Industry Reacts, Gears Up for Bidding in Next 70 MSAs

ATLANTA–Mandatory accreditation and Round Two of competitive
bidding have been on the industry’s radar for months, but the
whirlwind of recent CMS announcements detailing dates and deadlines
nevertheless stirred stakeholder reaction.

While the deadline for Round Two accreditation has not yet been
given, shortly before Christmas CMS set Sept. 30, 2009, as the
“drop dead” date by which all DMEPOS providers must be accredited.
On Tuesday, the agency followed with the list of the next 70 MSAs
that will be included in phase two of the bid.

To some, including Cara Bachenheimer, vice president, government
relations for Invacare Corp., Elyria, Ohio, CMS’ list of the MSAs
selected for inclusion came as a surprise.

“Some major metropolitan areas are omitted–Boston, Baltimore,
Washington, D.C., and Seattle–and CMS is including some very
sparsely populated MSAs. There is no information about why CMS
selected these MSAs and omitted others, aside from the criteria in
the final rule, so we may well never know the more specific
selection criteria,” she said.

Consultant Wallace Weeks of Weeks Group, Melbourne, Fla., was
also surprised at the cities that were chosen. Weeks had worked up
a forecast of cities that would be targeted in Round Two based on
the selection criteria CMS outlined, “but my forecast was very
wrong,” he said. “Only a little over 60 percent of the MSAs I
forecast were on the final list.”

However, Weeks continued, “It is good that CMS has announced as
early as they have and that the initial bidding process doesn’t
begin until winter of this year. I think that the list of MSAs
treats the industry as a whole better than I had forecast. If they
had gone for the larger MSAs like Boston, Philly, Phoenix and
Seattle, there would have been a larger impact on the
industry.”

Weeks said the fact “that a mail-order bid for diabetic supplies
is postponed is also a plus for the industry.” While those products
are excluded from the second phase of the bidding program, CMS said
it is planning a national bid for these items with details to be
announced later.

At a conference on competitive bidding sponsored by the Georgia
Association of Medical Equipment Services, held in Atlanta just two
days after CMS’ Jan. 8 Round Two announcement, many providers said
they were ready. Some, however, said they were concerned that
results from Round One of the bidding program were still
unknown.

Others, like Tim Pederson, CEO of WestMed Rehab in Rapid City,
S.D., said the HME industry should know by now that it must be
prepared for anything. “Providers that are prepared will do OK.
Providers that aren’t prepared will be hitting the panic button,”
he said.

But ready or not, competitive bidding is moving forward, and its
final outcome is, at least at this point, still anybody’s
guess.

In the wake of the recent announcements, here’s what
stakeholders had to say:

On accreditation:

“Accreditation is a given, and it has been for a while. Anyone
who is going to be in this industry should be accredited or should
be in the process. If you’re not well on your way, get started
tomorrow!”

–Don Clayback, vice president, government relations, The
Med Group, Lubbock, Texas

“My initial reaction is that we are going to have to organize
time for the providers. In other words, we’re going to have to
catch the information up front: Are you being accredited for a
fraud demo deadline? Are you being accredited for an MSA deadline?
Are you looking for accreditation by September ’09? From there, we
can give [providers] deadlines. If you need to be accredited by
whatever the MSA date is, you have to be finished with your work by
this date in order to get your survey in on time.”

–Mary Nicholas, executive director, Healthcare Quality
Association on Accreditation, Waterloo, Iowa

“Mandatory accreditation is going to eliminate 80 percent of
supplier numbers. We’ll probably lose 90,000 [suppliers] from
accreditation. The accreditation is going to be what causes the
eliminations. And with the losses of all these small providers,
access is going to be affected–it has to be.”

–Wayne Stanfield, president and CEO, National Association
of Independent Medical Equipment Suppliers, Halifax, Va.

On the MSAs chosen for Round Two:

“I was surprised at the omission of certain geographic areas.
Some large cities were not represented on that list, like
Philadelphia, Seattle, Portland, St. Louis. That was surprising to
me … It’s almost like [CMS] threw darts at a map.”

–Tim Pederson, CEO, WestMed Rehab, Rapid City,
S.D.

“The interesting part is the cities that were listed … I
wonder what [CMS’] methodology was. I think it caught a lot of
people off guard. Some people are going to be amazed that they are
included.”

