State of HME Industry 2015: Facing Challenges, Gaining Momentum

WASHINGTON (Jan. 20, 2015)—As the calendar rolls into 2015, the state of the industry is heavily influenced by two public policies implemented by the Centers for Medicare & Medicaid Services (CMS)—the bidding program for durable medical equipment (DME) and the auditing process for providers and hospitals.

These government policies, as well as other regulations, put financial strains on many businesses within the home medical equipment space. And when the providers struggle, it affects their ability to supply quality products and services to Medicare beneficiaries. Already, Medicare patients are hurt by these policies.

CMS has reported dramatic drops in utilization rates in bid areas for critical medical equipment such as oxygen therapy, power wheelchairs, and hospital beds. This is endangering senior citizens and people living with disabilities who endure more frequent and longer hospital stays without some of their home medical equipment. Thousands of Medicare beneficiaries are reporting problems accessing equipment prescribed by their physicians, as well as delays in receiving it.

“It’s clear that these public polices ranging from the bidding plan to out of control audits are forcing providers to make very difficult choices about their businesses,” said Tom Ryan, president of the American Association of Homecare (AAHomecare). “Most providers are committed to improving the quality of life for senior citizens and people living with disabilities, but many government policies just make that task much more difficult.”

The Medicare bidding program for DME, which has been riddled with flaws since it was launched in 2011, has been extremely troubling for providers. Critics, including 244 economic experts from around the world, maintained from the beginning that the process implemented by CMS is more like price-fixing than competitive bidding because CMS arbitrarily assigns prices somewhere between the lowest and highest bids. The process is tainted by the acceptance of nonbinding bids that have allowed providers to submit “suicide low-bids” with no obligation to provide the services or products if they win.

Bipartisan legislation has been introduced in the House and Senate that would help stop the speculative bidding that has marred the program. The legislation will make all bids binding, necessitate proof of licensure for the next rounds of bidding, and required bidders to obtain bid bonds.

“This legislation isn’t a fix-all, but it will restore some integrity to the process,” said Ryan. “The flawed bidding process has set unreasonably low prices that have forced businesses to close and good people to lose their jobs. This must stop. Lawmakers in Congress recognize that changes must be made in the bidding system to prevent their constituents on Medicare from suffering. We have to ensure that some of the most vulnerable people in our society have access to the medical equipment they need.”

Rep. Renee Ellmers, R-NC, proposed legislation last year that would reform the Medicare audit process for DME claims. The legislation will increase transparency, education and outreach, and reward suppliers that have low error rates on audited claims. The AIR Act requires the reporting of error rates on audited claims after adjustment for those audited claims that have been overturned on appeal, mandates thorough education and outreach, removes for one year all suppliers who have an error rate on audited claims of 15 percent or less (restricting them to one random claim audit per year), limits look-back periods, and eases filing constraints on appeals.

It has also become increasingly clear that CMS should establish a separate category for complex rehab technology (CRT) to serve the unique needs of Medicare patients with disabilities and chronic medical conditions who require specialized products. The coverage policies, coding, and quality controls for standard DME are no longer suitable for the new technologies available for CRT patients. Access to this equipment is being threatened by the policies and regulations, and Medicare beneficiaries are again the victims. Visit aahomecare.org.