Industry to CMS: ‘We’re Mad as Hell and We’re Not Going to Take it Anymore’

ATLANTA — Last week the Congressional Budget Office handed
the HME industry a bill for $20 billion
to get DMEPOS competitive bidding eliminated, but stakeholders
said not only are they not buying, they are challenging the
figure.

“The real question is not whether it’s achievable or not, but
whether the $20 billion is accurate,” said Walt Gorski, vice
president of government relations for the American Association for
Homecare.

John Shirvinsky, executive director of the Pennsylvania
Association of Medical Equipment Services, called the figure both
unsupportable and “insane.”

The CBO rescored H.R. 3790, the industry bill that would
eliminate competitive
bidding, after CMS said July 1 that Round 1 rebid
rates averaging 32 percent cuts would save Medicare $17 billion
over 10 years. Industry stakeholders were deeply skeptical of that
assertion, but the higher CBO score drew even greater reactions of
anger, dismay, alarm and disbelief.

“I’m more and more convinced that they just added the 32 percent
on top of the 26 percent [in savings from the initial aborted Round
1],” said Shirvinsky. “It’s the only way you can come up with a
number like that. The $17 billion that CMS came up with was
indefensible. This is insane.”

Mathematically, the figure does not compute, Shirvinsky said,
especially considering that the industry has already taken an
across-the-board 9.5 percent reimbursement cut to pay for the bid
program’s delay.

“Let’s say you disregard the 9.5 percent savings. Even then it
is only a 20 percent increase,” Shirvinsky said, adding that “$11
billion is the most you can come up with. And that requires you to
ignore a very substantial cut.

“The math is dizzying, but it is also pretty simple,” he
continued. “The way the CBO scores the expenditures is never a
straight-line calculation. But again, if you are looking at the
numbers in a sober fashion, you’re going to come up with [a figure]
a lot closer to $10 billion or $11 billion in savings.”

Gorski, too, questioned the savings estimate. “We are working
extremely hard to find out how the CBO arrived at the number,” he
said. Referencing bid evaluation, he continued, “Remember that CMS
staff said that when they were uncomfortable with the supplier’s
financials, they included the supplier in the mix, but they reduced
their capacity. And they did that 30 percent of the time. That
could affect the bid rates and be one of the reasons why CMS was
able to achieve such a savings.”

The issue calls into question once again CMS’ lack of
transparency, Gorski said.

“It really seems that for an administration that prides itself
on transparency, the bidding program has been shrouded in secrecy,”
he said. “One could argue that CMS is cherry-picking the rules to
suit its own needs.”

AAHomecare is working to get CMS to release the list of
providers, product categories and corresponding bid areas for those
bids that were used to determine the Round 1 single payment
amounts. “If this is such a great program, I don’t see why they are
so scared to provide this information,” Gorski said. While the
association doesn’t “jump to any conspiracy theories, who is
watching CMS?” he asked. “We understand the [Office of the
Inspector General] is supposed to do that, but we sure can’t find
anybody who is doing that over at the OIG.

“The bottom line is,” Gorski continued, “that the government
shouldn’t be able to make a decision in a black box and tell
providers and beneficiaries, ‘Just trust us.’ We really think this
is a train that is headed toward a broken bridge. For some reason,
CMS doesn’t understand why the system will collapse on itself.”

They’re Not Listening

Provider Tim Good, president of GoodCare in Logan, Ohio, said he
thinks CMS is beyond listening to the industry.

“We are unfortunately now at a position where DME and CMS are in
adversarial positions. CMS doesn’t listen to anything we say, and
we don’t believe anything CMS says,” he said.

Good doesn’t believe the figures that either CMS or the CBO are
touting. “I think the savings are false. I’ve never seen a 10-year
savings be real,” he said, adding that any savings realized through
competitive bidding will be eroded by exploding system costs as
patients fall victim to decreases in the quality of equipment and
service and end up back in the hospital.

