Welcome to H.R. 3790

With only weeks left until the bid window closes on the Round 1 rebid (Dec. 21), a bipartisan bill that would eliminate DMEPOS competitive bidding is gaining traction among legislators. At press time, H.R. 3790, introduced Oct. 13 by Rep. Kendrick Meek, D-Fla., had garnered 64 cosponsors — up from its original 16 — thanks to the efforts of many in the home medical equipment industry.

“We expect more congressional support as members fully understand the tremendous cost savings of our budget-neutral legislation,” said Barry Johnson, president of the Texas Alliance for Home Care Services and one of the bill’s originators.

With the Meek bill, providers are finally armed to fight the battle against competitive bidding, said Johnson, who stressed that more providers are needed on the front lines. “We need more providers to step up to the plate and tell the story,” he said. “It’s an education process.”

He knows it’s tough for providers who have never been politically active before. Johnson said when he visits a legislator’s office, “I say, ‘I’m not here to bother you; I’m here to tell you something that is going to make everyone’s life better.’”

A respiratory therapist for 40 years, Johnson is a salesman when it comes to the Meek bill because he believes it gives CMS just what it wants and protects patients and providers at the same time. “The point of competitive bidding was to reduce the number of providers out there. Competition reduction. Well, OK,” said Johnson. “Reduce fraud and abuse — absolutely. Get more for your money. I’m a taxpayer and I’m all for that.

“But what if I could do all that stuff better, faster, quicker and give you back $25 million? Would you go for that? Well, welcome to H.R. 3790.”

Johnson ticked off the bill’s selling points:

• Significant savings “First off, we have a bill with a number on it. It’s pretty tough to see the light when no one turns the light bulb on,” Johnson said. Up to this point, industry representatives could only provide legislators with information and particulars about the devastating problems competitive bidding would create for small business providers and Medicare beneficiaries, he said. “But how can they really properly evaluate what you are telling them? Now they have the legislation and they can see the legislation,” Johnson said. “We have had it scored by an independent actuary, and it’s coming in about 10 percent [savings for Medicare]. We’ve had a 9.5 percent cut already. That’s 19.5 percent, a half percent greater than the [savings from the] first round of demonstrations in Polk County, Fla.” Combined with the 25 percent savings on oxygen from the 36-month oxygen cap implemented in January, Medicare is already seeing a substantial savings that is far beyond the average 26 percent savings on DMEPOS items in the aborted Round 1 of competitive bidding last year. “We’re rolling back the prices to 1998. We’re better than Walmart,” Johnson said.
• Access to care The Meek bill would preserve patients’ access to care because it would not eliminate thousands of providers, Johnson pointed out. “When you’re reducing the number of providers by 90 percent, you are asking 10 percent of the providers to take care of 100 percent of the population. That’s a tough deal,” he said. His own Dallas County is 9,000 square miles and, under competitive bidding, would have only about 40 providers, he estimates. “It’s going to be difficult to get from one corner to another in a timely manner … Now we have a patient risk issue here because we are limiting access to care.” Medicare is very likely to see more trips to the emergency room and more hospitalizations because there will be too few providers to attend to patients quickly, a problem that would worsen dramatically in cases of thunderstorms, hurricanes, snow and heavy winds, Johnson said.

• Elimination of the Competitive Bidding Implementation Contractor “The CBIC can go away, and the cost of the CBIC is $25 million annually,” Johnson said. “We truly have a bipartisan bill which will achieve the same results as competitive bidding while returning $25 million to the taxpayer annually. These administrative funds are simply being wasted to administer the severely flawed competitive bidding program.”
• Curb fraud and abuse “We want to start a fraud-and-abuse program that works with the $25 million,” Johnson said. Because of mandatory accreditation, surety bonds, onsite visits, stiffer standards and post-payment audits, inroads are already being made into the fraud-and-abuse arena, he said.

“There was a reduction of providers, on average, of about 40 percent,” he said. “We think what has happened is that those people who were less than responsible, those people have dropped out.

“Congress is seeing that,” he continued, noting that despite the derogatory stories popping up all over the media — the most recent a “60 Minutes” piece on Oct. 25 — legislators are beginning to understand that most of the fraud that is surfacing is being perpetrated by “Nigerian scam artists and the Russian mob, not the majority of the independent mom-and-pop, dedicated providers” serving local areas.

“This is good news for our industry,” he said. “They know it’s not us.”

