HME’s New Frontier

For years, the HME industry has dodged the bullet of competitive bidding. Some have ignored it, others have fought it. But now time’s up, and it’s high noon at the HME corral.

Competitive bidding is a reality, and along with new oxygen provisions set out in the Deficit Reduction Act, the legislative and regulatory mandates currently in place will change the industry’s landscape forever.

HME’s New Frontier will require new thinking and new business models to face down the challenges and, when the baby boomers become Medicare-eligible in a few years, to deal with a new generation of beneficiaries who have their own ideas about health care service and setting.

Is it time to give up? Absolutely not, say the advocates on the following pages, including congressmen, lobbyists, providers, manufacturers and others.

Now more than ever, they say, is the time to get involved in shaping the industry’s future — and yours — by supporting legislative remedies that can protect your business and your patients.

Keep At It!

Cara Bachenheimer, senior vice president of government relations, Invacare Corp., Elyria, Ohio

To put it bluntly, Cara Bachenheimer believes the HME industry’s best opportunity to affect substantive improvements to CMS’ competitive bidding program lies with passage of the Medicare Durable Medical Equipment Access Act of 2007. Providers may be more familiar with the proposed legislation’s common bill numbers and names in the House and Senate: H.R. 1845, also known as the Tanner-Hobson bill, and S. 1428, known as the Conrad-Hatch bill.

While Medicare provisions could come into play earlier as Congress debates funding and expansion of the State Children’s Health Insurance Program, Bachenheimer says “we still have significant opportunity to [change things] now that we are hearing Congress … is inclined to consider and pass a Medicare package later this year.”

She explains that the push for a separate package of legislation that would address Medicare is driven primarily by lawmakers’ desire to “fix” the physician payment formula to avoid scheduled cuts.

It would be in the industry’s best interest if the competitive bidding bills could be attached to that larger package, Bachenheimer says.

But she adds accomplishing that feat means additional stakeholder support from among the industry’s rank and file is a must.

If there is a Medicare package, Bachenheimer says, “we have the time and an opportunity to get enough support for the competitive bidding bills to get them attached to that package, which also means we need to increase the number of members of Congress who are official supporters of these bills. That would help considerably,” she explains.

“If we get 200 members of Congress to sign on to the Tanner-Hobson bill, it is likely to attract a lot more attention, and that will make it far easier for our allies like Reps. Tanner and Hobson to push to get the bill attached to the larger Medicare bill this fall.”

Bachenheimer urges providers “to contact their representatives and senators and urge their support of these bills. We all have our work cut out,” she says.

Small HMEs Needed for Quality Care

U.S. Representative David Davis, R-Tenn.

Home health care and HME are important to Rep. David Davis, personally and professionally. He fears competitive bidding as it stands will be harmful to both patients and business owners.

“Being a small-business owner, the reality is that it will harm the economy of local communities and will put small-business owners out of business, which could also lead to less quality of care,” he says.

Davis — a respiratory therapist who has served as chairman of the Tennessee Association for Home Care — is also worried about the consequences of the Deficit Reduction Act’s forced transfer of oxygen equipment to beneficiaries.

“The idea of patients owning their oxygen equipment and being responsible for it is very disturbing to me as a respiratory therapist by training and the son of a mother with emphysema who was chronically attached to oxygen for five years,” he says. “If she had been without a company that had 24-hour emergency care, she would have stayed in the hospital many more days than she did before she passed away. I am very concerned about that.”

On a hopeful note, he adds that “the members I have talked to in Congress are open to listening to [these] concerns.”

But he also notes that providers must let their legislators hear how they feel about competitive bidding and the DRA’s oxygen provisions.

Advises Davis, “I would recommend that the business members across America and their patients and physicians contact their member of Congress and let them know the ill effects that can take place if the industry changes from locally owned, community-owned, quality companies like we have had in the past.”

