HME Wins Bid Delay!

ATLANTA

In a victory of landmark proportions for the home medical equipment industry and the people it serves, national competitive bidding was suspended July 15 when the House of Representatives and the Senate voted to override President Bush’s veto of the Medicare bill that includes the program delay.

It was a victory that was remarkable in several ways:

• It was only the third time in Bush’s presidency that his veto was overridden.
• Sen. Ted Kennedy, D-Mass., made his first appearance on the floor of the Senate since being diagnosed with a brain tumor to vote in favor of the Medicare package.
• It was the first legislative success for HME in at least 20 years, according to long-time industry stakeholders.

“It’s unbelievable,” said Cara Bachenheimer, senior vice president of government relations for Elyria, Ohio-based Invacare, about the override vote, which was decided in the House by a margin of 383 to 41 and in the Senate by a margin of 70 to 26.

In addition to the bid delay, the Medicare Improvements for Patients and Providers Act of 2008 (H.R. 6331) repeals the ownership transfer of oxygen equipment to beneficiaries mandated under the Deficit Reduction Act. It also carves out complex rehab from any future bidding project.

To pay for all of this, providers across the nation will take a 9.5 reimbursement cut in the 10 product categories included in round one of bidding. That cut will take effect Jan. 1, 2009.

Dubbed “MIPPA,” the law’s competitive bidding provisions are the result of an extraordinary effort by providers, manufacturers, industry organizations, advocacy groups and beneficiaries to educate legislators about the HME industry and the program’s potentially devastating effects.

“The industry should be extremely proud of its ability to raise awareness and make such a significant policy change,” said Walt Gorski, vice president of government relations for the American Association for Homecare.

“Everybody’s efforts paid off,” echoed Don Clayback, vice president, government relations, for Lubbock, Texas-based The MED Group. “It was a good example of [how] if you pull everybody together, you can certainly have some influence in Washington.”

Legislators who had aligned themselves with the industry’s five-year battle against NCB also heralded the new law.

Making the Most of the Future

“For months, I have worked to ensure [the Centers for Medicare and Medicaid Services’] highly-flawed competitive bidding program would not limit seniors’ access to the medical suppliers who can best meet their needs,” Rep. Jason Altmire, D-Pa., said in a statement immediately after the veto override. “With today’s vote, we have won a significant victory for western Pennsylvania’s seniors, the doctors who provide their care, and home medical suppliers.”

Altmire, who as chairman of the House Small Business Subcommittee early on recognized that competitive bidding would eliminate huge numbers of small business owners, added: “Now that Congress has sent competitive bidding back to the drawing board, I hope that significant improvements will be made to ensure this program reduces costs without jeopardizing patients’ access to quality care.”

But even as he and a jubilant industry celebrate the postponement of CMS’ problematic project, stakeholders caution the delay is not the end; indeed, it may be just the beginning.

Making the Most of the Future

For one thing, the new law compels CMS to rewrite the competitive bidding regulation so that it addresses many of the complaints regarding such issues as access to quality of care and transparency in the bidding process.

The industry needs to ensure it has a voice in this effort, Bachenheimer said. “We want to work with them,” she said. “Being involved in the political process is critical.”

Clayback agreed. “I don’t think the work is done,” he said. “We’ve got a much-needed delay in a program that was severely flawed and the opportunity to work with Congress and CMS on a program that will meet everybody’s needs, but in a much different venue.

“Congress and CMS are very concerned with the value of the dollars they are spending, about fraud and abuse and the quality of service to Medicare beneficiaries,” he continued. “As an industry, we have answers to every one of those things.”

The challenge, he said, will be effectively demonstrating those answers to Congress and CMS.

It’s crucial that the industry meets that challenge, Clayback and others say.

“We want everybody to remember that this is a delay of only 18 to 24 months,” said Alan Morris, marketing coordinator for Waterloo, Iowa-based VGM Group. “We are not done yet … We’ll go back to the drawing board and work to ensure that this program goes away.”

Without concentrated industry effort, Morris added, in six months providers will once again be grappling with timelines and gearing up for another bid process.

It is incumbent upon all stakeholders to make the most of the delay and the advances already achieved, said Rose Schafhauser, executive director of the Midwest Association of Medical Equipment Services.

“We need to use the opportunity to talk about what good work this industry does. Every single one of us wants those bad guys to go away. We do want to fight fraud.

“My hope,” she said, “is that … we use this momentum, that we not give up, that we say we’re serious. Let’s work together for programs that work for everybody.”

AAHomecare’s Gorski, too, believes the industry cannot flag in its efforts now. “I think that HME by no means has a lack of issues to work on,” he said wryly. “Clearly, how we address competitive bidding in the future is a crucial decision. Oxygen and [the elimination of the first-month purchase option for] power wheelchairs are still in the gun sights, and we face the possibility of two health care bills next year.”

