, and hospital and PCP visits. These unseen and increased expenses will far exceed the original savings sought.
As a member of the small business community my job, the life savings of the owners, and the jobs of my peers are at stake if Competative Bidding is allowed to be employed. So for the safety, comfort, and care of our patients, please consider ending Competative Bidding for good.
DME competitive bidding will without a dobt put several small companies out of business as they cannot compete with the pricing of large compnaies. The process itself if very flawed. DME accounts for 2 % of Medicare expenses yet has been subjected to the most scrutiny of price cuts already not including competitive bidding. Why not start with the hospitals having to submit bids for Medicare and take a 30% pay cut like DME has done over the last few years. Or the doctors who have had raises or a freeze every year for the last 5 years when DME has been cut? That woulkd be real savings t0o Medicare instead of this smoke and mirrors trying to save pennies when spending billions to hospitals and doctors
In today’s financial environment it is unthinkable that CMS is proceeding with implementation of a bidding system that will put so many small DME businesses out of business. Not only will these companies be forced to close, but all their employees will be out of jobs at a time when jobs are difficult to come by. In addition it will make it very difficult for those needing equipment to find it in a timely manner. Will hospitals release patients to go home when they need equipment that is supplied by competitive bid of a company 200 miles away?
It appears to me after reading this it is the plan and hope of the government to use competitive bidding as the tool to put solid, ethical, small mom and pop DME’s out of business at the expense of the locate residences that use them. So, set the prices and let the small business serve their communities and neighbors. Where is the free enterprise, boundries of forming monoploy, etc
Medicare spokesmen have repeatedly stated that it is there specific intention to drastically reduce the number of DME suppliers. Rather than do their job and properly screen those to whom they issue provider numbers they are resorting to a ‘scorched earth’ policy in an attempt to reduce cost and get rid of providers that should have never been allowed into the system in the first place.
There are sufficient regulations on the books now that would permit them to shut down any DME provider in the country that they deemed to be abusive or fraudlent.
Right now the government owned GM is shutting down dealerships so they can reestablish ‘pricing power’. Yet in the DME industry they are wanting to shut down dealerships with the argument that it will reduce prices. Which is the lie?
While I believe that the results of round 1 prove that a gross amount of flaws exist in the competitive bid program I am further perplexed that CMS has decided to proceed without the corrective action plans in place to proceed.I listened to everthing CMS had to offer at the PAOC meeting in Baltimore and the 8 hour day did not scratch the surface to address the flaws and yet here we go full speed ahead. If the current administration has success in providing a national healthcare program the insured ranks would grow by 40-50 million beneficiaries. Why then would we proceed with a program that eliminates 70% of the DME providers in the nation? We should at the least delay the program an additional 18-24 months until congress can give our issue some serious consideration. Its hard to get congressional leaders to listen to a little 10 billion $ issue when a 1 trillion $ issue is on the table.Its no surprise to me that CRE has uncovered another gross inconsistant policy.
The DMEPOS competitive bidding program will be harmful to both small business and to Medicare beneficiaries. Due to the fact that the program will exclude all but a handful of DMEPOS suppliers, and Medicare provides nearly 50% of industry revenues, literally thousands of small businesses will be thrown out of business by the program. In addition, beneficiaries will be left having to go to multiple DMEPOS suppliers for their product needs. For example, a beneficiary who needs oxygen, power mobility, orthotics, and aids to daily living will be forced to do business with 4 or more DMEPOS suppliers. In addition, if they do not receive quality service, they will be stuck with the 1 or 2 suppliers for that particular product in their area, thus limiting patient choice.
If the DMEPOS bidding program must move forward, it needs to follow the Medicare Advantage bidding model whereby prices are set by the market and all willing/qualified DMEPOS suppliers may participate at the bid price. Even with this; however, thousands of DMEPOS small business will go out of business as a result of the program.
Home care is the answer to the current budget crisis regarding the Medicare program. Rather than constantly making cuts to home care, the administration needs to look at ways to get people out of the hospital faster and into a home care setting with 1/10th the cost or less.
