Durable Medical Industry’s Proposal to Fix Medicare’s Competitive Bidding Program

January 18, 2012 by  
Filed under Feature Story, Guest Bloggers

Guest blog post by Bob Vogel

The current Centers for Medicare and Medicaid Services (CMS) competitive bidding program is deeply flawed and jeopardizes wheelchair users ability to get the seating and mobility equipment we need. Furthermore, competitive bidding will put the entire Durable Medical Equipment (DME) industry in jeopardy. Dave McCausland, Senior VP of Planning & Government Affairs for The ROHO Group explains that 244 leading economists, including several Nobel Prize winners, have examined the current competitive bidding program and all signed a document stating that the current competitive bidding system will fail, it is not a question of “if,” it is a question of “when.” What makes this all the more dangerous is that DME industry may be irreparably damaged in the process.

CMS competitive bidding has DME dealers bid to provide equipment in a certain category for the lowest price. The winning bidders get the contract to be the exclusive Medicare providers for a specific area for the product category(s) they win. For wheelchair users, this category is “power and manual wheelchairs and accessories.”

Round I of competitive bidding is already in place in 9 regions. Round II of competitive bidding is looming on the near horizon and will include 91 regions, including the largest cities in the country.

Congress’ plan was that competitive bidding would lower prices for DME, thereby reducing Medicare and beneficiary costs, while ensuring that beneficiaries (you and I) have access to quality items and service we need. But because competitive bidding is based on price alone, it is likely to create unrealistic and unsustainably low prices, the result will be that beneficiaries won’t have “access to quality items and service.” This means you and I won’t be able to get the equipment and service we need to stay healthy. McCausland explains that in it’s current state, competitive bidding isn’t really competitive. There is no accountability for bids, there is nothing in place to ensure bidders are truly qualified to provide the equipment and service needed in the areas they bid, and low-ball bids are likely to drive prices to an unreasonably low level that won’t provide a living wage for DME dealers.

But there is a plan to fix these flaws with competitive bidding. The American Association for Homecare (AA Homecare, the largest association of DME manufacturers and providers) worked with DME manufacturers and providers and created a plan to fix the problems that arise with competitive bidding. They created a legislative proposal called the Market Pricing Program (MPP). AA Homcare submitted the MPP to Congress and is asking that the proposal be included in the final doc fix bill to be sent to the President.

The current competitive bidding system allows a company with no physical presence in an area, to still submit a bid for that area. This encourages low-ball bids and there is no accountability. A dealer with no physical presence can submit a ridiculous low-ball bid that guarantees that the dealer wins the contract. Let’s say a local dealer needs to sell a product for $100 to stay in business. Another out-of-town dealer submits a low-ball bid for $50 to guarantee a wining bid and get the contract. Because actual reimbursement prices are based on the median price of bids, the winning bidder will get paid at the median price, lets say that ends up at $80. Now, the winning bidder from out-of-town looks at the reimbursement price of $80 and decides if they can make a profit. If they can, great they accept the contract and move into the market. If not, they can just walk away. But the rate is still set at $80  — CMS doesn’t adjust the price, they just go to the next bidder, and the next, until they find somebody desperate enough to take the bid  — the problem is that a dealer can’t survive by being reimbursed $80 for a specific product in that specific market. The only way for a desperate dealer to survive in this situation is to substitute the cheapest equipment and services allowed within Medicare guidelines, at the expense of the health and mobility of wheelchair users. This is explained in an earlier blog post, “Why You Need to Ask for Your Cushion by Name.

To address low-ball bidding and accountability, and make sure only serious DME dealers bid, the MPP requires bids to be binding. This means that the dealer must accept the offer presented by CMS, rather than being able to pass it off to another dealer. The MPP also requires bidders to put up a cash deposit with their bid. If the dealer wins the bid, it is binding and they must accept it. If the dealer walks away, they loose the cash deposit. This wipes out the out-of-town speculators and low-ball bidders. In addition, the MPP insists that the final price of a DME item be based on the “market clearing price” rather than the median price. This helps ensure that the winning bid allows enough profit to provide a living wage for the DME dealer and enable them to provide the proper equipment and services for wheelchair users.

