Home Health & Hospice Week

Beneficiaries won't like Medicare forcing them to switch suppliers.

If competitive bidding proceeds as planned, suppliers won't be the only losers - Medicare beneficiaries will suffer as well.

"Competitive bidding has the potential to create barriers to access for home medical equipment, reduce the quality of medical services that beneficiaries receive, and put small providers out of business," warns the American Association for Homecare.

When passing competitive bidding legislation in the Medicare Modernization Act last December, Senate Finance Chairman Charles Grassley (R-IA) "had concerns ... because of the potential impact on small businesses and the fear that access to quality suppliers could be undermined in rural states like Iowa," according to a Sept. 9 release from Grassley's office.

But the Government Accountability Office dismisses most of those fears in its recent report on bidding, "Past Experience Can Guide Future Competitive Bidding for Medical Equipment and Supplies" (GAO-04-765).

The Centers for Medicare & Medicaid Services can employ four basic tactics to head off potential quality and access problems under the bidding system, which will begin its phase-in in 2007:

1. Monitoring beneficiary satisfaction. Using a centralized ombudsman available through a toll-free number to field complaints, concerns and questions is one way to track and deal with problems, the GAO suggests. Beneficiary and referral source satisfaction surveys would be another useful tool.

2. Setting supplier standards. Tougher standards for bidding participants, including requirements on delivery staff qualifications and equipment pick-up timeframes, could curb quality problems, the report proposes. The MMA law implementing bidding requires these enhanced standards.

3. Selecting multiple bid winners. In the bidding demonstrations CMS conducted in Polk County, FL and San Antonio, TX, selection of multiple bid winners allowed beneficiaries to switch suppliers if they were dissatisfied, CMS told the GAO.

4. Taking quality into account when evaluating bids. Quality and service indicators could include financial stability and good credit standing, a record of providing products that meet beneficiaries' needs, compliance with Medicare's rules and regulations, acceptable business practices, ethical behavior and maintenance of accurate records, the GAO suggests.

But access to quality products and services, let alone beneficiary satisfaction, will be far from assured under these methods, critics charge. CMS claims beneficiary survey data from the demo projects shows beneficiaries under the pilots, which used most of these methods, were "generally" satisfied. But the demos lacked a formal mechanism for ombudsmen to summarize or report information on beneficiary complaints, the GAO points out. Thus a clear picture of demo project satisfaction isn't available.

CMS should realize beneficiaries using DME will be unhappy when they have to switch suppliers, notes Erik Sokol with the Power Mobility Coalition. "Change isn't welcome in this population," Sokol notes.

The demos allowed beneficiaries with existing supplier relationships to retain those suppliers even if they weren't participating in the projects. So, the projects didn't capture what would happen when beneficiaries are forced to sever their existing relationships to switch to bid winners, Sokol says.

And beneficiary satisfaction is sure to plummet when reimbursement for DME is cut so low that suppliers can no longer offer any service along with the equipment, protests Joan Cross, president of the Florida Association of Medical Equipment Suppliers.

Quality of service under bidding will be similar to quality of service under HMO plans, predicts Cross, co-owner of C&C Homecare Inc. in Bradenton, FL.

C&C has spent the last month securing its oxygen patients in anticipation of three different hurricanes, Cross tells Eli. Under bidding margins, reimbursement won't come close to covering those services, she fears.

Product Quality Reg on the Way

CMS is formulating a regulation outlining a process to ensure quality of the products suppliers furnish under bidding, Administrator Mark McClellan says in CMS' response to the GAO report. The process will include collecting specific information such as manufacturer, make and model number for certain high-cost items.

However, CMS rejects the GAO's recommendation to evaluate individual HCPCS codes to see if they should be subdivided because the items covered under them have too broad a price range. The HCPCS system bases codes on items' function and operation, not price, CMS maintains.

"We believe subdividing codes according to price ranges would lead to Medicare setting codes for particular brand names" when the items don't have "meaningful clinical differences or higher quality," McClellan says. 

Editor's Note: The GAO report is at www.gao.gov/new.items/d04765.pdf.