Observation Deck

The Doormat of Healthcare Reform

David Krause CMS’s pursuit of HME providers via NCB is short-sighted and morally wrong.

• By David Krause
• Dec 01, 2009

One conclusion can be drawn after reading H.R. 3962, “The Affordable Health Care for America Act of 2009”: Healthcare for seniors is being compromised with no moral or ethical regard. The recent 2,000-page healthcare reform bill states in Section 1149B, pages 439-441, that the Comptroller General shall evaluate “a competitive bidding process among manufacturers,” and then “make recommendations on how suppliers could be compensated for furnishing and servicing equipment and supplies.”

Recommendations are to be made in 12 months! This legislation is in addition to national competitive bidding (NCB), a program so poorly conceived by a previous Congress that it has taken CMS 15 years to try to implement it. NCB was created in 1994 and tested in Polk County, Fla. in 1999. One has to ask: Why is it taking so long to implement NCB why is Polk County taken out of the first round while the border counties are included?

Now only a few months away from starting NCB, Congress wants to evaluate direct negotiation with healthcare manufacturers. Of course, lawmakers add, “the beneficiary should be assured access to high-quality equipment and supplies,” to the bill.

This provision in the new bill ignores the dynamics of our industry, which have developed over the past 35 years. Today, discharge planners and other referral sources have knowledge as to which providers are best for various services and which competition drives in each area. That entire dynamic will change, leaving only large providers tied to manufacturers with no incentive to provide quality care, only efficient care.

Our patients are who suffer most when there are problems accessing HME. This extends their illness and suffering, while costing Medicare significantly more money in the long run. It is almost comical that the healthcare reform bill also contains provisions that penalize hospitals for excessive readmissions when, in fact, they are creating them.

Problems with NCB have been well documented and, it seems, well communicated by AAHomecare, PAMS, and other industry leaders: 1) Tens of thousands of jobs will be eliminated by NCB, and oligopolies will be systematically formed. Expanded costs to unemployment will offset any alleged savings. 2) Patients will no longer have freedom of choice, as CMS will decide which company is best to provide the service, based on price. Bid winners will continually strive to lower costs by delivering the cheapest product with no required service. 3) Quality care will not be the driving dynamic of competition, so current professional services for critical care products will no longer be provided, thus increasing the cost of institutional care. These three simple global facts are obvious consequences of NCB — along with many more complicated issues yet to be experienced.

Deeper Problems

More specific problems with NCB start with the selection of products and services to be bid. Did Congress or CMS simply say “let’s bid the top ten products” based on expenditures? This uninformed decision treats oxygen, negative pressure therapy, and enteral feeding in the same manner as a walker or hospital bed. Bidding commodity products with minimal service levels alongside critical care products requiring high service levels does not make sense, especially when starting such a program. Critical care products requiring highly trained care professionals will suffer most in the bidding process, and many of these patients will experience unnecessary institutionalized care, negating the cost savings.

Much has been discussed about oxygen, but for enteral feeding, the bidding process is particularly compromised. Similar to oxygen providers utilizing a respiratory therapist, quality enteral services include set up and monitoring by a registered dietitian (RD). Clinical outcomes have resulted in reduced hospitalizations and increased life expectancy when enteral patients are cared for by a professional.

Furthermore, providers have no control over enteral cost increases due to limited competition at the manufacturers’ level. Providers enjoying advantageous “class of trade” pricing from the manufacturers could easily win the bid, then sell their company to the highest bidder. Does Congress really want to turn over the delivery of all enteral feeding to one or both of these two manufacturers? It is a service that is obviously required and clinically effective to extend quality of life. Re-hospitalizations will occur much more frequently if manufacturers deliver the product with minimal care.

Another issue is the possibility of selling bid contracts. The first “mulligan” round of NCB demonstrated how simply winning the bid becomes a company’s most valuable asset, and CMS has given permission for that asset to be bought and sold. Conceivably, a manufacturer with no distribution experience could buy bid winners so its product is exclusively provided. Large distributors could easily buy bid companies to ensure growth.

Quality is another concern. In a bidding environment that focuses on driving prices downward at the sake of care quality, U.S.-made products will not be provided due to their higher prices, so U.S. taxpayers might pay for Chinese and other foreignmade DME, especially commodity items. How does the Comptroller General intend to bid manufacturers of other countries with different rules?

CMS must spread the burden of HME reduction to all suppliers. CMS should not include the critical care items if the bid process continues.

CMS has thousands of providers serving its growing Medicare beneficiaries, and it is going to just let them all go away with NCB. CMS should be accountable to the seniors it insures but instead, it pursues an industry representing $9 billion of its $440 billion budget with disproportionate zeal. This futile attempt to save so little money is fiscally irresponsible and morally wrong. Let us hope Rep. Meek’s bill H.R. 3790 will have the political clout necessary to kill NCB.

This article originally appeared in the December 2009 issue of HME Business.