Competitive Bid Pricing Affects TRICARE Rates and Veterans’ Access

WASHINGTON, D.C (August 26, 2016)—Home medical equipment providers who serve our nation’s military personnel are being hit with shocking new Medicare reimbursement cuts thanks to the Centers for Medicare and Medicaid Services’ (CMS) decision to widely apply rates from its competitive bidding program outside its original footprint in metro areas to now encompass the entire country.

In addition to causing financial hardship and access issues for beneficiaries and the HME providers who serve them in rural areas outside of the competitive bidding program, the new rates are triggering massive price cuts for companies that serve military personnel through TRICARE insurance programs. TRICARE plans have traditionally used Medicare rates for home medical equipment as a pricing guideline, often taking the Medicare rates and discounting those prices further.

CMS’s latest moves have cut pricing for providers by an average of 35 to 60 percent for many items vs. prices in effect at the beginning of the year. These rates are already painful enough for HME providers before taking an additional discount below the Medicare pricing. Depending on the region that processes TRICARE claims, the industry has seen additional reductions from anywhere between 10 to 55 percent on top of the Medicare cuts.

“The new TRICARE fee schedule effective July 1 comes with a 61 percent reduction for CPAP (continuous positive airway pressure) devices when compared to the rates in effect last year,” said Kirit Patel, owner of Progressive Home Medical in Chandler, Arizona. “We are now down to $18.41 per month for CPAP.”

“As a result, my company has stopped taking all TRICARE, and I know other companies in the Phoenix area are doing the same,” added Patel. “Unfortunately, these new reductions are going to leave our veterans with reduced access to medical equipment they need!”

“It is becoming more and more difficult to give the individual service and attention that is required in the home medical equipment industry,” said Joey Tart, president of Family Medical Supply, which serves patients though 17 locations in North Carolina. “It is sad to see service and quality take a back seat to price, especially for our servicemen and women. Our military personnel deserve better.”

“This is just the latest example of the disruption that the wider application of competitive bidding-derived pricing is causing across the nation,” noted Tom Ryan, president of the American Association for Homecare (AAHomecare). “These deep reductions in TRICARE rates underscore the urgent need for legislation to pause the latest round of reimbursement cuts so their effects on patients can be better assessed.”

The Senate and House have both passed bills instructing CMS to roll back part of this year’s cuts for providers not in the bidding program, but the two chambers have been unable to reconcile their bills thus far to provide legislative relief.

“Our association and leaders in the HME community will work with regional offices that oversee the TRICARE contracts to educate them on the impacts of using rates from the flawed competitive bidding program,” added Laura Williard, senior director of payer relations for AAHomecare. “We plan to share what we are hearing from providers across the country regarding the impacts these cuts are having on the military and their families.”

Visit aahomecare.org for more information.