–Mary Ellen Conway, president, Capital Healthcare Group,
Bethesda, Md.

“Out of the top 10 MSAs, only No.
5–Philadelphia-Camden-Wilmington–and No.
8-Washington-Arlington-Alexandria–are not included. A very
calculated move, so Congress won’t have to hear complaints from
providers and beneficiaries in their own backyard.”

–Rob Brant, general manager, City Medical Services, North
Miami Beach, Fla.

GAMES members on getting ready to bid:

“As far as preparing for the second round, our particular MSA
was obvious, so we were thinking about it. Now we have to go
through with the implementation. Do I think there’s an opportunity
there to survive? Yes. My end result is probably going to be to
change my business plan, change the way I do business … Not
having the results of the first round is the most devastating part
because you don’t know how to address it or how to react.”

–David Petsch, owner, Petsch Respiratory Services,
Martinez, Ga.

“I think that half of the small providers are not even going to
submit a bid. I think of the ones that do submit a bid, half of
them will screw themselves out of the bid because they won’t
understand how to do it.”

–L. Jack Clark, RRT, founder and principal, Mid Georgia
Respiratory, Macon, Ga.

“I feel like we’ll be more prepared for this round when it comes
through Atlanta. I had attempted to bid in Charlotte, and it was so
complicated and confusing and time-consuming that I quit halfway
through. I was disheartened because it was so overwhelming. But
with us having information from the first bid, the second round
should go a whole lot better.”

–Todd Tyson, president, HiTech Healthcare, Norcross,
Ga.

“I think this is positive. Through each challenge, ultimately
you get better. You have to continue to improve your processes and
improve your company.”

–Andrew Simmons Jr., vice president of field operations,
Cornerstone Medical, Atlanta, Ga.

On the inclusion of complex rehab in Round
Two:

“Obviously I disagree with the inclusion of complex rehab.
There’s no rationale for including that in competitive bidding.
That’s why we need to redouble our [legislative efforts] to carve
that out.”

–Tim Pederson, CEO, WestMed Rehab, Rapid City,
S.D.

“I am very disappointed that CMS included complex rehab in Round
Two. Utilization of complex rehab power wheelchairs has declined
since the implementation of new codes and coverage policies. And
utilization of these devices was already low relative to other
products … There is evidence that the impact of coding, coverage
and pricing changes has already caused tremendous financial stress
on the rehab industry. I had hoped that efforts … would convince
CMS to pause long enough the see the results of Round One before
putting thousands of individuals with disabilities at risk in 70 of
the largest MSAs. This will not have the impact CMS is claiming;
competitive bidding of complex rehab cannot even guarantee the same
quality goods and services available today.”

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

On pending lawsuits and legislation that would
stop/alter competitive bidding:

“I hope that [competitive bidding] will accelerate the
industry’s [legislative] actions, and some people that were
standing in the background waiting for other people to do what
needs to be done–waiting for CMS to see that this is illogical and
reckless–will now step up to the plate … Together we can get it
done more effectively.”

–Jason Rogers, president, Care Medical, Athens,
Ga.

“The announcement by CMS regarding Round Two for competitive
bidding hits the industry hard. Providers are more worried now than
ever about the future of their businesses. The industry needs to
come together to fight the current state of affairs by reaching out
to their legislators. We can’t sit back idly and allow this to
happen without a fight. AAHomecare, state associations, Invacare,
VGM, The Med Group and many other organizations have been trying to
get members of our industry to stand up and be counted, but few
have answered the call.”

–Sarah Hanna, vice president, ECS Billing & Consulting,
Tiffin, Ohio

“Anytime legislation is challenged in the court, it’s an uphill
battle. We feel that we have good arguments in the Dallas case and
in the Cleveland case, and we plan to push forward with them, but
the industry cannot look at these lawsuits as the magic bullet. The
industry needs to prepare for competitive bidding, work within the
parameters of competitive bidding, and then if one of these
lawsuits is successful, then that’s very good for the
industry.”

–Jeff Baird, chairman of the Health Care Group, Brown &
Fortunato, P.C., Amarillo, Texas

“There are legislative opportunities with the Tanner-Hobson
legislation, which would provide some legislative relief. We want
to build on the momentum that we built in 2007.”

