ATLANTA--The industry is reeling from the across-the-board cuts set in round one of competitive bidding, but nowhere is this more true than in the complex rehab sector.
Averaging 15 percent of current reimbursements, the reductions, coupled with the scant number of contracts offered in the product category, were shocking to members of the rehab community, which has been fighting--thus far unsuccessfully--to have complex rehab equipment excluded from the bidding program.
“I don't like the reimbursement numbers I am seeing,” said Gary Gilberti, vice president of the National Coalition for Assistive and Rehab Technology. “It's tight already; we have companies that are barely making it on current allowables. I think a lot of people bid out of fear. I think they bid low to try to keep their share of the market.”
Gilberti, president and CEO of Chesapeake Rehab Equipment, Baltimore, said his company won its bid in Charlotte, N.C., but lost in the Pittsburgh CBA.
“And I am glad I didn't bid in some of the other markets, considering how low those numbers are,” he said.
Tim Pederson, CEO of WestMed Rehab in Rapid City, S.D., agreed that the numbers are surprisingly low, especially since, he said, “it's completely inappropriate to competitively bid complex rehab at all.”
“It's bad,” said Pederson, who also serves as chair of the American Association for Homecare's Rehab and Assistive Technology Council. “Anytime you have reimbursement reductions of that magnitude, it's bad, because our profit margins are already so thin.”
Competitive bidding for complex rehab, Pederson argues, could ultimately result in tragedy.
“I think, just as I have thought for the past couple of years, that we probably won't have any real change in the [competitive bidding] program until we have a catastrophe. [CMS is] trying to see how low they can set the bar before they have a tragedy,” he said.
In addition to the round one reimbursement rates, many are also concerned that only five or six companies were selected as bid winners in five of the 10 bid areas. This means that, come July 1, some bid winners will be responsible for providing equipment and services for up to 20 percent of those MSAs.
Sharon Hildebrandt, NCART executive director, called the bid program “a disaster.”
“I see this as a disaster for consumers of complex rehab because in many of the markets, many inexperienced suppliers are being offered a contract,” she said. “They do not know the different types of technology needed for complex rehab clients, nor do they know or understand the disease progression in the disabilities.
“They were awarded the contracts because they bid low. They bid low because they don't know what their costs are. They just wanted the business,” she said.
Hildebrandt also voiced concerns over how repairs will be handled. CMS is not requiring those who win contracts to provide repairs, she said, “so repairs are going to be done by providers who did not win bids, and those providers are not going to be willing to provide repairs at less than cost … The consumers are going to be the ones who are going to be the big losers.”
In analyzing the problems concerning competitive bidding and complex rehab, Rita Hostak, NCART president and vice president of government relations for Sunrise Medical, Longmont, Colo., offered the following list of complaints:
--There are many reports of experienced rehab suppliers being disqualified due to bid amounts that someone judged to be too low. The irony is that many single payment amounts for items in category 3 are below supplier acquisition cost, so, these decisions appear to be arbitrary. The lack of judicial recourse is causing tremendous concern for these suppliers and the Medicare beneficiaries they serve.
--The fact that capacity was a key determining factor in the number of suppliers whose bids would be included in the development of the single payment amount is a significant concern. The suppliers are not in any way committed to their claimed capacity and yet, it eliminated other suppliers from the program that bid within pennies of the winning suppliers. This certainly gave competitors an opportunity to block out their competition.
--[There are] reports of a high number of winning suppliers in the complex rehab category that have little or no experience with these products or the individuals that require them. The fact that these suppliers would not intuitively understand the product or service costs related to this category would cause them to naively bid lower, therefore, blocking out more experienced and knowledgeable suppliers. The ultimate result will be that these knowledgeable suppliers could be forced to close their doors or sell their business to winning suppliers. Suppliers that are solely dedicated to providing complex rehab technology cannot survive a 30 percent or higher loss of revenue and sustain their business.
--The differences from CBA to CBA in the single payment amount cannot be accounted for in service cost differences. It appears that the experience of the supplier in terms of providing truly complex equipment may be the single most variance to cause this pricing difference. If a supplier does not recognize the broad range of technology that fits a single HCPCS code and the fact that consumers with severe physical disabilities often require a specific product within a code--meaning products within HCPCS codes are not interchangeable--the supplier could naively bid based a single low cost product within a code assuming that they can provide that product to anyone needing a product within that code. The problem that results is either the supplier begins to see that he cannot afford to provide the appropriate products at the single payment amount and drops out of the program (this is the unlikely scenario--after all, it is the supplier's livelihood) or the consumer no longer receives the appropriate device.
--Innovation in technology to improve people's lives will no longer be a viable option for manufacturers of products in the bid categories; the new goal will only be to reduce costs. Products will be de-featured, and manufacturing jobs will move overseas at a faster pace.
--Suppliers obviously analyzed utilization data, their own as well as CMS', and the weighting assigned to each HCPCS code in the bid request to help them determine their bid prices and to raise their chances of being a contracted supplier. The result is that repairs for beneficiary-owned equipment will be more difficult than ever to obtain. In several CBAs, the new single payment amounts on power wheelchair parts are actually below supplier acquisition cost. Whether suppliers did this purely on the basis of utilization and believing that the level of pricing would result in a composite bid that would place them in the winning array, or whether they also remembered that the Final Rule indicates that contracted suppliers are not required to repair beneficiary-owned equipment, is unknown. Regardless of what motivated the low bid prices, the result is that Medicare beneficiaries will most likely end up paying for repairs out-of-pocket.
--The fact that CMS did not require a bidding supplier to have a physical location in the CBA will cause problems for beneficiaries requiring complex rehab. To provide complex rehab, the [Assistive Technology Supplier] needs local support. They require demo equipment, simulation equipment. Meeting the medical and functional needs of an individual with severe disabilities is not accomplished with out-of-the-box technologies. [Often], a mobility system will require multiple fittings and may have to be delivered twice, once to the hospital so the evaluating therapist can assess whether the product ultimately meets the individual's needs, and again to the individual's home. This level of service is difficult to provide in a timely manner if the office is hundreds of miles away.
Seth Johnson, vice president of government affairs for Pride Mobility Products, Exeter, Pa., echoed concerns over winning bidders that may have no experience in the complex rehab market. He also raised questions as to the numbers behind CMS' selections in certain MSAs.
“The program should not go forward until these significant issues are resolved and more transparency is provided on the detailed calculations behind the establishment of the payment rates. Within the complex rehab category, for example, it is highly improbable that Cincinnati would have a straight 20 percent cut across all base codes,” Johnson said.
“The reductions in the Dallas, Miami and Riverside competitive bid areas are also questionable for the same reason, which raises issues with CMS' application of the required methodology to develop the payment amounts in the CBAs. When you look at the formula that CMS/CBIC were to follow, which is outlined in the Final Rule, such outcomes seem highly improbable.”
So what can complex rehab providers do?
For those preparing to bid in round two, Gilberti advised, “Know your costs … because right now we are doing nothing but damaging the market with these lowball prices.”
Access CMS' single payment amount charts for complex rehab and all product categories in round one.