HME News Poll - Has Medicare been over-paying for HME?

HME News is running a poll to gauge the industry reaction to the 26% cut in Medicare reimbursement to HME.

If the winning bidders think they can survive with a 26% cut, does that mean that Medicare has been overpaying or does that mean that vendors are undervaluing their products and services thinking that the only way to increase demand is to lower prices?

If you decide to play within the Medicare box, it looks like you might just get trapped. Medicare has limited businesses to the point that they are only allowed to compete on price. If you want to compete on a different level, fire Medicare and choose the customers you want to work with.

Vote early and vote often.

CMS unveils competitive bidding fee schedule for DMEPOS

CMS press release as seen on HMENews:

WASHINGTON - Providers in the first 10 competitive bidding areas submitted bids that on average will lower the fee schedule rates on many DME items by 26%, CMS officials stated during a late afternoon press conference.

"This new program means that Medicare beneficiaries will have access to some medical equipment and supplies at substantially lower prices than they are paying now," said CMS Acting Administrator Kerry Weems. "The Medicare program and taxpayers will share in these savings. This program represents yet another way to use the competitive marketplace to bring the best possible and most efficient care and services to people with Medicare. Because new accreditation and quality standard initiatives are being implemented in conjunction with the phase in of competitive bidding, this program will provide assurance to beneficiaries that they are receiving high quality medical equipment for home use."

Here's my first reactions:

1. 26% reduction in reimbursement? DMEPOS has fought every reduction in reimbursement tooth and nail, usually unsuccessfully. Given the chance to rally together and set the rates that everybody can live with has resulted in a self-imposed reduction of 26%. Not to mention the 100% reduction in reimbursement for those who did not win the bid because they wanted to keep their reimbursement higher. Ouch.
2. "The Medicare program and taxpayers will share in these savings." Sounds all warm and fuzzy to the average American who doesn't need any DMEPOS and doesn't realize how little of the total Medicare budget is actually spent on DMEPOS (1.7%).
   
3. Does anybody else cringe when you read 'use the competitive marketplace' in reference to a program that actually reduces/eliminates competition? He who controls the language, controls the debate.
   
4. When was the last time any government program was able to deliver on a promise of 'best possible and most efficient' especially when it comes to care or service?
5. Of course with the 'new accreditation and quality standard initiatives' that are being implemented, service providers have no choice but to provide the best possible equipment and service to beneficiaries.

Round 1 bid awards are expected to be announced any day now. I'm sure this announcement was a precursor to set the tone of the upcoming announcements and quell as much public debate as possible. Are you (your company) ready for this?

Round 1 Announcement Imminent

Seen on Notes from The Golden Commode:

Here’s the lastest news on round one of competitive bidding, courtesy of Don Clayback, The MED Group’s vice president of government relations. Clayback had a call with the Competitive Bidding Implementation Contractor (CBIC) earlier today. Here’s what he found out:

1.) The CBIC will send out notices to all Round 1 bidders within the next two weeks. That could mean this week or next; they would not be more specific.
2.) All letters (winners and losers) will be sent out the same day via Certified Mail. That means everyone should get their letter within a day or two of each other.
3.) Winners will receive a contract to be signed along with the new fee schedule. They will have 10 days from the mailing date to respond.
4.) The contract will be for a three year period commencing July 1, 2008.
5.) Unsuccessful bidders will also receive a letter stating they were not selected.
6.) Despite Clayback's additional inquiries, the CBIC would not share more specific information at this time.

Competitive Bidding vs. Congressional Signatures

HME News reports that there are two letters being circulated around congress right now with the intent to put pressure on CMS about competitive biding. The letters have been signed by 100 congressmen so far. The letters don't call for an end to competitive bidding but they do ask for CMS to reexamine the impact on the small DME companies and might give enough time for congress to investigate the process as well.

The letters may just be a shot over the bow of CMS. It seems to me that if congress really wanted to stop competitive bidding there would be more aggressive moves made. However, a step is a step. Call your congressman and make sure his/her signature is on the letters.

Is this a sign that congress has decided that their local business community might be affected? Is this a sign that congress has decided that their constituency might be affected? Is the signature of 100 or more congressmen strong enough to make an impact on CMS?

The Buck Stops. . . Over There

An excerpt from a VGM Legislative Update email reminds us that CMS is all about saving it's bacon when it comes time to report to it's pork barrel loving bosses, the U.S. Congress. It's not enough that we are responsible to make sure the Dr.'s notes actually back up the CMN they sign, we are also fingered as the biggest de-frauders of the people and the system that we serve. And it's all your fault!

CMS Staff Briefs Congress on Competitive Bidding, and Slams the Industry

Yesterday, CMS hosted a congressional briefing on competitive bidding for the durable medical equipment (DME) in Medicare. Senior CMS officials outlined the agency's work on the competitive bidding program, summarized efforts to expand bidding to an additional 70 areas, and slammed the industry as a hotbed of fraud.

During the briefing, CMS staff claimed that DME fraud is the largest area of fraud in the Medicare program, the biggest loss to the program, and the biggest vulnerability in the program.

However, CMS staff did not describe their agency's accountability for failing to prevent criminals from obtaining Medicare supplier numbers.

