WASHINGTON--In a victory of landmark proportions for the home medical equipment industry and the people it serves, the two-week-old DMEPOS competitive bidding project came to a screeching halt last week. But as of Friday, providers in round one were still confused about exactly how to proceed.
The Centers for Medicare and Medicaid Services program was suspended July 15 when the House of Representatives and the Senate voted to override President Bush’s veto of the Medicare package that includes a delay of the bidding program. It was the first legislative success for HME in at least 20 years, according to long-time industry stakeholders. (See HomeCare Monday Special Alert, July 15.)
“It’s unbelievable,” said Cara Bachenheimer, senior vice president of government relations for Elyria, Ohio-based Invacare, about the vote, which was decided in the House by a margin of 383 to 41 and in the Senate by 70 to 26.
The Medicare Improvements for Patients and Providers Act of 2008 (H.R. 6331) also eliminates the transfer of ownership of oxygen equipment called for under the Deficit Reduction Act of 2005, and carves out complex rehab from any future competitive bidding project.
To pay for all of this, providers across the nation will take a 9.5 percent reimbursement cut in the 10 product categories included in round one of bidding. The cut will become effective Jan. 1, 2009.
The law and its provisions are the result of an extraordinary effort by providers, manufacturers, industry organizations and even beneficiaries to educate legislators about the industry and the devastating effects of competitive bidding, stakeholders said.
“It’s a good outcome, and everybody’s efforts paid off. It was a good example of [how] if you pull everybody together, you can certainly have some influence in Washington,” said Don Clayback, vice president, government relations, for Lubbock, Texas-based The MED Group.
“The industry should be extremely proud of its ability to raise awareness and make such a significant policy change,” echoed Walt Gorski, vice president of government relations for the American Association for Homecare.
Legislators who had aligned themselves with the battle against competitive bidding also heralded the new law.
“For months, I have worked to ensure CMS’ highly-flawed competitive bidding program would not limit seniors’ access to the medical suppliers who can best meet their needs,” Rep. Jason Altmire, D-Pa., said in a statement immediately after the override vote. “With today’s vote, we have won a significant victory for western Pennsylvania’s seniors, the doctors who provide their care, and home medical suppliers.”
Altmire, who as chairman of the House Small Business Subcommittee early on recognized that competitive bidding would eliminate huge numbers of small business owners, added: “Now that Congress has sent competitive bidding back to the drawing board, I hope that significant improvements will be made to ensure this program reduces costs without jeopardizing patients’ access to quality care.”
As jubilant as Altmire and most of the industry are over the delay, however, questions remain about exactly how the shutdown of round one will play out.
Competitive Bidding Rewind The new law terminated all contracts under the first round of bidding, implemented July 1 in 10 of the nation’s largest cities, and DMEPOS reimbursement will return to its pre-competitive bidding status. But by the time the program was halted, it had been in effect for two weeks, so questions about payment, claims handling, beneficiary changes and an assortment of other concerns are surfacing.
In bits and pieces since the Tuesday veto override, CMS has begun addressing the issues. On Wednesday, the agency issued a notice that beneficiaries could use any Medicare provider and said it would send letters about the change to all Medicare households in the 10 competitive bidding areas by the end of July.
On Friday, CMS cancelled accreditation deadlines that had been set for round two of bidding (see more in this issue) and said it would reprocess any HME claims submitted after July 1, thus saving providers from having to re-file claims.
“There’s a lot of clean-up work to do,” said Alan Morriss, marketing coordinator for Waterloo, Iowa-based VGM Group. “Even those who are excited because they can bill Medicare again certainly lost business over the [those] 15 days, and it might be difficult to get it back. Loyal beneficiaries have now changed providers.”
Both providers who won contracts and those who can now bill Medicare again have lost money, Morriss said.
“No one is able to measure how much was lost by not being a contract supplier for 15 days,” he said. “Contract suppliers are concerned because they have a lot of money invested and they are concerned about what the process is going to be to claim damages.”
There may be some help for the bid winners, he said.
“It was written into this law that there were funds available for those that can claim damages because of loss of contract or in any way the delay of the competitive bidding program,” Morriss noted. “It’s too early in the process to know how easy it will be to make those claims.”
Providers were also eager for information on another of the law’s provisions: its repeal of the oxygen equipment transfer to beneficiaries, which was to go into effect Jan. 1, 2009.
“The title transfer is another big issue, as well,” said Gorski. “The legislation repeals transfer of ownership. The [36-month] cap remains.” Providers, he said, will be paid for contents after 36 months, but they will not be paid for equipment after 36 months. And, Gorski said, “there is no guidance yet on the maintenance and service issues.”
