The Ohio Association of Home Medical Equipment Services has announced its opposition to the Center for Medicare and Medicaid Services' competitive bidding plan for Medicare reimbursements, joining a host of other organizations that contend the plan is unsustainable will put provider organizations out of business and, as a result, restrict access to needed medical equipment and care.
"The Medicare 'competitive' bidding program, conceived over a decade ago, is an out-dated, economically crippling initiative aimed at a segment of healthcare that currently represents the slowest growing, most cost-effective option for our seniors – home medical services," said Kam Yuricich, executive director of OAMES.
Instead OAMES and others back H.R. 3790, the Competitive Bidding Repeal Act, a bill the group says would provide other kinds of cost savings that will reduce reimbursements while preserving access to patients.
Competitive bidding has been bandied about for the past decade as one method to provide significant savings for government-run health programs.
"When this program begins in January, Medicare beneficiaries … will see substantially lower prices than they are paying now," said CMS Deputy Administrator and Director for the Center for Medicare Jonathan Blum. "The program also ensures continued access for beneficiaries to high-quality products from accredited suppliers that meet stringent quality and financial standards which help to reduce fraud. The program is expected to save more than $17 billion over 10 years."
But industry opponents say the projected savings are based on what it calls "suicide bids" – rock bottom bids made by companies eager to get the contracts, but at prices that are unsustainable in the long haul because they are below cost.
"The operating costs of the services we provide are far more than just the acquisition cost of the equipment or supply," said John Reed, senior vice president of PRO2 Respiratory Services, in Lima, Ohio. "The costs are, in many cases, mandated by accreditation, federal, state and local regulations and cannot be reduced or eliminated. No matter how often we communicate this, insulated and uninformed administration officials refuse to understand the fundamental facts about offering this cost-effective and efficient service to the elderly."
The reaction from the Ohio group comes roughly a month after CMS announced the winning bid amounts that slashed reimbursements to home medical equipment providers an average of 32 percent on equipment and supplies in the program. Among the most frequently used medical equipment that falls under competitive bidding, CMS announced savings for oxygen concentrators (from $173 to $116 per month) and diabetic supplies with reimbursement set to be cut by more than half from $75 a month to $33. These bids are set to take effect in nine cities across the country on Jan. 1, 2011.
Such large reductions have many industry groups supporting H.R. 3790, which also has the support of more than 250 members of Congress.
CMS is apparently digging in for a battle. In a conference call in early July, Laurence Wilson, director of chronic care policy at CMS said: "We do screen bids that are on the low side (to) determine whether or not the supplier can actually provide the service or the item at that price. That includes looking at invoices … and the supplier's financials, including their liquidity and credit, and their ability to expand into a market area. We have been very careful in selecting suppliers and in scrutinizing these bids, in terms of prices and sustainability. I think we're comfortable, when we look at the prices that we see."