The authorization of a new SCHIP bill — the State Children’s Health Insurance Program measure that was vetoed by the president last year — will come before the new Congress in March, he said, and it is likely that a much larger, comprehensive Medicare bill will be put together later in 2009. Both bills could have features relevant to HME.

The positive in all this is that “we have established better working relationships with Congress and we will continue to build upon the efforts that we have made this year,” Gorski said.

Seth Johnson, vice president of government relations for Pride Mobility Products, Exeter, Pa., brings up another issue that demands the industry’s attention.

“Our primary concern is the application of the 9.5 percent cut to complex rehab,” he said.

“Clearly, we are very pleased that complex rehab is exempt from round two of competitive bidding, and we’re very pleased that there were no changes to other areas of DME such as the first-month purchase option for power wheelchairs. But the 9.5 percent cut to complex rehab is going to have almost the same impact to access as inclusion in competitive bidding would have. With either of those reductions, [providers] are not going to be able to stay in business.”

Since all power wheelchairs, including complex rehab, sustained an average 27 percent cut in 2006, complex rehab providers are working on a very small margin, he pointed out.

“Now this is almost another 10 percent cut,” Johnson said. “It is not sustainable. Providers do not have another 10 percent to give. We need to do everything we can to address that cut.”

Bachenheimer said the industry also must work to rid itself of its image as a hotbed of fraud and abuse.

“Obviously, we’ve got a very good message out there. People could understand very clearly the negative impact [of competitive bidding] on beneficiaries and suppliers. We got [congressional] leadership and ranking minority support for bills. This is huge … But the industry has a long way to go because of fraud and abuse as its image,” she said. “If we had a better image, it would be easier for us.”

Going Back to the Past

Even as stakeholders contemplated future actions, at press time providers were trying gamely to return to the past.

The new law terminated all contracts under the first round of competitive bidding, implemented July 1 in 10 of the nation’s largest cities. But by the time the program was halted, it had been in effect for two weeks, so issues of payment, re-filing claims, beneficiary changes and an assortment of other concerns were surfacing.

“There’s a lot of clean-up work to do,” VGM’s Morris acknowledged. “Even those who are excited because they can bill Medicare again certainly lost business over [those] 15 days, and it might be difficult to get it back. Loyal beneficiaries have now changed providers.”

Both providers who won contracts and those who can now bill Medicare again have lost money, he said.

“No one is able to measure how much was lost by not being a contract supplier for 15 days,” he said. “Contract suppliers are concerned because they have a lot of money invested, and they are concerned about what the process is going to be to claim damages.”

There could be some help for the bid winners, he said.

“It was written into this law that there were funds available for those that can claim damages because of loss of contract or in any way the delay of the competitive bidding program,” he explained, adding that “it’s too early in the process to know how easy it will be to make those claims.”

Providers were also eager for information on another of the law’s provisions: its repeal of the oxygen equipment transfer to beneficiaries, which was to go into effect Jan. 1, 2009.

“The title transfer is another big issue,” said Gorski. “The legislation repeals transfer of ownership. The [36-month] cap remains.”

Providers, he said, will be paid for contents after 36 months, but they will not be paid for equipment after 36 months. And, Gorski said, “there is no guidance yet on the maintenance and service issues.”

Although questions remain on details, stakeholders said they are relieved that competitive bidding has been suspended.

“I think in general everybody is happy with the delay,” said Clayback. “They’re happy with the improvements [in the new law], happy with the exemption of complex rehab. The unhappiness resides in round one bidders who invested dollars.”

Still, many of the 325 providers who won contracts have said that they are happy with the outcome.

“I think those folks that did win contracts understand [the delay is good for the industry as a whole],” Schafhauser said, “but they are out lots of money.

“They have mixed feelings,” she added. “They have spent a lot of money and spent a lot of time and hired staff. And what now? How do they recover the expenses they incurred? They are the good ones that literally got hurt from this. They are basically the sacrificial lambs in this whole process. CMS had no business starting the program July 1.”

Georgie Blackburn, vice president of government relations for Blackburn’s Pharmacy in Tarentum, Pa., which won — and now has lost — six contracts, said she had already billed four times when competitive bidding was suspended. She did not know at press time whether or not she would have to re-file her claims to get paid or exactly what process CMS would use for reimbursement. Yet she was thrilled with the delay, which she had fought for along with thousands of others.

“It’s really exciting to have been part of this movement,” she said. “It was the right thing to do — and the right thing happened.”

CMS Fact Sheet

On July 16, CMS announced plans to implement provisions of the new Medicare law and issued a short fact sheet stating that “Medicare beneficiaries may use any Medicare-approved supplier” for DME.

“If a beneficiary changed suppliers when the program started (July 1, 2008), they can either continue to use the new supplier or choose another supplier,” CMS said.

Also according to the fact sheet: “The original DME payment rates in effect prior to July 1 are reinstated retroactively. All Medicare households in the 10 competitive bidding areas will be notified of this change directly in a letter from CMS within two weeks.”