Competative Bidding & Medicare Advantage plans are a dis-advantage to beneficiaries needing DME equipment. My company just this mornign told a sweet couple looking for a wheelchair that our company was not a provider for the Medicare Advantage Plan they had. Truly a SAD situation because I do not know how this couple is going to get what the wife is needing. They just pulled out of our parking lot more lost than when they came in.
Now how is Competative Bidding going to fix this? No way it can. Limiting providers will be a truly a sad, sad, situation. Homecare is not the problem to our healthcare crisis – Homecare is the answer. DME is just over 1% of the entire Medicare budget. Congress,please wake-up!!! DME cannot sustain anymore cuts. Many of the Rehab (custom wheelchair)providers have already closed down their wheelchair operations. Oxygen will be next.
The answer is to fund DME and Respiratory. Mandatory Accreditation, Surety Bonds, and Site-visits will be enough to police the Fraud and Abuse. Limiting providers and funding will only cost our healthcare system more. Proper wheelchair seating and positioning does prevent pressure ulcers and needless, expensive surgeries as well as costly hospital and nursing home stays.
Competative Bidding and Medicare Advantage plans our poor systems because they limit competition & decrease the level of services available. Thus, we have many fewer providers in business. So many DME jobs are going to be lost while nursing homes and hospitals will have to expand to house these beneficiaries who can nolonger remain at home. Once again we’re driving up our nations healthcare cost. Remember DME is only 1.09% of the entire Medicare budget. DME is the most affordable healthcare available. Fund DME & eliminate Competative Bidding.
Re: Competitive Bidding, Surety Bonds and 36 Month Cap on Oxygen
I am a sole proprietor and have been in the DME business and a Medicare Provider for over
24 years. I am a small business owner (8 employees) in the Sierra Nevada mountain range in California. Yosemite National Park is part of my service area. I have Medicare Customers scattered all through these mountains. It’s normal for my drivers to put 200 to 300 miles a day of mountain driving to service Medicare Patients with their medical equipment needs. Like the Post Office we deliver / service thru “rain, hail, sleet and snow,” but ours is 24 hours a day 7 days a week.
I have spent the time and money becoming Accreditated with JCAHO. I have all the licenses that are required by law and have tried to follow the industry standards to the best of my ability. I have never had to submit a claim to my insurance company over the last 24+ years! Yet now I’m told I am going to be required to get a “Surety Bond”. Why? Shouldn’t that happen only to those who have been a problem like “The Scooter Store?” I have survived the many cut backs and changes that have happened in the Medicare realm over the last 24 + years. I also know with this experience that when Medicare speaks all other insurance companies follow. So this change will also affect my relationship with most of the other insurance companies I do business with.
In saying this, I believe the “Competitive Bidding” program that has been developed by Medicare is not in the best interest of small businesses or Medicare Patients. How could it be when 1,000’s of small businesses as myself will be unable to compete with companies like “The Scooter Store”, who has done nothing but break rule after Medicare rule and even had to pay millions of dollars back to Medicare for “fraudulent claims” (without having to admit quilt) and still retains their “Provider” status! How can we small DME businesses compete with that? What will my patients do when we close and they have to drive an extra 80+ miles round trip to the next DME company? Mountain and rural people will suffer greatly from this form of Competitive Bidding.
I believe all existing DME companies that are Medicare Providers should be able to continue billing at the rate that is decided by whatever means. That is fair!
Honestly, I never thought Competitive Bidding or the 36 month oxygen cap would go this far! Whoever thought up the 36 month oxygen cap was NOT a business person! I believe the price for oxygen use should have been divided up over the 60 month life of a concentrator but this figure must also include service, supplies and the 24 hour emergency service that comes with it! I don’t know one business person that would want to get paid for 36 months rental of a piece of high tech equipment then receive practically nothing for 24 months more! Not only that, if the patient moves across the country the DME company has to pay another company to provide the patient with oxygen for up to 24 months! My business brain tweaks out every time I think of it! It is not logical or good business. The fact is the cost to keep a patient at home with DME and/or Home Oxygen is so small compared to any hospital stay! We are already a discount industry when compared to many other medical expenses.
