A Bidding Train Wreck

The home care community has been advocating a suspension in round one of bidding, armed with critical economic studies, projections of thousands of lost jobs and likely harm to patient access and quality. Now we’re addressing the impact of round one payment amounts, which includes deep reimbursement cuts and wide price variations, and what appear to be serious flaws in the mechanics in the bidding process.

Within minutes of the overnight letters from the Centers for Medicare and Medicaid Services landing on desks of round one bidders on March 21, the American Association for Homecare began hearing examples of bidders who were stunned to learn that they had been disqualified because of missing financial data, even though the bidders provided all of the right information and carefully documented their submissions.

In a sense, being disqualified is worse than losing. It means your bid wasn’t even considered.

Since March 21, the association has been collecting examples of bidding problems in round one to share with CMS and with Congress. On March 26, AAHomecare sent a letter to CMS Acting Administrator Kerry Weems asking him to extend the 10-day contract acceptance window for those providers who were offered contracts.

In the letter, we outlined the problems that we have heard from more than 100 round one bidders who may have been improperly disqualified and encountered other serious problems. We also requested an immediate meeting with CMS to find how to examine and address errors in round one.

Of course, there are deeper and broader problems with the bidding program. With CMS optimistically trumpeting deep savings for Medicare and announcing high levels of participation for small providers, there is no way the average person would know the legacy that competitive bidding is much more likely to leave:

• Thousands of small providers going out of business and thousands of jobs lost.
• Less competition in the durable medical equipment field.
• Fewer choices for consumers.
• Less certainty and greater complexity for seniors who require home medical equipment under Medicare.
• A weaker, less robust national infrastructure for providing home medical equipment.
• And ultimately — higher costs for Medicare and taxpayers.

For years, CMS and some members of Congress have touted the bidding program as a comprehensive cost-reducing program for the overburdened Medicare budget. But the home care community has raised numerous concerns about the expected outcome of competitive bidding in the small but cost-effective durable medical equipment sector.

Following the AAHomecare 2008 Washington Legislative Conference in March, letters were sent to CMS by bipartisan members of the House and Senate — spearheaded by Rep. Jason Altmire, D-Pa., and Sens. Sherrod Brown, D-Ohio, and George Voinovich, R-Ohio — raising concerns about the impact of the competitive bidding program on DME providers. The letters requested the release of CMS data on how the bidding program will impact thousands of small providers.

The Senate letter suggested that reducing the number of DME providers could actually increase rather than decrease Medicare costs: “Small suppliers pay close attention to local, specialized service as a commonsense means of reducing medical errors, equipment-related injuries and returned equipment. This in turn reduces Medicare costs.”

Several individual letters were also sent to CMS, including one from Sens. Arlen Specter, R-Pa., and Bob Casey, D-Pa. The letter stated concern for the numerous “unintended consequences” that may arise including the possibility the program will “significantly reduce the number of DME providers and thus concentrate market share into the hands of a few. The result will be the dismantling of healthy and competitive markets in favor of regional oligopolies.”

As an industry, we continue to meet with members of Congress and aggressively push for delays in competitive bidding until the full impact of the program can be examined.

Tyler J. Wilson is president and CEO of the American Association for Homecare, Alexandria, Va. He may be reached by e-mail at [email protected]. For more information about the association, visit www.aahomecare.org.