The Good, the Bad and the Uncertainty
Edition: November 2012 - Vol 20 Number 11
In theory, anything the Centers for Medicare and Medicaid Services (CMS) can do to reduce healthcare costs is a good thing. But, as industry experts have known for years, there is a price to pay for spending less.
The goal of competitive bidding is to assist Medicare in aligning payment rates for durable medical equipment prosthetics, orthotics and supplies (DMEPOS). “In January, 2011, CMS selected nine metropolitan statistical areas,” explains Bob Miller, vice president of sales, Gericare. “Under this program, existing DMEPOS fee schedules were replaced with single payment amounts, averaging about a 32 percent savings across nine product categories.” In 2013, CMS is expected to add 91 metropolitan statistical areas and various product categories, including walkers, support services, oxygen, scooters and negligible wound therapy pumps.
“CMS views the competitive bidding program as essential in helping Medicare align payment rates for DMEPOS items and services,” says Miller. “It feels this can be done by getting market-based prices. In fact, to date, the program has saved the country $20 billion – which is huge, he points out. So, it should be no surprise that there continues to be substantial support for competitive bidding on the part of Congress and the Senate. “Ideas about an auction system would better facilitate the bidding process and ensure that the quality of care would be retained,” he adds.
What’s wrong with this picture?
So, why would some industry nay-sayers like to see competitive bidding repealed? “People who are against this feel it’s anti-competitive, does not promote thinking out of the box and negatively impacts the quality of care to the resident,” says Miller. “Loss of control” is another issue, he notes. Take enteral tube feeding. “Say, for example, that district A has been supplying a particular nursing home [with enteral feeding tube supplies] for 10 years. This is a distributor that deals with nursing homes on a regular basis.” However, a competitive bid comes into play, and the current supplier doesn’t win the bid. “Now you may have a DME or home healthcare company taking over the job of delivering [supplies] to a nursing home, which they have never done [in the past]. They also maybe 200-300 miles away [from the nursing home] and unable to service them.”
This scenario raises several questions, such as the following, he says:
• Is the new distributor familiar with the needs of the nursing home patients? (“A local supplier may be proficient in the home care market, but has never been in a nursing home before,” says Miller.)
• Does the distributor realize an enteral tube feeder may need round-the-clock supervision?
• Will the quality of care and the correct products be given and monitored correctly?
• Will the nursing home have to sub-contract for certain services?
When service suffers, so do the nursing home patients, says Miller, who questions whether, in these cases, the ill and the elderly are appropriately cared for. Furthermore, when distributors win a competitive bid, they likely must absorb a margin cut. In this – or any other – economy, that calls for a “big adjustment,” he points out.
To bid or not to bid
When it comes to competitive bidding, distributors have two choices, according to Miller. They can “get in there and bid aggressively,” he says. That means completing all necessary paperwork and “following the rules completely, with no mistakes.” Indeed, mistakes in the paperwork can be costly. “[A distributor] can be thrown out of the bid,” he says. The other choice is to refrain from bidding and lose the opportunity to service customers. “Get with the program or be left behind,” he says.
On a positive note, if a distributor gets the bid, it likely will retain the business and may even pick up other accounts in the process. “This is the only way [distributors] can stay afloat,” Miller says. “[Distributors] need to be on top of their game and know all the rules and regulations in order to be effective.” They must supply all of their accounts within a 24-hour period, which means they “really have to do their homework,” he says. In all likelihood, he adds, “competitive bidding is here to stay because of the significant savings ($29 billion) it has already generated.”