Georgia Home Medical Equipment Providers Seek Delay In Expansion Of Medicare Bidding Program

From: Georgia Association of Medical Equipment Suppliers

ATLANTA, June 28, 2013 /PRNewswire-USNewswire/ — Citing the high percentage of out-of-state providers contracted to service Georgia Medicare beneficiaries, the Georgia Association of Medical Equipment Suppliers (GAMES) has requested a delay in the scheduled July 1 expansion of the Medicare bidding program.

The Centers for Medicare & Medicaid Services (CMS) plans to expand the controversial bidding program from nine locations to 91, but providers, members of Congress, and patient advocates around the country have asked for a delay because of many serious problems with the program. In a letter to CMS, GAMES said that more than half of the contracted providers serving Georgia are from out of state, with as many as 2/3 located more than 100 miles away from one community.

“Patients and providers both are being hit hard. Our company, which has provided services to the Atlanta health community for over 20 years has been eliminated from 80% of contracts in the Atlanta bidding area,” said Todd Tyson, president of Hi-Tech Healthcare, Inc. in Norcross, Ga. “Patients are confused about why we can no longer provide services, and they do not have any reason to select another provider other than the government restrictions from not being awarded competitive bid contracts. Patients and providers are preparing for the perfect storm slated to go into effect next week.”

In addition, the letter said that at least 17% of the contracted suppliers in Georgia do not have proper licensure in other states, which should disqualify them from working with Medicare patients in Georgia.

“According to CMS’ own words, this is considered a breach of their entire contract, creating additional access issues in Georgia,” said Phillip Stoudenmire, president of GAMES.  “These suppliers’ bids should not have been considered in the Georgia competition, potentially lowering the contracted rates and taking contracts away from qualified, local suppliers.”

The dangerous and defective bidding program contracts providers to supply critical medical equipment such as oxygen tanks, power wheelchairs, and diabetic testing materials for Medicare patients.

“I have been told by social workers at a large rehab center that the doctor in charge has given orders not to release any patient from the rehab center till the home medical equipment he orders for them is either at the rehab center or at home,” said Sergio Silva, president of Medi-Source Home Medical Inc. of Marietta, Ga. “Patients are to remain at the center at a cost of $2,000 per day till they can get the equipment necessary for them to be released to go home.”

Tyler Wilson, president of the American Association for Homecare (AAHomecare), said that “CMS must acknowledge the seriousness of the problems, delay expanding the program, and allow time for it to be fixed.” Last week, AAHomecare filed a federal lawsuit asking the courts to delay the expansion of the bidding program, citing the widespread awarding of contracts to providers who don’t have the proper state and local licensing required by the bidding program.

“A federal agency responsible for providing care to the most vulnerable people in our society must abide by the rules designed to guarantee their safety,” Wilson said. “Medicare beneficiaries as well as state regulators don’t expect CMS to circumvent state and local laws and allow unlicensed contractors to provide services and products to senior citizens and people living with disabilities.”

Thus far, 244 economists, more than two dozen consumer and disability groups, 186 members of Congress, and the National Federation of Independent Business have denounced the bidding program.  One of the chief complains is that CMS allows providers to make non-binding bids, which allows providers to make “suicide” low-ball bids, bids while hoping that other providers bid reasonably, in desperate attempts to win contracts. But, they have no obligation to sign contracts for the amount of their bids. Even if they refuse contracts, CMS still uses these bid amounts in calculating the reimbursement prices.

The flawed process will result in an average cut in prices of 45 percent for durable medical equipment, known as DME, if the bidding program is allowed to expand next week.

Dr. Brett Katzman, Chair of the Department of Economics, Finance & Quantitative Analysis at Kennesaw State University, in Kennesaw, Georgia, has sharply criticized the bidding program.  “There are winners and losers, but winners are chosen based on their willingness to game the system rather than their cost competitiveness,” said Katzman, one of the nation’s leading experts on auctions.

“The bottom line is that competition is not setting the new prices lauded by CMS,” Katzman explained. “The new prices are just as much administratively set as the old fee schedule; they are just being set more deceptively. The fact is that administrative pricing rarely gets the price ‘right’ and just as the fee schedule prices were too high, the CMS prices are simply too low.”

In the letter, GAMES said, “The current Medicare Bidding Program is actually anti-competitive, reducing access to care, patient choice, and potentially, the quality of care for Medicare beneficiaries–tax-paying Americans who have paid into the program for their entire working lives! It also forces providers of this life-giving equipment to lay off good employees, and in many cases, close their businesses. (One study estimates a loss of up to 2,000 jobs in Georgia.) Unfortunately, for many Medicare beneficiaries, this also means the end of a relationship with a supplier they have come to trust.”

Clearly, there is significant opposition to the bidding program in Georgia.

Rep. Tom Price, (R-Ga.) has introduced bipartisan legislation, H.R. 1717, the Medicare DMEPOS Market Pricing Program Act of 2013. This legislation will repeal and replace many of the flaws associated with the current Medicare bidding program, creating a fair and transparent program, protecting patient access to quality home medical equipment services, and allowing many small businesses to continue to serve patients in their community.

In addition, eight Georgia House members–Sanford D. Bishop, Jr. (D-2(nd) ), Doug Collins (R-9(th) ), Phil Gingrey (R-11(th) ), Henry C. “Hank” Johnson, Jr. (D-4(th) ), Jack Kingston (R-1(st) ), Tom Price (R-6(th) ), David Scott (D-13(th) ), and Lynn A. Westmoreland (R-3(rd) )–are among the 227 members of Congress who have signed a letter to CMS asking for a delay in the expansion of the program.

The American Association for Homecare represents durable medical equipment providers, manufacturers, and others in the homecare community that serve the medical needs of millions of Americans who require oxygen systems, wheelchairs, medical supplies, inhalation drug therapy, and other medical equipment and services in their homes. Members operate more than 3,000 homecare locations in all 50 states. Visit www.aahomecare.org.

The Georgia Association of Medical Equipment Suppliers  is a proactive, state-wide association providing leadership, resources and support to companies that serve home care patients. Our mission is to facilitate business success, influence public policy and improve patient care in the home.