As the government prepares to roll out a program in 10 markets for medical equipment suppliers to bid on Medicare contracts, witnesses at a Congressional hearing expressed concern about the next stage - an expansion of the program to 70 markets in January.
The subcommittee on urban and rural entrepreneurship, under the House Small Business Committee, heard testimony Wednesday from witnesses who pleaded for adjustments in the program before it's expanded.
Committee Chairman Rep. Heath Schuler took the Centers for Medicare & Medicaid Services to task for the current state of the program and the potential damage it could cause to the estimated 5,000 durable medical equipment suppliers in the country, many of which are small businesses.
"They are an essential source of healthcare services, particularly in rural areas," Shuler said. "By pushing to expand this project without addressing the harm it is likely to cause entrepreneurs, CMS is undermining their ability to serve patients and their key role in strengthening the economic base of local communities."
In the first round of the program to bid out contracts for durable medical equipment and prosthetics, orthotics and supplies, some 325 suppliers in 10 markets were announced as successful bidders by CMS. About a thousand DMEPOS suppliers submitted bids. The federal contracts go into effect on July 1.
The approach places a heavy burden on physicians in rural areas, who sometimes fill a dual role as DME suppliers, said Bob Haralson, MD, medical director for the American Association of Orthopedic Surgeons. Under the program, such doctors have to submit bids that compete with much larger DMEPOS companies.
The competitive bidding process does not appropriately address the provision of complex technology for patients, said Linwood Staub, president of Global VAC Therapy for Kinetic Concepts, Inc., representing the Advanced Medical Technology Association.
"Unfortunately, the current DMEPOS competitive bidding program has failed to address the fact that there are fundamental differences between simple functional products on the one hand and diagnostic or therapeutic devices on the other," he said.
Some equipment requires significant oversight by suppliers because it's technologically complicated and being used to provide in-home clinical care to patients, he said.
"The DMEPOS competitive bidding program should have, but did not, reflect those differences in four important areas: selection of products for bidding, clinical support and patient education, supplier capacity and capability and the impact on patients and total Medicare spending."
More than 60 percent of the bidders in the recently completed first round were disqualified because they didn't provide complete or accurate information, leaving only 375 companies for CMS to consider, said Casey Hite, vice president of Aeroflow Healthcare in Asheville, N.C.
"We do not believe that any program where more than 60 percent of suppliers were disqualified to be a success," he said.
"The Medicare bidding program will radically change the HME marketplace and dismantle the nation's home medical infrastructure if implemented in its current form," he added. "The bidding program designed by CMS is fatally flawed and its widely touted savings are misleading. Small business owners bid unreasonably low to have an opportunity to 'stay in the game' since the alternative was to risk business failure immediately. We believe the extraordinarily low bid rates will be unsustainable over a three-year contracting period."
Gary Gilberti, president and CEO of Chesapeake Rehab Equipment, said bid rates for the initial set of 10 metropolitan statistical areas set an artificially low floor that can't be used to predict savings.
"The single payment amounts for complex rehab were, to a great extent, based on bids submitted by companies with no experience in the provision of complex rehab and companies that have no experience providing any products within the specific CBA," said Gilberti, speaking on behalf of the National Coalition for Assistive and Rehab Technology. "In several situations, bids (were) submitted only in an effort to 'practice' in preparation of round 2. The result is that the single payment amounts established for many complex rehab HCPCS codes are unrealistic."
How do you anticipate the bidding program will affect your organization? Contact Fred Bazzoli at fred.bazzoli@medtechpublishing.com.