Stakeholders Push for Proposed Market Pricing Program as a Smarter Alternative

HELENA, Montana, Dec. 14, 2012 /PRNewswire-USNewswire/ — Medicare’s controversial bidding system for durable medical equipment (DME) used at home is pushing Montana homecare companies out of business years before it is even implemented in the state. The bidding system is also making it harder for vulnerable seniors and people with disabilities to receive required home medical equipment that has been prescribed for them.

Mike Calcaterra , acting president of the Big Sky Association of Home Medical Equipment Suppliers, said, “Medicare says the competitive bidding program is not affecting Montana, but it is. There are job losses and company closures because of this program and other federal policies that have hurt homecare.  Also here in Montana, there are negative effects from the bidding program on private insurance.  Private insurers are already establishing lower reimbursement levels for oxygen therapy, hospital beds, power wheelchairs, and other home medical equipment.  These prices set by bidding from other areas of the country are creating financial havoc for medical equipment businesses in the state.”

“I’ve already seen some consolidations and job losses, and you’ll see further consolidations and job losses; I know it because we’ve been involved in buyouts where we had to eliminate the jobs,” said Calcaterra, who is northern zone vice president at Norco Inc., a provider of home medical equipment based in Boise that operates more than 45 branches across Montana, Idaho, Oregon, Washington, Nevada, Utah, and Wyoming.

The Centers for Medicare and Medicaid Services (CMS) acknowledges that utilization of DME equipment has dropped significantly since the bidding program began.

Consumer advocates including Montana ADAPT, homecare providers, manufacturers, academics, and economists say utilization has declined because the bidding program has essentially eliminated several thousand proficient DME providers from servicing Medicare beneficiaries. Most stakeholders believe the sharp reduction of providers is making it more difficult for Medicare beneficiaries to fill prescriptions for DME equipment and that is why there has been a reduction in reimbursement claims.

“People living with disabilities are not receiving critical medical equipment and services. It leaves beneficiaries out in the cold,” said Calcaterra.

Tyler Wilson , CEO and president of the American Association for Homecare (AAHomecare), said the objective of a bidding system should be to increase competition. Instead, Wilson said, the current system allows non-binding bids that encourage unsustainable prices and do nothing to ensure that winning bidders are actually qualified to provide the products and services to Medicare beneficiaries.

In fact, 244 economists and auction experts, more than two dozen consumer and disability groups, 165 members of Congress, and the National Federation of Independent Business have opposed the current bidding system.

Wilson called on Congress to enact HR 6490, a bill to establish a Market Pricing Program (MPP). The legislation has 80 co-sponsors so far in the House and is based on recommendations by economists and auction experts in the field who have studied the current program.  The bill outlines an auction system to establish market-based prices around the country and would require Medicare to make fundamental changes to ensure the long-term viability of the pricing program. Among the key components:

• The MPP program is designed to achieve an accurate market price.
• Bids are binding for the bidders and cash deposits are required to ensure that only serious homecare providers participate.
• The bid price is based on the clearing price, not the median price of winners.
• The program includes the same equipment and services as the current bidding system and would be implemented across the country during the same timeframe.
• Two product categories per market area would be bid. Eight additional product categories in that same area would have prices reduced based on auctions conducted simultaneously in comparable geographic areas.

Calcaterra said the MPP program is far better for providers and beneficiaries.   Providers who don’t win bids are barred from doing business for three years with Medicare, which is their biggest customer, he said.  Faced with that possibility, he said, companies are “suicide bidding, hoping to get a contract and then going from there. And CMS is saying there’s no problem.”

Big Sky Association of Home Medical Equipment Suppliers is dedicated to promoting ethical and professional home medical services to the patients of Montana and Idaho.  Our members adhere to strict professional practices to provide the highest quality services available. Visit http://bigskyames.org.