Round One Will Have a National Impact

Bill Elliott, president and CEO, The MED Group, Lubbock, Texas

Anyone who has been in the HME industry in the last decade knows that predicting what Congress will do is impossible. That’s why Bill Elliott says providers must diversify to become less reliant on Medicare business.

“Sometimes there are things in life that you don’t control, and even if you have done all the right things, the government can still make an absolutely crazy decision,” he says. “We can’t predict all the things that are going to happen. I can’t predict how much of Tanner-Hobson, if anything, is going to come through. And frankly, I’m tired of hearing other people’s opinions on it because their opinions are not any better than mine.”

Adds Elliott, “We know there are going to be winners and there are going to losers.” That’s why he wants providers to be ready — financially and operationally — to succeed. “If you only have one product line and if Medicare is making up 30 to 40 percent of your business, it’s pretty hard to sustain your company’s business,” he says.

“If, however, you’re more diversified, it gives you some opportunity to focus on … the private pay and the commercial business in the area that you didn’t win with Medicare until that comes back around to you, because it will come back.”

Clients Beware: NCB Will Limit Access

John Gallagher, vice president of government relations, The VGM Group, Waterloo, Iowa

According to John Gallagher, “A lot of providers have kind of dropped off the radar thinking that [competitive bidding] won’t affect them for a couple of more years, or that it is not going to affect them even after the first round is implemented.” But he points out that the pain could be universal. “Unfortunately, if there are enough erroneous bids, CMS can use [the bid pricing] for inherent reasonableness.”

Gallagher explains that if too many very low bids are submitted in the first round, “they will come back to haunt people in Peoria, in Louisiana and in the panhandle of Texas.”

That’s one reason it just makes “common sense” that providers should support the passage of the Tanner-Hobson and Hatch-Conrad bills to get them enacted.

Amending the competitive bidding program to allow qualified providers to participate would benefit both patients and providers, Gallagher says. “Then there wouldn’t be access issues for beneficiaries and small businesses would not have to go out of business.”

And, he adds, “we won’t have crazy bidders in Miami setting the fee schedule that will be in the future for people in Utah.”

Congress is Tough to Predict, So Be Ready

Rita Hostak, president of the National Coalition for Assistive and Rehab Technology and vice president of government relations, Sunrise Medical, Longmont, Colo.

Once national competitive bidding is implemented, says Rita Hostak, “there is no doubt there will be limited access” to some items necessary to meet the unique needs of individuals with disabilities.

“Newly injured clients may or may not be aware of the access problems because they don’t have a strong knowledge of what technology had been available before,” she says. “But, aware or not, their function and independence will be negatively impacted by reduced access and standardization of products.”

Many in the industry’s rehab sector also believe competitive bidding will limit access to providers.

“The rehab technology industry has never been one that attracted new people because of the profitability. People entered this market because of a strong desire to serve people with disabilities; many of the people in this industry have clinical backgrounds or family members with disabilities,” Hostak explains.

“However, reimbursement cuts and increased costs associated with the provision of these technologies are driving manufacturers and suppliers toward standardization of equipment. The ability for an RTS to assess an individual’s technology needs and select equipment that truly meets their medical and functional needs and promotes independence and, equally as important, prevents further decline in function, is already threatened.”

Hostak adds that the first round of competitive bidding will further deteriorate the ability of those individuals in the first 10 CBAs to meet their goals. “National competitive bidding will change the service delivery model for rehab technology permanently — and the change will not be positive,” she concludes.

When It Rains … CHAMP Pours

Robert D. Hoover Jr., MD, MPH, FACP, chief medical officer for DeVilbiss Healthcare, Somerset, Pa.

As if competitive bidding isn’t enough to deal with, the Children’s Health and Medicare Protection Act of 2007 (H.R. 3162), also known as the CHAMP Act, has become another serious issue for the HME industry.

