PROGRAM FAILURE EMINENT SAY LEADING ECONOMISTS

January of 2011 saw the implementation of a controversial new Medicare program commonly referred to as “Competitive Bidding”.  Administered by the Centers for Medicare & Medicaid Services (CMS), the Competitive Bid program awarded exclusive contracts to lowest bidding suppliers to provide DME equipment and services to Medicare beneficiaries.  Those suppliers who did not submit “lowest cost” bids will no longer be allowed to provide services to Medicare beneficiaries. 

To date, over 30 patient advocacy groups, 244 expert economists, and 145 Members of Congress have publically condemned the CMS program citing numerous flaws that will force thousands of small businesses to permanently close their doors while directly impeding patient’s access to medically necessary equipment and related services.

While round one of the program (beginning January 2011) will impact nine metropolitan areas, CMS will begin implementation of Round two of this controversial program in January of 2012, which will further expand into include the Seattle-Tacoma-Bellevue and Portland-Beaverton-Vancouver metropolitan areas.  This will severely impact suppliers and patients throughout Washington and Oregon both inside the metropolitan areas as well as in rural parts of our region. The program will be further expanded nationally in 2016.

The intent behind the Competitive Bid program according to CMS has been to reduce overall healthcare costs as well as fraud, waste, and abuse associated with Durable Medical Equipment (DME). We at Care Medical & Rehabilitation Equipment are staunch supporters of controlling Medicare fraud, and consistently advocate for responsible regulations at the national, state, and local levels.

Unfortunately, there is insufficient evidence to conclude that competitive bidding would deter fraudulent providers from committing Medicare fraud. In fact, there is overwhelming evidence that demonstrates that the exact opposite holds true. Many independent studies have concluded that Competitive Bidding significantly lowers both the quality and accessibility of care that beneficiaries receive.

According to more than 167 nationally recognized auction design experts (including several Nobel Laureates), the current program has demonstrated itself to compromise patient care, and threatens to actually increase fraud, waste, & abuse.  These experts have cited numerous counts of gross negligence on part of the CMS administration that places Medicare patients at risk by distorting information and blatantly ignoring patient advocacy group testimony and recommendations of auction experts.

University of Maryland Economics Professor Peter Cramton recently wrote a letter that was signed by 167 economists was addressed to Members of Congress and CMS administrators and adamantly stated:

“The current program flaws discussed below will lead to a “race to the bottom” fostering fraud and corruption, which is especially harmful to the millions of Medicare beneficiaries around the country.  A program that pushes aside low-cost and high-quality providers cannot be tolerated.”

Letter from 167 Concerned Auction Experts (pdf)
AAHomecare Competitive Bidding Summary (pdf)
Supporting Advocacy Groups (pdf)

Professor Peter Cramton and his colleagues have clearly cited four fundamental flaws with the current bid program:

1. Bids are not binding commitments- any auction bidder is able to decline to provide services and encourages unsustainable “low ball” bidding.

2. Severely flawed pricing rule- this results in at least half of “winning” bidders are issued contracts that are below their initial bids.  This further perpetuates a downward cycle towards the lowest cost alternative in care.

3. Use of Composite Bids- reliance on “averaging” submitted bids actually encourages what is referred to as “bid skewing” in which bids are manipulated by bidders and are unreflective of real-world demands of beneficiaries’ medical requirements.

4. Severe lack of transparency- both quality standards and auction selection process have been developed behind closed doors.  There is significant evidence that CMS has actually manipulated data to ensure the perception of feasibility, but continues to refuse requests for information.

How will Competitive Bidding Affect Medicare Beneficiaries?

The current Medicare competitive bid program directly threatens to reduce your access to essential home medial and rehabilitation equipment.  Numerous problems have been reported to AAHomecare by physicians, patients, clinicians, and home care providers such as:

*Difficulty finding a contracted local equipment service providers

*Delays in obtaining medically required equipment and services;

*Longer than necessary hospital stays due to trouble discharging patients to home-based care;

*Fewer choices for patients when selecting equipment or providers;

*Confusing or incorrect information provided by Medicare;

*Patients and caregivers being restricted to only category specific suppliers;

*Medicare beneficiaries being forced to “lowest cost” (ie: lower quality) alternatives.

