Associations Call for Rescission of Competitive Bidding IFR

ARLINGTON, Va.–In a letter sent Monday, the American
Association for Homecare and 27 regional and state home care
associations urged the White House Office of Health Reform, the
Department of Health and Human Services and the Centers for
Medicare and Medicaid Services to rescind the competitive bidding
interim final rule before it takes effect April 18.

Issued on Jan. 16, literally in the waning hours of the Bush
administration, the IFR requires a rebid of Round One in
2009.

Last July, Congress delayed the DMEPOS bidding program so
numerous procedural and other problems could be fixed. But HME
advocates have said that very few of the issues raised then have
been addressed in the IFR.

Stakeholders have also estimated that in its current version,
the bidding program will put at least 90 percent of providers, many
of them small businesses, out of work.

“This is not the solution to Medicare’s reform and
it is certainly not the answer for patients and seniors,”
said Tyler J. Wilson, AAHomecare president. “This flawed
regulation would wipe out small businesses across America and
reduce quality and access to care for seniors and the
disabled.”

The association letter was addressed to HHS Acting Secretary
Charles Johnson, CMS Acting Administrator Charlene Frizzera and
Nancy-Ann DeParle, director of the White House Office of Health
Reform.

The full text of the letter follows:

Dear Acting Secretary Johnson, Acting Administrator Frizzera, and
Ms. DeParle:

The American Association for Homecare and the 27 regional and state
associations listed below, which represent providers of durable
medical equipment (DME) and services, urge you to rescind the CMS
competitive bidding rule published during the last hours of the
Bush administration. The rule, which would re-implement Round One
of the bidding program in the DME sector of Medicare, would reduce
access to care and put thousands of DME providers out of business,
eliminating jobs at a time when the federal government is trying to
preserve them. The rule does not address the fundamental problems
of the program that came to light during its brief implementation
last year.

Because of flaws in the bidding program, Congress voted to reform
and delay the program as part of the Medicare Improvements for
Patients and Providers Act of 2008 (MIPPA), enacted on July 15,
2008. CMS published an interim final rule on the bidding program on
January 16, 2009, and that rule will be implemented on April 18,
2009, unless it is rescinded.

MIPPA addressed several near-term concerns with the program, but
thoughtful and deliberate rulemaking by CMS was clearly expected by
Congress, given the overwhelming level of congressional and
stakeholder concern during initial implementation. The intent
behind the MIPPA provisions on bidding was for CMS to correct the
fundamental flaws of Round One of bidding, allowing for feedback
from stakeholders through a comment period before CMS issued a
final rule. This process did not take place and the flaws in the
bidding program remain.

As currently designed, this bidding program will lower quality
and reduce access to care for seniors and people with disabilities.
Moreover, it will reduce competition, eliminating up to 90 percent
of home medical equipment businesses in any market area where it is
implemented. Many of these practices are small businesses already
struggling under the current economic recession.
 
This bidding program allows the government to selectively contract
with only a small fraction of current homecare providers, forcing
out DME companies that provide high-quality equipment or provide
critical patient services.

Competitive bidding, which would ultimately drive national
reimbursement rates, ignores the critical role of services required
to provide care to people in their homes. It will result in fewer
resources for service-related activities that patients and
physicians have come to expect, which allow people to remain in
their homes. The program does not adequately account for
providers’ ability to serve a geographic market. The program
will produce a bureaucratic, anti-competitive price-setting system
that would be similar to a closed-model HMO and would have the
effect of government-mandated consolidation in the home care
sector.
 
This is not the solution to Medicare’s reform–and it is
certainly not the answer for patients and seniors.

The current structure of the competitive bidding program bears
no resemblance to earlier demonstrations. Unlike the 1997-98
demonstrations in Florida and Texas, the current version of the
bidding program will put at least 90 percent of providers out of
business and will harm Medicare beneficiaries’ access to
quality home medical equipment and services.

While proponents of this bidding program argue that it will reduce
Medicare spending, the inevitable cutbacks in services will result
in increased length and cost of hospital stays. Reducing access to
quality home medical equipment and services will give many seniors
no choice other than to leave their homes for nursing homes or
hospitals. The equipment and service for medical oxygen therapy,
for example, cost about $8 per day. This is far cheaper than an
average daily cost of about $200 for a nursing facility and $5,000
for a hospital stay.

Home medical equipment and care is already the most cost-effective,
slowest-growing portion of Medicare spending, increasing only 0.75
percent per year according to the most recent National Health
Expenditures data. That compares to more than 6 percent annual
growth for Medicare spending overall. DME represents only 1.6
percent of the Medicare budget.

Proponents of the bidding program have also claimed that it will
reduce fraud and abuse in the Medicare system, confusing the
price-setting mechanism with effective anti-fraud measures.
However, long-overdue accreditation requirements for DME finally
take effect this year, and surety bond requirements for DME also
take effect this year. On top of that, the American Association for
Homecare has presented to Congress a far more aggressive and
comprehensive 13-point anti-fraud plan, which lays out tough,
effective measures to stop waste, fraud, and abuse in
Medicare’s DME sector.

In summary, we believe that CMS should immediately withdraw the
interim final rule for competitive bidding and identify the problem
areas that led to the delay of Round One of the program. CMS should
issue a proposed rule that solicits public comments on the
implementation of MIPPA and other modifications and improvements to
the program. Specifically, CMS should convene the Program Advisory
and Oversight Committee immediately.

We support efforts to make health care more affordable and
accessible. To that end, we urge you to review and rescind the
flawed “competitive” bidding regulations because of the
far-reaching negative impact it will have on patients and
businesses nationwide. If you have more questions regarding our
views on this issue, please contact me at (703) 836-6263.

Sincerely,

Tyler J. Wilson
President, American Association for Homecare

Alabama Durable Medical Equipment Association
Arizona Medical Equipment Suppliers Association
Association of Indiana Home Medical Equipment Services
Big Sky Montana & Idaho Association of Home Medical Equipment
Suppliers
California Association of Medical Product Suppliers
Colorado Association of Medical Equipment Services
Florida Association for Medical Equipment Services
Georgia Association of Medical Equipment Services
Illinois Association for Medical Equipment Services
Jersey Association of Medical Equipment Services (New Jersey)
Kentucky Medical Equipment Suppliers Association
Maryland National Capital Homecare Association
Medical Equipment Suppliers Association
(Texas, Louisiana, Arkansas, Oklahoma, New Mexico)
Michigan Home Health Association
Midwest Association for Medical Equipment Services
(Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South
Dakota,)
Mississippi Association of Medical Equipment Suppliers
Nevada Association of Medical Products Suppliers
New England Medical Equipment Dealers Association
(Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island,
Vermont)
New York State Medical Equipment Providers Association
North Carolina Association for Medical Equipment Services
Ohio Association of Medical Equipment Services
Pennsylvania Association of Medical Suppliers
South Carolina Medical Equipment Services Association
Tennessee Association for Home Care
Utah Medical Equipment Dealers
Virginia Association of Durable Medical Equipment Companies
West Virginia Medical Equipment Suppliers Association