Bidding War

The home medical equipment sector is holding its breath this fall for an assault on home care. In spite of making our voices heard on the flawed “competitive” bidding program, Medicare is going forward with the Round 1 rebid in January 2011. The bidding window is scheduled to open on Oct. 21 and CMS would announce the resulting contract suppliers next fall. Like the initial Round 1 last year, many observers believe cuts to HME payments will be similar to bidding in the past when there was a total average reduction of 26 percent.

And if that is not enough, the Senate Finance Committee’s health care proposal, which is being considered at the time of the writing of this column, would speed up the implementation of the bidding program. For HME providers who have long believed they would not be affected by price setting based on competitive bidding — it is time to reconsider.

The Senate Finance proposal contains a provision that expands the number of metropolitan statistical areas included in Round 2 of competitive bidding from 79 to 100. The provision would also require that the bid program apply competitively bid rates to the remaining non-bid areas by 2016. There is an allowance for the Health and Human Services Secretary to make certain geographic exemptions, but those exemptions are not automatic and require an affirmative act.

The acceleration of the bidding rollout will cost home care providers another $1.4 billion in reduced payments over the next 10 years while at the same time resulting in an anticipated shortage of providers in any area where the program is being run.

Many HME providers are now deciding that they cannot afford to continue to provide services to Medicare beneficiaries, and as a result these providers may decide to pull out of Medicare, leaving the neediest patients without the level of access and care that they deserve.

Even those who choose to remain in business and discontinue relationships with Medicare may find lower rates from private insurance firms since Medicare reimbursement rates are the basis for rates set by many other health insurance carriers.

The competitive bidding study released in August by Brian O’Roark, PhD, of Robert Morris University in Pennsylvania, found that as Medicare rates fall, insurance firms’ rates fall, too. And while insurance firms will enjoy profits, HME providers will be driven out of business as the cost of supplying products and services exceeds the reimbursement rate. This will lead to reduced access for millions of seniors and patients.

AAHomecare strongly supports the elimination of the competitive bidding program. The Association has asked all HME stakeholders to contact their representative in Congress to urge support of legislation that would repeal the program.

To ensure we have champions for this bill, everyone must be speaking with their members of Congress and educating them on the perils of competitive bidding. The perceived benefits of a bidding program will never materialize. Any program that produces fewer competitors, fewer home care services and lowest-common-denominator health care for older Americans and people with disabilities is wrong. Every provider must make a stand.

Speak up about the value of the home medical equipment sector in your local news with facts and personal stories of how your business positively impacts the community. Introduce your members of Congress to your patients during site visits to your facilities, and help legislators understand the role of home care in making our health care system more cost-effective. Explain why the bidding program will be counterproductive to ensuring quality health care in your community, even if you are not in Round 1. Visit www.aahomecare.org for talking points to assist in your efforts.

The Association is doing its part, but a united and energized effort is needed to preserve home care.

Read more AAHomecare Update columns.

Tyler J. Wilson is president and CEO of the American Association for Homecare, headquartered in Arlington, Va. You can reach him at [email protected]. For more information on critical home care issues, visit the association’s Web site at www.aahomecare.org.