HME Industry Testifies to Congress: Competitive Bidding Will Hurt Small Providers

WASHINGTON

While CMS’ Laurence Wilson presented the agency’s view of competitive bidding, a string of HME stakeholders told an entirely different story to members of a House of Representatives subcommittee late last month.

Representing the American Association for Homecare, Georgie Blackburn testified before the House Small Business Committee’s Subcommittee on Investigations and Oversight Oct. 31 that unless Congress modifies the program, competitive bidding for HME will hurt small providers and “undermine the nation’s home care infrastructure.”

The program will “jeopardize patients’ standard of care, choice of provider and access to the medical equipment and services they need,” said Blackburn, vice president of government relations and legislative affairs for Blackburn’s Physicians Pharmacy in Tarentum, Pa.

“Those who are not selected as winning bidders will not be able to provide competitively bid equipment or services to Medicare beneficiaries. Since Medicare payments typically comprise 35 to 50 percent of a small provider’s revenue,” Blackburn explained, “losing the ability to provide competitively bid items for a three-year contract period is essentially a death knell.”

The association pointed out that the competitive bidding rules are stacked against small providers, who do not have the economies of scale to negotiate lower prices from manufacturers or the physical size to cover an entire bidding area.

Blackburn testified that “even with the small business protections included as part of the program, such as the ability to form networks or the 30 percent set-aside for small businesses, the bidding program will still radically reduce the number of suppliers that exist today.”

But Wilson, director of the Chronic Care Policy Group for CMS, told the subcommittee the agency had taken adequate steps to help small providers, such as setting the small business revenue ceiling at $3.5 million and allowing the formation of networks to serve an entire CBA.

Although he acknowledged there could be fewer companies eligible to serve Medicare beneficiaries as a result of the bidding program, he said that the providers CMS selects as bid winners will be accredited, and there will be a better environment for providing care.

Wilson revealed that the agency received 6,300 certified bids from the first round of bidding. While that number is higher than industry insiders had predicted, it is still much lower than CMS’ estimate that it would get nearly 16,000 bids.

He also said CMS is working on improvements to the bidding system before publishing a request for bids in the second round.

But that comment prompted another from subcommittee member Rep. Charles Gonzalez, D-Texas: While CMS is on a learning curve, he said, small businesses could go under.

In its report on the hearing, AAHomecare characterized the subcommittee as “friendly.” Chairman Jason Altmire, D-Pa., called the hearing to shed light on the small business dimensions of the DMEPOS bidding program, the association said.

AAHomecare asked the subcommittee for support of H.R. 1845, the Tanner-Hobson bill, which would:

• Exempt smaller, rural areas from competitive bidding;
• Allow all qualified providers who submit a bid to continue doing Medicare business at the bid rate;
• Restore providers’ rights to administrative and judicial review; and
• Exempt Medicare items and services unless a savings of at least 10 percent can be demonstrated.

In addition to Blackburn, five others representing various industry sectors testified at the hearing, including John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers; Carol Gilligan, president of Health Aid of Ohio, Cleveland; Richard Saxon, president and CEO of BioMedical Life Systems, Vista, Calif., on behalf of the Advanced Medical Technology Association; Dr. Ross Taubman, president-elect of the American Podiatric Medical Association; and Jose Navarro, RPh, of Navarro Discount Pharmacies in Medley, Fla., on behalf of the National Association of Chain Drug Stores.

According to Shirvinsky of PAMS, “What CMS is doing is a formula for certain higher prices down the road. Competitive bidding for DMEPOS is not good business. It is bad news.

“The most responsible thing that this Congress can do on this count is to admit that a previous Congress made an error in approving a poorly considered provision.”