Home Health & Hospice Week

Uphill battle won, but contract bidders are left in the lurch.

Durable medical equipment bidding will stop in its tracks thanks to a new Medicare law, but that isn't good news for everyone.

On July 15, Congress voted to override a veto from President Bush and enact Medicare budget legislation that includes an 18-month delay to the first round of competitive bidding. Suppliers had to accept a 9.5 percent cut to bid items in exchange for the delay.

The new law also mandates bidding reforms when the program does finally take effect. Those reforms include requiring an accreditation date for suppliers and closing a widely criticized loophole that allows winning bidders to contract with unaccredited sub-contractors, notes the American Association for Homecare.

The new law, the Medicare Improvements for Patients and Provider Act (MIPPA) also repeals the requirement for oxygen equipment ownership to transfer to beneficiaries after 36 months, notes the Council for Quality Respiratory Care, a trade group representing large oxygen companies.

What now?: "Medicare beneficiaries may use any Medicare-approved supplier for Durable Medical Equipment," the Centers for Medicare & Medicaid Services says in a fact sheet about MIPPA released July 16. "If a beneficiary changed suppliers when this new program started (July 1, 2008), they can either continue to use the new supplier or choose another supplier."

Rates effective prior to July 1 will once again be in effect, CMS adds.

Stay tuned: "Information on payment rates and claims processing will be communicated to DME suppliers in the coming days," CMS promises in its MIPPA fact sheet. The agency will send letters to Medicare households in the 10 bidding areas in two weeks informing them of the delay.

Bidding Complaints Quickly Piled Up

Industry observers were held in suspense over competitive bidding's fate when the Senate failed to vote on the bill delaying the program on June 26 (see related story). The bidding program took effect as scheduled July 1, with many complaints quickly pouring in.

Hospitals and physicians in Florida had significant trouble securing oxygen for their discharged patients, they told AAHomecare.

For example: Dr. Natarajan Rajagopalan, chief of staff at a hospital in Miami-Dade County, "found that none of the companies we called carry liquid oxygen systems," he said in a letter to Rep. Mel Martinez (R-FL).

"Typically oxygen is delivered to a patient in hours not days," Dr. Rajagopalan wrote. "That policy will create countless problems for our hospital and the other hospitals in the area. We cannot wait days for equipment to be delivered to the hospital or to the patient's home before they are discharged."

Dr. Seth Gottlieb of Miami reported a similar problem to Martinez, AAHomecare says. "The competitive bidding program ... is only a few days old and it has already caused major delays and problems for my staff and the discharge coordinators at the Mount Sinai Medical Center in Miami Beach," Gottlieb said in a letter.

But the Bush administration continued its hard press to preserve the program. In an opinion piece in the July 9 Wall Street Journal, Health and Human Services Secretary Mike Leavitt said, "the government is paying insane rental prices for medical equipment--prices far higher than it would cost to purchase the equipment outright."

"Make no mistake: 'Delay' means 'kill,'" Leavitt claimed. "Killing this competitive bidding program would cost taxpayers about $1 billion annually, while unjustly overcharging senior citizens."

After the Senate approved the legislation, sending it to the President to sign into law, President Bush expressed his opposition to delaying the program. "The legislation would leave the Federal Supplementary Medical Insurance Trust Fund vulnerable to litigation because of the revocation of the awarded contracts," Bush said in a message to Congress July 15. "Changing policy in mid-stream is also confusing to beneficiaries who are receiving services from quality suppliers at lower prices."

Varying Support Make Bidding's Future Uncertain

Despite the administration's opposition, both houses of Congress voted to override the veto, enacting the delay.

"The home care community scored a hard-fought victory," AAHomecare cheered. "Congress agreed to delay competitive bidding in order to allow some critical process reforms, quality im-provements, and other reforms to the bidding program and HME policy."

"This important and unprecedented victory was won because of grassroots power," praises the National Association of Independent Medical Equipment Suppliers. "The industry can now take a deep breath and begin to evaluate the path to follow as we adjust to the provisions of this law."

"It has been a long and winding road, but today we celebrate that Congress heard the voices of millions of patients and physicians," said the American Medical Association in a statement.

Bidding "was just a stupid plan" that "disenfranchised 70 percent to 80 percent of providers," House Ways and Means Health Subcommittee Chair Pete Stark (D-CA) said before the vote.

Despite the victory, lawmakers were sharply divided over whether to delay bidding. Some legislators who voted for the Medicare bill were against a bidding delay. "Like all great compromises, this legislation is not 100 percent of what anyone wanted," noted Sen. Jay Rockefeller (D-WV) in a re-lease. "I continue to oppose a delay of nationwide competitive bidding."

And other lawmakers who voted against the legislation actually supported a delay. "I am pleased ... the durable medical equipment competitive bidding program is being delayed" despite his "no" vote on the legislation, said Sen. Richard Burr (R-NC) in a release.

Many legislators simply praised the postponement. "It is important that we move forward in a way that will ensure that Medicare beneficiaries in our region and across the country will be able to get the DME such as oxygen equipment and power wheelchairs that they need," said Rep. Mary Bono Mack (R-CA), whose district saw bidding implemented July 1.

The program "unfairly discriminates against small local providers," pointed out Rep. Paul Kanjorski (D-PA), who also represented a district affected by bidding.

Bidding Lawsuits Face Legal Hurdles

The President's fears of bidding-related lawsuits is likely well founded. Suppliers who bid and actually won put major resources into gearing up for the program, only to have the carpet yanked out from under them.

Before the veto, Ablecare Medical's Ed Biggins told Congressional Quarterly's Healthbeat newsletter that the contract bidder would "aggressively seek ... legal rights." The company spent hundreds of thousands of dollars to prepare for bidding.

Other contract bidders are scrapping plans for expansion, CQ noted.

NAIMES is offering to members a complimentary consultation with its general counsel Neil Caesar about lawsuit prospects. "These suppliers have incurred financial losses that should be repaid by the government," the trade group says.

But suppliers may not have much luck with legal proceedings, predicted Jeffrey Holman of First Priority Medical Services, speaking to CQ Today. The bidding contracts specified that they were "subject to changes in regulation and law," noted Holman, a bid winner.

Holman fears the bidding delay will "just let all the bad guys right back in the business.