Please keep small companies like mine in mind when you make your decisions. We have been here for Medicare Patients for 24 loyal years. If I were to lose my Provider status with Medicare I would go out of business! For my Employees, my Medicare Customers and my Business I appeal to your conscience.
Thank you for your time and may the decision be what is best for the “quality of life” and the “independence for daily living” of our Medicare Patients and for the life of the Small DME Businesses scatter throughout this nation.
Competitive Bidding is the wrong term for the program that CMS has and still is proposing. It is more of an auction for the lowest bidder, who may not be a qualified provider of the equipment they are bidding on. This does not save money, nor does it give the patient the freedom of choice that Medicare has always demanded. CMS has not proven that they have eliminated the issues that Congress demanded and are going ahead with a program that that is inadequate.
I was involved in a focus study group a number of years ago which was a precursor to competitive bidding. It was sponsored by CMS with supposedly “independent” people leading it. There were approximately 20 providers of DME there. All of us asked the same question: Is this a way of weeding out small suppliers?
At that time we all knew what was coming. I don’t understand how the administrative costs of running the Competitive Bidding program is justified. Are the savings of competitive bidding subtracted from those costs? We have never been told what they are.
Please give the elderly a choice of where to get their equipment! Please give small business like ours a chance to stay in business.
The economy is bad. Companies closing and people losing their jobs does not seem like it will help!
Will the Congressmen and Senators choose this program when they reach 65? Or, will they stay with the “cozy” FHP program?
If you think it is bad now, just give it a little time and you will see how bad it can really get. Congress passed a law and handed it down to CMS to enforce and they have made it clear that there are no exceptions to the law. I fully understand the intent but I also think I might have a clearer picture of what is coming than you do in regards to this specific legislation.
On January 1, 2009 Medicare stopped paying the monthly rental fee for every Oxygen patient that has been on service since on or before January 1, 2006. This is the dreaded 36 month oxygen rental cap. The Home medical equipment supplier will retain ownership of the equipment and will be responsible for servicing the equipment and the patient 24 hours a day 7 days a week for the next 2 years. If the patient moves from Fort Worth to Santa Fe, I am bound by federal law to continue to service that patient and equipment for at least the next 2 years. I am sure that I am not licensed to do business in New Mexico. I realize that congress was trying to save some money but I firmly believe that just the opposite is about to happen.
There will be a number of DME dealers that are overly dependent on Medicare as their primary Payor that will simply be forced out of business. I can assure you that every patient that is serviced by every supplier that goes out of business will be forced to look for a new supplier. I am wondering just who you think will take a patient and supply equipment and service to that patient for $0.00 reimbursement for the rest of their life. I can assure you that the patient will be turned away and will not have any choice of where to go except to the hospital. Now we can start spending some money. Instead of paying $2,000.00 per year for round the clock service (24/7) you will get to pay $2,000.00 per hour for simply letting the patient breath hospital supplied oxygen while they try unsuccessfully to find a new DME dealer to service that patient.
You have made it to where the surviving DME dealers have no choice except to refuse the capped out patient. The patient will suffer and the supplier will suffer and when enough of them are out of business, then what are you going to do. Even National Service Providers like Apria or Lincare will not take a patient that has capped 36 months on oxygen if they will not be paid for servicing the patient and supplying the equipment.
My offices are across the street from the hospital. I know for a fact that the hospital stays full and that there are patients in the hall waiting for rooms. I am not talking about a little backwoods hospital I am talking about one of the biggest hospitals in the state of Texas. There is a push daily to get patients discharged and home so that they can move people from the hallway to even a semiprivate room.
Just exactly where do you think these suffocating, oxygen dependent, patients are supposed to go. I can assure you that the ambulance trip and single emergency room visit alone will cost more than what we are paid for 24/7/365 service to supply oxygen to the patient at home.