Don't Quit Now, HME Leaders Say Although questions remain on many details, most stakeholders said they are relieved that competitive bidding has been suspended. But industry leaders cautioned that this is not the time to sit back and relax.
For one thing, the new law compels CMS to rewrite the competitive bidding regulation so that it addresses complaints such as access to quality of care and transparency in the bidding process.
The industry needs to ensure it has a voice in that effort, Bachenheimer said. “We want to work with them,” she said, adding that “being involved in the political process is critical.”
Clayback agreed. “I don’t think the work is done,” he said. “We’ve got a much-needed delay in a program that was severely flawed and the opportunity to work with Congress and CMS on a program that will meet everybody’s needs, but in a much different venue.
“Congress and CMS are very concerned with the value of the dollars they are spending, about fraud and abuse and the quality of service to Medicare beneficiaries,” he continued. “As an industry, we have answers to every one of those things.”
The challenge, he said, will be effectively demonstrating those answers to Congress and CMS. “We want everybody to remember that this is a delay of only 18 to 24 months,” added Morriss. “We are not done yet … We’ll go back to the drawing board and work to ensure that this program goes away.”
Without concentrated industry effort, he added, in six months providers will once again be grappling with timelines and gearing up for another bid process.
It is incumbent upon the industry to make the most of the delay and the advances already achieved, said Rose Schafhauser, executive director of the Midwest Association of Medical Equipment Services. “We need to use the opportunity to talk about what good work this industry does. Every single one of us wants those bad guys to go away. We do want to fight fraud.
“My hope,” she said, “is that … we use this momentum, that we not give up, that we say we’re serious. Let’s work together for programs that work for everybody.”
AAHomecare’s Gorski, too, believes the industry cannot flag in its efforts now. “I think that HME by no means has a lack of issues to work on,” he said wryly. “Clearly, how we address competitive bidding in the future is a crucial decision. Oxygen and [the elimination of the first-month purchase option for] power wheelchairs are still in the gun sights, and we face the possibility of two health care bills next year.”
The authorization of a new SCHIP bill--the State Children’s Health Insurance Program measure that was vetoed by the president last year--will come before the new Congress in March, he said, and it is likely that a much larger, comprehensive Medicare bill will be put together later in 2009. Both bills could have features relevant to HME.
The positive in all this, Gorski said, is that “we have established better working relationships with Congress and we will continue to build upon the efforts that we have made this year.”
Seth Johnson, vice president of government relations for Pride Mobility Products, Exeter, Pa., said there is another issue on the table that demands the industry’s attention.
“Our primary concern is the application of the 9.5 percent cut to complex rehab,” he said. “Clearly, we are very pleased that complex rehab is exempt from round two of competitive bidding and we’re very pleased that there were no changes to other areas of DME, such as the first-month purchase option for power wheelchairs. But the 9.5 percent cut to complex rehab is going to have almost the same impact to access as inclusion in competitive bidding would have. With either of those reductions, [providers] are not going to be able to stay in business.”
Since all power wheelchairs, including complex rehab, sustained an average 27 percent cut in 2006, complex rehab providers are working on a very small margin, he pointed out.
“Now this is almost another 10 percent cut,” Johnson said. “It is not sustainable. Providers do not have another 10 percent to give. We need to do everything we can to address that cut.”
Bachenheimer said the industry also must work to rid itself of its image as a hotbed of fraud and abuse.
“Obviously, we’ve got a very good message out there,” she said. “People could understand very clearly the negative impact [of competitive bidding] on beneficiaries and suppliers. We got [congressional] leadership and ranking minority support for bills. This is huge … But the industry has a long way to go because of fraud and abuse as its image. If we had a better image, it would be easier for us.”
Even as stakeholders contemplated future action, however, they were savoring the success at winning the delay.
“I think in general everybody is happy with the delay,” said Clayback. “They’re happy with the improvements [in the new law], happy with the exemption of complex rehab. The unhappiness resides in round one bidders that invested dollars.” (See “Bid Winners Wonder: Who Pays for Their Costs?” in this issue.)
Georgie Blackburn, vice president of government relations for Blackburn’s Pharmacy in Tarentum, Pa.--which won six contracts--said she was thrilled with the delay, which she had fought for along with thousands of others.
“This was not a partisan issue,” she said. “This was for the welfare of America. It’s really exciting to have been part of this movement. It was the right thing to do--and the right thing happened.”
For a summary of provisions affecting HME in the new Medicare law, click here.