The Debate Heats Up

The ability to choose a provider or supplier safeguards quality and continuity of care because it allows Medicare patients to establish long-standing relationships with providers and suppliers.

At this moment, Medicare legislation is on a very fast track. Key committee chairmen have indicated that they will pass this legislation and send it to the Senate this month. Congress is drafting Medicare reform and prescription drug legislation, that includes a national competitive bidding program for durable medical equipment, orthotics and prosthetics and lab services, even before the competitive bidding demonstrations in Polk County, Fla. and San Antonio, Texas have been completed.

If Congress were to enact a nationwide competitive bidding program consumers would be the ultimate losers.

If Congress were to enact a nationwide competitive bidding program, consumers would be the ultimate losers. People with disabilities would have only the cheapest products available to them. Most likely they would have a limited choice of providers, and the services of trained re/hab technologists would almost certainly be diminished.

In recent weeks, the call for national competitive bidding for medical equipment has been increasing in the White House and on Capital Hill. The president's proposal for nationwide competitive bidding for durable medical equipment has engendered significant interest on Capital Hill, and the staffs of the House Ways and Means and Energy and Commerce committees, intend to include language on competitive bidding in the upcoming Medicare legislation. Many organizations, including the American Association for Homecare (AAHomecare), remain opposed to competitive bidding and believe that extending the Center for Medicare and Medicaid Services' (CMS) flawed model from the demonstration projects on a national basis is premature.

Background

The Balanced Budget Act of 1997 (BBA '97) gave CMS authority to implement five competitive bidding demonstration projects to examine the effects of competitive bidding on home medical equipment (HME) markets in communities of varying sizes. CMS is currently conducting only two limited demonstration projects. In Florida, Medicare beneficiaries can obtain home oxygen services, hospital beds, wound care supplies and incontinence supplies only from Medicare chosen providers. The Texas demonstration includes home oxygen services, hospital beds, nebulizer drugs, wheelchairs and orthotics.

Competitive bidding has the potential to create barriers to access for home medical equipment, diminish the quality of medical services beneficiaries receive and eliminate small businesses. Congress should not expand the current HME competitive bidding in light of CMS' own analysis of the Polk County, Fla. demonstration project that concluded that it is too soon to fully understand the ramifications of competitive bidding.

The administration has failed to recognize that implementing a competitive bidding program on a national basis is not possible if the administration truly wants to ensure a choice of providers for beneficiaries. Regions, states and even counties vary significantly, and it would take a whole new corps of bureaucrats to determine which HME providers could serve particular locales under such a system. In addition, competitive bidding systems, if administered as in the pilot programs in Polk County and San Antonio, fail to recognize the importance of services that HME suppliers pride themselves in providing their patients.

Rationale

  • Restricted Access and Choice

    • To implement the competitive bidding demonstrations, Congress waived a beneficiary's right to choose a health care provider or supplier within the Medicare program. The ability to choose a provider or supplier safeguards quality and continuity of care because it allows Medicare patients to establish long-standing relationships with providers and suppliers.

  • Loss of Quality and Service

    • In contrast, non-demonstration beneficiaries have access to medically necessary professional services such as respiratory therapists and 24-hour on-call services. Competitive bidding eliminates market pressure to provide this clinical support for critically-ill patients. This could result in Medicare beneficiaries in the demonstration areas receiving a lower standard of care.

  • Competitive Bidding is a Misnomer

    • Although the term competitive bidding may sound attractive, the demonstration actually eliminates the free market competition that encourages the provision of high quality medical services to Medicare beneficiaries. The demonstration design greatly reduces the number of HME providers who can serve beneficiaries with specific needs and eclipses the key component of free market competition-consumer choice. Medicare's winning bidders, therefore, are not subject to the market forces of consumerism.

  • A New Bureaucracy

    • A program of national competitive bidding for HMEs would require a new bureaucracy to administer it. To properly administer a national program, CMS must fix structural flaws in the model and incorporate procedural protections and oversight capabilities. The ultimate expense of expanding the limited demonstration model to larger urban areas will eclipse any projected savings.

  • Impact on Small Businesses

    • The average HME supplier is a small entrepreneurial operation with fewer than 20 employees and less than $3 million in annual revenue. For the average HME provider, the demonstration projects have amounted to a loss of approximately 27 percent of annual revenue. At least one provider in Polk County has filed for Chapter 11 protection, and many more have been forced to move out of the demonstration area.

    Competitive bidding has the potential to create barriers to access for home medical equipment, diminish the quality of medical services beneficiaries receive and eliminate small businesses.

    Organizations such as AAHomecare will be augmenting their grassroots efforts on this issue in order to provide information to key federal legislators. Members of the HME community are encouraged to do everything possible to teach policymakers at all levels.

    Through joint letters and visits, the HME industry can urge Congress to carefully examine the impact that the recent demonstrations have had on beneficiary satisfaction or health outcomes and the suitability of the demonstration design before expanding the demonstration.

    What to do

    Find out who your representative is by logging on to http://capitol.medgroup.com. At the bottom of the page enter your zip code. Click on the info link under your representative's picture to pull up his or her contact information. Or contact the house switchboard at (202) 224-3121.

    Determine if your member is on the House Ways and Means or Energy and Commerce committees by looking under the "Other Information" section of his or her biography page.

    If your member is on House Ways and Means or House Energy and Commerce contact them to ask them to oppose a national competitive bidding program for durable medical equipment.

    If your member is not on the above committees ask them to contact House Ways and Means Chairman Bill Thomas and House Energy and Commerce Chairman Billy Tauzin to oppose legislation that includes national competitive bidding for durable medical equipment.

    I encourage you to reach out to your Congressmen and educate them about the value of home care and the importance of what the industry does for patients. We expect that in this election year, there will be legislation making adjustments in Medicare programs. We need to make certain that in this legislation, the industry takes steps forward and not backwards.

    This article originally appeared in the June 2002 issue of HME Business.

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