Medicare bidding program will lead to 'suicide bidding', says Pennsylvania Association of Medical Suppliers

Jun 8 2010

Providers of home medical equipment and services across Pennsylvania are proposing a fiscally responsible alternative to the mislabeled "competitive" bidding scheme currently under way in Medicare that will actually discourage competition, reduce access to care for many of Pennsylvania's more than two million Medicare beneficiaries, and put hundreds of Pennsylvania's homecare providers out of business.  

"The Medicare bidding program represents big government bullying at its worst," says John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers.  "It is a program whose goal is not merely to reduce expenditures, but to decimate the ranks of local HME providers.  Because Medicare is the largest purchaser of home medical equipment in the country, its threat to eliminate nine out of ten providers is not encouraging competition.  It is blackmailing mostly small, independent businesses into irresponsible bids in the hope that they will simply survive.  The bid numbers that we have seen so far are tantamount to economic suicide.  This is a very bad and anti-competitive program that will result in business failures, job losses and reduced care for Medicare beneficiaries."

The Medicare bidding program encourages "suicide bidding," using economic coercion by forcing providers to submit unsustainable bids necessary to win a contract. Although Congress delayed the implementation of the selective contracting program in 2008 to allow for needed changes, the Centers for Medicare and Medicaid Services (CMS) ignored congressional intent and did not address the flaws that precipitated the delay.  

The bidding process for durable medical equipment and services is now underway in nine metropolitan statistical areas in the U.S.  Research shows that in Pittsburgh, more than 1,500 jobs could be lost due to the bidding program.  An additional 91 metropolitan statistical areas are scheduled to be affected next year across the nation.

"The Medicare bidding program's primary selection criteria is price," explains Georgie Blackburn, vice president of government relations and legislative affairs for BLACKBURN's in Tarentum, Pennsylvania.  "It is simply a 'race to the bottom' in quality of care and will jeopardize quality and access to care to millions of Medicare beneficiaries.  Our industry has warned of these undesirable outcomes since the program's inception.  This program will result in thousands of small business failures.  It will result in thousands of job losses across the country.  It will limit access to homecare products and services.  It will reduce the quality of care provided to Medicare beneficiaries.  And it will likely result in HIGHER costs for the Medicare program as hospitalizations and admissions to long- term care facilities increase."

The Pennsylvania Association of Medical Suppliers (PAMS) supports H.R. 3790, a bipartisan bill that would preserve access to homecare and provide a cost-effective alternative to a misguided Medicare "competitive" bidding program for durable medical equipment. H.R. 3790 replaces the Medicare bidding program with other types of cost-savings that will reduce reimbursements to home medical equipment providers but preserve patient access to medically required equipment and services in the home.

So far, the bill has 242 cosponsors in the U.S. House of Representatives with broad bipartisan support. More than half of both the Democratic and Republican delegations in the House support the bill.

In Pennsylvania, Representatives cosponsoring the legislation include Jason Altmire (D), Chris Carney (D), Kathleen Dahlkemper (D), Charles Dent (R), Tim Holden (D), Paul E. Kanjorski (D), Tim Murphy (R), Todd Platts (R), Joe Sestak (D), Bill Shuster (R), and Glenn Thompson (R).

Patient and consumer groups that support the elimination of Medicare's "competitive" bidding program for durable medical equipment include the ALS Association, the American Association for Respiratory Care, the American Association of People with Disabilities, International Ventilator Users Network, the Muscular Dystrophy Association, National Emphysema/COPD Association, National Spinal Cord Injury Association, United Cerebral Palsy of Pittsburgh and Post-Polio Health International, among others.

Proponents of the Medicare bidding program for durable medical equipment have perpetuated several myths about the program. However, the reality is quite different.

MYTH:  The bidding program will be good for Medicare beneficiaries.

REALITY: It will, in fact, reduce access to medically required equipment and services.

MYTH:  The program will eliminate Medicare fraud in the durable medical equipment sector.

REALITY: The solution to fraud is better screening of providers, real-time claims audits, stiffer penalties, and better enforcement mechanisms for Medicare – steps that the home medical providers support.

MYTH: The bidding program helps businesses by creating a more competitive environment.

REALITY:  The program coerces providers to bid at unsustainable Medicare reimbursement rates and will force thousand of businesses to close, reducing competition in the long term.

MYTH: Providers will be competing on quality and price.

REALITY: The bidding program will ration care. Home medical equipment providers already compete on the basis of quality and help move people smoothly from hospitals to cost-effective care at home.

MYTH:  The bidding program will make healthcare more cost-effective.

REALITY: The home is already the most cost-effective setting for post-acute care. As more people receive good equipment and services at home, the U.S. will spend less on longer hospital says, emergency room visits, and nursing home admissions.  

www.aahomecare.org/competitivebidding