Experts agree that the current bid program will take away your right to choose who provides your medical equipment including oxygen, CPAP, walkers, wheelchairs, diabetic supplies, TENS devices, hospital beds, complex rehabilitation equipment and many other medically necessary items.  You will very likely experience delays in receiving your home medical equipment or services, and will see a severe reduction in access to quality medical equipment.

ROUND TWO: PRODUCT CATEGORIES

The current (2012) Medicare competitive bid program consists of nine (9) product categories & related supplies/accessories:

1) Oxygen Supplies & Equipment

2) Power & Manual Wheelchairs & Scooters

3) Enteral Nutrients & Equipment

4) CPAP Devices & Respiratory Assist Devices

5) Hospital Beds

6) Walkers

7) Support Surfaces (Group 2 Pressure Relief Mattresses & Overlays)

8) Negative Pressure Wound Therapy (NPWT) Pumps

9) Diabetic Supplies

Will Competitive Bidding Affect Non-Medicare Beneficiaries?

Yes!  Simply put, when Medicare implements a new policy or fee schedule, other health insurance carriers often attempt to implement similar guidelines and schedules.  We have already seen a significant detrimental impact as commercial insurers have begun reducing rates far below the unsustainable competitive bid rates.  This places your healthcare benefits in jeopardy of falling victim to the “race to the bottom” regardless of whether you have Medicare, Medicaid, commercial or private insurance, or even pay out-of-pocket!

NOTICE: ROUND 2 WILL EXPAND THIS PROGRAM INTO YOUR AREA!

Beginning in January of 2012, CMS intends to expand the program by an additional 91 Metropolitan Statistical Areas bringing the program to Oregon and Washington.  DME suppliers across the nation have witnessed severe reductions DME benefits from Medicare, Medicaid, and commercial insurers. We at Care Medical believe that regulation can be positive when it is balanced with common sense and humanity.  We sincerely feel that patient’s access to homecare services should be encouraged rather than limited as it continues to be the most cost-effective resource in our healthcare system. We do not believe that patient care should be considered as the “lowest common denominator”, and continue to advocate for evidence-based practices and policies from those legislators, administrators, and providers who serve the citizen beneficiaries under the Medicare and Medicaid programs.

When providing home healthcare services, it is essential to remember that we are not bidding merely on the equipment, but rather patient’s prescribed plans of care. While competitive bidding may be appropriate for bulk purchases of capitol acquisitions, it does not translate well to patient’s livelihoods, and directly threatens beneficiaries’ access to healthcare services. By implementing the present competitive bid program, CMS has decided that quality is worth sacrificing in order to lower its costs. For many years, we have taken a proactive approach to maintaining the highest sustainable levels of care for our patients through accreditation and self-regulation by such organizations as the Pacific Association of Medical Equipment Services (PAMES), and the Joint Commission on Accreditation of Healthcare Organizations (JCAHO).

What can YOU do to help?  Contact your Members of Congress!

Congressman Glenn Thompson and Congressman Jason Altmire have introduced the Fairness in Medicare Bidding Act of 2011 (HR1041).  This bipartisan legislation would protect your benefits by eliminating the Medicare competitive bid program for home medical equipment and services.  Currently over 125 Members of Congress and numerous patient advocacy groups have signed on in support of this legislation! 

Contact your Members of Congress (you have two Senators and one Representative) and ask them to sign on as a co-sponsor of HR 1041 to repeal this failed program!  If you belong to an organization, please ask them to issue a letter of support to pass HR 1041 and forward copies to your Members of Congress.

An example of what to say:

“My name is ____________________ and my address is _______________________.  I am calling to ask my Member of Congress to sign on as a co-sponsor to HR 1041 to repeal the CMS competitive bid program.  I am concerned that I will lose my choice of what provider I may receive equipment services from and that I will not get the same quality of service that I’ve received for many years from my present supplier.  I am very concerned that CMS has chosen to ignore the warnings of 167 economic experts, and that the program will fail.”

ADDITIONAL RESEARCH & MATERIALS AVAILABLE:

American Association for Homecare: www.aahomecare.org

AAHomecare (HR 1041): http://www.aahomecare.org/displaycommon.cfm?an=1&subarticlenbr=572

Professor Peter Cramton Materials: www.cramton.umd.edu/papers/health-care/

Medicare Competitive Bidding Panel Video Presentation: http://vimeo.com/24663642

Library of Congress (HR 1041): http://thomas.loc.gov/cgi-bin/thomas

FREQUENTLY ASKED QUESTIONS REGARDING HOW
MEDICARE PAYS SUPPLIERS FOR OXYGEN EQUIPMENT

Changes in law require Medicare to change the way it pays suppliers for oxygen equipment and supplies. You will still be able to get your oxygen equipment. However, you should know about the new rules that start January 1, 2009.

