Observation Deck

Going the Distance Against Bidding

How the industry will keep up the fight for sustainable reimbursement policy.

AAHomecare works on multiple fronts to improve the business environment for the home medical equipment community. With the support of leaders on our Association’s Councils, we engage CMS and other state and federal agencies to simplify and reduce the stream of red tape and regulations that stands between providers and patients. Recent successes on these fronts include expansion of the prior authorization program for power mobility devices, excluding imported HME-related items from new tariffs, and convincing CMS to employ new oxygen modifiers to improve claims processes.

Reimbursement Cuts Whittle Away HME Suppliers

As important as those regulatory successes are for many HME providers, they can’t fully offset the effects of drastic reimbursement cuts stemming from competitive bidding and the application of bidding-derived rates outside of competitive bidding areas.

As we get ready to enter the ninth year under the bidding program, the impacts on the HME sector are profound and unmistakable. Our analysis of CMS data shows that one out of three traditional HME suppliers has gone out of business since 2010, the year before the bidding program first took effect, dropping from 9,700 companies to 6,400 in that span – a 33.8 percent reduction. Total locations (or “rooftops”) were reduced by a similar 31.8 percent rate, from 14,000 to 9,600. These numbers would be sobering enough if the Medicare beneficiary population had remained static during that time frame. Instead, those reductions come as the number of Medicare enrollees has jumped by approximately 25 percent over that period.

What should be a thriving and growing industry helping America’s seniors and people with disabilities and chronic conditions stay in their homes is instead contracting due to the bidding program.

Reforms for the Bidding Program Remain a Priority

AAHomecare and other stakeholders in the HME sector have been focused on reforms for the competitive bidding program to lessen the impacts of bids from less-serious and non-qualified companies on bidding results and improve the price-setting mechanism used in determining bids. In 2015, we succeeded in having language included in a broad Medicare legislative package mandating that providers must have proof of applicable state-level licensure before they can submit bids, and that bidders would be required to obtain a surety bond to ensure that “winning” bid providers stand behind their bids. These reforms will take effect in the next bidding round, details of which are expected soon. While those hard-won provisions will certainly have a positive impact on the next bidding round, AAHomecare has been advocating for more comprehensive reforms for the bidding program, including:

  • Using market clearing price to determine Single Payment Amount for any item included in competitive bidding;
  • using historical claims data to determine supplier capacity;
  • increasing the transparency of the competitive bidding program; and
  • reforming competitive bidding product categories.

Focus on Rural and Non-Bid Rates Provides Some Relief

If you’ve followed AAHomecare’s public policy work over the past few years, you’re aware that we’ve put a lot of energy and resources into fighting for fairer reimbursement rates for suppliers in rural and other non-bid areas. We’ve had success in this area in getting six months of retroactive relief on cuts for rural and non-bid providers through the Cures Act in late 2016. This relief also resulted in commensurate positive adjustments for suppliers serving patients covered by TRICARE over that period.

We subsequently worked to support the release of an HME-related Interim Final Rule proposed by HHS that would have further extended that relief. The departure of HHS Secretary Tom Price in September 2017 slowed that process, and there was some concern that the IFR might never be released, but it was ultimately finalized in May 2017, delivering seven months of relief for suppliers serving patients in rural areas.

Some in the HME community have questioned AAHomecare’s focus on getting this relief for rural and other non-bid area suppliers. I personally heard from suppliers who believed this focus meant that we were giving up on substantial reforms for the bidding program.

As someone who had a successful oxygen business ravaged by the onset of the bidding program, I know how damaging this approach has been for both companies that didn’t win bids as well as those that did. Unfortunately, earlier attempts to stop or dramatically alter the program in its early days were unsuccessful, and competitive bidding has taken hold despite criticism of the program by a range of healthcare professionals, including discharge planners, caseworkers, and groups representing patients that depend on HME.

What It Takes to Win

There’s a common thread running through our initial success in improving the bidding program in 2015 and the relief won for rural/non-bid suppliers through the Cures Act and the IFR. All of these gains are the result of persistent and passionate engagement from HME stakeholders over a long period.

For example, in the case of getting the IFR released, AAHomecare and other HME stakeholders enlisted Capitol Hill support in the form of Congressional sign-on letters, direct contact with CMS and the Office of Management & Budget (OMB) by members of Congress, and by encouraging legislators to bring up the issue in Congressional hearings with HHS Secretary Azar and OMB Chair Mick Mulvaney. We also helped convince Congressional leaders to include language in a report accompanying March 2018 Omnibus legislation pushing CMS to release the IFR. Without this sustained pressure over the nine-month period following the first appearance of the IFR, this relief for rural providers might not have materialized at all.

The pace of progress for improvements to the bidding program and rural/non-bid area reimbursement is no doubt frustrating for suppliers who are dealing with razor-thin (or even negative) margins. But the gains we’ve made in recent years are real and substantial, and the process has shown us what it takes to win: a sustained effort from the HME community to build relationships on Capitol Hill and demonstrate the impacts of unsustainable reimbursement rates on our industry and the patients we serve.

I want to thank the hundreds of companies that have invested their time and effort in these efforts. Your energy, commitment, and credibility made these accomplishments possible. For those who haven’t helped work towards better public policy for HME, I hope you will provide the reinforcements we need to continue to fight and bring home some more much-needed wins.

This article originally appeared in the September 2018 issue of HME Business.

About the Author

Tom Ryan is the president and CEO of the American Association for Homecare (Washington, D.C.), the industry's national association.

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