Mixon to Congress: Support H.R. 1845

ELYRIA, Ohio–In a letter sent last week to 28 members of the
House of Representatives, Invacare Chairman and CEO Mal Mixon urged
support for H.R. 1845, known as the Tanner-Hobson bill, to “protect
beneficiary access and enable small providers to continue to serve
Medicare beneficiaries.”

Introduced in late March by Reps. John Tanner, D.-Tenn., and
David Hobson, R-Ohio, the bill would soften some effects of
competitive bidding by allowing any qualified provider who has
submitted a bid below the current allowable to continue doing
Medicare business (see HomeCare Monday, April 2.)

In the May 7 letter, Mixon stressed the plight of seniors–who
will have limited beneficiary choice–and small providers, many of
whom, he said, could go bankrupt under the bid program.

“CMS estimates that over 50% of small business will not win a
bid. When that occurs, these small businesses, whose revenue is
largely Medicare, will likely be forced into bankruptcy,” Mixon
wrote the congressmen. “As the industry’s largest creditor,
Invacare will have a major negative financial impact if a
substantial number of our customers go bankrupt. The Tanner-Hobson
bill would fix this by allowing any willing provider to participate
in the program at the bid rate.”

Industry advocates have launched a major push for cosponsors in
hopes of getting the bill passed, and have asked providers to send
similar letters to their representatives.

The text of Mixon’s letter follows:

I am writing to ask you to sign on as a co-sponsor of H.R.
1845, a bill introduced March 29, 2007 by Representatives John
Tanner (D-TN) and David Hobson (R-OH). The bill, “The Medicare
Durable Medical Equipment Access Act,” would rationalize the
Centers for Medicare and Medicaid Services’ (CMS) implementation of
the competitive acquisition program for durable medical equipment
and supplies, mandated by the Medicare Modernization Act of 2003.
The bill would protect beneficiary access and enable small
providers to continue to serve Medicare
beneficiaries.

lnvacare Corporation is the global leader in the manufacture of
the broadest product offering of innovative home medical equipment
(HME) that promotes recovery and active lifestyles. The majority of
this equipment falls under the definition of “durable medical
equipment” as defined under Part B of the Medicare Program. Home
medical equipment is an integral part of our nation’s health care
system and is proven to be clinically efficacious, cost effective,
and consumer preferred. Headquartered in Elyria, Ohio, Invacare
sells its products to approximately 15,000 independent home medical
equipment providers throughout the United States.

On April 2, 2007, CMS issued the final regulation implementing
the competitive acquisition program, and is now collecting bids
from providers in the first ten large metropolitan areas. The
program will go live April 1, 2008. CMS is providing less than a
month for the industry to digest and understand the many
complexities of the 401 page regulation before suppliers must
undergo complex calculations and processes to submit bids that are
due the end of June. This document is a true example of our
government gone amuck. It is a complete takeover and control of an
industry that is already highly competitive and which represents
only slightly more than two percent of the Medicare budget. There
are complexities related to how Medicare will select contract
suppliers, complexities related to how CMS will calculate the bid
amounts for each HCPCS code included in the ten product categories,
and how this bid program will clash with the Deficit Reduction
Act’s mandate that seniors be forced to assume ownership and
responsibility of their complex oxygen equipment and other HME
items.

CMS’s attempts to provide small suppliers with an ability to
compete are wholly unrealistic in a competitive marketplace. It is
likely that seniors with multiple needs will be required to obtain
different items and services from different providers. This will
result in significant confusion among a population that is already
dealing with chronic and acute conditions (seniors will receive
co-payment invoices from multiple providers and will have to know
which provider to call to obtain service for which item, etc.).

We are very concerned about the ability of the majority of our
customers who are small business to win a bid in these ten large
metropolitan areas. In fact, CMS estimates that over 50% of small
business will not win a bid. When that occurs, these small
businesses, whose revenue is largely Medicare, will likely be
forced into bankruptcy. (As the industry’s largest creditor,
Invacare will have a major negative financial impact if a
substantial number of our customers go bankrupt.) The Tanner-Hobson
bill would fix this by allowing any willing provider to participate
in the program at the bid rate.

H.R. 1845 does not repeal competitive acquisition for durable
medical equipment (DME). It seeks to make reasonable changes to the
structure of the competitive acquisition in order ensure
beneficiaries’ access to DME is maintained, protect small business
providers of DME, and foster a dynamic marketplace for Medicare
reimbursed DME. The most innovative and cost effective health care
marketplace is one in which a large number of suppliers/providers
are competing for business. Approximately 80% of DME suppliers are
small businesses that are ill equipped to participate in this
federal contracting process. However, small providers are an
important part of the DME marketplace, so this bill aims to make
competitive acquisition work for small business, preserving
consumer access.

If a significant portion of small suppliers are eliminated every
three years because of the federal contracting process, competition
in the marketplace will diminish, prices will eventually increase,
quality will erode, and beneficiaries will be left with few
choices. This program will come dangerously close to eliminating
the competitive marketplace that ensures seniors have access to
high quality items and services, [as] well as their choice of
provider.

I urge you to sign on to H.R. 1845 as a co-sponsor.