MIAMI — Home medical equipment providers offered some advice to HHS Secretary Kathleen Sebelius on Friday: If you want to stop fraud, stop national competitive bidding.
Sebelius and U.S. Attorney General Eric Holder were in Miami July 16 to kick off what will be a series of regional health care fraud summits; Los Angeles, Las Vegas, Detroit, Boston and Philadelphia are in line for future meetings. The Miami event featured federal, state and local law enforcement officials, Medicare beneficiaries, providers and others discussing ways to eradicate health care fraud.
While HME stakeholders were not at the table, they were on the streets. About 100 providers and beneficiaries wearing bright shirts proclaiming "Medicare bidding is fraud" greeted Sebelius and Holder when they pulled up to the James L. Knight Convention Center.
"We appreciate what they are doing to curb fraud and to cut waste, but they need to look at their own programs," said Rob Brant, president of the Accredited Medical Equipment Providers of America, which was instrumental in getting the protest together. "[DMEPOS competitive bidding] has been administered in a fraudulent manner," Brant said. "They are changing the rates based on the lowest bidders, and they [allowed in] companies that are bankrupt in everything but name."
Roger Ribas, president of the Florida Alliance for Home Care Services, said CMS has ignored the concerns of the elderly and those of accredited HME providers. "Congress delayed this program in 2008 because Medicare allowed out-of-area, inexperienced, financially bankrupt companies to win with desperate 'suicide bids,'" Ribas told reporters at the protest. "The only thing that has changed in the rebid is that Medicare lowered their financial qualifications and the new rates are now much lower than manufacturers' cost."
He added: "Despite the fact that Medicare does not require same-day deliveries, or brand-name products, or local providers, or experienced providers, or financially sound providers, they are still trying to promote this as a benefit to the elderly."
A FAHCS press release stated that "Medicare bidding will create fraud, because at 40 percent to 60 percent reductions in reimbursement, we can be almost assured that the only way to stay in business will be to commit fraud."
Medicare's new Round 1 rates, which are set to be implemented Jan. 1, 2011, average a cut of 32 percent off current allowables across bid categories. Industry advocates have said the rates are unsustainable and will result in serious fallout that includes the demise of hundreds of businesses, loss of beneficiary access, increased hospitalization costs and elimination of up to 100,000 jobs in the competitive bidding areas.
While CMS has said it would not reveal the names of contract holders until September, Orlando, Fla.-based Rotech Healthcare announced last week it had netted 17 contracts. That sparked disbelief and outrage on the part of industry stakeholders, who noted that the company, which said it expects to lose $900,000 in the first quarter of the contracts, is more than a half-billion dollars in debt and must pay it all off by 2012, 15 months into the three-year bidding contract. (See "Rotech, Lincare and Competitive Bidding: How Will It All Play Out?".)
Protestors on Friday tried to make that point to Sebelius and Holder with signs that read "Medicare bidding is fraud: No location + no experience + no financials = bid winner."
"We want to give them the message that they are touting that this program is so wonderful and it is going to be so good for patients, but it is going to be a lot of problems for patients when you have inexperienced, out-of-the-area and financially bankrupt companies as your bid winners," said Brant. "It just doesn't make sense."
Bad News
Meanwhile, in tandem with the summit, Sebelius and Holder announced the largest federal health care fraud takedown since the Medicare Fraud Strike Force began operations in 2007. Charges were unsealed against 94 defendants in five cities — including 24 in Miami and others in Baton Rouge, La.; Brooklyn, N.Y.; Detroit; and Houston — for allegedly submitting more than $251 million in false claims.
While the charges are based on a variety of schemes, many involved home health and DME, according to press reports.
There was more bad news. Even as the summit was going on, stakeholders continued reaction to an Orlando Sentinel column by Mike Thomas (July 14) in which HME providers were, at best, painted as crooks — and which attacked Rep. Kendrick Meek, D-Fla., now a candidate for the Senate. Meek introduced H.R. 3790, the bill that would repeal competitive bidding, last fall.
"This is a column about waste, fraud, abuse and self-destruction by U.S. Senate candidate Kendrick Meek," Thomas wrote in the column, titled "Why would Meek oppose savings for Medicare?"
Wayne Stanfield, president of the National Association of Independent Medical Equipment Suppliers, called the piece "biased and uninformed," while AMEPA termed it "one of the most misleading articles about DMEPOS bidding ever published" and called on its members to respond.
View more competitive bidding stories.