The Race to Stop Competitive Bidding

Leaders at the American Association for Homecare’s Washington Legislative Conference March 1-3 told attendees that getting the industry’s message out on competitive bidding was up to them.

“You have a real opportunity over the next couple of days to make a difference,” said AAHomecare President Tyler Wilson, pointing out that health care is at a crossroads.

“There really are fundamental issues being discussed and profound philosophical differences being voiced. It’s also fair to say there are bare-knuckle politics being played up and down Pennsylvania Avenue. So almost everything related to health care is in play, and that means that nearly everything is up for debate.

“And that,” Wilson continued, “is the good news and perhaps the bad news for the home care community.”

The association sent a two-page summary sheet to Capitol Hill offices outlining HME’s issues — ahead of 300 lobbying visits scheduled during the week with federal lawmakers and their staffs — chief among them support for H.R. 3790 to repeal the bidding program.

But according to AAHomecare’s Walt Gorski, vice president of government affairs, “An issue paper does not sell support of H.R. 3790 … That’s your job.”

And a Big Job It Is

The bill is gaining traction; at press time, providers’ lobbying efforts were expected to bump the number of cosponsors substantially. But with health care reform in play, Wilson said, “every day that goes by” makes the push for H.R. 3790 more critical.

CMS is also looking at the clock. Round 1 is on the way toward implementation on Jan. 1, 2011, and the ramp-up for Round 2 was set for discussion at a March 17 meeting of the Program Advisory and Oversight Committee, said the agency’s Jonathan Blum.

Blum, director of CMS’ Center for Medicare Management, staunchly defended the DMEPOS bidding program at a conference lunch.

“We have two problems with the DME side of the Medicare program,” Blum said, noting first “a payment policy that is based upon a statutory formula that we know is not the best possible price for our beneficiaries and for taxpayers. We also have a tremendous supply of providers … the best way to address both challenges is through competitive bidding.

“To our minds,” Blum continued, “no other program but competitive bidding can ensure that we have the best possible price and also the highest quality providers at the same time.”

But “I’m not here to change your mind” about the program, he told the audience of nearly 300 providers and manufacturers — and he didn’t.

John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers, summed up their sentiments: “No matter how hard you guys work, it doesn’t change the fact that we’re dealing with a fundamentally flawed program that’s been put into your hands …

“This industry is not going to be able to survive that,” he told Blum. “There will be business closings. On average, we depend on Medicare for about 40 percent of our business just because of the nature of what we do. This is going to hurt our customers. They are going to lose their local suppliers … the neighborhood wheelchair supplier, the neighborhood oxygen supplier is going to disappear.”

Blum’s response was anything but encouraging. “We know the changes are controversial. We know the changes are disruptive. We know the changes have tremendous impact to our beneficiaries … but this is a very high priority for the agency,” he said. Competitive bidding, he added, is the “first test in the agency’s ability to implement the much more comprehensive, wide-sweeping changes” that Congress is looking for in moving away from a fee-for-service payment system.

Following the lunch session, AAHomecare’s Gorski quipped that Blum’s comments were “really motivational” for providers tasked with getting legislators to stop the bidding program.

Those who traveled to Washington for the push on H.R. 3790 said they were up to the challenge.

“I love what we do, and I think most people who are in this business are in it to care for people,” said Bill Cheek of Carmichael’s Home Medical Equipment in Monroe, Ga. “We improve a lot of people’s quality of life every day. We’re just a small company and I know what we do with our 10 employees, and it’s something to be proud of.

“It’s something to fight for.”

• Read the “Providers Take Sobering Job-Loss Projections to the Hill” sidebar to learn about the analysis by the VGM Group.

View more competitive bidding stories.

Providers Take Sobering Job-Loss Projections to the Hill

Providers attending AAHomecare’s Legislative Conference had some sobering job-loss statistics to share with the nation’s legislators. According to an analysis by The VGM Group, if competitive bidding is implemented as planned, the program will cost more than 80,000 jobs in bid areas over the next three years, with totals likely to exceed 100,000 in all areas. In addition, according to the report:

• 93 percent of local providers will not be awarded contracts. As a result of the original Round 1 (delayed by Congress in July of 2008), only 7 percent of local providers were awarded contracts. CMS expects the rebid results will likely resemble those from the first Round 1.
• 42 percent of non-contract providers are likely to go out of business, a figure that corresponds to reports that the average HME provider gets 42 percent of its revenue from Medicare. “If 42 percent of all revenue is taken from a sector of an industry, it’s likely the resulting consolidation will result in a reduction of an approximately equal percent of existing companies,” the analysis said.
• Medicaid and private insurers will reduce payment rates due to the program. “Generally, Medicaid and private insurers follow Medicare’s lead when setting reimbursement rates for DME,” the report noted. “Bid rates will undoubtedly result in significant reduction in payment from all payers, only reinforcing the fact that more than 100,000 jobs will be lost as a result of direct and indirect effects of the program.”
• Even contract suppliers will lose, on average, 33 percent of their Medicare business, and 14 percent of their overall patient base. For the 7 percent of local providers receiving contracts, the average DME company will receive only four of six bid product category contracts based on original Round 1 results.