More Questions than Answers in Proposed Rule, HME Stakeholders Say

ATLANTA–Industry stakeholders contacted by HomeCare
Monday about CMS’ proposed competitive bidding rule had a mixed
response. Some said the rule contains unexpected details and others
said it includes some surprises–but almost all said they simply
need more answers.

“Two hundred and three pages and we still don’t have those
really critical facts known,” said Miriam Lieber of Lieber
Consulting, Sherman Oaks, Calif., referring to the lack of
finalization of which cities and what products will be included in
the initial bidding program. “Leaving so many variables undone
makes it very difficult for people to plan.”

“Under the category of surprises,” according to Wallace Weeks of
Weeks Group, Melbourne, Fla., among other things there are “the
addition of a nationwide mail order competition, grandfathering,
the undeveloped financial standards, a rebate program and allowing
a physician to prescribe the brand, or mode of delivery.”

And according to The Med Group’s Don Clayback, vice president,
networks, “you still have the big issues” of how CMS will calculate
savings, how the agency will make sure there’s a sufficient number
of suppliers to meet the needs of the community, and “how the
beneficiaries are going to make out at the end of this.”

Said Clayback, “There is still the challenge of how you are
going to prevent beneficiaries from having to deal with two or
three companies for the same treatment: If someone needs a hospital
bed, a wheelchair and a concentrator, theoretically they could have
to deal with three different companies for that. And how that
benefits the beneficiary, I’m kind of missing that point.”

Additional comments from Lieber, Clayback and others,
follow:

“My initial impression is that it left more questions than it
answered, because the MSAs aren’t identified, and the product
categories aren’t identified. It sounds like most of the
information is going to be in the request for the bid.”
–Sharon Hildebrandt, executive director, National Coalition for
Assistive and Rehab Technology, Washington, D.C.

“I was not surprised that the NPRM did not identify the MSAs or
the product categories subject to competitive bidding, but I was
concerned about the methodology for picking the winning bid. CMS
plans to determine how many suppliers it needs to meet the market
capacity for the MSA and use that number to establish the cutoff
for the winning bid. This has the potential to establish a winning
bid cutoff that is lower than the mean or the median of all the
bids.”
–Asela Cuervo, Law Offices of Asela Cuervo, Washington,
D.C.

“Unfortunately, there is still so much we do not know. We all
know the genie is out of the bottle, but we don’t know whose wish
will be granted. As for me, I just do not believe the savings are
there. It is going to be a monster to administer, and I think
costly as well. At any rate, the time is over for complaining.
Competitive bidding is coming, and we are going to have to figure
out how to not only survive but to thrive.”
–Mike Norby, senior vice president, medical sales, Mabis
Healthcare/Duro-Med Industries, Waukegan, Ill.

“I am running the business as if we will be in the first round
in 2007. I have had this approach since 2003 when the [Medicare
Modernization Act] became law. My ongoing focus is to be the
leanest and most efficient supplier in the area, while continuing
to offer the best solutions for the right customer. I am also
looking at ways to diversify my payer mix, including adding more
cash sales. The HME business for me is a daily evolution.”
–Cliff Woolard, president and CEO, Home Med-Equip Co., Concord,
Calif.

“First, there is some definitive discussion about the use of
gap-filling being used as part of the pricing strategy. With all
the problems we have experienced historically and the ongoing
discussions we have had with CMS, any use of gap-filling is likely
to create some pricing aberrations that will be problematic for
suppliers of those products.”
–Tim Pontius, former chairman of AAHomecare and president,
Young Medical, Maumee, Ohio

“As a card-carrying Medicare beneficiary who happens to know a
little bit about the HME industry, I am frightened beyond measure
at the idea that the oxygen therapy that allows me to enjoy life
itself, the rehab technology that enables me to participate in life
and community, and the ostomy supplies that help prevent
life-threatening infections could all be supplied by the ‘lowest
bidders.’

“Knowing that something came from the lowest bidder would make
me wonder what was compromised to enable them to reduce costs and
still make profits. Are the equipment and supplies up to
conventional standards? Has the time between delivery and
expiration date for certain supplies been shortened? Are the people
involved in providing important ancillary services properly
trained? Can I be confident that the ‘lowest bidder’ will still be
in business or, am I going to call for help only to find out ‘the
number you have reached is no longer in service?’ Is the equipment
provided what my physician prescribed or is it an item or items
contained on the limited formulary the low bidder used to secure
the Medicare contract?

