Homecare Association Says CMS Pricing For DME Equipment Will Endanger Seniors, Cost Jobs, And Force Business Closures

WASHINGTON, Jan. 30, 2013 /PRNewswire-USNewswire/ -- Pricing data released today by the Centers for Medicare & Medicaid Services (CMS) will result in the government's poorly designed bidding program continuing to disrupt Medicare patients' access to vital home medical equipment such as oxygen therapy, power wheelchairs, and hospital beds.

While CMS, which administers the Medicare program, alleges it will save an average of 45 percent on certain medical equipment by extending its controversial bidding program to 91 new areas, those so-called savings are created by a sharp decline in utilization of home medical equipment by Medicare patients. Experts say the unrealistic low prices for durable medical equipment (DME), like the ones announced today, are forcing providers in the affected communities to go out of business or no longer offer products or services to Medicare beneficiaries.

"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 American Association for Homecare (AAHomecare). "This program is spiraling out of control. Providers, consumer advocates, and economists are urgently calling on Congress to adopt a better system."

The Medicare bidding program uses economic coercion to force homecare providers to submit unsustainable bids necessary to win a contract. Because 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. Thus far, 244 economists, more than two dozen consumer and disability groups, 186 members of Congress, and the National Federation of Independent Business have opposed the current bidding system.  

Moreover, Joel Marx, chairman of the American Association for Homecare and chairman of Medical Service Company in Cleveland, called the new reimbursement rates disastrous for providers across the country.      

"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. 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."

Clearly, momentum is building to change the system. Last year, legislation in the House to establish a Market Pricing Program (MPP) for Medicare DME collected 94 co-sponsors.  MPP, which was shaped by economists and the nation's leading auction experts, features an auction system that would establish market-based prices and require fundamental changes in the current system. Similar legislation will be re-introduced in the new Congress.  

Wilson said that Medicare beneficiaries are paying a steep price for the false savings.

He cited data indicating that when Medicare patients aren't receiving some DME products they have a higher risk of death, a higher frequency of emergency room visits and hospitalization, and longer hospital stays. Moreover, since CMS is not considering the higher costs of emergency room and hospital visits in their alleged savings, it is further evidence that their projections are bogus.

"The hidden costs of the bidding program are far exceeding any savings to the government from reduced claims on home medical equipment," Wilson said. "The government's own data also portrays the extent to which the program is dismantling the network of providers that are the core of the Medicare DME procurement system. It is a grave disservice to the Medicare beneficiaries who depend on the providers for vital equipment, products, and services."

Consumer advocates and Medicare beneficiaries are alarmed that the dangerous and defective bidding program is poised to continue expanding.

An organization, People for Quality Care, collects stories from seniors and people living with disabilities who are adversely impacted by government healthcare policies.  They cite how a couple, Paul and Mary, have been impacted by the CMS bidding program.

Because of the bidding program, Mary was forced to change medical equipment providers in January 2011. But, unlike the previous provider, the new one is not located in the town where he lives. Paul reports that the new oxygen provider visits much less often than the old provider, now visiting once every six months instead of once every three. At one point an entire year had passed before a provider visited. Paul called the provider for new oxygen tanks and was told that since his wife "isn't as bad as other people, she doesn't need the same attention."

Thus, Paul told People for Quality Care that he has been forced to make oxygen concentrator adjustments on his own when coached by a doctor, and he is much more worried than he was before. He admits that he is not trained to monitor the meter and to know when adjustments are necessary.

"This is an example of how some of the most vulnerable people in our society are affected by the Medicare bidding program," Wilson said.  "This couple is forced to live in fear because of this bad public policy."

The American Association for Homecare represents providers of home medical or durable medical equipment and services who serve the needs of millions of Americans who require prescribed oxygen therapy, wheelchairs, enteral feeding, and other medical equipment, services, and supplies at home. Visit www.aahomecare.org.

SOURCE American Association for Homecare