As described previously, another problem area in the current competitive bidding system is that there is nothing in place to ensure bidders are qualified to provide the equipment and service that beneficiaries need in the areas they bid. A quality DME dealer has spent years developing relationships with therapists, rehab centers and hospitals in the area, has established a working relationship with wheelchair users they service and are well equipped to handle the equipment and service needs of their area. With the current system, speculative dealers with no physical presence in a market can submit low-ball bids all over the country with no knowledge of the equipment or service needs of the area  — these bids may overwhelm local dealer’s bids. And, if a speculative dealer wins a bid they can turn it down if there is no profit, or they can swoop in and grab it, leaving wheelchair users at their mercy.

The MPP says that in order to bid in a market area, DME dealers must have a history of doing business and providing equipment to the population — based on Medicare records — in that area. This will ensure the winning bidder has a presence and working relationship in the region.

AA Homecare is asking all of its members — DME manufacturers, dealers and providers — to contact their Representatives and Senators to support the Market Pricing Program proposal and ask that it be included in the upcoming doc fix legislation.

The Market Pricing Program proposal is one example of the many ways the DME industry is working to insure that beneficiaries like you and I have access to the equipment we need. Thanks to the ongoing hard work by many individuals and groups within the rehab sector, Congress passed legislation to specifically exclude complex power wheelchairs from competitive bidding. And recently, CMS officially announced that ultra-light weight manual wheelchairs, power assist accessories for manual wheelchairs and adjustable skin protection cushions will be removed from the upcoming round of the competitive bidding program!

Working together we can make a difference!

More information on the Market Pricing Program can be viewed here.

 

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Bob VogelBob Vogel, 51, is a freelance writer for the ROHO Community blog. He is a dedicated dad, adventure athlete and journalist. Bob is in his 26th year as a T10 complete para. For the past two decades he has written for New Mobility magazine and is now their Senior Correspondent. He often seeks insight and perspective from his 10-year-old daughter, Sarah, and Schatzie, his 9-year-old German Shepherd service dog. The views and opinions expressed in this blog post are those of Bob Vogel and do not necessarily reflect the views of The ROHO Group.

A Step-by-Step Guide to Contacting U.S. Representatives and Senators

Guest blog post by Bob Vogel

For all my writing about competitive bidding, I’m embarrassed to admit I’ve never contacted my senators and representatives — the people elected to work for us — to let them know, as a voter that I’m against competitive bidding, until now!

As I wrote in my previous blog “Why You Need to Ask for Your Cushion by Name” round II of CMS (Centers for Medicare and Medicaid Services) competitive bidding is looming on the horizon and it is crucial that each one of us contact our senators and representatives and let them know we are opposed to competitive bidding.

It was time to take my own advice  — make my voice heard and become part of the solution. Here is my experience and a step-by-step guide on how to contact your senators and representative and speak up against competitive bidding.

First I located my two U.S. senators and representative by going to: www.usa.gov/Contact/Elected.shtml

I clicked on “U.S. Senators” and went to the “Choose a State” bar — scrolled down to California, clicked, and up popped the contact information for my two U.S. Senators, Barbara Boxer and Dianne Feinstein.

Next I went back to: www.usa.gov/Contact/Elected.shtml and clicked on “U.S. Representatives.” When the Representative’s page opened up, I clicked on “Find Your Representative” typed in my zip code, clicked, and there was contact information for my U.S. representative, Tom McClintock.

Armed with contact information, I set about the first task — emailing both U.S. senators and my representative to explain that I am opposed to competitive bidding. The easiest way to do this is go to go to ROHO’s form, fill in the blanks and email it to your U.S. senators and representative. I chose to write my own, based on a combination of my experience of getting a pressure ulcer caused by a memory foam cushion — when I had requested a ROHO — and information from my previous blog post, “Why You Need to Ask for Your Cushion.” The total amount of time it took me to look up and email senators and congressman was 8 minutes.

I’ve heard a letter sent via U.S. mail has more power than an email so I printed out my email letters and invested $1.32 in stamps and mailed them to all three individuals. The total time to mail all three letters was 10 minutes, plus a nice walk with Schatzie — my German Shepherd service dog — to the post office.

Last but not least, I phoned all three. It’s funny, I’ve spoken in front of groups of 1,500 people with no problem. I knew when I phoned I would just be speaking with an aid — but I was still a bit nervous and had to remind myself, “they work for me, and I am making a difference.” I had my cheat sheet “bullet points” ready:

*My name, that I’m a registered voter, and my zip code.