Johnson is hopeful that other organizations will get on board to help champion H.R. 3790 with legislators. The 5,000-member National Association for Support of Long Term Care already has thrown its support behind the bill. The group is encouraging a grassroots effort and is sending an advocacy message to legislators.

Such support could help to make H.R. 3790 a standalone bill rather than one that would need to piggyback on another measure such as health reform legislation. “I personally would like to see it as an independent-status bill,” Johnson said. “There are too many problems associated with the health reform package.”

He’s proud of the Meek bill, which he noted was forged over seven months with important input from industry stakeholders and help from the American Association for Homecare. There’s much good in it, he believes. But in the end, the biggest reason to eliminate the DME bid program is “to save the beneficiary” because competitive bidding is unsafe for patients, Johnson said.

“Rather than go through this gyration with competitive bidding and all the problems associated with it, let’s just go with 3790 and make everybody happy,” he said. “It’s a way to save for the Medicare program. This is a bipartisan bill that does something for everybody.

“We’ve kept access, lowered the patients’ copay by reducing the fee schedules and, Grandma, we are not throwing you out with the bathwater … We do all that independently, with one swoop of the pen and without asking for any assistance from any government agency and no new taxes for any taxpayer.”

Johnson has a personal interest in all this that goes beyond his business. His father is 86 and needs oxygen. He does not want to see what happens to his dad if competitive bidding goes through. Elimination of the program is “just something that has to happen,” he said. “We owe this to the American taxpayer, we certainly owe it to the beneficiary and we owe it to Congress to come up with a bill where we can continue to provide the services, protect the elderly and prevent fraud.

“If they can pass this bill, they will definitely be a Medicare beneficiary’s hero.”

Don’t Let Bid Program Restart

In a letter last month to members of Congress asking for support of H.R. 3790, lead sponsor Rep. Kendrick Meek, D-Fla, wrote:

“The Medicare competitive bid program for durable medical equipment and services (Title XVIII of the Social Security Act) began in July 2008 as a well-intentioned effort to improve quality of service and eliminate excess costs in Medicare. However there was nothing competitive about the misconceived program.

“There are serious flaws in the bidding process which produced few competitors, fewer home care services and a decrease in the quality health care [for] those with disabilities who require the right care and equipment in order to live.

“Congress delayed the program only two weeks after it began, in a clear acknowledgement that the bidding process was deeply flawed and needed fixing. For example, contracts were awarded to suppliers without a physical location in or near the bid area and who were unable to provide the equipment or services to patients; unlicensed providers (in violation of state standards); and fly-by-night operations with no experience in providing bid items.

“However, in the 14 months since the competitive bidding program has been delayed, no significant improvements have been made to the process. In October 2009, the program is due to begin again. We cannot allow it to restart.”

To contact your representative in support of H.R. 3790, call the U.S. Capitol switchboard at 202/224-3121. The operator will connect you directly to your congressman’s office using your ZIP code.

How It Works

To gain support from a Congress dealing with budget deficits and health care changes, H.R. 3790 is budget-neutral, calling for minor cuts in all DME (except Group 3 complex rehab) of 0.25 percent for three years and a single 0.5 percent cut two years later combined with a CPI-U freeze.

According to a summary from AAHomecare, here’s how H.R. 3790 would offset the cost of eliminating the competitive bidding program:

• In 2010, 2011 and 2012, the bill eliminates the annual payment update (CPI-U) for all HME items and reduces payment rates for all items by 0.25 percent in each year.
• In 2014, the bill eliminates the additional 2 percent increase in payment rates. All items would still receive the annual CPI-U update.
• In 2015, the bill eliminates the annual CPI-U update for all HME items and reduces payment rates for all items by 0.5 percent.
• Complex rehab power wheelchairs (Group 3 and above) would not be subject to any of the reductions.

For the full text of H.R. 3790 along with background and talking points, check the AAHomecare Web site at www.aahomecare.org.

We’re All in Round 1

“This affects every provider. Our focus now has to be as providers getting our representatives signed on [to H.R. 3790] … The bill is a good one, the pay-for is fair and the industry as a whole will stay intact. I hope we can get traction, because competitive bidding is not the answer to health care.”

— Georgie Blackburn, vice president of government affairs, Blackburn’s, Tarentum, Pa.

“The term ‘competitive bidding’ really means ‘restrictive contracting’ and essentially destroys about 90 percent of small businesses, removes healthy competition, limits patient choice and limits patient access to care. At the end of the day, that strategy will prove more costly than the alleged savings of the bid program.”

