Competitive bidding as a way to set Medicare rates for home medical equipment is looking more permanent these days.

The HME industry continues to lobby for a replacement system that would require bids to be binding. Bidders now aren’t obligated to provide HME products at the “low-ball” prices they may have bid. Also, the industry wants final rates to be determined by the highest acceptable bid instead of the median bid, and bids to be backed by cash deposits “to ensure that only serious homecare providers participate” (HHL 4/18/11).

The American Association for Homecare (AAH), which speaks for HME suppliers, anticipates the introduction of a House bill that would adopt the changes it wants. But there seems little chance such legislation could be considered until after the November elections, an AAH staffer acknowledges.

 

AAH finds no lack of negatives

As evidence that a new approach to HME rate-setting is needed, AAH has documented more than 600 cases of problems under the existing system. Those range from the difficulty beneficiaries have finding local equipment or service providers, to longer-than-necessary hospital stays caused by lack of HME products discharged patients need once they’re at home.

Because of a change in supplier, for example, a 92-year-old Cincinnati-area woman couldn’t get her wheelchair fixed, according to AAH. And a patient in the Charlotte, N.C., metropolitan area was required to stay in the hospital for several extra days because delivery of oxygen equipment to the patient’s home was delayed.  

AAH also cites the opinion of 167 auction experts that the bidding program developed by CMS is seriously flawed.

Nevertheless, CMS recently announced a routine second round of competitive bidding for the nine markets where bidding was conducted for the first time three years ago. The new round, scheduled for fall 2012, again is for six categories of products:

·         Respiratory equipment and related supplies and accessories.

·         Standard mobility equipment and related accessories.

·         General home equipment and related supplies and accessories.

·         Enteral nutrients, equipment and supplies

·         Negative pressure wound therapy pumps and related supplies and accessories.

·         External infusion pumps and supplies.

New HME items on the bidding list

In a change from the first round, however, CMS is exempting retail (non-mail order) diabetes supplies from bidding. It also is adding several “high-cost, high-volume items, with a large savings potential,” including standard nebulizers and external infusion pumps, a CMS spokesperson says. Currently pending are bids for HME products in the 91 markets covered by the second round of competitive rate setting, scheduled for 2013.

In announcing the second round, CMS released a report that found first-year savings under the bidding program represented a 42%, or $202 million, reduction in Medicare’s HME costs in the initial nine metropolitan statistical areas.

Over 10 years, savings for taxpayers and beneficiaries combined could reach nearly $43 billion, the report estimates – $17 billion of that from reduced co-insurance charges to beneficiaries and lower Medicare premiums. Last year alone, beneficiaries saved up to $105 on hospital beds, $168 on oxygen concentrators and $140 on diabetic test strips, the report states.

Monitoring of the bidding program’s effects indicates “beneficiaries’ access to necessary and appropriate items and supplies has been preserved,” the report states. “Moreover, the rate of use of hospital services, emergency room visits, physician visits, and skilled nursing facility care has remained consistent with the patterns and trends seen throughout the rest of the country.”