Rural Areas Outside Round 1, 2 Still Affected by NCB
Competitive bidding will directly and significantly affect rural areas, according to economist
- By David Kopf
- Sep 09, 2010
Rural areas not included in Rounds One and Two of competitive bidding will still be negatively impacted by the program, according to a study by economist Ken Brown, Ph.D., an expert on competitive bidding for home medical equipment, industry.
The study concludes that rural areas not located in the metropolitan statistical areas in the first two rounds of the bidding program, will still suffered loss of small-business jobs and subsequently, reduced access, service and choice for Medicare beneficiaries.
“While it may appear at first glance that competitive bidding will not impact rural areas since competitive bidding does not initially apply in those areas, I believe competitive bidding will, in fact, have a significant impact on rural areas,” said Brown, the Lawrence M. Jepson Professor of International Economics at the University of Northern Iowa-Cedar Falls.
In latest study from Brown, who has completed several studies on the effects of competitive bidding, an examination of the marketplace in five rural states: Iowa, Montana, North Dakota, Wyoming and West Virginia showed a significant drop off in the number of rural providers. His findings indicate a 40 to 50 percent decline in HME providers in Iowa, Montana and West Virginia; a 15 to 25 percent decline in North Dakota, and a 35 to 45 percent decline in Wyoming.
The reason for this is that, as national providers close branches across the country because of financial instability and the 32 percent reimbursement cut from the Round One re-bid, rural areas will still feel the impact.
Brown also documented the financial struggles that several large, national HME companies have experienced.
“If these firms are having trouble surviving in this business climate, then it is quite likely that the small, independently owned suppliers that cannot take advantage of the economics of scale that go along with a national presence are having financial difficulties as well,” he commented. “A significant number of suppliers will fail.”
Brown wrote in his study. He estimates that approximately one-third of independent HME providers are already operating at a loss.
Of particular concern is that as the number of providers drops off in a rural area, patient access to increasingly distant providers will have a number of negative consequences:
- Oxygen and other respiratory patients will be at much greater risk during power outages, which are often more common and of longer duration in rural areas.
- Respiratory patients will have diminished access to portable tanks which will lead to reduced ambulation and lower quality of life.
- Increased dependence on more costly institutional care.
- It will take longer to get equipment repaired. For a complex rehab patient, could mean confinement to bed for extended periods of time, which increases the chance of developing pressure sores or contracting pneumonia.
“This will have a number of negative, unintended consequences that must be considered when deciding whether or not to move forwa
David Kopf is the Editor of HME Business.