Observation Deck

Harnessing the Industry's Passion

CMS has released the Round Two payment rates. What is needed to advance an alternative?

• By Seth Johnson
• Apr 01, 2013

Medicare released the Round Two payment rates in late January, which were shockingly low and a direct result of the Centers for Medicare and Medicaid Services (CMS) ignoring recommendations from over 200 economists and auction experts, serious concerns from providers and consumers, and even a bipartisan mandate from Congress to fix the program prior to implementation.

While CMS is continuing to move forward with the ten-fold expansion of their flawed Competitive Bidding program, many in Congress recognize that while payment changes within the DME fee schedule are needed in certain areas, a 45 percent average reduction for home medical equipment (HME) will result in thousands of jobs lost and seriously compromise beneficiary access to the care they need.

At the time of writing this article, industry stakeholders were continuing to meet with our champions and the key committees in the House and Senate to discuss the best pathway toward advancement of an alternative prior to implementation. A few state and national organizations have held lobby days on Capitol Hill and meetings back in the legislators’ states/districts, which are extremely important in order to compel legislators to act in a timely manner.

While a significant amount of support exists for the industry’s Market Pricing Program (MPP) alternative, which was designed to address the fundamental flaws of Medicare’s bidding program, challenges do subsist with regard to its CBO score and budget neutrality. That said, options exist to stop the program as long as the House and Senate committees are compelled to act prior to implementation and replace it with a workable alternative. So what does the industry need to do to see an alternative advanced prior to July 1 implementation?

That’s simple: Harness the passion and serious concerns with the program and take it to Capitol Hill to share with senators and representatives. Specifics need to be provided, such as how the program structure is flawed and incentivizes low ball bids, how the Medicare payment methodology used to determine the single payment amounts takes the median of the median which is no reflection of a market based price, and what types of companies were awarded and accepted contracts simply in order to try and sell the contracts.

Here are a few of the key talking points highlighting the problems with the Medicare bidding program to help guide your communications with legislators:

Non-binding bids

• Any contract winner can refuse to sign a contract.
• Bids from those offered contracts but rejected are still included in the payment calculations.
• This process encourages DME providers to “game” the bidding system to try and win a “lottery ticket” to sell, rather than provide a market based price.

Manipulated median used to determine payment rates

• CMS manipulates the median by assigning a capacity (quantity to be provided) to each bidder.
• CMS further manipulates the establishment of the single payment amounts by taking the median of the median in their payment methodology, which is no reflection of market based prices.
• This makes the program an arbitrary pricing process instead of a transparent auction.

No transparency

• CMS continues to deny industry and even congressional requests for specific
  information pertaining to the factors used not only for Round Two, but even
  for the Round 1 rebid, which has been in place for over two years. This begs
  the question, why all the secrecy if Medicare has nothing to hide?

Detailed examples, talking points, and other resources are available by contacting the American Association for Homecare (www.aahomecare.org). The tools are updated regularly and used weekly in meetings with legislators, which seem to be strengthening our case for some kind of congressional actionprior to July 1.

Constant Effort

It is important to keep in mind that contacting your legislators once will not be enough. Persistence and ongoing dialogue with your legislators between now and when Congress takes action to stop the program will be necessary. Building in an hour a week for follow up with your legislator’s offices via phone or email is a good place to start. It is also good to engage the district office and request to be added to the mailing list for upcoming local events where the legislator will be present in order to continue to share the impact of the Medicarebidding program on your business.

Do not forget to personalize your message and talk about the area(s) you serve and the impact of Round Two on your business, your employees, and the beneficiaries you serve. In addition, highlight the fact that MPP was developed by experts in the field of government auctions, addresses the critical flaws ofcompetitive bidding, and sets fair, sustainable market prices.

While it is good to know the clear pathway toward victory on this, many times when dealing with Congress and the administration, the road is not clear. That said, if we as an industry stay focused and continue to raise real concerns and questions with regard to the program and the impact it will have on jobs and beneficiary access to care, we can and will replace it with analternative prior to implementation.

This article originally appeared in the April 2012 issue of HME Business.