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Medicare Auction Brings Unprecedented Changes to Homecare Equipment Services

On July 2, the U.S. Department of Health and Human Services (HHS) announced “winning” bid rates for a disastrous Medicare program called DMEPOS “competitive” bidding which will totally change homecare equipment services as we know it today.  This initiative was passed by Congress in 2003 and temporarily stopped by Congress due to numerous problems that developed when it was launch five years later.

The clock is ticking and after a two-year delay, the program will attempt to roll out again on January 1.  It will be implemented nationwide in two phases; the first in nine metropolitan areas followed by another 91 the next year.  Unfortunately, Cincinnati and Cleveland are two of those cities affected in the first round.  Soon after, the federal law requires bidding in Akron, Youngstown, Toledo, Columbus, and Dayton. 

This attractively labeled program is anything but “competitive”.  By name alone, opponents have faced an enormous public relations battle to explain why something called “competitive” is not. The reality is this single sweeping initiative puts us squarely on the brink of gutting the durable/home medical equipment sector – an integral part of the homecare community that has matured through market demands to support a higher acuity patient to keep them living independently and safely at home. 

In simplest terms, this Medicare auction encourages “suicide bidding,” using economic coercion by forcing providers to submit unsustainable bids necessary to win a contract.  If a provider is unsuccessful in securing a Medicare contract, the chance of survival is nil therefore bids were motivated solely on one factor – to survive at any cost. 

Given the shocking results of the “suicide” bids which averaged rates at 32% lower than fees today, one must question the true impact to the public and the integrity of the benefit.  After all the debate, it is simply a math question – what impact will this drastic cut have on a segment of health care that averages single digit net profit?  What are the ramifications on homecare services access, choice and quality of products, clinical oversight to support patients and families at home, other insurance programs including Medicaid, technology innovation and Ohio jobs? 

If you or a loved one uses homecare equipment services, you should be aware of the following facts: 

How will this program affect seniors?

How will this program affect Ohio’s local economies?

Won’t bidding improve competition?
NO!  This is a myth promoted by the Medicare agency and some in Congress.  The reality today is Medicare sets reimbursement and home medical equipment providers compete on the basis of quality to help transfer hospital patients into cost-effective care at home. Providers have an incentive to perform competitively to retain the trust and support of referral sources and patients. “Contract suppliers” under this bidding model have little, if any, incentive to “compete”.

Isn’t it true this program will eliminate fraud?
NO!  CMS asserts this claim but it is extremely misleading since the bidding program sets prices; it does nothing to prevent fraud. The homecare sector has zero tolerance for fraud and abuse. The real solution to keeping criminals out of Medicare is better screening and better enforcement.  Furthermore, Ohio has state licensure for home medical equipment (HME) companies so there are safeguards to protect all payers and consumers in Ohio, not just those served by Medicare.

Can anything be done to stop the Medicare bidding program?
YES!  But this initiative is law so it will take law to stop it.  HME providers across the U.S. support a bill in Congress, HR 3790, to eliminate the bidding scheme in a manner that reduces Medicare spending in other ways, preserving access to home care.  Fifteen of Ohio’s 18 Congressional representatives have signed on to the bill demonstrating strong bi-partisan to stop the program.  However, we need a Senate companion bill to support these House efforts so contact Senator Brown and Senator Voinovich’s offices and urge they help. 

And while the homecare community is united to halt the bidding program, numerous consumer and clinical groups support HR 3790 including the ALS Association, the American Association of People with Disabilities, Cerebral Palsy Association of Ohio, the Muscular Dystrophy Association, National Emphysema/COPD Association, National Spinal Cord Injury Association, among others

At a time when our elderly population is burgeoning and health care costs are sky-rocketing, the Medicare agency is determined to launch a program that will ravage the least costly, slowest growing sector of healthcare – the home/durable medical equipment benefit.  Consumers who rely on these products and services will pay a steep price under this controversial program and while HME providers have fought long and hard to beat back this ill-fated program, it’s up to consumers now.  This is your health care, your life, your independence, and we need your voice to permanently end this program before it’s too late. 

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