Someone needs to take the time to step up and listen and truly address this issue BEFORE it crashes and creates an even bigger mess. As DME dealers across the country realize that their reimbursement is not enough to cover the cost of servicing their patients and that they cannot pay their vendors or meet their other financial obligations, they will be forced to close their doors. They would love to stay in business; they simply cannot afford to stay in business. Other people will think that they can get into the DME business and provide service to oxygen patients. They will quickly do the math and figure out that it is impossible to purchase the equipment, deliver and setup the equipment, perform routine maintenance on the equipment, provide backup or portable systems to the patient, deliver filled tanks to the patient when theirs are empty due to use or the inability to turn off the valve correctly, answer all respiratory questions and concerns that the patient might have, provide 24 hour a day emergency service to the older patient that cannot seem to unscrew a humidifier bottle and then screw it back on without cross threading the threads, provide customer service to the patients, correctly gather information and required documentation so that we can legally bill for the services that we provide, maintain a warehouse that meets the requirements of Medicare standards, provide for liability insurance in case one of the patients (that signed a form and promised that they would not smoke while on oxygen) burns themselves up in the privacy of their own living room, pay for salaries of all the supporting staff, including storefront, marketing, customer service, billing, respiratory, delivery personnel to name a few.
It is possible that you are thinking that DME dealers are simply greedy money hoarding thieves. I can assure you that just the opposite is true. I have a dedicated staff that fights daily to do everything they can to service our patients during a time of falling reimbursement and economic collapse.
I agree with the need for consistency within the program but it is equally important to be realistic about what is happening. It is not just a piece of equipment that provides oxygen. It is a program that provides a real way for Medicare to save money. Driving the DME dealers out of business is counterproductive and will have dramatic results if careful steps are not taken now.
Just like what was stated above so eloquently by Shannon whom I couldn’t agree with more. You lawmakers seem to have no knowledge of what it’s like to run a small business much less a DME business. Sorry if that seems harsh but reality is far from you policy. In your attempt to cut Medicare costs you are only pushing for increased Part A costs by limiting the suppliers payment for services on Oxygen. You are also really wasting taxpayer money by spending so much time on this competitive bidding issue. It seems that it would be more productive to pay the supplier for services rendered and also start paying for things not covered by Medicare such as grab bars, which a couple could be installed for under $200, and you could save a patient who falls from having to go to the hospital for a broken hip for $20,000. Your attempt to cut costs would be better served there than cutting costs by imposing competitive bidding. I hope these comments won’t go unnoticed by you politicians and you will really take to heart what people in the trenches everyday in this business know and listen to what us peons have to say. It’s time to start listening to your constiuents and really do what the people put you in office to do, which is work for us not against us!!!!
Competitive Bidding will save a couple dollars in the short term but will cost 10 times the saving in the long run. This program will stifle innovation and cause beneficiaries to get old equipment and horrible service. They will then need to be admitted to the ER and have to stay a couple days in the hospital.
Homecare is the answer, not the problem…let us prove it!
Our common goal is to decrease healthcare costs.
To do that, we need to decrease emergency room visits, decrease untimely readmissions, and decrease hospital length of stay.
To do that, we need to provide quality care and service in the home.
To do that,we need to eliminate the 36 month oxygen cap and eliminate DMEPOS competitive bidding.
It’s not that difficult.
I keep coming back to the phrase TO BIG TO FAIL. CMS is setting up the same problem going forward in this industry. If CMS has their way there will be just a hand full of companies providing DME to the entire country. The handful if successful bidders will provide services as they see fit and the patient will be nothing more than a number, not to mention the probability of the patient having to go to several different companies for multiple pieces of equipment based on who was successful bidder for what piece of equipment. If one of the companies gets into trouble, we as tax payers will have to rescue them. What happened to the free enterprise system? How many bidders do you think CMS will have for the next round of bids? Most likely the same handful that were successful the first time at a cost of their choosing will be the ones that are successful the second time.
