Durable medical equipment suppliers had their day in the spotlight Tuesday to present concerns that Medicare's plan to use a competitive bidding program is not working as well as it intended.
At least one committee member on the subcommittee on health for the House Ways and Means Committee expressed concerns that the bidding program, developed by the Centers for Medicare and Medicaid studies, has significant gaps and needs to be retooled.
The session was requested by committee members who wanted CMS to explain the program and answer industry concerns about the bidding process. While CMS estimates that the program will reduce contract rates for durable medical equipment by 26 percent, DME organizations are concerned that the process excluded a large number of small suppliers that weren't able to bid successfully under the new program because they're not geared up to serve large metropolitan areas.
"The current bidding program will drive thousands of qualified HME providers out of the Medicare marketplace," said Tom Ryan, a member of the executive committee of the American Association for Homecare. One of the consequences will be limitations on services available to millions of seniors and people with disabilities."
The flawed bidding process didn't provide fair access to small providers that wanted to bid to provide service in the 10 metropolitan statistical areas in which the program is being rolled out, Ryan said.
"Nearly two-thirds - 63 percent - of accredited, qualified homecare providers that submitted bids have been disqualified in the first round of bidding. Moreover, such a dramatic reduction in the number of homecare facilities will result in reduced access to home providers and the quality of services that they provide if this bidding program moves forward in its current form," he said.
Committee member Jason Altmire (D-Pa.) said that only 52 medical equipment providers in the Pittsburgh area were awarded contracts by CMS to sell DME. He estimated that another 480 to 640 small medical equipment providers in the area won't be able to participate in the program as a result.
"Many of these are small businesses that could be forced to close if they lose their ability to sell to Medicare patients, who often account for a majority of their business," Altmire said.
HME providers are typically small to mid-sized businesses that typically receive about 40 percent to 50 percent of their business from Medicare patients, Ryan said. "The loss in the ability to serve this patient population will result in layoffs and many business failures."
The new program also may cause care and supply disruption for Medicare beneficiaries who are already dealing with difficult medical conditions, such as needing oxygen service or diabetes care, Ryan said.
Testimony by the Government Accountability Office re-emphasized that the program will need adequate oversight from CMS. A GAO report noted concerns that suppliers who placed low bids to get contracts may try to cut costs by providing lower-quality items and curtailing services.
"We will be assessing CMS's implementation of the competitive bidding program," said Kathleen M. King, director of healthcare for the GAO. "As part of the Medicare Modernization Act, we are required to review and report on the program's impact on suppliers and manufacturers and on quality and access of items and services provided to beneficiaries."
The bidding approach is necessary because Medicare is paying suppliers prices for DME that are far beyond what is widely available, said Kerry Weems, acting administrator for CMS.
"Requiring suppliers to submit bids, including information on price, accreditation and financial standards, will ensure access to high-quality medical equipment at a more reasonable price to beneficiaries and the Medicare program," he said.
CMS is reaching out to communicate changes in the program to various stakeholder groups and will take an active role to monitor supplier performance in the program, he added.
Suppliers with gross revenues of $3.5 million or less represent about 64 of the suppliers offered contracts in the first round, CMS said. In addition, bidders whose bids "qualified but were not in the winning range" will receive a notice that they may receive a contract from CMS if one of the suppliers that was offered a contract decides not to participate in the program, or they can bid in future rounds of the bidding process.
The American Hospital Association submitted a statement indicating its concern that certain CMS regulations will restrict hospitals' ability to meet patients' DME needs. The AHA's letter said it wants hospitals to be able to participate in the program by accepting the price set through competitive bidding, "without being required to submit a bid."
Altmire has co-sponsored legislation that would allow all eligible suppliers to provide equipment and services at the competitive bid rate established by CMS, even if they were not originally awarded contracts through competitive bidding.
"Acting Administrator Weems said nothing today to alleviate my concerns about CMS's competitive bidding process," he said afterward. "Given the numerous problems so far in the rollout of the first round, CMS should take a step back and work to resolve these issues."