— Beth Bowen, executive director, North Carolina Association of Medical Equipment Services

“The Senate Finance Committee [reform bill] is expanding Round 2 to 100 metropolitan statistical areas and fast-tracking the date for applying competitive bidding results to the rest of the nation. Everyone should be concerned about this.”

— John Shirvinsky, executive director, Pennsylvania Association of Medical Equipment Suppliers

“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.”

— Tyler Wilson, president and CEO, American Association for Homecare

“We believe [this bill] has brought consensus within the industry for the best of the independents, nationals and beneficiaries as a whole … As H.R. 3790 continues to gain support, providers are reminded and urged to continue calling their representatives to ask that they cosponsor this budget-neutral bill. Time is of the essence!”

— John Gallagher, vice president of government relations, VGM

“I’ve been in business for 26 years, built up a loyal clientele, gotten good at my craft. Now all that’s in jeopardy due to misguided government bureaucracy.”

— Bill Griffin, president and CEO, Griffin Home Health Care, Charlotte, N.C.

“Medicare is looking to drop all reimbursements to first-round competitive bidding prices immediately, insurance companies will match Medicare’s rates, Medicaid programs will follow, etc. The disgusting reality is that those initial bids will, again, not be based on reality of providing quality service … Our industry will be destroyed. Winners will be losers along with everyone else; there can be no winners with a competitive bidding program so flawed and pooly executed.”

— Roger Ribas, president, Florida Alliance of Home Care Services

“Everything is impacting the patient. The unfortunate thing is that in [CMS’] zeal to curb fraud and abuse and to limit suppliers, they are harming the people who need the services.”

— Wayne Stanfield, president and CEO, National Association of Independent Medical Equipment Suppliers

Déjà VU All Over Again

A number of serious problems with the competitive bidding program surfaced in its initial rollout, which was halted by Congress after a two-week implementation in July 2008. Summarized here by AAHomecare, HME stakeholders fear many of the same problems will occur again in the repeat implementation of Round 1, including:

• Disruption to patient services Patients were forced to go to multiple, unfamiliar providers for different items and services. Informal surveys showed that some winning providers were unable to provide care to beneficiaries.
• Greater costs to Medicare due to longer hospital stays Confusion about the restricted list of contracted HME providers delayed hospital discharges and triggered unnecessary emergency room visits.
• Non-local providers Providers with no history of servicing a geographic area or no operations in a bidding area were awarded contracts.
• Inexperienced/unlicensed providers Companies were awarded Medicare contracts to provide equipment and services for which they were not licensed and had no previous experience providing.
• Desperation bidding Structural flaws in the bidding program caused providers to submit artificially low bids because they were faced with the threat of losing their businesses if not awarded a contract. Winning contracts also were viewed as commodities that could be sold once a bid was won. “I don’t expect anything different,” said provider Rob Brant of City Medical Services in North Miami Beach, Fla., about the Round 1 rebid. “It’s déjà vu all over again. Medicare is basically doing the same thing, saying the same thing, using the same methodology as before. There is no judicial review, no transparency.”

The Round 1 Rebid

Competitive Bidding Areas

• Cincinnati-Middletown (Ohio, Kentucky and Indiana)
• Cleveland-Elyria-Mentor (Ohio)
• Charlotte-Gastonia-Concord (North Carolina and South Carolina)
• Dallas-Fort Worth?Arlington (Texas)
• Kansas City (Missouri and Kansas)
• Miami-Fort Lauderdale-Miami Beach (Florida)
• Orlando (Florida)
• Pittsburgh (Pennsylvania)
• Riverside-San Bernardino-Ontario (California)

Products

• Oxygen supplies and equipment
• Standard power wheelchairs, scooters, and related accessories
• Complex rehabilitative power wheelchairs and related accessories (Group 2)
• Mail-order replacement diabetic supplies
• Enteral nutrients, equipment and supplies
• CPAP, RADs, and related supplies and accessories
• Hospital beds and related accessories
• Walkers and related accessories
• Support surfaces (Group 2 mattresses and overlays) in Miami

Timeline

• 12/21/09 – 60-day bid window closes
• June 2010 – CMS announces single payment amounts, begins contracting process
• September 2010 – CMS announces contract suppliers, begins contract supplier education campaign
• Early Fall 2010 – CMS begins supplier, referral agent and beneficiary education campaign
• 1/1/2011 – Implementation of Medicare DMEPOS competitive bidding program Round 1 rebid contracts and prices

For additional information on the Round 1 rebid, including program information and fact sheets, FAQs, bidding charts and other educational materials, see the CBIC Web site at www.dmecompetitivebid.com.