What Would You Tell Kerry Weems?

At the time our staff planned HomeCare’s editorial calendar for 2008, we decided it would be beneficial to present information from their peers that might help home medical equipment providers contemplating round two of national competitive bidding.

Who knew when it came time to field our competitive bidding survey in April, particularly considering the impending July 1 implementation date for round one, CMS would have disqualified 630 of the 1,005 bidders and would not yet have announced the contract winners? Who knew the zip codes that define the round two competitive bidding areas would not have been released, or that the agency would extend the deadline for accreditation application for round two participation?

Ah, well, in spite of the changes and the information they were missing, 395 providers shared their thoughts about competitive bidding — about round one, about round two and about their company strategies moving forward. Their responses to the survey questions, compiled on the following pages, speak for themselves.

We also asked participants to answer this question: If you could talk directly to acting CMS Administrator Kerry Weems, what would you tell him about Medicare’s DMEPOS competitive bidding program?

Almost 300 providers took the time to pen thoughtful answers that show their frustration with the bidding program, their worries about their businesses and their concern for Medicare patients. A representative sample of their answers, which also speak for themselves, are printed in this section.

Survey Fast Stats

• About Payment Rates and Contracts

  Fifteen percent of respondents operate in one or more of the 10 MSAs in round one of competitive bidding, and 35% operate in one or more of the 70 MSAs designated for round two. Fourteen percent operate in both a round one and a round two MSA. Among respondents with 10 or more locations, 80% operate in one or more current or future bidding areas.
• Half of respondents plan to bid in round two. Among these, 72% indicate their company is currently accredited, 20% have applied for accreditation and 8% had plans to meet the May 14, 2008, deadline for accreditation application. (The survey was fielded and results taken before CMS extended the accreditation application deadline for round two.)
• Among respondents who said they will bid in round two, 41% began planning two or more years ago, 36% have been planning to bid for one year or less and 23% began planning when the round two MSAs were announced.
• Over one-third (36%) of respondents who are planning to bid believe they are ready to craft a reasonable bid, but 29% want more information from CMS about the bids in round one.
• More than nine in 10 respondents (92%) planning to bid in round two said they will do so independently, and another 7% plan to bid as part of a network.
• Nearly one-third (30%) indicate they would need to subcontract with other companies if they were offered and accepted a contract in round two. Sixty-six percent said they would be able to service the bidding area without subcontracting.
• Only 14% of respondents said they would not accept a contract in round two if the payment rate was lower than their bid. Sixty-three percent said it would depend on how much lower; 5% would accept a bid; and an additional 14% feel they would have to accept a contract in order to stay in business.
• Forty-three percent of respondents do not think their company could remain viable if the reimbursements that are set in round two are dramatically lower than current rates. An additional 42% are unsure, while only 14% believe their company would remain viable.
• Respondents are mixed on the bids for round two: 30% think they will have to bid lower than the contracts in round one to win a contract, while 64% think that round two bidders will submit bids that are higher than those in round one.

Based on the round one payment rates set by CMS (with the average reduction listed next to each product category), if you had been offered a contract, would you have taken it?

If you could talk directly to acting CMS Administrator Kerry Weems, what would you tell him about Medicare’s DMEPOS competitive bidding program?

Following is a representative sample of providers’ responses to this write-in survey question.

1) You are killing small business. 2) Just lower the current allowable rates … and set a date that everyone must be accredited. That way everyone can participate. 3) You should take the money (tax dollars) that is being spent on the implementation of competitive bidding and put it in the OIG to reduce fraud and abuse. 4) If you are going to move ahead with round one, give more time to evaluate the success and make changes before you move into round two.

A competitive bid would have suppliers setting prices based on cost of doing business, not starting at a predetermined CMS rate and then bidding lower. Many suppliers are bidding low from the fear of losing their business.

A number of round one bidders were rejected for failure to provide a complete and accurate bid package when, in fact, they did. How do you explain this, and why should I be confident that my bid won’t be rejected due to some reviewer’s incompetence?

Allowing outside bidders to submit lowball bids in MSAs that they have no history or physical presence in will blow up in everyone’s face.

Although providers, hospital discharge planners and physicians are all going to be burdened, and in some cases put out of business, it is patients who will ultimately suffer the most. They will have their choice of suppliers reduced and will be forced to deal with multiple providers, deliveries, forms, etc.

