New Medicare bidding rules, pricing raise objections

“It’s ironic that a program that is supposed to increase competition among providers is actually reducing competition, costing jobs in communities, and putting Medicare patients at risk,” said Tyler Wilson, president of the Washington-based American Association for Homecare.

The Medicare competitive bidding program replaces its existing fee schedule amounts in selected areas with prices based on suppliers’ bids.

For some products and services, there is a revised price list.

The bidding process and new price list is not part of the medical device tax that was included in the Patient Protection and Affordable Care Act.

Wilson said the American Association for Homecare represents those who serve the needs of millions of Americans requiring prescribed oxygen therapy, wheelchairs, enteral, or tube, feeding and other medical equipment, services and supplies at home.

“This program is spiraling out of control. Providers, consumer advocates and economists are urgently calling on Congress to adopt a better system,” he said.

Marilyn Tavenner, acting administrator for the Centers for Medicare and Medicaid Services (CMS), said expanding bidding in 2012 saved the government more than $200 million last year. “This program has already saved millions for taxpayers and beneficiaries while maintaining access to care,” she said. “We look forward to building on this success by serving more beneficiaries, increasing savings and helping to ensure the long-term sustainability of Medicare,” she said.

Fixing the problem

Rep. Tom Price (R-Ga.), who is a past chairman of the Republican Study Committee, the caucus of conservative Republicans that forms the majority of the majority in the House, is preparing legislation to fix the problem.

Price, a licensed physician, introduced legislation in the previous Congress to establish the Market Pricing Program, which will reform the current system by creating local bidding regions that are smaller and more homogenous that the current Metropolitan Statistical Areas and will make the bid price that actual clearing price, not a median price of other winning bids.

There would also be protections for established local businesses against poaching bidders from outside their bid region.

Wilson said CMS, which administers the Medicare program, told the industry that the program saves an average of 45 percent on certain medical equipment by extending its bidding program to 91 new areas.

Those savings come from fewer patients participating in the home medical equipment programs, he said.

Wilson said that Medicare beneficiaries are paying a steep price for the false savings. CMS is not considering the higher costs of emergency room and hospital visits in their alleged savings; further evidence that their projections are bogus, he said.

The prices set by CMS are unrealistic and force business to either shutter or move on to other markets, he said. For many businesses, the government is in a position to coerce businesses to participate at below-market prices because of its size, he said.

Medicare is the largest third-party purchaser of home medical care, its market power effectively compels providers to bid at unsustainable reimbursement rates to ensure the opportunity to continue serving Medicare beneficiaries, he said.

Joel Marx, chairman of the American Association for Homecare and chairman of the Cleveland- based Medical Service Company, said the new reimbursement rates are disastrous for providers across the country.

Convoluted methodology

“These reimbursement rates are based on a convoluted methodology which pits providers in a life-or-death situation,” said Marx.

“The government then decides which companies survive and which are driven out of business rather than run a fair auction conducted by auction experts,” he said.

“The current bidding system is forcing seniors and people living with disabilities to seek medical help in emergency rooms, to be forced into nursing homes and to be hospitalized when they could be cared for at home at much lower costs,” he said.

Wilson said the government’s approach leads to lower quality care and higher costs that are simply recorded somewhere else in the system.

“The hidden costs of the bidding program are far exceeding any savings to the government from reduced claims on home medical equipment,” he said.