Errors Plague Medicare "Competitive Bidding" Program

Main Category: Caregivers / Homecare
Also Included In: Medicare / Medicaid / SCHIP
Article Date: 08 Apr 2008 - 5:00 PST

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A new Medicare bidding program for durable medical equipment (DME) scheduled to be implemented in 10 metropolitan areas starting on July 1, 2008 will put many DME providers out of business and will disrupt services for many of the three million seniors and people with disabilities living in those areas.

Those areas include Charlotte, N.C., Cincinnati, Cleveland, Dallas-Ft. Worth, Kansas City, Miami, Orlando, Pittsburgh, Riverside, Calif., and San Juan, P.R.

Last Friday, DME providers in the first ten competitive bidding regions received letters from the Centers for Medicare and Medicaid Services (CMS) explaining whether they had been offered a contract, been disqualified from bidding, or bid outside of the bidding range for a product. Those DME providers that did not receive contracts for a given Medicare item or service are shut out of the Medicare program for three years.

The American Association for Homecare has received word from hundreds of DME providers who say they have been improperly disqualified and thereby removed by CMS from the bidding process. That includes more than 40 documented cases of disqualified bidders in the Miami and Orlando areas.

The congressionally mandated competitive bidding program was designed to reduce the number of DME providers and reduce reimbursement rates for oxygen therapy, hospital beds, wheelchairs, and other types of home-based equipment and care in Medicare. Reimbursement rates are already set by Medicare and reimbursement rates for oxygen have already been cut by nearly 50 percent over the past 10 years. The DME industry has long argued that this new program will needlessly punish established, high-quality providers, reduce the DME industry's focus on service, and harm patient access to care.

"We're alarmed about the volume of the mistakes made by Medicare's contractor tasked with evaluating bids and implementing the bidding program," said Heather Allan, executive director of the Florida Association of Medical Equipment Services. "A process this obviously flawed needs to be stopped, analyzed, and corrected if it can't be done away with altogether. If it's not, the ramifications for Medicare beneficiaries and small businesses alike will be much worse than we anticipated."

The DME industry consists primarily of small to medium-sized businesses serving relatively small service areas. The average DME company receives about 40 percent of its business from Medicare patients. Loss of this business will result in layoffs and business failure for many DMEs.

"The Secretary of Health and Human Services has called home-based healthcare 'radically' more efficient than institutional care, yet the federal government is determined to aggressively dismantle the nation's homecare infrastructure at a time when our healthcare system needs it the most," said Tyler J. Wilson, president of the American Association for Homecare. "DME spending is the smallest sliver of Medicare, less than two percent of spending, and is the slowest-growing segment. Taxpayers may ultimately face higher costs as hospital stays lengthen due to more complicated hospital discharge logistics, more emergency room visits, and cost-shifting from Medicare Part B to Part A services."

The American Association for Homecare is pursuing regulatory, legislative, and legal remedies to allow for review of the cases of those DME providers that have been disqualified and is calling for the suspension of the first round of the bidding program until questions about patient access and harm to DME providers can be fully assessed.

The American Association for Homecare (AAHomecare) represents providers of durable medical equipment and related services and supplies as well as equipment manufacturers. 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, therapies, services, and supplies 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