1.09% of Medicare’s budget is made up by DMEs. In order to be a provider we must be accredited, have a store front and in October we will have to be bonded. We are required to be licensed in our state to be a provider. I think that CMS has put plenty of obsticals in place to do away with those companies practicing fraud and abuse. CMS with their requirements and site vists should be able to get rid of all the non-compliant companies in a relatively short time. CMS should not hand out a provider number until they are sure that all of provider requirments are met.
We don’t need competative bidding, we need CMS to go after the the other 98.91% of their budget where they can have a real impact on cutting cost and saving the tax payers dollars.
Let free entrerprise work.
I have been in the HME industry for 34 years and have been competing for every referral based on quality of my service. NCB will eliminate a majority of HME companies in every MSA and will also terminate any quality of care/service. Here is a good example in my area of southern Cal. Prior to the Cap Contract Kaiser now has with a National Company, I was able to provide service as well as a few other’s. We were called on when the National was unable to provide timley service as to not hold up a discharge. We were called on when a patient was complaining about poor service. We were called on to provide care/service to Kaiser employee’s and their family. Now that the Cap keeps us on the side lines the Staff that has the responsibility of referring and taking complaints are pulling their hair out. My experence is that if you eliminate competition you eliminate quality. The have always gone hand in hand.
My company is a small ($1.5 mil, 5 empoyees) mail-order diabetic supplier. What has infuriated me from the beginning has been the exclusion of retail from competitive bidding. Does anyone see the total unfairness of forcing my little business to bear the rigors, and reduced reimbursements, of competitive bidding while the big-box retailers with their billions in sales are exempted from bidding when it comes to diabetic supplies?
CMS has established a product category simply on how the product is delivered. Does this make any sense? Is it the intention of CMS to have just a half-dozen or so of the large national diabetic suppliers survive and then impose those lower bid prices on retailers?
I agree that competitive bidding is just a reverse auction, but without any standards. When the Air Force or NASA requests bids they establish strict standards. Otherwise their machines would fall out of the sky. Well, since there is no standard for diabetic testing strips the winning bids the first round came in at a $18-20 range. That could only mean one thing, the winning bidders will force their patients into cheap foriegn imports, denying them the quality name brands they enjoy now. Was this the intent of Congress?
At a minimum the Any Willing Provider Clause should be added to competitive bidding. Better yet, just scrap the whole bad idea and accept the 9.5% cut as sufficient.
Now more than ever, the government needs to stop interfering in the marketplace by attempting to impose bureaucratic solutions. This so called competitive bidding is nothing of the kind and the way it is being proposed is flawed.
Having been in the Home Medical Equipment business for the best part of 40 years, I have seen many changes in the industry, some good, and some bad. None of which would have the negative effect on the quality of care that the National Competitive Bidding (NCB) program promises. This industry has, over the years, reduced Medicare spending by billions of dollars by markedly reducing hospital lengths of stay and readmissions.
This is especially true for the home oxygen patients, an at risk group of patients predominantly of Medicare recipient age. The Agency for Healthcare Quality and Research (AHRQ), the Department of Health and Human Service’s own in-house experts on patient quality, access and evidence-based medicine, released a comprehensive study in 2004 of the effect of Long-Term Oxygen Therapy (LTOT) on patients’ health and related health care utilizations. “In a retrospective cohort study of 246 patients that focused on the effect of LTOT on hospitalization, Ringbaek et al. (2002) reported that the average number of hospital admissions per patient per year decreased from 2.1 to 1.6 and the average number of days hospitalized decreased from 23.7 to 13.4 after LTOT.” Since the current cost of one day hospital stay is $4,603/day while the annual cost to Medicare for providing home oxygen is $2,457, a policy that restricts access to LTOT may result in Medicare spending far exceeding the calculated savings resulting from the NCB while further jeopardizing the health of an already at risk population. The results of the first eight days of implementation of round one bidding which was implemented on July 1, 2008 and was then rescinded on July 15 2008 (attached to separate email) accurately demonstrates this potential negative effect in that some of the companies awarded bids, either were not licensed to provide oxygen in the areas they were awarded bids, or they would take 2 to 3 days to provide the oxygen. Under the current arrangements home care providers are able to, within about two hours, provide the patient at the hospital with portable oxygen for transport to their home while providing a stationary oxygen system in their home. These NCB resulting delays can result in an additional 2 to 3 day stay in the hospital for the patient while adding much additional cost to the healthcare program and disadvantaging the at risk patient.