Bad policy, bad precedent, poor public image for CMS and a roadmap for disaster. When patients start to show up at the ER door as a result of malfunctioning oxygen equipment, or diabetics start to die due to poor management of diabetes as a result of substandard test strips in order that a company can make a profit, the public will cry foul.

Competitive bidding will put an end to compassionate, caring and professional services at the home care level. It amazes me that you continue to put an emphasis on equipment and dismiss the fact that most companies employ respiratory therapists and nurses to assure quality care to their clients. We keep patients at home because we spend the money to employ, educate, evaluate and dispatch such personnel.

Congratulations on creating a two-tier health care system of have and have-nots.

Dispense with the ridiculous notion of having 80 different prices (plus the 50 state reimbursables) and simply come up with reasonable reductions for all accredited suppliers.

Drop it … you are dealing with elderly COPD and O2 patients that need a lifeline and support that you are taking away.

Health care cannot be driven by a bidding process or any other similar cost-driven mechanism. We are not simply providing a piece of equipment; we are providing patient care in the form of a variety of services and supplies. It is our industry that delivers the equipment directly to the patient, instructs the patient on the proper use of the equipment and at 2:00 a.m. will make the necessary repairs.

I don’t know why Medicare can’t just have a fair fee schedule and accept all accredited, willing providers.

I understand CMS’ longtime desire to reduce providers to better police them, but this will not work … Already, fraudulent providers are setting their sights on procedure codes not included in the bid. The monies spent on analysis and implementation would have been better spent on fraud prevention.

I would have to question the rationale of focusing on DMEPOS in the first place. If CMS is looking for cost reductions, they should not concentrate on the smallest slice of the pie … It makes more sense to focus their cost-saving efforts on larger expense categories.

If competitive bidding saves Medicare any money it will be mainly at the expense of the American public … by forcing companies to take contracts at lower rates and eliminating competition between providers, service will no longer exist. Companies that have the Medicare contracts will provide only the bare minimum service.

Instead of being a critical part of the care process and an invaluable source of information for the referring provider, this program is trying to reduce us to UPS companies.

It flies in the face of all that we know about economics in a free market. Reducing suppliers in a rapidly growing environment of demand can only lead to inefficiency, catastrophe and, ultimately, chaos. I think we are already witnessing that.

It will disadvantage and marginalize our senior population creating undue physical hardship.

It’s like a vacuum cleaner — it sucks.

Poorly conceived and poorly enacted. CMS has failed once again with both the beneficiary and the supplier being the losers.

Quality customer service is based on ability to create relationships with clients. Competitive bidding removes all possible human interaction to the lowest time necessary to complete a transaction. The term “drop and run” would become the new delivery model.

Rates are not sustainable with the cost of business increasing daily (gas) and too few suppliers to service MSAs.

Rethink the value of home medical care in keeping people in their homes rather than in hospitals.

The program is deeply flawed. Many providers in round one, especially those that lowballed all the product categories just to win bids do not understand the cost of doing business and do not realize the magnitude of what is to come. Beneficiaries (can we still call them that?) are going to be subject to mass confusion and inconvenience at best along with inferior service and products … there’s no way around it. Also, far too few contracts were offered to handle the demand. There are no “winners” here.

This is not a true competitive bid. This is a blood bath of the American system.

This will be a bigger disaster than Katrina. You are killing an industry that keeps patients out of hospitals and long term care. The companies that don’t get a contract will go out of business; the ones that do get the contract will go out of business before the contract is over. Then who will provide the home care equipment?

About This Survey

Data were collected April 29 through May 14, 2008. Of 395 qualified responses, 74 percent are from HME providers, 10 percent from pharmacy/chain drugstores with HME and 7 percent from specialty HME companies. Nearly half (47 percent) of respondents operate one location, while 40 percent operate between two and nine locations and 13 percent operate 10 or more locations. Respondents’ companies have been in business an average of 16 years, and nearly nine in 10 are privately owned. While 26 percent reported revenues of $1 million or less, 10 percent indicated revenues of more than $25 million. Fifty-eight percent of survey participants had revenues of $3.5 million or less (which means they would be classified as “small” providers under CMS’ competitive bidding definition). Fifteen percent of all companies in the survey indicate they operate in one or more of the 10 MSAs in round one of bidding, while 35 percent said they operate in one or more of the 70 MSAs selected for round two and 14 percent operate in both a round one and round two MSA. Thirty-five percent of respondents do not operate in an MSA in either round one or two. Not all respondents answered every question, and some totals may add to more than 100 percent due to multiple responses. Survey methodology conforms to accepted marketing research methods, practices and procedures.