Results of Competitive Bidding? Read ‘Em and Weep

MIAMI — In its weekly newsletter, the Accredited Medical
Equipment Providers of America said competitive bidding is not what
CMS describes and will, in fact, result in numerous problems.

The organization detailed six issues it predicted will surface
through Medicare’s DMEPOS bidding program:

• 1. CMS AWARDED “SUICIDE BIDS” THAT WILL CAUSE
  RUIN.

  No company that applied in any category made more than a 6
  percent profit in the years prior to the bid, so no one can take a
  40 percent cut in reimbursement rates and survive.

• 2. CMS APPROVED RATES FAR BELOW ACTUAL
  COSTS.

  Although CMS assured the government and providers it would not
  allow bids that were below the cost of equipment, CMS accepted bids
  that are below the actual wholesale cost of supplies. In categories
  such as liquid oxygen, enteral feeding and more, the reimbursements
  are far too low for anyone to do anything but lose money.

• 3. CMS ALLOWED UNVIABLE AND FRAUDULENT COMPANIES TO
  WIN.

  Many of the companies that were awarded contracts did not have
  the finances to justify they could remain in businesses with or
  without the bid. Many companies that are viable lost in the bid. In
  addition, companies suspected of fraud by virtue of the fact that
  they are on 100 percent pre-paid audit [status] and have records of
  40 percent or more denial of claims, were awarded.

• 4. CMS IS ALLOWING SAME-DAY SERVICE TO
  DISAPPEAR.

  There is no way to make a profit in most of the categories, but
  the only sure way to create drastic savings in a medical equipment
  business is to eliminate same-day service. Doing so will help
  control travel cost, but it will force many patients in need to go
  to emergency rooms and will keep hospital-bound patients in
  hospitals longer.

• 5. CMS’ CUTS TO REIMBURSEMENTS ARE MORE THAN PROJECTED
  OR VIABLE.

  The reported 32 percent savings does not take into account the
  9.5 percent cut taken two years ago as a temporary cut until a
  solution to competitive bidding could be found. Combined, the cut
  is actually 41.5 percent from the 2008 allowable. Diabetes rate is
  64 percent below the 2008 allowable and the current rate for power
  wheelchairs is at 70 percent of the 2006 [stet] allowable.

  “This is unsustainable and our government never intended such
  great cuts. In addition, removing complex rehab from the average
  (which is a limited category of specific providers), you get 36.25
  percent before the 9.5 percent cut is added. Companies treading
  water with audits, slow pay, caps in wheelchair and oxygen and more
  cannot survive with any one of these cuts.

• 6. HOSPITAL DISCHARGE DELAYS WILL DRIVE UP
  COSTS.

  Case managers and hospital discharge personnel will have to
  contact multiple HME companies to arrange equipment for discharge
  as opposed to calling one provider today. Remaining companies will
  plan at least 24 hours to arrange equipment, resulting in patients
  remaining in hospitals longer, costing the government more money
  and causing problems for the hospitals.”

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