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A Better Way for Medicare to Pay for Medical Equipment?

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Well, this is my first attempt at a “Blog”.  Our marketing department is convinced that there are folks out there that would be interest in hearing what I’ve got to say and that I need to “Blog”, “Twitter” and do all kinds of social networking.  Frankly, this is all far beyond the understanding of this “Old Dog” that learned to type on a manual typewriter, and who still thinks that the internet will be the death of interpersonal relations.  That being said, they told me that if I wrote something (whenever I get the urge) they’d take it from there.  So I’ll leave it to you to determine whether my “Blog” and my thoughts are worth the band width they are consuming.

Recently CMS published a new bulletin via “MLN Matters” entitled:  “Medicare’s DMEPOS Competitive Bidding Program – A Better Way for Medicare to Pay for Medical Equipment”.  I knew I shouldn’t read it, I knew that it would just upset me… but I couldn’t resist.  After reading the article, and allowing sufficient time for my blood pressure to go down, I feel compelled to respond because there is very definitely another side to this story.  Here are some of the claims made in the article with my “editorial” comments.

Here’s one of the first statements in the article, “What You Need to Know: …The program will reduce out-of-pocket expenses for Medicare beneficiaries and save the Medicare program money while ensuring beneficiaries continue to receive quality products from accredited suppliers.”  This all sounds wonderful… but I’ve got a few thoughts:

  • Does this claim that it will “reduce” beneficiary expenses take into account the fact that beneficiaries may now be forced to pay privately for items that providers previously accepted assignment on?  Does it tell beneficiaries that if they choose to purchase something privately so that they can have more say in whom they do business with, and in what they are purchasing, that Medicare will no longer provide them any reimbursement (zero) for the purchase, even if they meet medical necessity?  Could these new restrictions on whom they do business with, and what products / services are available to them, result in longer institutional stays or cause more re-admissions to institutional settings?   You know, a few years ago we had an ice storm that cut my electricity for a week.  At the end of the month my electrical bill was “reduced” but the cost to run my gas powered generator and eating out still resulted in me paying out considerably more in total.
  • Does this claim that it will “save” the Medicare program money consider any increases to costs in other areas of Medicare as a result of reduced quality and access to DME?  Will Medicare save money if the length of stay in an institution or re-admission to institutions goes up?  As my Dad use to say “you’ll never get ahead being penny wise and dollar foolish”.
  • How can Medicare guarantee that beneficiaries will continue to receive “quality” products when companies are required to bid using an antiquated coding system (HCPCS) that lumps products together in ways that may be way too broad?  I’d argue that some of these codes that Medicare is asking companies to bid on are about as distinct as asking someone to bid on a “motorized, wheeled vehicle”.  Given this definition you could see bids submitted on everything from a powered skateboard to a high end SUV.  In addition, Medicare’s bidding rules award contracts based on price.  So, anyone who needs a “motorized, wheeled vehicle” better be able to ride a skateboard.
  • What do “accredited” suppliers have to do with bidding and searching for the lowest price?   As an industry we’ve been asking Medicare to require accreditation for years.  Now that they’re doing it they make is sound like an essential part of competitive bidding.  I would argue that any bidding program that selects winners based on the lowest price is contradictory with a focus on quality.  Further, whether accreditation really produces any benefits depends upon how stringent the standards are that a provider has to meet to get accredited.  The entire DMEPOS quality standards document published by CMS was 19 pages long.  The first 9 pages contain the general supplier requirements.  There are two specific pages related to respiratory equipment, 3 pages for manual and power wheelchairs and 5 pages on orthotics.  These really don’t seem to be very stringent quality standards to me; and, some of the specific quality standards that are included relate to products that aren’t even being included in competitive bidding, like manual wheelchairs, complex rehab power wheelchairs and orthotics.

Later in the article it says that “All suppliers are thoroughly screened.”  Well, they must be accredited based on those standards we’ve already discussed and they do have to meet Medicare’s financial standards (to make sure that they aren’t likely to go out of business).  However, we can actually evaluate how effective this “screening” process is by looking at the providers that Medicare chose to offer contracts to in from the original round of bidding (that Congress threw out).  Through this screening process Medicare still awarded contracts to providers that had no physical locations in the metro area they bid on.  They also awarded contracts to providers for products that the provider had not offered in the past.  If I’m a Medicare beneficiary I know that I feel more secure knowing that my respiratory, wound care or rehab equipment may be provided by someone from out of town that has no history providing these products… then again, I like to get my haircut at a barber college and go to the dental school for root canals, I just live for thrills!

“Competitive bidding creates incentives for suppliers to continue to provide quality products and services efficiently and at a reasonable price.”  How can a bidding process that selects winners solely based on the lowest prices incent suppliers to continue providing quality goods and services?  It would seem to me that the incentive is for providers to offer the cheapest products they can and eliminate any services possible.

“Competitive bidding selects multiple winning contract providers…”  Well that is true but another way of saying this would be to say, “Competitive bidding will eliminate over 80% of the providers eligible to service Medicare beneficiaries.”

In the article there is a whole section touting the “proven results” of competitive bidding demonstration projects done several years ago.  Yet, the model Medicare is following now isn’t the same as it was in the demonstrations.  In the demonstrations the large majority of bidders were offered contracts so beneficiaries had broader access and the winners still needed to compete based on the quality of goods and services they offered compared to their competition.  The demonstrations were limited to two geographic areas in southern Florida and Texas.  As such, the large majority of bidders were the local providers and there was not much incentive for folks from out of town to try and move in.  Further, Medicare did a better job at only requesting bids on codes that were well defined and represented homogeneous groups of products.  If this is the litmus test to demonstrate “proven results” then I must be a scratch golfer… after all I have shot par, one time, on one hole.

OK, time for me to step down from my soap box.  Let me know if you agree with my marketing department that folks want to read this stuff or with me that my writing is a great cure for insomnia.


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