Hazleton-area residents on Medicare who need durable medical equipment in their homes such as feeding tubes, wheelchairs, walkers and CPAP devices now have to deal with suppliers from out of the area or even out of state.
This month, Medicare started supplying those products plus oxygen devices, medical pressure wound therapy pumps, hospital beds and support mattresses through companies from anywhere in the nation that won competitive bids.
For example, Hazletonians who need a wheelchair will find the nearest suppliers are Lincare, 27 miles away in Plains Township, and ProCair, 76 miles distant in Towanda, according to Medicare.gov. The other 13 suppliers are more than 100 miles from Hazleton. The program affects only people on traditional Medicare, not private insurance or Medicare plus policies such as Geisinger Gold and Humana Gold. A grandfather clause lets people remain with their current supplier until their contracts expire.
Medicare experimented with competitive bidding to save money in test areas, including Pittsburgh, before widening the program to Wilkes-Barre/Scranton/Hazleton and 90 other metropolitan areas on July 1. Companies submitted bids to serve those metropolitan areas by March 2012 and learned earlier this year whether they won any contracts.
Depending on the bids submitted, suppliers could have contracts in just a couple cities or all 91 metropolitan areas. Similarly, some providers have contracts to supply just one category of items, or all eight included in the program: oxygen supplies and equipment, wheelchairs and scooters, enteral nutrients, CPAP (continuous positive airway pressure) devices, hospital beds, walkers, support surfaces and negative pressure wound therapy pumps.
Of Hazleton companies, only McNelis Home Care prevailed. McNelis secured contracts to supply oxygen devices and hospital beds. For other products, the company didn’t win contracts so McNelis arranged to supply them as a subcontractor working for successful bidders, Missy Evans of McNelis said.
Evanko Respiratory also subcontracted so the company can continue to help local residents who are on Medicare.
Subcontracting reduces a firm’s income, and one company with which Evanko subcontracted is in Texas. “They actually won the bid. It’s unbelievable,” Larry Marchetti, a branch manager for Evanko, said. Asked if he would like Congress to repeal the bidding program, Marchetti said, “Absolutely.” Teresa Jacketti of Luzerne Medical Equipment said U.S. Rep. Lou Barletta, R-11, and Pennsylvania’s U.S. senators, Democrat Bob Casey and Republican Pat Toomey, all support a repeal. Jacketti said the bid program is the most extreme change she faced since starting her company 30 years ago. “They’ve excluded you from providing for patients,” Jacketti said.
She has to stop services to some patients on feeding tubes for whom she provided supplies and equipment for 30 years.
“I referred them to a national supplier with a Wilkes-Barre office, and they are picking and choosing their clients,” Jacketti said.
Because Luzerne Medical is a small company that can’t cover the entire metropolitan area between Hazleton and Scranton, Jacketti didn’t bid for contracts.
She said the program put small companies out of business; for example, APO2 of Hazleton sold out to another firm.
While people with Medicare didn’t account for a large share of her business, other insurers are starting to adopt the prices fixed by the competitive bidding of Medicare.
Luzerne Medical can still supply test strips that diabetics use to determine their blood-sugar levels through Medicare, but the price contracts that Medicare bid with mail-order firms sets the price. Some other equipment, including wheelchairs and hospital beds, becomes the property of the patient after 10 months. After that, the patients pay for repairs and must find a repair firm. The bid requirement also prevents people on Medicare from buying equipment if they stop by Luzerne Medical’s store downtown.
“A lady came in for a walker last week and I told her nobody in Hazleton is allowed to do walkers. She didn’t
believe it,” Jacketti said. Medicare.gov lists Blackstone Healthcare, an Ohio firm with an office in Wilkes-Barre, and the Walmart in Wilkes-Barre as the suppliers of walkers nearest to Hazleton. To get a suitable walker, people like to try them out after being measured for one.
Across the metropolitan area, 84 percent of Scranton area durable medical equipment suppliers won’t have contracts to sell specific products to Medicare beneficiaries – creating, in some cases, hundred-mile gaps between seniors and capable providers. Implemented to shrink medical equipment costs, the program has eliminated 84 percent of Scranton area providers in favor of suppliers from as far as Florida, Texas and California, said John Shirvinsky, executive director of Pennsylvania Association of Medical Suppliers.
He provided a chart that shows a 98 percent reduction, from 53 to one, in providers within a 50-mile radius of Scranton who are contracted to supply wheelchairs to Scranton/Wilkes-Barre/Hazleton area Medicare beneficiaries. There are six between Florida and Texas. “How is someone in Florida going to help someone in NEPA if their oxygen concentrator gives out in the middle of the night?” Shirvinsky said.
Lorraine Ryan, public affairs officer for Centers for Medicare & Medicaid Services, said the program was implemented because Medicare beneficiaries have paid too much for equipment for years. Noting that beneficiaries normally pay about 20 percent of equipment costs, Ryan said they are spending $100 for a $500 item. The pricing model, she said, has been based on an old formula that doesn’t have “any reality in today’s marketplace.”
The expanded program – which applies to original Medicare only, about 70 percent of beneficiaries – should result in an average savings of 45 percent compared to current fee schedule prices, she said. Medicare beneficiaries still have the option to purchase supplies from providers who didn’t receive contracts, but Medicare won’t cover any expenses. And the businesses won’t receive any reimbursement from Medicare. Citing round one of the bidding program – rolled out in 2011 in nine U.S. cities including Pittsburgh – Ryan said it saved $202 million in the first year, without leaving a negative impact on health care and consumers ability to get supplies.
“We found there was more than adequate coverage (in Pittsburgh) in terms of enough suppliers to provide necessary equipment,” she said.
Ryan said the organization follows a “very rigorous process” to make sure suppliers are capable of meeting the demand in designated areas. Bids are evaluated based on the supplier’s eligibility and bid price, and the suppliers “need to be accredited and must meet very strict financial requirements,” she said.
Shirvinsky offered a different story on Pittsburgh’s success, saying 58 percent of the bid winners for the Pittsburgh area were out-of-state companies with no facilities in Pennsylvania. Of those, he said at least 71 percent never served a single patient in the Pittsburgh area.
“We are expecting the same thing to happen in Scranton, only worse,” he said, referring to how few out-of-state suppliers served Pittsburgh Medicare beneficiaries.
Robert Brown, vice president of operations for Andrew Brown’s Home Health Care Center in Scranton, voiced the importance of local access to care.
He said a variety of equipment, such as CPAP machines, requires “constant monitoring and tweaking to ensure proper fit and usage.” Likewise, putting a patient in a wheelchair normally requires a visit to the facility, where a patient is properly fitted and educated on how to use the equipment.
“It is a concern among providers in this area, not only for business purposes, but patient care,” Brown said.
He estimated Medicare makes up 40 percent to 60 percent of suppliers’ revenue nationwide.
“If all your eggs are in that basket, it’s certainly going to be difficult to get by,” he said.