CQRC Warns OIG Competitive Bidding Report Puts Patients at Risk

WASHINGTON, D.C. (May 29, 2018)—The Council on Quality Respiratory Care (CQRC) today warned a report released by the Department of Health and Human Services Office of Inspector General (OIG)—Round 2 Competitive Bidding for Oxygen: Continued Access For Vast Majority of Beneficiaries—underestimates the negative impact the Competitive Bidding Program for Durable Medicare Equipment (DME) continues to have on beneficiary access to home respiratory supplies and services.

While the OIG states that their “report supports the conclusion that the vast majority of beneficiaries had continued access to oxygen equipment and contents after Round 2 began,” limitations in the reports methodology signal significant flaws in the OIG’s conclusions.

The OIG states within the report that continued Medicare payment “is not a direct measure of continued access to oxygen equipment and contents” and “the response rate for our survey was too low to project the results to all beneficiaries for whom claims did not continue.” Further, the OIG did not independently verify responses from physicians and beneficiaries, calling into question the validity of the OIG’s conclusions on patient access to home respiratory supplies and services.

“The OIG’s assessment of the Competitive Bidding Program’s impact on patient access is once again misleading and based on a survey with significant limitations,” said Dan Starck, chairman of the CQRC. “It is past time for CMS to correct the competitive bidding methodology with a set of rules that ensures access to oxygen and home therapies for Medicare patients in need of respiratory care as well as adequate reimbursement to providers dedicated to the delivery of high quality home oxygen care.”

A report released by CQRC in March, Rationale for Reforming Medicare Home Respiratory Therapy Payment Methodology, shows that beneficiaries have indeed lost access to specific services, including access to respiratory therapists. It highlights work showing the difficulty hospital discharge planners have in making sure beneficiaries have the home respiratory therapies they need to leave the hospital and go home, suggesting reports concluding beneficiaries are experiencing no problems under the current program do not tell the whole story.

While respiratory care providers have attempted to insulate patients from the worst effects of the rate cuts, it has become increasingly difficult for home respiratory therapy providers to provide services. For example, one national home respiratory supplier has closed 87 locations in non-competitive bidding areas (CBAs), 44 locations in CBAs, and has laid-off 3,000 employees since the implementation of Medicare’s Modified Fee Schedule. Another large supplier has closed nearly 200 locations in non-CBAs, and at least one national supplier has reduced or stopped providing services in rural areas across 24 states.

The CQRC is advocating for critical reforms to the competitive bidding program, which currently uses a methodology to set the payment rates that artificially lowers payment for home respiratory supplies and services. As a result, rates are so low that providers cannot recover the full expense of providing services to patients across the country. The ability of home respiratory care providers and suppliers to absorb these below cost rates is no longer sustainable, underscoring the urgent need for more comprehensive reforms.

Specifically, the CQRC is advocating for reforms to the competitive bidding program that:

• Change the method for setting the single payment amount from the median to clearing price (the amount of all the bids when arrayed that gets to the capacity level needed for the individual competitive bidding area (CBA)). This means no supplier is asked to accept a contract at a rate that is below what they bid.
• Ensure providers bid using a lead product (with the relationship among products determined by updated 2015 fee schedule as is done with the current inversion policy) or by simply bidding a percentage off of the 2015 fee schedule as annually updated.
• Prohibit suppliers from using the bid amounts from suppliers with no historic volume of services (capacity) in the CBA. These suppliers can still win a contract if their bid is at or below the clearing price, but their lack of experience would not negatively impact the rates.
• Split oxygen and sleep equipment and supplies into two categories. These are very different products with different suppliers so including them in the same category skews the rates inappropriately.

Home respiratory therapy supplies and services are vital to managing Chronic Obstructive Pulmonary Disease (COPD) and other pulmonary conditions. Data show home oxygen care reduces preventable hospitalizations and readmissions, signaling that reduced access to quality respiratory care in the home will result in increased emergency room (ER) visits and readmissions, therefore harming patient outcomes and increasing Medicare costs.

Visit cqrc.org for more information.