15 Questions to CBIC From Accredited Medicare DME Provider

On April 10th an Accredited Medicare Provider located in North Carolina sat down in front of a computer and visited the CMS website, typed in a Raleigh North Carolina zip code, and analyzed the bid winners.

They found several interesting facts:

  • 75% of bid winners (composite of all bid categories) are located more than 50 to 2,826 miles away, to include providers in SC, VA, PA, GA, AL, FL, TX, MN, UT, NY, and CA.
  • The average distance for a CPAP provider is 448 miles away – half are over 400 miles away
  • When choosing multiple categories, there was only one provider that could provide those multiple categories within 115 miles

The questions the Provider Raised to CBIC were as follows:

1)      How can bids and their related capacities from suppliers located such long distances from the CBA’s be included in determining the median bid?

2)      If your answer is “sub-contractors” (which will be difficult if not impossible to establish given the low reimbursement rates), how is Medicare verifying that these suppliers are establishing the necessary presence by July 1, 2013?

3)      If the majority of these “remote” bid winners fail to establish a CBA presence as expected, how is Medicare verifying that those with a presence can handle the demand?

4)      Competitive Bid eliminates 90% of CBA home medical equipment suppliers, yet Medicare spokesman Jonathan Blum insists that this program assures local access.  How is that possible with only 25% of award winners being within 50 miles?  Can you name any other industry that could sustain a steady supply chain under these conditions?  Can you imagine what would happen if 90% of all grocery stores were closed, and the remaining 10% (many of which are hundreds of miles away) were forced to reduce their prices 45% to 72%?

5)      It is now confirmed that many providers have no physical presence in dozens of CBA’s in which they were awarded contracts.   They have little to no possibility of establishing such a presence in just a few months, and have put their companies up for sale.  Merger & Acquisition experts / analysts agree that it will be difficult at best to sell these businesses, as the new payment schedules are largely unprofitable.   How will beneficiaries receive the equipment that they need under this scenario?

6)      The Prior Approval demonstration project (part of CB) for power mobility devices now has a rejection rate of 80% nationally.  DME claims are denied at the rate of 85%.  An entire industry exists just to try to educate providers on how to navigate Medicare’s complex rules and documentation requirements, yet the failure rates remain off-the-charts.  Frustrated physicians are increasingly refusing to complete the documentation necessary for power mobility, and patients aren’t receiving the equipment that they need.  Does CMS consider 80% – 85% failure rates acceptable?  Has CMS considered that given an entire industry’s failure, that its requirements are excessively complex?

7)      An independent accounting firm (Hogan, Hanson) contacted Medicare regarding Competitive Bid, asking two questions:  1) if a particular type of medical equipment (walker, hospital bed, wheelchair, etc.) is subject to competitive bid and 2) if a particular zip code is in a Competitive Bid zone.  The wrong answers were provided 96% and 98% respectively.  Was this merely incompetence, or a deliberate attempt to mislead the public?

8)      Industry analysts and stakeholders agree that if Competitive Bid continues to move forward, as many as 85% of the nation’s home healthcare equipment providers will close their doors.  The results of Round 1 support this projection, and over 200+ leading economists and auction experts agree that this program is unsustainable.  On what basis do you ignore these projections and put access to quality healthcare equipment and services to America’s seniors at risk?

9)      Firms that were awarded contracts are about to realize substantial sales increases to their businesses.   Are you aware of any company that was awarded a contract that is NOT trying to stop Competitive Bid?  Why would a company that was just awarded a large contract NOT be fighting to keep Competitive Bid in place?

10)  Why does Medicare refuse to disclose its financial review criteria for award winners?  Can you please explain how a tiny DME Provider which has one small location next to a liquor store in Hollywood, FL, 3 employees, and a high credit limit of $8,000, could be awarded contracts for 8 CBA’s in FL?  Could their inability to supply the capacity Medicare assigned to them (and won’t disclose) be the reason that they are trying to sell their business?

11)  CMS touts Competitive Bid’s significant savings to DME expenditures (less than 2% of CMS spending).  Has CMS considered that these savings will result in even higher expenditures in other areas, e.g. emergency room visits, hospital stays, and assisted living facilities?  Keeping people in their homes is the most cost effective solution – do you not see significant risk of beneficiaries being forced from their homes due to restricted access to home healthcare equipment and services?

12)  If a provider outside a CBA is competing for a cash sale with a provider who was awarded a contract, and the customer is located outside the bid zone, the non-contract provider is excluded from being able to compete even outside the CBA.   By Medicare rules, the contracted supplier can sell the product 45% below the non-contracted supplier, who cannot sell below the Medicare allowable outside a CBA.  With a cash sale, there are virtually hundreds of dollars in cost savings in the form of documentation, claim filing, appeals, and audits versus selling through Medicare.  How is this fair to a non-CBA supplier?

13)  Has CMS considered the impact to local and state economies by the closing of thousands upon thousands of small businesses and industry estimates of 85,000 – 100,000 job losses?

14)  National DME Providers have lost Billions over the past two years and some have declared Bankruptcy.  How do you anticipate that they will be financially viable after their reimbursement rates are cut 45%?  How will you monitor this going forward?  What is the contingency plan if substantial supplier(s) close their doors due to the new rates being unsustainable?

15)  Given the rash of legitimate concerns and likelihood of this program destroying the entire infrastructure of the nation’s home healthcare equipment providers, will CMS consider postponing the implementation date, or simply choose to ignore the advice of the vast majority of industry experts?

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