–Don Clayback, vice president, government relations, The
Med Group, Lubbock, Texas

“I’m interested to know how many of [the areas CMS has chosen]
have more than half-a-million people (in total population). These
areas would be automatically excluded under Tanner-Hobson. We need
to continue to get sponsors. Also, H.R. 2231 is gaining more
cosponsors, but it’s at a snail’s pace.”

–Tim Pederson, CEO, WestMed Rehab in Rapid City,
S.D.

“Congressional action is the only way [competitive bidding] is
going to get stopped. What we have to hope happens is what we feel
in our hearts–that it’s not going to work. I think [competitive
bidding] is going to be devastating to the beneficiary population,
and I think once all the people see the impact, there will be
congressional action to delay it, but if we can stop it or not, I’m
not sure.”

–David Petsch, owner, Petsch Respiratory Services,
Martinez, Ga.

On what happens now:

“The most disturbing thing is that CMS’ implementation plans for
Round Two will ensure that they are not able to make any
adjustments in Round Two based upon impacts of/lessons learned from
Round One. That seems counter to Congress’ intent, which provided
for a two-year span between the implementation of Rounds One and
Two. Congress purposefully required CMS to roll out such a massive
program in multiple phases so they would be able to learn from
their own experience. Just because CMS got behind in implementing
Round One doesn’t mean the rest of the country subject to Round Two
should suffer.”

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

“As hard as we’ve worked, we’ve had little or no effect on the
mentality of CMS and how they’re going to roll forward from
here–and they’re going to roll forward by rolling right over
us.”

–Jason Rogers, president, Care Medical, Athens,
Ga.

“I don’t have a sense yet of how, if you get paid less than you
were getting paid, you could offer anything but less service and
quality. The patient’s co-pay may shrink with the degree that the
bid price shrinks, but it will be at a cost of getting low-quality
products and no service.”

–L. Jack Clark, RRT, founder and principal, Mid Georgia
Respiratory, Macon, Ga.

“If the government continues to tighten the requirements just to
file a Medicare claim, the patients will be the real ones to suffer
because there will be limited access to care. It is almost
unaffordable to provide service in an environment when we have to
add layers of employees just to comply with rules that bring us the
same or less money than we’ve received in the past. The real
question is: When do we get to tell our side of the story? I’d be
happy to inform CMS about the good work done for patients who would
otherwise go without. When disasters strike, I’ve never heard of a
provider saying no, even [though] they do not earn one dime more
for their valiant efforts. Well, maybe we should rephrase it–maybe
they haven’t had to say no just yet!”

Miriam Lieber, Lieber Consulting, Sherman Oaks,
Calif.

“I think right now the way it’s headed, it will be negative. CMS
is moving much too quickly. There was a great deal of difficulty in
Round One and, now, without even taking a pause to learn from that
experience, they’re going forward and expanding seven-times
plus.”

–Don Clayback, vice president, government relations, The
Med Group, Lubbock, Texas

“I am very concerned about the impact on the industry. Am I
worried enough to give up the ship? No.”

–Tim Pederson, CEO, WestMed Rehab, Rapid City,
S.D.

“To begin, the ‘Armageddon’ predictions offered by some industry
stakeholders shortly after the MMA was published will not, in my
opinion, occur. While there will certainly be some significant
Round One reimbursement reductions, providers serving the Round Two
areas have the relative luxury of sufficient time to prepare for
the 2009 contracts … With that said, if I was asked whether there
will be a large number of Part B suppliers who will cease serving
Medicare beneficiaries or perhaps go out of business, the answer is
yes. But there are over 100,000 active Medicare Part B supplier
numbers. The number of full-line HMEs and other DMEPOS companies
servicing beneficiaries on a regular basis is much smaller–less
than 20,000. Of these, while acknowledging many will be affected in
some manner by competitive bidding, the great majority will
continue their quality home care services as before. Many will reap
the benefits of increased business.”

–Mark Higley, vice president of development, VGM Group,
Waterloo, Iowa

“I am very bullish on the industry, and I think it’s going to
continue to grow. Let’s not be pessimistic. I think we have the
right to be optimistic. Simply, the landscape has changed; we’re
having to play by new rules. Change is always traumatic, but if we
are proactive and aggressive and as long as we’re not scared of our
own shadow, I think the well-run HME business–whether it’s a major
or a regional or a mom-and-pop–is going to do very well.”

–Jeff Baird, chairman of the Health Care Group, Brown &
Fortunato, P.C., Amarillo, Texas.