DME Matters

WASHINGTON- The Centers for Medicare & Medicaid Services (CMS) continues to expand its bidding program for home medical equipment, even as momentum builds in Congress for changes to address the many defects in the program that are negatively impacting providers and beneficiaries. CMS is pursuing regulatory changes allowing the agency to apply prices from bidding areas to other geographic locations where the program has not been officially implemented. The American Association for Homecare (AAHomecare) submitted 55 pages of comments regarding the concerns with applying competitive bid rates to non-bid areas. “Evidence continues to mount that the bidding program is jeopardizing the health of Medicare beneficiaries and causing businesses – large and small – go out of business, lay-off employees and stop serving Medicare beneficiaries, said Thomas Ryan, president of AAHomecare.” Many critics are recognizing that the bidding process is more like price-fixing than competitive bidding. CMS arbitrarily assigns prices for home medical equipment such as power wheelchairs, oxygen therapy and diabetic supplies, that range somewhere between the lowest and highest bids. The reimbursements amounts to providers have plummeted, with some being lower than the provider costs for obtaining the equipment. What really taints the process is that all the bids are non-binding, so a supplier can submit low-bids with no obligation to provide the services or products. But CMS uses all these bids, including the absurdly low ones, to establish its clearing reimbursement price. Ryan said the prices set by CMS are clearly the product of a “profoundly flawed” bidding program, do not reflect the true cost of doing business, and should not be used. In fact, experts say that prices for providers could be cut by a third if CMS successfully expands the program to the remaining 50 percent of the country where it is not operating. Another problem is that the entire process lacks transparency because CMS has not discloses exactly how the single payment amounts were calculated. In a July 25 letter to U.S. Department of Health and Human Services Inspector General Daniel R. Levinson, bipartisan members of Congress, led by Rep. Tom Price (R-Ga), asked the OIG to conduct a study on the bidding program, and specifically cited the program’s secrecy around setting prices. “We make this request because the lack of transparency in the competitive bidding program from its inception and the limits of the studies and evaluations done to this point make it impossible to judge the impact of the program on the health and well-being of the particularly vulnerable group of Medicare beneficiaries for whom this Medicare benefit was specifically developed,” the congressmen wrote. “They are beneficiaries with severe disabilities and/or multiple chronic illnesses who need…products that enable them to care for themselves at home and avoid costly use of hospitals, emergency rooms, and nursing homes.” Further, the House members said there is “abundant” and “concerning” evidence of arbitrary manipulations of the price-setting system. These problems, they wrote, directly limit seniors’ access to care and technology. “Members of Congress need a much better understanding of the impact this program has on our seniors.” Already, the Congress is considering legislation that would impose binding bids in the program, a move that would make the pricing more realistic. CMS is also proposing to amend the bidding regulations to permit them to conduct auctions using bundles of equipment, services and supplies. CMS wants to establish one bundled monthly payment for all the home medical equipment or enteral products and related supplies a beneficiary would need during a period of medical necessity. The bundled monthly payment would replace the current rental and routinely purchased payment categories established by Congress. But AAHomecare said this “hybrid payment methodology,” which combines bundling and bidding, is a radical departure from the current fee schedule methodology. In fact, AAHomecare even questions whether CMS has the authority to replace the payment categories under the fee schedules with their bundled payments. AAHomecare strongly recommends that CMS withdraw the proposed rule until it has balanced bidding data to implement payment adjustment in areas outside the designated bidding areas. AAHomecare is calling for a system in which CMS removes bids from unlicensed suppliers, recalculates pivotal bids, and the agency determines regional pricing by using the revised pivotal bids. “There is a clear lack of quantifiable data behind the reasoning in this proposed rule. CMS does not fully understand the devastating impact of these proposals on suppliers and the patients they serve,” said Ryan. “This rule should be withdrawn and CMS can take the opportunity to listen to the people their policies affect, and work collaboratively with the consumer groups, economists, Members of Congress and providers who want to help build responsible solutions.”