Say It Isn’t So: GAO Looks at Competitive Bidding for Manufacturers

ARLINGTON, Va. — As if DMEPOS competitive bidding
weren’t enough, now there is the possibility of a competitive
bidding project for manufacturers of home medical equipment.

The American Association for Homecare said last week it had met
with officials from the Government Accountability Office, which is
studying the viability of such a program. The study was spurred by
a
request from lawmakers in the House of Representatives who want
to determine if competitive bidding for HME manufacturers is
feasible for both equipment and services.

“The meeting with GAO was extremely productive,” said AAHomecare
President Tyler Wilson. “We were able to explain the home medical
equipment benefit and provide key insights into the program.”

The association stressed that product costs are only a small
portion of the total cost of furnishing home care products to
Medicare beneficiaries and that the “process of moving home medical
equipment from the manufacturer to the Medicare beneficiary’s home
is complex.”

Said AAHomecare officials: “Both issues would create significant
hurdles for an HME manufacturer bidding program and would create
serious access-to-care problems.”

Representatives from Elyria, Ohio-based Invacare were also part
of the April 20 meeting and shared with GAO officials a copy of
comments on the issue the company had sent in December to the House
Ways and Means Subcommittee on Health.

In those comments, the HME manufacturing giant pointed out that
there are a limited number of HME manufacturers, most of which
exist on single-digit margins. In 2008, Invacare itselfrecorded a
loss of $6.4 million.

“We believe there are minimal opportunities for savings from the
DME manufacturing sector,” wrote Cara Bachenheimer, the company’s
senior vice president, government relations.

Invacare also questioned how Medicare would “unbundle” payment
for equipment acquisition cost and the services HME providers
offer. Medicare has historically not recognized services
separately.

“This would be a dramatic change for the DME industry,
particularly given that Medicare has done a poor job of defining
the specific services it expects Medicare beneficiaries to receive
in conjunction with their DME items,” Bachenheimer wrote. “How
would the Medicare program determine how to compensate HME
providers for all the services they provide for beneficiaries?
“

Invacare also posed several other questions:

• “If the Medicare program were to limit the beneficiary’s choice
  of product, how will beneficiaries have access to new technology
  that may be available, but that may not be included in the
  program’s contract(s) with the contractor manufacturer(s)?

• How would the Medicare program ensure that contracted
  manufacturers’ products would meet the full array of all
  beneficiaries’ needs?

• “How would the Medicare program ensure that beneficiaries will
  have access to quality products and that price will not be the sole
  determinant? We believe it is essential that Medicare define
  specific performance standards for any products that would be
  covered under such a program.”

• “What criteria would the department require of contractors?” On
  that concern, Invacare pointed out that the Department of Veterans
  Affairs currently holds contracts with manufacturers and “there are
  multiple complex and sophisticated requirements.”

In addition, the company noted, there is a huge difference
between the VA structure and the current
manufacturer-to-provider-to-beneficiary HME delivery model. The VA,
Invacare said, has a “built-in infrastructure that includes medical
personnel and administrative support via their regional
facilities.”

Following Tuesday’s meeting, GAO officials toured Roberts Home
Medical in Germantown, Md.

“The site visit allowed GAO personnel to gain an in-depth look
at how an HME facility works, the type of equipment that is
prescribed to patients and a demonstration of the level of service
that HME providers furnish to patients,” AAHomecare reported. “We
were also able to show the complex nature of rules and billing
requirements that all HME providers must comply with in order to
participate in the Medicare program.”

Walt Gorski, vice president of government affairs for
AAHomecare, attended the tour. “Nothing shows the value of home
care like a facility tour,” he said. “Without this type of
exposure, reports and studies on our sector cannot capture the
complete picture of the patients who need the HME items, the
services provided, or the regulatory morass that HME providers must
wade through.”

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