*I’m calling about Medicare, specifically Round II of the CMS competitive bidding program. I am against CMS competitive bidding and I urge the (senator/congressperson) to speak out against competitive bidding.

* I’m a paraplegic and competitive bidding takes away my ability to choose a DME dealer that puts my health and equipment needs first. Competitive bidding will force me to use a DME dealer that may be in it for price alone.

*(I took much of this from my previous blog). The way competitive bidding is set-up encourages DME dealers that are only concerned with profit to submit a lowball bid and enables them to make a lot of profit by becoming the only dealer in town, if they provide poor service or try and make an extra buck by cutting corners, most people will just put up with it.

An example of how they can legally cut corners and make a lot of profit is by looking at the government HCPCS (Healthcare Common Procedure Coding System) code for the type of cushion that many paraplegics and quadriplegics use, E2622. Medicare will reimburse $347.69 for this type of cushion (if a person is in a manual wheelchair). For many wheelchair users, $347.69 is barely enough to cover the cost of the type of cushion they need to prevent pressure ulcers. However, Medicare’s Pricing, Data Analysis and Coding (PDAC) for E2622 includes 915 different cushions in this category. A dealer that is only in the business for profit can find a cushion on the list that retails for $39. If I had to sit on this cushion I would quickly develop a pressure ulcer that would likely land me in the hospital for months and cost taxpayers upwards of $50,000. This would likely happen to many other wheelchair users as well. But the dealer could easily continue to rack up big profits by placing these cushions under unsuspecting clients.

The aids I spoke with were very helpful and wanted to hear what I had to say. In all three phone calls I would stop and say, “Does what I’m saying make sense?” In each case they understood Round II of competitive bidding, understood that I was against it. In each case the were interested when I reiterated how crucial the proper cushion is to help me avoid pressure ulcers and if I had to sit on one of the cheaper cushions approved under code E2622 on the PDAC list I would be in danger of being hospitalized with a pressure ulcer which would put my life in danger and be a massive expense to taxpayers.

By doing this I have now officially become part of the solution. I encourage each of you to use this as a guide. Please join me and get involved. Contact your senators and representatives and please post a comment after you do — it will help encourage others to follow our lead. I also encourage you to ask your family and friends to use this blog post as a guideline to contact their senators and representative, as well. Contacting senators and representatives and becoming part of the solution feels pretty cool!

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Dear Senator __________,

As a registered voter in your district I am against Round II of CMS (Centers for Medicare and Medicaid Services) competitive bidding program.

I am a 51-year-old paraplegic — paralyzed for 26 years. Like many wheelchair users, I sit on a wheelchair cushion — the proper cushion is crucial to avoid getting a pressure ulcer (skin breakdown). A pressure ulcer is life threatening and commonly results in months of hospitalization at an average cost to tax payers of $50,000–$70,000 (average costs for a full-tissue depth pressure ulcer).

Currently I can choose which DME (durable medical equipment) dealer I use to get my cushion. I choose a dealer that provides me the best DME (wheelchair, cushion etc.) for my needs within Medicare reimbursement guidelines.

The cushion that I require to prevent pressure ulcers is approved by Medicare, assigned to HCPCS code E2622 and reimbursable by Medicare with an allowable of $347.69, of which I am responsible for at least 20% of the payment.

However, under competitive bidding, the incentive for DME dealers to strive to provide the best equipment for their clients is replaced with the necessity of reducing their costs as much as possible. In addition, competitive bidding opens the door for a DME dealer who is only interested in profit to make easy, quick and massive profits by submitting a “lowball bid.” An example of how this can be done is: there are more than 900 cushions under code E2622 on the PDAC list, including one that lists on the internet for $39.95. A “profit only” business could fit unsuspecting clients with this type of cushion, make large profits and still be within government guidelines — resulting in countless life threatening pressure ulcers, and massive hospital bills that will be passed on to the taxpayer.

When I first left the spinal cord rehabilitation hospital, I was placed on an inferior cushion that caused a tiny pressure ulcer (about the size of a pimple). I immediately saw the pressure ulcer because I check my skin with a mirror each day, but this could have resulted in a massive pressure ulcer within a few days. Instead, I was able to resolve the issue with bed rest and the proper cushion. The average wheelchair user would not have noticed the red spot before it became a life-threatening pressure ulcer — requiring a lengthy and expensive hospital stay. This is why I urge you to speak out against Round II of competitive bidding.