There are currently an estimated 25,000 to 30,000 HME companies employing approximately 300,000 individuals. These companies have survived because they know that this business is a service business. They succeed by obtaining referrals from doctors and hospital discharge planners because they are able to provide quality care on a timely basis. CMS does not understand this concept. They continue to attempt to establish reimbursement rates as if these service companies were your standard retail companies using cost of goods as the only condition for determining rates. In fact, studies show that the cost of goods for your typical HME company is only 28% of their total costs. These companies must provide 24 hour availability. They provide pick-up and delivery. They provide all necessary repairs and maintenance. They monitor the patient’s condition and alert the physicians of any changes in their condition which often results in early intervention and eliminates a costly hospitalization. They are required to adhere to very strict record keeping requirements and must wait for their Medicare payments which may take well over 90 days. These quality providers and the competition that now exists are responsible for the reductions in hospital stays and the reductions in readmissions and yet, CMS acknowledged in one of their teleconferences that they have no way of determining whether the bidders are qualified to provide the services required of the winning bidders.
The NCB program began when Congress, as a part of the Balanced Budget Act of 1997 directed CMS to evaluate what effect a change in the then current methodology for DME payments would have if it were changed to a National Competitive Bidding process. CMS then conducted demonstration studies in 1999 through 2001. The results were summarized by Tommy G. Thompson, the then Secretary of HHS as follows:
“Fee schedules resulting from the three bidding competitions held in the two sites suggest that substantial savings can be realized from competitive bidding. Our final estimates suggest savings of 16-17 percent annually in Polk County’s Round 1, 20 percent in Polk County’s Round 2, and 20 percent in San Antonio’s single round. Overall, the demonstration in both sites saved 19 percent over what would have been paid under the existing statutory fees. The demonstration reduced Medicare payments by $7.5 million and beneficiary payments by $1.9 million.”
Relying on the results of these studies, Congress, in 2003, enacted the Medicare Reform Bill. In this bill Congress directed CMS to implement the NCB with the intent of reducing reimbursement by approximately 19%.
What has been overlooked is the fact that, concurrent with CMS developing the roll out of NCB, they implemented other rate reductions and rate freezes that resulted in saving exceeding the 19% savings intended by Congress. To demonstrate this, we performed the Following comparisons. Since the CMS demonstrations were conducted between 1999 and 2001 we determined the average national rates for the year 2000 for those items contained in the bid process. Certain of those items could not be analyzed due to changes in coding and product descriptions so we analyzed the remaining 16 items. We then adjusted the unit prices of these items to what their 2009 allowable rates would have been using the then existing methodology used by CMS to adjust rates annually. At that time the rates were increased annually based on the market basket CPI-U index increase. Finally we compared these results to the actual 2009 average allowable charges. We then performed the same analysis just on all biddable Respiratory Items and also on just the Oxygen items. These amounts were then adjusted to a consistent historic volume so as to accurately reflect their impact on overall Medicare spending. Using the year 2000 as the base year, the rate reductions already realized are 30.9% for all items analyzed, 35.5% reduction for all respiratory items and 36.7% for Oxygen items. This analysis does not include the savings from the 36 month stationary Oxygen cap.
THIS ANALYSIS CLEARLY SHOWS THE RATE REDUCTIONS INTENDED BY CONGRESS HAVE ALREADY BEEN GREATLY EXCEEDED AND THIS SAVINGS IS REALIZED WITHOUT IMPLEMENTATION OF THE COMPETITIVE BIDDING PROCESS AND WITH THE ELIMINATION OF THE 36 MONTH OXYGEN CAP.
