Flawed Bid Process Began October 21 in Riverside-San Bernardino Area; H.R. 3790 Would Eliminate the Bid Program, Reduce Medicare Spending, Preserve Access to Quality Care, and Save Thousands of Small Businesses
The California Association of Medical Product Suppliers and the American Association for Homecare praised a bipartisan bill in Congress, H.R. 3790, to eliminate the misguided and deeply flawed "competitive" bidding program for durable medical equipment and services in Medicare. The bidding process in this controversial program began on October 21 in the Riverside-San Bernardino-Ontario metropolitan statistical area and eight other MSAs across the U.S.
Durable, or home medical equipment, such as oxygen, wheelchairs, diabetic supplies, and hospital beds, enables seniors and people with disabilities to receive quality care at home. Home-based care represents a cost-effective alternative to institutional care, and seniors prefer to receive care at home rather than in an institution.
To ensure that seniors and taxpayers receive the savings projected for the bid program, the bill would reduce Medicare reimbursements to home medical equipment providers in 2010, 2011, 2012, 2014, and 2015. At the same time, the bill will allow thousands of home medical providers to keep their doors open to serve the millions of Americans who require home-based care and will allow patients to continue to receive services from the providers of their choice.
H.R. 3790 has bipartisan support from two dozen cosponsors in the House of Representatives including Congressman Sam Farr (D-Calif.). The introduction of the legislation came just days before the start-up of the bidding process, which began on October 21 in nine metropolitan statistical areas across the U.S. including the Riverside-San Bernardino MSA. The bid prices and bid winners would be selected in 2010 and new prices would become effective January 1, 2011. Another round of bidding would begin after that in 100 MSAs across the U.S.
"I wish that I could be confident that the disastrous outcomes of the first attempt at implementing competitive bidding were not about to recur," said Esta Willman, president of Medi-Source Equipment and Supply in Yucca Valley, Calif. and a representative of the California Association of Medical Product Suppliers. "As a supplier in the Riverside metropolitan area who participated in the first attempt at the bidding process, I have first-hand experience that tells me that many of the issues that were present in the first round will likely recur in the rebid because adequate, meaningful changes have not been made to the program to prevent such recurrence.
"The rebid will still likely result in a drastic reduction to the number of experienced suppliers in the Riverside-San Bernardino area and other affected bidding areas. Combine that with the impact of dramatically declining Medicare reimbursement rates along with accreditation and surety bond requirements, and the result will be that most suppliers close down or withdraw from Medicare. That means that patient access to the services of experienced suppliers and quality items will be severely jeopardized. I fear that we are about to see the beginning of the dismantling of the nation's homecare community, which helps control health care spending by keeping patients in the least costly setting for care: in their homes. H.R. 3790 provides the government with the projected savings from the program without all of the harmful impacts that will inevitably result if the program is permitted to continue as is."
Categories subject to the bid program include medical oxygen, which is a highly regulated prescription drug, complex rehabilitative power wheelchairs, enteral nutrients (used in tube feeding), and hospital beds, among other categories.
The initial roll-out of the bidding program in 2008 produced disastrous results for home medical equipment patients and for providers (mostly small businesses) who were excluded from Medicare as a result of the first round of bidding.
During the 2008 implementation, serious problems were encountered, such as:
- Disruption to patient services - Patients were forced to go to multiple, unfamiliar providers for different items and services. Informal surveys showed that some winning providers were unable to provide care to beneficiaries.
- Greater costs to Medicare due to longer hospital stays - Confusion about the restricted list of contracted home medical providers delayed hospital discharges and triggered unnecessary emergency room visits.
- Non-local providers - Providers with no history of servicing a geographic area or no operations in a bidding area were awarded contracts.
- Inexperienced/unlicensed providers - Companies were awarded Medicare contracts to provide equipment and services for which they were not licensed in their states and for which they had no previous experience providing.
- Desperation bidding - Structural flaws in the bidding program caused providers to submit artificially low bids because they were faced with the threat of losing their businesses if not awarded a contract. Winning contracts also were viewed as commodities that could be sold once a bid was won.
Due to these problems, Congress delayed the bid program when it enacted the Medicare Improvements for Patients and Providers Act of 2008, in hopes that the federal Centers for Medicare and Medicaid Services would substantially improve and reform the program. However, the fundamental problems still remain in the bid program. The congressional action last year to delay the bidding program also required that the home medical equipment sector accept a 9.5 percent Medicare reimbursement cut effective January 1, 2009 to pay for the savings the bid program would have reaped.
"We recognize the need to control costs in Medicare. However, the home medical equipment sector has seen far more than its share of reimbursement cuts over the past 10 years," said Tyler J. Wilson, president of the American Association for Homecare. "This bidding program is designed to selectively contract with a small fraction of the nation's home medical equipment providers and put the vast majority of them out of business even if they agree to new, lower reimbursement rates. That's not good for the seniors and people with disabilities who depend on quality home medical equipment and services in order to remain independent."
K. Eric Larson, executive director of the National Spinal Cord Injury Association, said, "A 'competitive' bidding program that relies solely on the price of a winning bid simply cannot guarantee quality of, and access to the care our members need. Home medical equipment providers offer quality items and service to beneficiaries living with paralysis and complex conditions such as amyotrophic lateral sclerosis (ALS), muscular dystrophy, and spinal cord injuries who rely on customized mobility equipment, life-dependent oxygen, and other life-preserving medical equipment, service, and care. This bidding program needs to be repealed before the program creates human tragedies across the country."
"This bidding program will produce a bureaucratic, anti-competitive system that will have the unintended consequences of reducing quality and access to care for patients," said Wilson. "The result would be similar to a closed-model HMO and will have the effect of government-mandated consolidation in homecare. There are far better ways to save money than destroying the home medical sector."
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. Home medical equipment represents only 1.6 percent of the Medicare budget.
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