Sincerely,

 

Robert H. Vogel

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Bob VogelBob Vogel, 51, is a freelance writer for the ROHO Community blog. He is a dedicated dad, adventure athlete and journalist. Bob is in his 26th year as a T10 complete para. For the past two decades he has written for New Mobility magazine and is now their Senior Correspondent. He often seeks insight and perspective from his 10-year-old daughter, Sarah, and Schatzie, his 9-year-old German Shepherd service dog.

Why You Need to Ask for Your Cushion by Name

Guest blog post by Bob Vogel

In my experience with DME (durable medical equipment) dealers, competition leads to quality. I was injured in 1985 — a T10 complete paraplegic — my first cushion and wheelchair were covered by Medicaid and provided by a local DME dealer. In the 90’s I worked as a sales rep for a wheelchair manufacturer, selling to and working with DME dealers. After that I worked as a sales rep for a DME dealer.

In my experience, a good DME dealer has the knowledge and takes the time to properly fit and provide the best cushion, wheelchair, etc., to meet their client’s needs. DME dealers strive to provide the best service and best products to meet our needs because it’s the right thing to do, and because it’s good business. We have the power to take our business to another DME dealer and word of mouth — good or bad — is powerful when it comes to business.

Unfortunately, because of competitive bidding, this paradigm is changing. The CMS (Centers for Medicare and Medicaid Services) competitive bidding program has DME dealers bidding to see who can provide equipment in a certain category for the lowest price — for you and I this category complex rehab, from cushions  and wheelchair backs to manual chairs and high-end power chairs. Round I of competitive bidding is already in place in 9 regions. Round II of competitive bidding is looming on the near horizon with 91 regions including the largest cities in the country.

Under competitive bidding, instead of Medicare beneficiaries having five to ten Medicare providers to choose from that compete based on the quality of the products and service they provide, we may only have one in our region — eliminating the competition and the need to provide quality products and service. Have a local DME dealer who didn’t win the bid that you have been going to for years? Tough. Don’t like the way the winning bid DME dealer does business? Tough. It’s not just Medicare — Medicaid and many private insurance companies have track records of following the Medicare competitive bidding guidelines.

The way competitive bidding is set-up encourages DME dealers that are only concerned with profit to underbid DME dealers that are truly concerned with providing the right product for their client. As an example, let’s take a look at a common type of cushion. Let’s say your skin and seating requires a ROHO® HIGH PROFILE® Single Compartment Cushion — the government HCPCS (Healthcare Common Procedure Coding System) code for this type of cushion is E2622. Now let’s say there is a dealer who is only in it for profit, winning the bid, and becoming the only game in town. Medicare’s Pricing, Data Analysis and Coding (PDAC) for E2622 includes 915 different cushions. According to this data, every cushion on the list will protect your skin just the same. If dealer only who is in it for profit carefully goes through the list they will find some real “bargains,” including a layered foam cushion with a 1/4″ gel cover that retails for $39. But hey, it fits into the code so it “should” protect your skin just like a ROHO HIGH PROFILE Single Compartment Cushion — right? Wrong!

When I left rehab in 1985, my therapist sent me home on a memory-foam cushion saying it “should” protect my skin just as well as the ROHO HIGH PROFILE Single Compartment Cushion I had requested. Despite regular weight shifts, I developed a tiny pressure ulcer within 3 months. Regular mirror-skin checks enabled me to catch it right away — I got the ROHO Cushion and was able to heal at home, feeling like I had dodged a bullet.

A dealer only interested in profit could submit a lowball bid of say $250 for this category — win the bid and start shoving $39 cushions under clients while collecting $250 per cushion from Medicare.

This is why it is vital that you, working with your clinician, request the exact cushion that you need on a doctor’s prescription/documentation. Because even if you are in an area that already has competitive bidding, there is a clause in competitive bidding that says if a doctor’s prescription specifies the make, model and product, then the winning bidder — the DME dealer — has to provide that cushion, or find another winning bidder DME dealer that will provide the cushion. As competitive bidding looms, it is more important than ever for each of us to advocate for our proper seating. Make sure your prescription includes exactly what your seating needs are, for example ROHO® HIGH PROFILE® Single Compartment Cushion (4″). Make sure the size of the cushion needed is included on the prescription, for example 16″ x 16″.