How does the recent law change the way Medicare pays for oxygen equipment and related supplies? Previously, the law stated that you would own the oxygen equipment after you rented it for 36 months. Under the new law, the rental payments will end after 36 months, but the supplier continues to own the equipment. The new law then requires your supplier to provide the oxygen equipment and related supplies for 2 additional years (5 years total), as long as oxygen is still medically necessary.

How does Medicare pay for oxygen equipment and related supplies and what do I pay? The monthly rental payments to the supplier cover not only your oxygen equipment, but also any supplies and accessories such as tubing or a mouth piece, oxygen contents, maintenance, servicing and repairs. Medicare pays 80% of the rental amount, and the person with Medicare is responsible for any unpaid Part B deductible, and the remaining 20% of the rental amount. By the end of 36 months, total payments from Medicare and you to your supplier would be more than $7,000 (based on rental payments of about $200 per month).

What happens with my oxygen equipment and related services after the 36 months of rental payments? Your supplier has been paid over 36 months for furnishing your oxygen and oxygen equipment for up to 5 years, and your supplier is required to continue to maintain the oxygen equipment (in good working order) and furnish the equipment and any necessary supplies and accessories, as long as you need it until the 5 year period ends. If you use oxygen tanks or cylinders that need delivery of gaseous or liquid oxygen contents, Medicare will continue to pay each month for the delivery of contents after the 36-month rental period. The supplier that delivers this equipment to you in the last month of the 36-month rental period must provide these items, as long as you medically need it, up to 5 years.

Will Medicare pay for any maintenance and servicing after the 36-month period ends? If you use an oxygen concentrator or transfilling equipment (a machine that fills your portable tanks in your home), for 2009 only, Medicare will pay for routine maintenance and servicing visits every 6 months starting 6 months after the end of the 36-month rental period.

Why is the supplier not being separately paid for other maintenance and servicing such as repairs if the equipment breaks down? Because under the new law, suppliers still own the equipment after the rental payments stop and are required to take care of the equipment they have been paid to furnish to you. The supplier can’t charge you for performing these services. This includes repairing the equipment and replacing any parts necessary to make sure that the equipment functions properly. If the equipment must be replaced because it will no longer function properly, the supplier must replace it with the same, or similar, make and model of equipment at no charge.

What happens to my oxygen equipment after 5 years? At the end of the 5-year period, your supplier’s obligation to continue furnishing your oxygen and oxygen equipment ends, and you may elect to obtain replacement equipment from any supplier. Your current supplier will probably alert you before the 5-year period is over so that you have time to decide whether to obtain the replacement equipment from them or from another enrolled supplier that you choose if you decide to switch suppliers. A new 36-month payment period and 5-year supplier obligation period start once the old 5-year period ends and the new oxygen and oxygen equipment you require is furnished. All of the other rules described in this fact sheet apply to the replacement equipment and supplier of that equipment.

What if I’m away from home for an extended period of time or I move to another area during the 36-month period? If you travel away from home for an extended period of time (several weeks or months)or permanently move to another area during the 36-month rental period, ask your current supplier if they can help you find a supplier in the new area. If your supplier can’t help you locate an oxygen supplier in the area where you are visiting or moving to, call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.

What if I’m away from home for an extended period of time or I move to another area after the 36-month period? If you travel or move after the 36-month rental period ends, your supplier has been paid for furnishing your equipment for 5 years and is generally responsible for ensuring that you are provided with oxygen and oxygen equipment in the new area. Your supplier may choose to make arrangements for a different supplier in your new area to provide the oxygen and oxygen equipment. However, a supplier may not charge you for the equipment, supplies, accessories or other services identified above that are provided after the 36-month rental payment period. The only exceptions to this rule are noted above.

What if my supplier refuses to continue providing my oxygen equipment and related services as required bylaw? If your supplier is not following Medicare laws and rules, call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048. The customer service representatives will refer your case to the appropriate area. For more information about Medicare’s coverage of durable medical equipment, visit www.medicare.gov/Publications/Pubs/pdf/11045.pdf to view “Medicare Coverage of Durable Medical Equipment and Other Devices.” You can also call
1-800-MEDICARE.