Round One Shocker: It’s Bad, Say Complex Rehab Experts

Averaging 15 percent off current reimbursements, the payments CMS set for complex rehab under round one of competitive bidding, coupled with the scant number of contracts offered in the product category, were shocking to members of the rehab community, which has been fighting — thus far unsuccessfully — to have complex rehab equipment excluded from the program.

“I don’t like the reimbursement numbers I am seeing,” said Gary Gilberti, vice president of the National Coalition for Assistive and Rehab Technology. “It’s tight already; we have companies that are barely making it on current allowables. I think a lot of people bid out of fear. I think they bid low to try to keep their share of the market.”

Gilberti, president and CEO of Chesapeake Rehab Equipment, Baltimore, said his company won its bid in Charlotte, N.C., but lost in the Pittsburgh CBA.

“And I am glad I didn’t bid in some of the other markets, considering how low those numbers are,” he said.

Tim Pederson, CEO of WestMed Rehab in Rapid City, S.D., agreed that the numbers are surprisingly low, especially since, he said, “it’s completely inappropriate to competitively bid complex rehab at all.”

“It’s bad,” said Pederson, who also serves as chair of the American Association for Homecare’s Rehab and Assistive Technology Council. “Anytime you have reimbursement reductions of that magnitude, it’s bad, because our profit margins are already so thin.”

In addition to the round one reimbursement rates, many are also concerned that only five or six companies were selected as bid winners in five of the 10 bid areas. This means that, come implementation on July 1, some bid winners will be responsible for providing equipment and services for up to 20 percent of those MSAs.

In analyzing the problems concerning competitive bidding and complex rehab, Rita Hostak, NCART president and vice president of government relations for Sunrise Medical, Longmont, Colo., offered the following list:

• There are many reports of experienced rehab suppliers being disqualified due to bid amounts that someone judged to be too low. The irony is that many single payment amounts for items in category 3 are below supplier acquisition cost, so, these decisions appear to be arbitrary. The lack of judicial recourse is causing tremendous concern for these suppliers and the Medicare beneficiaries they serve.
• The fact that capacity was a key determining factor in the number of suppliers whose bids would be included in the development of the single payment amount is a significant concern. The suppliers are not in any way committed to their claimed capacity and yet, it eliminated other suppliers from the program that bid within pennies of the winning suppliers. This certainly gave competitors an opportunity to block out their competition.
• [There are] reports of a high number of winning suppliers in the complex rehab category that have little or no experience with these products or the individuals that require them. The fact that these suppliers would not intuitively understand the product or service costs related to this category would cause them to naively bid lower, therefore, blocking out more experienced and knowledgeable suppliers. The ultimate result will be that these knowledgeable suppliers could be forced to close their doors or sell their business to winning suppliers. Suppliers that are solely dedicated to providing complex rehab technology cannot survive a 30 percent or higher loss of revenue and sustain their business.
• The differences from CBA to CBA in the single payment amount cannot be accounted for in service cost differences. It appears that the experience of the supplier in terms of providing truly complex equipment may be the single most variance to cause this pricing difference. If a supplier does not recognize the broad range of technology that fits a single HCPCS code and the fact that consumers with severe physical disabilities often require a specific product within a code — meaning products within HCPCS codes are not interchangeable — the supplier could naively bid based on a single low cost product within a code assuming that they can provide that product to anyone needing a product within that code. The problem that results is either the supplier begins to see that he cannot afford to provide the appropriate products at the single payment amount and drops out of the program (this is the unlikely scenario — after all, it is the supplier’s livelihood) or the consumer no longer receives the appropriate device.
• Innovation in technology to improve people’s lives will no longer be a viable option for manufacturers of products in the bid categories; the new goal will only be to reduce costs. Products will be de-featured, and manufacturing jobs will move overseas at a faster pace.
• The fact that CMS did not require a bidding supplier to have a physical location in the CBA will cause problems for beneficiaries requiring complex rehab. To provide complex rehab, the [Assistive Technology Supplier] needs local support. They require demo equipment, simulation equipment.

Meeting the medical and functional needs of an individual with severe disabilities is not accomplished with out-of-the-box technologies. [Often], a mobility system will require multiple fittings and may have to be delivered twice, once to the hospital so the evaluating therapist can assess whether the product ultimately meets the individual’s needs, and again to the individual’s home. This level of service is difficult to provide in a timely manner if the office is hundreds of miles away.

So what can complex rehab providers do?

For those preparing to bid in round two, Gilberti advised, “Know your costs … because right now we are doing nothing but damaging the market with these lowball prices.”