Congress needs to hear this message loud and clear.
by Cara C. Bachenheimer
July 1, 2010

With jobs and the economy consistently ranking as the most
important issue across the country, members of Congress are
responding to the message that the so-called
“competitive” bid program for home medical equipment
will cost jobs across the country. This message is, of course,
inextricably tied to the consumer access message; devastating the
industry will cost jobs and deny consumers access.

Importantly, all consumers will lose access. With the closure of
HME firms across the nation, not only will Medicare beneficiaries
lose access to the range of providers in their community but all
consumers will. Those who have private insurance, or who are state
Medicaid recipients, or who choose to obtain DME items at retail,
will no longer be able to choose from the variety of competitive
firms that have historically served their community. The resulting
loss of competition will disserve all consumers.

The Centers for Medicare and Medicaid Services' durable medical
equipment “competitive” bidding program is scheduled to
be implemented Jan. 1, 2011, in nine of the nation's largest
metropolitan areas (Round 1). The program will be expanded to an
additional 91 cities starting in January 2013 (Round 2).

Based upon a recent analysis performed by member services
organization VGM, the bidding program will likely cost more than
80,000 American jobs in bid areas over the next three years. This
is a strong message that we must make sure all members of Congress
hear loud and clear.

Following are some key talking points to convey to your
representatives and senators based on VGM's jobs loss analysis.

  • 93 percent of local providers will not be awarded
    competitive bidding contracts

    As a result of the original bidding process in 2008, on average
    only 7 percent of local providers were awarded contracts. In its
    own analysis of the bid program (CMS' Interim Final Rule,
    CMS-1561-IFC, Jan. 16, 2009), CMS indicated that the Round 1 rebid
    results are likely to very closely resemble those in the 2008 bid
    process. CMS has told us that it would not be changing its supplier
    selection process and its methodology for reviewing the financial
    capability of supplier bidders. Therefore, it is highly unlikely
    that the results of this Round 1 will be substantially different
    (i.e., better) than that of the 2008 bid process.

  • 42 percent of non-contract providers are likely to go out of
    business

    The average DME provider relies on Medicare for 42 percent of
    its revenue. If 42 percent of all revenue is taken from a sector of
    an industry, it is likely that the resulting consolidation will
    result in a reduction of an approximately equal percent of existing
    companies.

  • 39 percent of all suppliers located in competitive bidding
    areas are likely to go out of business

    The 42 percent reduction in revenue for the 93 percent of
    providers who will not be awarded contracts will likely result in a
    39 percent reduction in providers and associated jobs.

  • 12,000 employees are set to lose their jobs through the
    first round of bidding

    The average DME provider employs 10 full-time employees. The
    reduction of nearly 1,200 provider locations will result in nearly
    12,000 lost jobs in 2011 within the nine Round 1 competitive
    bidding areas.

  • More than 80,000 employees will lose their jobs through the
    implementation of the first two rounds of competitive bidding

    Competitive bidding implementation in the nine Round 1 areas,
    plus an additional 91 Round 2 bid areas in 2013 will collectively
    result in more than 80,000 lost jobs within these 100 bid
    areas.

These are important figures for your members of Congress to
understand — particularly those that will be impacted in the
very near term, the nine metropolitan areas slated to go live in
January. Further, the additional 91 metropolitan areas where the
bid program is scheduled to be implemented in January 2013 will
cover virtually the entire country.

For the complete VGM jobs loss analysis, go to www.vgm.com/headlines/article.asp?ID=1457.

Read more Washington Wit & Wisdom
columns. View more competitive bidding
stories.

A specialist in health care legislation, regulations and
government relations, Cara C. Bachenheimer is vice president,
government relations, for Invacare Corp., Elyria, Ohio.
Bachenheimer previously worked at the law firm of Epstein, Becker
& Green in Washington, D.C., and at the American Association
for Homecare and the Health Industry Distributors Association. You
can reach her at 440/329-6226 or cbachenheimer@invacare.com.