Observation Deck

CMS Doubles Down on Bidding

Join the HME leaders around the country who are lobbying Congress to lessen proposed cuts for rural providers.

The competitive bidding program for home medical equipment has performed in the range of nuisance to disaster for providers and patients alike in the 100 metro areas that it has been deployed nationwide. Panned by nearly 250 auction experts and economists — including Nobel prize laureates — and so haphazardly implemented that Congress had to pass legislation mandating that CMS actually enforce their own regulations on licensure for bidders, the bidding program remains in need of serious fixes. Instead, CMS is looking to expand the program nationally before needed changes can be made. We can’t let that happen.

In October 2014, CMS released a rule establishing a methodology for applying prices derived from the 100 competitive bidding areas to rural areas starting in Jan. 1, 2016 (although only half of the overall bidding-derived reduction will be applied at that time; the full weight of the cuts go into effect six months later).

The American Association for Homecare has estimated examples of how the new methodology will affect rural providers:

HCPCS Code Region Current 1/1/16 rate 7/1/16 rate
E1390 (concentrator) Mideast $178.23 $134.21 (-25%) $90.18 (-49%)
EO470 (BiPAP) Rocky MT $241.85 $178.50 (-26%) $115.14 (-52%)
K0003 (stndrd. chair) Great Lakes $97.98 $68.78 (-30%) $39.58 (-60%)
K0823 (stndrd. PMD) New England $568.89 $424.22 (-25%) $279.55 (-51%)

Even for winning bidders in the initial competitive bidding areas, cuts like these have taken a bite out of company bottom lines and even forced some providers out of business. But those winning bidders are at least able to enjoy the compensating effects of increased market share in the categories they won.

Rural providers will get no such increased volume benefit, and also don’t receive any consideration or adjustment for the unique challenges and costs related to longer distances for delivery and service that will certainly result.

But CMS’ new rule doesn’t limit the pain to them. CMS is also planning to set a ceiling for all future bids topping out payment rates determined in previous rounds of bidding.

The new bid ceiling doesn’t take into consideration the idea that providers’ costs of doing business won’t increase in the coming years, whether it’s from a tightening labor market, higher energy costs, product costs, real estate values and property taxes, or simply broad-based inflation.

Can Anything Be Done to Stop the New Provisions?

We’ve seen six bills introduced to modify or completely eliminate the program introduced in the previous three Congressional sessions. We finally secured our first victory in this fight in the 114th Congress with binding bid legislation (H.R. 284) that would ensure that companies had to be properly licensed in the states where they were bidding, and that winning bidders could not walk away from their bids, if accepted. These provisions were included in comprehensive Medicare-related legislation, and finally signed into law in April of this year.

It wasn’t easy, but persistent and passionate grassroots efforts from leaders in the HME community in state and regional associations, buying groups, and providers, manufacturers and service providers large and small, working in concert with the AAHomecare lobbying team, has raised the credibility of our issues with this program a great deal in the last few years.

Now, I’m asking for the support of the HME community once again, as we try to keep this ruinous program from expanding further and adopting an anti-competitive bid ceiling.

Congressman Tom Price (R-Ga.), chairman of the House Budget Committee and long-time advocate for the HME community, is currently developing a proposal that would establish a 30 percent adjustment for rural suppliers to address their challenges serving widely spread communities, provide a four year phase in for national price adjustments, and set a bid ceiling at current unadjusted Medicare fee schedule rates. This would provide much fairer treatment for rural providers and better service and access to HME for their patients, while also allowing for a more reasonable bid ceiling.

CMS has estimated that their proposals will save Medicare seven billion dollars as is. These new provisions to provide relief for rural providers keep the majority of those savings intact, and are projected to still save Medicare five billion dollars.

We need your help in making sure that every individual who cares about the future viability of the HME sector is aware and engaged on the competitive bidding issue, and can help us move this proposal forward.

Here’s what you can do:

  • Get the facts on the bidding program at aahomecare.org.
  • Go to the PowerOfHomecare.com page to join the thousands of individuals who have sent a letter to their Congressional representatives on the issue.
  • If you’re not an AAHomecare member, sign up at the Join the Team button on PowerOfHomecare.com, and you’ll get our updates on further legislative developments on the bidding program.

And, most importantly, don’t give up. I’m truly heartened by the high volume of back-home meetings with legislators that have taken place during Congressional recess periods this summer. The Alabama Durable Medical Equipment Association had meetings with their entire delegation during the recent August break, while the Home Medical Equipment and Services Association of New England plans to meet with all 12 senators and 21 representatives by the end of October. We’ve heard about district office meetings and site visits from AAHomecare member companies and our state and regional association allies from Georgia to Oregon and everywhere in between.

These district-based face-to-face meetings with members of Congress play an important role in generating support and co-sponsors for priority legislation, and they provide a critical foundation for our D.C.-based lobbying efforts. If you’ve never been involved in direct lobbying efforts like these yourself, I encourage you to check out the web resources mentioned above for tips on how to become more involved, as well as messages and talking points on priority issues like competitive bidding and audit reform. You can also join HME leaders from around the country at the next AAHomecare’s Washington Legislative Conference (May 25 to 26, 2016), where we will provide you with guidance on how to lobby your Congressional representatives, and set up Capitol Hill meetings for you with these legislators and their staffers.

I can’t promise you that we’ll stop these fresh cuts from taking place, but I will assure you that a fairer and more transparent bidding program remains a top priority of the leadership of AAHomecare, and we will do everything we can to convince Congress that additional change is needed. I hope you’ll continue to fight alongside the dedicated homecare advocates nationwide who are actively engaged on this issue to make this a reality.

This article originally appeared in the October 2015 issue of HME Business.

About the Author

Tom Ryan is president and CEO of the American Association for Homecare (AAHomecare.org). Prior to assuming that role in 2013, he spent 25 years as the president and CEO of Homecare Concepts, a Farmingdale, N.Y.-based respiratory company that he had founded. Follow Tom on Twitter @TomRyanHME.

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