“I think if anybody took a hard look at the facts, the savings,
in my opinion, will not be there,” said Good, who noted he doesn’t
believe the industry is “in any shape to offer $20 billion” to buy
out of the bidding program.

Pennsylvania provider Terry Luft, owner and president of Central
Medical Equipment in Harrisburg, said there is little bargaining
room left. “What can the industry stand? I don’t think it’s a lot,”
he said.

The government demands more and more for less and less. “The
cushions are not there anymore,” said Luft, who has been in the
business 29 years. “We’re not getting paid for what they are asking
us to do. You can’t make it up on volume. It just doesn’t work that
way.”

Already, he said, he has seen many small providers disappear,
done in by increasing demands. “When the pendulum swings one way, a
lot of small providers fall by the wayside and all of a sudden the
industry is controlled by a bunch of giants,” he said. “They tell
the government, ‘We can’t work with this’ and the government [pulls
back], and then the pendulum swings back the other way toward the
small provider. But who is left?”

That’s indeed the question if competitive bidding moves forward.
Some stakeholders believe the $20 billion price tag is too high and
competitive bidding should be allowed to implode, even at the
expense of numerous independent providers.

Wayne Stanfield, president of the National Association of
Independent Medical Equipment Suppliers, said the industry
shouldn’t put forth “one more penny.”

“If the $20 billion holds as the required pay-for, then the
industry can’t afford it. Round 1 will have to go forward,” he
said, adding that most of the people he has spoken with consider
the CBO score “ridiculous” but believe it will stick and that
competitive bidding will be implemented.

“Many … said let it go and let it fail rather than pay
more to stop it,” Stanfield said. (See Stanfield’s commentary “Not
One Penny More” in this issue.)

“We cannot survive with this made-up ridiculous price,” agreed
David Petsch, owner of Petsch Respiratory in Martinez, Ga., and
managing director of CSI:HME. “We should not have to pay another
dime. Unless we get an alternative choice, my opinion is let it
crash and burn. We need to draw the line on the sand. Let CMS take
the blame for this one.”

Good said it will take “a train wreck” for CMS and Congress to
realize that competitive bidding won’t work for anyone —
providers, beneficiaries, hospitals, the government. Both he and
Petsch said they would continue to fight for H.R. 3790 (the bill
currently has 255 co-sponsors) and a companion Senate bill.

Still, Good believes that while the provider voice is important,
it’s going to be the voices of hospitals and referral sources that
will carry the most weight. “When referral sources spend half a day
just trying to coordinate care from three different providers and
then try to get [the equipment] there at least by the next day
… those are going to be times when they say the system just
doesn’t work,” he predicted.

Added Luft, “We are caring people in this industry. Our industry
is made up of nurses, therapists, and they are in this industry
because they care. We have taken such good care of our patients. If
we didn’t, they would be on Washington’s steps screaming. And in
the future, they will be.”

There is yet a chance that it doesn’t have to get to that point,
according to Pride Mobility’s Seth Johnson, vice president of
government affairs, who said two House hearings on competitive
bidding in September should give the industry an opportunity to
state its case. The first by the Ways and Means Committee is to be
held Sept. 15, and the second by the Energy and Commerce Committee
will likely be held the next week, Johnson said.

“We have the ability to raise concerns with the information we
have been able to glean on the manner in which [CMS] has rolled out
the program,” he said. “They really haven’t changed anything from
the initial Round 1 to this round. Why would, or why should,
Congress think the outcome is going to be any different than it was
in the summer of 2008? I think the hearings in September can be
helpful to the industry even if we don’t have additional
information from the CBO.

“We’re still in this fight. It’s not over yet,” said
Johnson.

“We know what we have to do,” Shirvinsky added. “We have to
press as much as we can on transparency and we have to do battle on
that $20 billion number. I think ultimately we will be successful
with that; we cannot let that number stand. And ultimately, we need
to get [H.R. 3790] passed before the end of the year …

“It’s time to open up the window and shout, ‘I’m mad as hell and
I’m not going to take it anymore.’”

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