Home Care Stakeholders Testify to Congress: Competitive Bidding Will Hurt Small Providers

WASHINGTON–While CMS’ Laurence Wilson presented the agency’s
view of competitive bidding, a string of HME stakeholders told an
entirely different story to members of a House of Representatives
subcommittee last week.

Representing the American Association for Homecare, Georgie
Blackburn testified before the House Small Business Committee’s
Subcommittee on Investigations and Oversight Oct. 31 that unless
Congress modifies the program, competitive bidding for HME will
hurt small providers and “undermine the nation’s home care
infrastructure.”

The program will “jeopardize patients’ standard of care, choice
of provider and access to the medical equipment and services they
need,” said Blackburn, vice president of government relations and
legislative affairs for Blackburn’s, Tarentum, Pa.

“Those who are not selected as winning bidders will not be able
to provide competitively bid equipment or services to Medicare
beneficiaries. Since Medicare payments typically comprise 35 to 50
percent of a small provider’s revenue, ” Blackburn explained,
“losing the ability to provide competitively bid items for a
three-year contract period is essentially a death knell.”

The association pointed out that the competitive bidding rules
are stacked against small providers, who do not have the economies
of scale to negotiate lower prices from manufacturers or the
physical size to cover an entire bidding area.

Blackburn testified that “even with the small business
protections included as part of the program, such as the ability to
form networks or the 30 percent set-aside for small businesses, the
bidding program will still radically reduce the number of suppliers
that exist today.”

But Wilson, director of the Chronic Care Policy Group for CMS,
told the subcommittee the agency had taken adequate steps to help
small providers. Although he acknowledged there could be fewer
companies eligible to serve Medicare beneficiaries as a result of
the bidding program, he said that the providers CMS selects as bid
winners will be accredited and there will be a better environment
for providing care.

Wilson revealed that the agency received 6,300 certified bids
from the first round of bidding. While that number is higher than
industry insiders had predicted, it is still much lower than CMS’
estimate that it would get nearly 16,000 bids. Wilson said the
numbers were closer than they might appear, however, because
suppliers could submit one bid for multiple sites under common
ownership.

Wilson noted that three-fourths of the winners in CMS’ two
previous competitive bidding demonstrations–in San Antonio and
Polk County, Fla., in 1999-2002–had been small suppliers. This
time, he said, CMS made some special provisions for small
suppliers, such as setting the small business revenue ceiling at
$3.5 million and allowing the formation of networks to serve an
entire CBA.

He also said CMS is working on improvements to the bidding
system before publishing a request for bids in the second
round.

But that comment prompted another from subcommittee member Rep.
Charles Gonzalez, D-Texas (who represents San Antonio): While CMS
is on a learning curve, he said, small businesses could go
under.

In fact, in its report on the hearing, AAHomecare characterized
the subcommittee as “friendly.” Chairman Jason Altmire, D-Pa.,
called the hearing to shed light on the small business dimensions
of the bidding program, the association said.

AAHomecare asked the subcommittee for support of H.R. 1845, the
Tanner-Hobson bill, which would:

–Exempt smaller, rural areas from competitive bidding;
–Allow all qualified providers who submit a bid to continue doing
Medicare business at the bid rate;
–Restore providers’ rights to administrative and judicial review;
and
–Exempt Medicare items and services unless a savings of at least
10 percent can be demonstrated.

In addition to Blackburn, five others representing various
industry sectors testified at the hearing, including John
Shirvinsky, executive director of the Pennsylvania Association of
Medical Suppliers; Carol Gilligan, president of Health Aid of Ohio,
Cleveland; Richard Saxon, president and CEO of BioMedical Life
Systems, Vista, Calif., on behalf of the Advanced Medical
Technology Association; Dr. Ross Taubman, president-elect of the
American Podiatric Medical Association; and Jose Navarro, RPh, of
Navarro Discount Pharmacies in Medley, Fla., on behalf of the
National Association of Chain Drug Stores.

“While CMS has made some noise about addressing small business
issues, I don’t believe that CMS has taken any meaningful steps to
address the special needs of small business and our ability to
participate in the program,” Gilligan said in written testimony.
Describing the individualized products and services required to
service her high-end rehab customers, Gilligan said, “As a small
business, I believe we are disproportionately negatively impacted
by this bidding program.”

Navarro testified that some provisions of the bidding program
“could prevent pharmacies from effectively serving their Medicare
patients,” such as establishing national or regional competitive
bidding areas for mail-order suppliers that could significantly
limit participation in the program by small pharmacies and reduce
patient access.

According to PAMS’ Shirvinsky, “What CMS is doing is a formula
for certain higher prices down the road. Competitive bidding for
DMEPOS is not good business. It is bad news. The most responsible
thing that this Congress can do on this count is to admit that a
previous Congress made an error in approving a poorly considered
provision.”