Myths and realities of Medicare bidding program for durable medical equipment

Aug 7 2010

Providers of home medical equipment and services across California 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 California's 4.6 million Medicare beneficiaries, and put thousands of California homecare providers out of business.

The U.S. Department of Health and Human Services recently announced that bidding in nine of the country's largest metropolitan areas could reduce spending in Medicare for home medical equipment and services. But those alleged savings are the result of "suicide bids" from providers in this ill-advised race to the bottom that will put thousands of homecare providers out of business and reduce patients' access to care. Although Congress delayed the implementation of the selective contracting program in 2008 to allow for needed changes, the Centers for Medicare and Medicaid Services ignored congressional intent and did not address the flaws that precipitated the delay.  

"The competitive bidding program will put new hurdles between Medicare beneficiaries and essential products and services," said Esta Willman, owner of Medi-Source Equipment and Supply, based in Yucca Valley. "Patients will see their ability to choose a local, familiar supplier for home medical equipment diminished, and may face longer wait times for products to be delivered as suppliers are forced to close locations and restrict delivery options."

"Home-based care is by far the most cost-effective setting for post-acute care," added Willman. "Quality home medical equipment and services help to reduce hospitalizations, ER visits, and admission to nursing homes.  If we lose a significant number of homecare providers to competitive bidding, we're certain to see increased costs for Medicare down the road."

"There will be no winners in competitive bidding; everyone will be a loser," predicted Diana Guth, owner of Home Respiratory Care in Los Angeles.  "Beneficiaries will lose access to companies that have earned their trust; they will be left with very few choices and much confusion. The companies who did not bid at unprofitable levels will lose their businesses because they can't survive without Medicare. The so-called 'winners' will go bankrupt because they will find their bids fiscally untenable in the long run."

The bidding process for home medical equipment and services is now complete in nine metropolitan statistical areas in the U.S., including Riverside. An additional 91 "round two" areas scheduled to be affected next year, including Bakersfield, Fresno, Los Angeles, Sacramento, San Francisco, San Jose and Visalia.

"This ill-conceived and anti-competitive program could put thousands of community-based companies in California out of business," said Gloria Peterson, assistant executive director of the California Association of Medical Product Suppliers (CAMPS).  "As a result, California's seniors and those who depend on home medical equipment will have less access to the products and services they need to live independently, or recuperate at home after illness or surgery."

CAMPS 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 254 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, including California Representatives Joe Baca (D), Brian Bilbray (R), Mary Bono Mack (R), Ken Calvert (R), Rep. Susan Davis (D), Rep. Sam Farr (D), Rep. Bob Filner (D), Rep. Jerry Lewis (R), Rep. Buck McKeon (R), Rep. Devin Nunes (R), Rep. Linda Sanchez (D), Rep. Adam Schiff (D), Rep. Mike Thompson (D) and Rep. Diane Watson (D).

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, 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: 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 stays, emergency room visits, and nursing home admissions.