In addition, there is still time to phone, email, or write your representative and senators and tell them you do not want competitive bidding. Explain that while competitive bidding may save money in the short term, the wrong cushion risks life threatening pressure ulcers that will cost taxpayers in excess of $50,000 per occurrence in hospitalization alone.

So what can you do to change the outcome?
1. Send letters to your representative and senators. It’s OK if you don’t know what to write, we have a letter already written and all you have to do is fill in the blanks.
2. Go to competitivebiddingconcerns.com and fill out a form to record your personal struggles with getting mobility equipment.

To view the list mentioned in this blog, go to the Medicare Pricing, Data Analysis and Coding list (PDAC) https://www.dmepdac.com/dmecsapp/do/search. Next, scroll down to the green bar that says “Search DMEPOS Product Classification List.” Under the green bar to the right, type in E2622 and click on the purple GO button and all 915 cushions that meet the criteria for this code will appear.

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Bob VogelBob Vogel, 51, is a freelance writer for the ROHO Community blog. He is a dedicated dad, adventure athlete and journalist. Bob is in his 26th year as a T10 complete para. For the past two decades he has written for New Mobility magazine and is now their Senior Correspondent. He often seeks insight and perspective from his 10-year-old daughter, Sarah, and Schatzie, his 9-year-old German Shepherd service dog.

6 Resources For Understanding U.S. Health Reform

I recently went to a luncheon that discussed the basics of the US Health Care Reform. I found out that even though it was blasted all over the media, I knew very little, and almost nothing regarding how it would affect me.

I knew that the bill would require most U.S. citizens to have health insurance (beginning in 2014) and provide more affordable health insurance options. I knew that there were incentives for businesses to offer health insurance to their employees. I knew that the bill imposed regulations to prevent health insurers from denying coverage to people for any reason, including a pre-existing condition. That is about I all knew.

One of the biggest changes is that the new reform hopes to saves costs by changing the mentality and coverage from “fix it after the fact” to “preventive care methods.” For example, no coinsurance or deductibles will be charged for preventive services for Medicare recipients. Medicare will also cover a free annual comprehensive wellness visit and personalized prevention plan.

If you’re like me here are a few resources that might help navigate through reform changes and your coverage.

Resources:

 

 

Why is there more focus on Medicare than on Medicaid?

More wheelchair users are covered under Medicaid in the US than are covered by Medicare so why does the Durable Medical Equipment (DME) industry focus on Medicare?

There are at least fifty Medicaids and a myriad of third party payers in the U.S. and they are all different in coverage, reimbursement and rules. In fact, the only thing that they all have in common is their link to Medicare, and that’s why the DME industry focuses so much attention on Medicare. Consider the following:

  • Medicare’s Healthcare Common Procedure Coding System (HCPCS) is used universally in the U.S.
  • Every Medicaid is a cross-over payer to Medicare.
  • The large majority of payers (and almost all Medicaids) look to Medicare’s coverage rules as the basis to set up their own coverage policies.
  • The large majority of payers (and almost all Medicaids) use Medicare’s reimbursement rates as a basis for their own. In fact, it is not unusual for other payer’s reimbursement rates to be set as a percentage of the Medicare rates.

Medicare’s recent experiment in competitive bidding for DME is raising the stakes much higher in this pattern of other payers mimicking what Medicare does. The Medicare competitive bidding program has hardly proven itself. 166 leading economists, including Nobel Prize winners, have predicted that it has several fatal flaws and will fail. Yet, even with all its flaws, at least Medicare had the sense to implement this program in stages and affix some specific requirements and constraints on it. Unfortunately, we are already seeing other payers adopting Medicare’s pricing from competitive bidding without any apparent consideration or limitations. They appear to be focusing solely on cutting their cost for DME with little if any regard to the impact it may have on quality and access for their beneficiaries.

Bottom line, in the U.S. when Medicare gets a sniffle every other payer catches a cold… and competitive bidding may lead to pneumonia.

(This has been modified from an original e-mail written by Dave McCausland, Sr. VP of Planning & Government Affairs)

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