Nor did CMS provide the math for how, exactly, the DME sector, about 1.7 percent of Medicare spending, could account for the largest amount of fraud in the entire Medicare program, which spends more than $400 billion per year. CMS estimates that the total cost of fraud across all sectors of Medicare is somewhere between $40 billion to $80 billion per year. So the agency's own margin of error for calculating Medicare fraud is many times greater than the total DME spending in Medicare.

Under the current system, CMS staff said, it is too easy for fraudulent suppliers to look like they meet all of the quality standards when they get their initial site visit from the National Supplier Clearinghouse and further claimed that suppliers do not uphold the standards once they have their provider number.

CMS suggested that there are116,000 DME suppliers enrolled in the Medicare program that collectively bill more than $10 billion per year and provide services to about 10 million beneficiaries per year (about one quarter of all Medicare beneficiaries).

And while it doesn't have much to do with rehab specifically, there was a frightening comment made in passing:

According to CMS staff, there is no product category for mail order diabetic supplies in round two because CMS is planning on having a national mail order diabetic program in the near future, which they are hoping can begin in 2010.

Whoah! So now the government is going to actually become a supplier? Is this a first tentative step towards the slippery slope of nationalized DME? Will grandma have to go stand in line at the Federal Oxygen Administration office, next to the DMV, to refill her tanks or have her concentrator hours checked monthly? Rehab will be just like the old Fords. You can have any color wheelchair you want, as long as you like black.

So it's obvious that CMS doesn't trust you. How much do you trust them?

The Scooter Store Keeps Taking The Hits

A few days ago we found out that Invacare had dropped The Scooter Store after learning about the letter that had been circulating around congress to discourage the rehab carve-out. The week hasn't gotten any better for The Scooter Store.

• Jerry Keiderling, president of US Rehab sent a letter to AAHomecare encouraging the expulsion of The Scooter Store from the Rehab and Assistive Technology Council (RATC), citing the need to keep a unified industry voice when dealing with congress.

These two are not aimed specifically at The Scooter Store by name, but the timing is hard to ignore:

• Pride Mobility has stiffened up and re-published their provider standards, putting an emphasis on mandatory annual training, ATS/ATP employed at each location, and servicing ALL products sold. Pride promises to review their suppliers annually for compliance.
• CMS published a new set of supplier standards raising the number from 21 to 31. CMS feels that competitive bidding will weed a lot of fraudulent providers out of the system, but the increased supplier standards will discourage the few that may slip through.

Invacare has still not made a statement on InvacarePro but our local rep has been making the rounds sharing the story and the stand that Invacare has taken. Sunrise Medical is the only other provider listed on The Scooter Store's website that has not made a comment, even subtly, in response to the carve-out letter.

So is everybody ganging up on The Scooter Store, or is The Scooter Store trying to take advantage of a business opportunity that has presented itself? The letter from The Scooter Store and the statements from the CEO show two different faces of the company, one that looks out for the industry interests and one that looks out for the company interests. Who is looking out for the clients?

Breaking Up Is Hard To Do

HMENews got the scoop on the break-up between Invacare and The Scooter Store. Last week Invacare announced that they will no longer supply products to The Scooter Store stating they are, “against everything the industry stands for.”

HMENews reports that:

After 17 years of focusing on consumer/geriatric mobility and scooters, the Scooter Store began tiptoeing into the complex rehab market late last year. Then, in December, the company circulated a letter to a “handful of congressional offices” making its case that complex rehab should not be carved out of competitive bidding.

Obviously, if complex rehab is not carved out, the sheer geographic reach of The Scooter Store will make them the biggest player at the competitive bidding party.

The Scooter Store did some backpedaling about the letter and tried to toe the industry line, but revealed it's true intentions when the CEO, Doug Harrison stated, "the Scooter Store opposes it (competitive bidding); but if it must go forward, both geriatric mobility and custom rehab should be carved out; and one big bid would be more efficient for CMS than 80 smaller bids." Confused yet? It sounds like they are apologizing with their fingers crossed behind their backs.

The rest of the article dissolves into the classic he said, she said bickering that you have to listen to when your best friends break up in high school. The Scooter Store points out that Invacare will be losing a large chunk of income. Invacare thumbs it's nose at the former bed partner preferring to hang out with the whole industry instead of trying a monogamous relationship. Like most break ups, each party is quietly hurting inside but everybody on the outside is secretly happy the relationship is over.

Obviously The Scooter Store is not out of business. They no longer have any Invacare images on their website, but they are still pushing Pride Mobility and Sunrise Medical. Invacare, is banking on an increased sense of loyalty from independent rehab providers despite the fact that they have not published their story on their website. I guess they are hoping that HMENews and other industry news sources will tell their story for them.

There still isn't a clear cut winner here. The Scooter Store, like any other business will conduct business in a manner that is most beneficial for them. Competitive Bidding is not good for the industry as a whole but may be good for a small number of companies and CMS. Business owners and customers both lose when competition is artificially eliminated by the government. I don't know if Invacare struck a positive blow against Competitive Bidding or not, but they have put their money where their mouth is.

Invacare is hoping to gain some ground in the industry by showing loyalty to the industry as a whole rather than one large customer. Will Invacare's recent actions influence your product purchasing?