Drafted as the House version of legislation to expand the State Children’s Health Insurance Program, Dr. Robert Hoover explains, “the bill includes a provision that reduces the reimbursement cap on oxygen concentrators, liquid and gaseous systems from the 36 months legislated by the Deficit Reduction Act to 18 months. However, it preserves the 36-month payment cap for oxygen generating portable equipment.”

But he adds that “despite industry efforts, it [does] not include a provision to eliminate the transfer of title to the equipment.” The bill would also eliminate the first-month purchase option for power wheelchairs.

“Although much has been said about CHAMP and its potential impact on the industry, it has not passed into law yet,” notes Hoover.

“The industry does have friends in the House and Senate that have pledged to work on keeping further oxygen reimbursement cuts out of any final legislation. Then, assuming the worst case and that an oxygen and/or wheelchair provision remains in the bill that is ultimately passed, President Bush could still veto the bill and has pledged to do so with the current Senate version.”

Bidding Is Good — For Office Furniture

Darren Jernigan, director of government affairs, Permobil, Lebanon, Tenn.

There’s no sarcasm lost when Darren Jernigan speaks about competitive bidding. “Competitive bidding is slowly becoming a reality. All the arguments remain the same, and CMS continues not to deal with hypothetical situations,” he says.

“Wait … this just in. CMS has extended another deadline. Could this mean some of the hypothetical arguments are coming true? Could there really be a burden on the provider? Will the end-user really lose choice or be harmed from such a policy?”

Jernigan says competitive bidding is a good financial strategy, just not for health care. “Don’t get me totally wrong. I am all about the concept of competitive bidding,” he explains. “I think there is a place for cost-effective programs in government. For instance, buy the cheapest toilet paper or the cheapest desk or office chairs or items shipped in bulk.”

But Jernigan quickly gets serious about the ramifications of competitive bidding for complex rehab products. He fully supports H.R. 2231, a bill before Congress that would carve complex rehabilitation out of competitive bidding.

“Complex rehab, which involves fitting wheelchairs for the most vulnerable of our citizens, should be included as an exemption from competitive bidding,” he says.

Notwithstanding the notion of dignity and independence, Jernigan says, “health and safety must always be on the forefront when considering the lowest price.”

Rehab Sector Pushes for Relief

Seth Johnson, vice president of government affairs, Pride Mobility Products Corp., Exeter, Pa.

Members of the industry who focus on rehabilitation are optimistic they can find some relief through legislative efforts, but they are also pushing for regulatory means that would exclude rehab products from the competitive bidding program.

“We have really been pursuing all options that are available to us, both from a legislative perspective with the efforts under way for H.R. 2231 and H.R. 1845, and also on a regulatory front with legislators weighing in with the Secretary of Health and Human Services,” says Seth Johnson.

The significant decline in access for those with disabilities that has occurred since new mobility coverage guidelines were implemented has already resulted in some legislators asking CMS to withdraw rehab products from competitive bidding, he points out.

He also notes that “the Secretary has the authority to make that type of a change at any point in the process. We certainly would like the Secretary to make those changes prior to the bidding continuing, but to the extent [he] does not weigh in prior to the close of the bid window, he could weigh in at any point in the process.”

Whether that does or doesn’t happen, Johnson says, “we are going to continue to work that regulatory angle along with the significant efforts that are under way from a legislative perspective to preserve and protect the rehab providers.”

Access to Local, Personal Care Is What Matters

Joel Mills, CEO, Advanced Home Care, Greensboro, N.C.

Without reprieve, the HME industry will have a remarkably different face in a few years. According to Joel Mills, “We will see high-volume, low-margin businesses not dissimilar to the drug store or grocery store business. There will be some local niche players, but large regional and national companies will have the bulk of the business at lower margins.”

Local companies are going to be hit hard, Mills says, but all companies will have to change. “All companies will have to cut costs and cut services to patients as well as reduce the level of staff that is providing services to patients,” he says.