As a result of the above referenced rate cuts many of the existing HME companies are now struggling to keep their doors open. In a recent report from wall street analysts, Suntrust Robinson Humphrey said that, in a survey of more than 50 oxygen suppliers on the impact of 2009 Medicare cuts (already in place), only 40 percent of providers expected to be profitable in 2009, and 60 percent said they would close up shop if further cuts were implemented. (78 percent said they were small providers with annual revenues of less than $6.5 million). The complete report (see attached to separate email) included analyses for Deutsche Bank, Soleil and Pomeroy and concluded that, if the cuts Congress is currently considering are implemented, only Lincare, Inc. will be in a financial position to survive. This result would obviously be devastating to the industry, result in the closing of approximately 30,000 companies and the elimination of over 250,000 jobs, not to mention the effect on hospital costs and the homecare patients.
I applaud your efforts in attempting to take action to protect the small businesses. My concern is their ability to compete with the anticipated rate reductions. They would have to slash services at the expense of hospitals and the patient. I am also concerned that there is no protection for an important part of the industry, the independent regional companies. These companies started as small business but, due to their successes, no longer qualify under SBA’s definition. The large, publicly traded companies may survive and your recommended exceptions for small business afford them the opportunity to compete but the intermediate sized private companies would be punished for their successes.
I especially applaud your recommendation that the awarded competitive bidding contract not be transferrable for a period of at least one year. It is very apparent from the attached report of the first 8 days of round one implementation that many of the winning bidders in round one had no intention of providing the equipment and services awarded under the bid. I am sure many companies submitted “low-ball” bids with the intent of being awarded the bid and then selling their companies. Requiring them to provide these equipment/services for an extended period of time will eliminate these bidders from the process.
I would hope that, since Congress’s initial intent to reduce HME reimbursement has more than been met, and, since implementation of NCB in its present form would have such a negative effect on hospitals, total Medicare reimbursement, independent businesses, their employees and especially to the patient, you would recommend to Congress that they pass legislation eliminating NCB for the HME industry and instructing CMS to develop a reasonable method of establishing Medicare rates for this industry, or, return the CPI-U increases.
Has CMS already forgotten that DME took a 9.5% reduction in fees for the 10 categories that were up for bid in Round One of the competitive bid project last summer? And has CMS forgottent that the cut was taken simply to allow a DELAY in the program? The simple fact that our industry was willing to take a nearly 10% cut to delay a program does not indicate that we as an industry are overpaid…it indicates that we as an industry were trying to buy time to figure out how to survive.
I know that our small company in west central Indiana can not begin to truly compete with large regional and national players in a competitive bidding environment. But I do know this: Our patients and customers will consistently receive better care and service than most regional and national companies will ever provide.
I find it interesting that at the same time that CMS is demanding accreditation for DME, which in theory provides better patient care, our industry is constantly compared to internet-based companies that are not required to offer any care or service. CMS constantly states that an oxygen concentrator can be purchased over the internet for substantially less money than CMS pays a DME dealer. How true! If Internet companies had to be accredited, adhere to CMS supplier standards(which includes a physical brick and mortar location), bill the purchase price to the buyer in 36 monthly installments, offer 24 hour emergency service, warranty repairs on demand, and a backup system in the event of power failure, I believe that the internet price might be slightly higher!
In conclusion, competitive bidding is nothing more than an attempt by CMS to weed out a significant number of smaall DME providers.
Competitive Bidding Disaster!!
Thousands of providers out of business, patients unable to access care, poor services, providers are already dropping out of Medicare, discharge planners and hospitals unable to coordinate care, patients receiving multiple equipment from multiple providers, patients re admitted to the hospital…etc
Medical equipment providers have already been cut and are the slowest growing part of expenses in the health care system YET home care providers take care of those at home in the most cost effective manner.
CMS is out their minds!
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