“Reading that 200-plus pages of the NPRM provides no comfort
that these questions have been asked, much less that CMS knows the
answers.”
–David T. Williams, former director of government relations for
Invacare Corp. and industry consultant, Amherst, Ohio

“When you look at the methodologies that they’re using to
determine the items that will ultimately be included, I think it’s
really imperative that they use the latest available data possible
just due to all the changes that this industry’s been through since
the MMA. Otherwise, they’re really not going to have any reasonable
data that’s going to allow them to appropriately determine what
products could potentially save additional money.

“We’ve had the FEHBP reductions, we’ve had a freeze in the
updates, and the coding and payment initiatives that have been
moving forward for other items are going to require CMS to look at
all of those factors prior to determining what items should be
included in competitive bidding and what savings–if any–could
actually be achieved by including those items in a competitive
bidding environment.”
–Seth Johnson, vice president of government affairs, Pride
Mobility Products, Exeter, Pa.

“We definitely need expert defending since what is actually a
service industry is now being defined and described as a product
industry. The hours we work, the diagnoses we work with and
community/patient issues we deal with are not product-related.

“Will manufacturers one day be bidding on how well they can make
a quality product at the lowest price ever? I am concerned that
home care providers are being asked to make a bid that encompasses
analyzing so many variables out of their control … Can we control
shipping costs, gas costs and manufacturing costs? Or how about
providing health insurance to our employees? This must become a
political issue, not just a bidding issue.”
–Louis Feuer, president, Dynamic Seminars & Consulting,
Pembroke Pines, Fla.

“Two hundred and three pages and we still don’t have those
really critical facts known. Leaving so many variables undone makes
it very difficult for people to plan.

“Nonetheless, it looks like people need to gear up for giving it
their best shot in terms of what kind of bid they would be able to
do. Even if you’re in New York, Chicago or L.A., it sounds like you
should still continue to prepare because at some point they could
find a way to carve back in some portions of these cities.”
–Miriam Lieber, president, Lieber Consulting, Sherman Oaks,
Calif.

“I believe it is good that they are excluding the three top MSAs
and admitting that it would be difficult to administer the program
in the largest population areas without first gaining additional
experience. They propose criteria for selecting products that will
be mostly cost-driven. It is important for providers to understand
what services will be required, and that will not be known until
the standards are released.

“They describe they will select the winning bidder on the
weighted median of the bids, and this will remove some of the
extreme outlier bids. There is some discussion about the need to
give a grace period for providers who are not accredited and want
to bid, but there is not a lot of detail on that or how they will
grandfather those that are accredited.

“Overall, there is still a good deal of work that needs to be
done.”
–Thomas Ryan, AAHomecare chairman and president and CEO,
Homecare Concepts, Farmingdale, N.Y.

“It’s depressing reading it. It’s depressing because they
reiterate ‘the greatest savings potential.’ Every decision CMS is
making is predicated on that principle.”
–Cara Bachenheimer, vice president, government relations,
Invacare Corp., Elyria, Ohio

“You still have the big issues: How are you going to estimate
the savings? How are you going to make sure there is a sufficient
quantity of suppliers to meet the needs of the community, and how
the beneficiaries are going to make out at the end of this?

“There is still the challenge of how you are going to prevent
beneficiaries from having to deal with two or three companies for
the same treatment: If someone needs a hospital bed, a wheelchair
and a concentrator, theoretically they could have to deal with
three different companies for that. And how that benefits the
beneficiary, I’m kind of missing that point. And then you tack that
onto how much savings the government is really going to get. CMS is
saying they want to have savings, but I think they need to have
some formalized way of calculating those. CMS is also saying that
their concern is to make sure of the welfare of the beneficiaries,
but the [quality] standards have not been published yet and they’re
talking about a grace period for suppliers, so they may be
including in the winning bids suppliers who have not yet been
accredited.

“I think it gets to the point that this thing is moving way too
quickly. CMS is already 18 months behind their original timeline.
If the real concern is to implement this in a rational and logical
way to minimize inconvenience to the Medicare beneficiary, they’re
really not going at it that way.”
–Don Clayback, senior vice president, networks, The Med Group,
Lubbock, Texas