Letter to the Editor: CMS delivers serious blow to HME/DME industry

BIRMINGHAM, Ala., Feb. 3, 2013—Like two prizefighters duking it out in a 15-round title bout, CMS and the DME  industry have stepped into the ring of cost cutting and cost saving for over a decade and beyond. The DME industry throws the punch of “saving health care dollars by keeping patients at home.” CMS’ counter punch is “you are getting paid too much for what you do.” Out of all the battles that the DME industry has faced in the past, this battle could be a devastating knockout blow for many DME providers. The DME industry has let its guard down and CMS has just landed a rattling punch with the announcement of Round 2 competitive bid rates. The new rate announcement has knocked the industry to its knees. The 10 count is on. Will the DME industry stand to its feet for one more round and continue to fight, or will this be the final blow?

Last week CMS announced DMEPOS competitive bidding payment amounts for the Round 2 and National Mail-Order Competitions. As I looked through the new fee schedule I was shocked, to say the least. Throughout the bidding process I went to many seminars and conferences to learn about the bid process. There was one central theme that rang out loud and clear in most all of these meetings, “Don’t submit a suicide bid,” mainly because of all the horror stories that were heard about Round 1 bidders. Suppliers in Round 1 bid so low that even those who won and accepted a contract could not stay in business. Apparently, the message fell on deaf—and I might add, dumb—ears in Round 2 bidding. The payment amounts are on average somewhere around 45 percent under the current Medicare allowable, which is the median amount, meaning that half of the bidders bid below 45 percent. The payment amounts in Round 2 are about 10 percent lower than in Round 1. Did we not learn anything from the Round 1 train wreck? CMS can go back to Congress and tell it that suppliers can, in fact, do business and make money on much lower reimbursements, which proves what CMS has been saying all along. CMS can point to Round 2 as proof based on bids submitted. As an industry we have sent a message to CMS that we are being overpaid by almost 50 percent. We have said to CMS “go ahead, punch us in the face.”

I have been in the DME industry for 20 years, and every time CMS announced a cut in reimbursement we as an industry have screamed and yelled that we cannot do what we are doing for less money. The Medical Equipment Supplier Association (MESA) made a statement that says it best: “competitive bidding wasn’t supposed to be a race to the bottom of the reimbursement pool. It was about the government saving money, yes, but it wasn’t about how fast bidders could bankrupt themselves and others. It wasn’t about the lowest bid just to win a contract; it was about intelligent bidding—viable bidding—to stay in business and to serve their customers. If the goal for CMS was to save a minimum of, say, 20 percent, why would anyone bid down to 40, 50, or 60 percent? What good does that do anyone in the long run?”

I have often called my elected representatives to plead our industry’s case, even going so far as visiting them at their offices in Washington, D.C. At this point I feel like somewhat of a fool. All that they have to do is look at how our industry slashed its prices in Round 2.

A few months ago a contract was offered to our company. The first thing I do when I get a contract offer is to go straight to the fee schedule of the proposed contract to see if it is worth doing. In this particular contract, the prices were about the same as the amounts in Round 2. Needless to say, I refused the contract. In order to accept the contract I would have to make serious cuts in service and the quality of equipment I provide, which is one of the reasons I was offered the contract in the first place. The existing provider was using rusty old hospital beds and worn-out wheelchairs and the service was not up to par. At the current rates in Round 2, I fear providers will resort to the same type of shortcuts. How are the providers who were awarded contracts in Round 2 going to provide the service and products that we as an industry have been bragging about to CMS and our elected officials? How will we convey to them our value at this point? My company was not offered a contract because the bid we submitted reflect rates that would allow us to continue to provide quality products and services to our patients.

The 10 count is on—will the DME industry come around and stand to its feet and continue to fight, or will this be the final blow that knocks us out?

About the author: Jonathan Temple is the owner of OxyMed, LLC. Go to www.oxymed1.com.