Even companies that win bids in their MSAs are going to be challenged, he believes: They may survive, but they may not thrive.

“The value of businesses will come down significantly because of the uncertainty and the continued cuts,” Mills says.

Mills, whose company has locations in one of the first-round MSAs, says it’s high time to get politically involved. “The industry needs to be motivated. Everybody needs to get involved and get behind these bills and advocate,” he urges.

“Our industry is under attack, and unless everybody gets involved and starts talking to their members of Congress and inviting members of Congress into their facilities, we are going to continue to be under attack — and there is going to be a significant number of companies that are going to go out of business.”

Competitive Bidding: Not the Right Program for America

U.S. Representative Tom Price, R-Ga.

Receiving health care is personal. Someone with a chronic illness or disability should be able to choose who enters their home to discuss health care issues and plans of care, according to Rep. Tom Price, a physician. He believes that is just one of the reasons why competitive bidding in its current form is not best for Medicare beneficiaries.

“Home care and durable medical equipment are areas of treatment that are most trusted to folks that are close to you,” he says. “The competitive bidding program that is required in the plan by CMS would make it so that it is an issue that is based at the federal level and not at the local level.”

And when decisions about health care are made at the federal level, there is a disconnect that does not benefit patients, Price continues. “Very few people have a real appreciation for what happens on the ground — what happens in the day-to-day aspects and the logistics of providing sick people with care.

“I don’t think that [competitive bidding] was intended to do what it has done and will continue to do unless corrected. The result will be that somebody in Washington will decide what’s best for somebody in small-town Georgia, Nebraska or Washington State. It simply can’t work,” says Price.

“This notion that Washington can be the end-all and be-all in decision-making for health care is fundamentally flawed,” he continues. “When Congress adopts bills that put its faith and trust in the bureaucrats in Washington, they can’t get to the right answer because [the bureaucracy] is not responsive.”

Price — lead sponsor of the Home Oxygen Patient Protection Act (H.R. 621), which would remove the DRA’s oxygen cap and restore ownership of equipment to providers — reminds that it all comes back to patient care and relationships.

“There is no way for anybody in Washington to be able to appreciate the decades-long relationships that people build up with their local pharmacists, with their local health care provider, that can be pulled right out from under them with some ‘competitive bidding’ decision at the federal level. That’s not the kind of care that anybody envisions being appropriate for America.”

U.S. Representative John Tanner, D-Tenn.

There are no bones about it, says Rep. John Tanner. Competitive bidding will lead to a limited choice of providers and limited consumer access to high-quality products and services, especially for those consumers in rural areas.

According to Tanner, the program has flaws that are readily apparent. “We are already seeing problems with the program because [CMS] has already had to extend the time periods for bids to be entered,” he points out. “Additionally, multiple problems have been identified by suppliers as they continue to try to participate in the bidding process. If CMS is having this many problems just getting the bidding process to work, I don’t think that bodes well for the future of the program.”

Tanner, along with Reps. David Hobson, R-Ohio, and Mike Ross, D-Ark. (who owns an HME business), introduced H.R. 1845, which includes what they deem sensible changes to help protect consumers and still allow the marketplace to work.

“Changes such as allowing all qualified providers to participate at the selected award price and requiring that certain savings be demonstrated before moving forward are important to ensuring continued consumer access, and also ensuring that small DME providers are not totally forced out of the system,” he explains.

While Tanner says he is optimistic about a good outcome for the measure, he says that he and his cosponsors need the industry’s help.

“We are still hopeful that we can get some or all of the provisions of H.R. 1845 enacted. We continue to highlight the problems that we think will be the result of the competitive bidding program,” he says.

Along with others interested in HME’s future, Tanner issues an urgent appeal. “It would be helpful if beneficiaries and DME providers would contact their member of Congress and share their support of our bill and urge them to work with us on this issue by cosponsoring H.R. 1845.”