Medicare Bidding Program For Durable Medical Equipment May Harm Small Businesses And Decrease Patient Access To Care, Say 137 Members Of Congress

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Medical Devices
Article Date: 25 Mar 2008 - 5:00 PDT

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Bipartisan groups of 120 members of the U.S. House of Representatives and 17 U.S. Senators sent letters to the Centers for Medicare and Medicaid Services (CMS) raising concerns about the impact of a new Medicare competitive bidding program on small durable medical equipment (DME) providers. The letters ask CMS to release data on how the bidding program will impact thousands of small providers.

"Although CMS and the Small Business Administration raised special considerations for small suppliers during the rulemaking process, we continue to believe that these steps will not guarantee adequate participations for small businesses," the House letter stated. "This will result in a number of small medical device providers going out of business, severely impacting patient access to necessary equipment and quality care."

In addition to asking for economic data on the bidding program's impact, the House letter expressed concern about CMS's plan to initiate the second round of contract awards. The second round will take place in 70 areas across the nation in 2009, before the first round has been fully implemented and before first-round results can be properly evaluated.

The Senate letter suggested that reducing the number of small DME providers could actually increase rather than decrease Medicare costs. "Small suppliers pay close attention to local, specialized service as a commonsense means of reducing medical errors, equipment-related injuries, and returned equipment. This in turn reduces Medicare costs."

The House effort to gather support for the letter was led by U.S. Congressman Jason Altmire (D-Pa.). Co-signers included House Minority Leader John Boehner (R-Ohio). The effort behind the Senate letter was led by Senators Sherrod Brown (D-Ohio) and George Voinovich (R-Ohio). See http://www.aahomecare.org for full text of the two letters.

This month, CMS is expected to award the first round of competitive bidding contracts, based on a provider's ability to cut prices, in 10 metropolitan statistical areas. Those 10 areas include: Charlotte, N.C.; Cincinnati, Ohio; Cleveland, Ohio; Dallas-Fort Worth, Texas; Kansas City, Mo.; Miami-Fort Lauderdale, Fla.; Riverside-San Bernardino, Calif.; Orlando, Fla; Pittsburgh, Pa.; and San Juan, P.R.

Because of the design of the bidding program, thousands of DME providers throughout the U.S. will not receive contracts and will lose their ability to serve Medicare patients who require medical equipment and services subject to bidding. This loss of business may force thousands of small providers to close, thus jeopardizing patients' ability to continue receiving quality service in their homes. CMS estimates that approximately 85 percent of registered providers qualify as small businesses.

The Weeks Group, a business consulting firm in Melbourne, Fla., conservatively estimates that a minimum of 14,000 full-time equivalent jobs will be lost in the durable medical equipment sector when the first two rounds of the bidding program are implemented in the first 80 metropolitan areas throughout the U.S.

Moreover, a study published earlier this year in the Southern Economic Journal analyzed the CMS demonstration projects on which the bidding program is based and concluded that, "the CMS format will likely result in an insufficient supply of medical equipment, increased prices on a number of goods, and potential problems for beneficiaries in obtaining equipment." The study authors, Brett Katzman, Ph.D. of Kennesaw State University and Kerry Anne McGeary, Ph.D. of Drexel University, "strongly urge a restructuring of the bidding process." Similar conclusions were reached by two economists at Robert Morris University, Brian O'Roark, Ph.D. and Stephen Foreman, Ph.D., who performed a recent study that concluded, "the proposed competitive bidding for medical equipment and supplies will increase concentration and will reduce competition."

The American Association for Homecare (AAHomecare) represents providers of durable medical equipment and related services and supplies as well as the manufacturers of that equipment. AAHomecare members serve the medical needs of millions of Americans who require home oxygen equipment, wheelchairs and other mobility products, hospital beds, medical supplies, inhalation drug therapy, home infusion, and other medical equipment, products, and services, delivered in the patient's home. AAHomecare's provider members operate more than 3,000 home care locations in all 50 states.

American Association for Homecare