ATLANTA
The fees are in, but the jury's still out when it comes to the
impact competitive bidding will have on the home medical equipment
industry, according to stakeholders who got their first look last
month at Medicare's reimbursement rates for round one of the
program.
On March 20, CMS revealed its new allowables, with average
reductions across the 10 first-round product categories at 26
percent. The agency also said 64 percent of the winning bidders
fell into the small business category, surpassing its original 30
percent contract target for small suppliers.
According to CMS, the average savings from Medicare's current
fee schedule in each category is:
Oxygen and oxygen equipment: 27%
Standard power wheelchairs, scooters and related accessories:
21%
Complex rehabilitative power wheelchairs and related
accessories: 15%
Mail-order diabetic supplies: 43%
Enteral nutrients, supplies and equipment: 26%
Continuous Positive Airway Pressure devices, respiratory assist
devices and related supplies and accessories: 29%
Hospital beds and accessories: 29%
Negative pressure wound therapy pumps and related supplies and
accessories: 14%
Walkers and related accessories: 27%
Support surfaces, such as specialized mattresses to help people
with pressure ulcers: 36%
“We were overpaying” for many of the items now
included in competitive bidding, CMS' Acting Administrator Kerry
Weems told reporters at a press briefing announcing the rates.
While Weems pegged potential savings at $1 billion a year once
the program is in full swing, others raised serious questions about
its impact on beneficiaries and providers.
“The American Association for Homecare thinks the jury is
still very much out on the question of competitive bidding and its
impact both on beneficiary access to care and the quality of that
care,” said Tyler Wilson, president.
“The CMS perspective seems to be limited to focusing on
payment cuts. After July 1 when the program is implemented, we will
begin to get a sense of the services that contract providers may
have had to eliminate in order to meet CMS' singular concern about
home medical equipment pricing.”
Even some providers that won their bids had reservations about
what the program could mean to the industry.
Raul Lopez's company, Bayshore Dura Medical in Miami Lakes,
Fla., won eight of the 10 categories it bid on, losing only in
mail-order diabetic supplies and standard power wheelchairs. But
the president of the Florida Association of Medical Equipment
Services still wasn't celebrating.
“I know too many suppliers who do a good job who can't do
Medicare business anymore,” Lopez said.
Stakeholders also were bothered by the wide range in rates from
area to area.
“The disparity between MSAs is quite shocking,” said
Miriam Lieber of Sherman Oaks, Calif.-based Lieber Consulting.
“I think the lesson learned is you don't have to lowball.
In Miami where the prices are much lower than in Riverside
[Calif.], for instance, it's almost like providers played a game of
chicken, and look what it got them. They didn't need to bid so low,
because you see in the other areas that the prices are not nearly
as low.”
She also questioned whether CMS' assertion that 64 percent of
the contracts were awarded to small businesses was really good
news.
“CMS is touting that 64 percent of small suppliers won
bids, but the fact is that those who did not win are simply out of
business,” said Lieber. “I would get back to the fact
that, really, CMS' objective with competitive bidding was to limit
the number of providers and to get their prices lower.”
And those are not the only problems.
When CMS sent out the round one contract offers to arrive March
21, some 160 complaints from providers claiming their bids were
disqualified due to CMS' error were reported within a matter of
days.
The deluge spawned action from AAHomecare, The VGM Group, the
National Association of Independent Medical Equipment Suppliers and
others who began contacting members of Congress as well as
Washington legal teams including Sidley Austin and Akin &
Gump.
At press time, the organizations were reviewing grounds for
potential lawsuits contesting the DMEPOS bid program.
Others in the industry want to see CMS' math.
In some product categories, identical prices were calculated for
multiple bid areas, said Cara Bachenheimer, senior vice president
of government relations for Elyria, Ohio-based Invacare.
As an example, Bachenheimer noted in the high-end rehab
category, 105 HCPCS codes had identical prices in two markets, 24
codes had identical prices in three markets and 14 codes had prices
that were identical in four markets.
In the standard wheelchair product category, she said, 76 codes
had identical prices in two markets and 18 codes had prices that
were identical in three markets.
“This is highly improbable mathematically” and
suggests a flawed bid calculation process, Bachenheimer said.
As the industry waits for CMS' announcement of bid winners,
VGM's John Gallagher, vice president of government relations, said
there could be a bright side to the problems in round one.
“Actually, this is almost too good to be true. It
highlights the total incompetence of CMS,” he said.
“CMS is totally incapable of moving [competitive bidding]
forward … It's almost like the Keystone Cops have taken over
and rolled this thing out. They have no idea what they are
doing.”
