A smaller number of providers servicing the needs of an increasing number of Medicare beneficiaries is another issue.

“This could be a slippery slope for both patients and providers. Providers will be required to ramp up their businesses quickly with limited funds as a result of reduced reimbursements and ever-growing operating costs, which could ultimately result in reduced service to the patient,” says Kristin Mastin, director of marketing for DeVilbiss Healthcare, Somerset, Pa.

Still another effect that troubles many in the industry is the number of companies awarded round one contracts that are either not located in the CBA in which they won or do not have prior experience with respiratory care.

“As long as you were [accredited] and checked all the right boxes, you were approved as a bidder,” notes Ron Richard, vice president of sales and marketing for SeQual Technologies, San Diego.

“You don't need to have previous experience dealing with any of these kinds of conditions — you just need to be able to fill out a lot of forms. I guess that's how we're going to manage our health care system going forward.”

Richard adds that providers who will not participate in DMEPOS bidding — due to opting out because of reduced reimbursements or because they are not successful in bidding — will have a challenge when transitioning their patients over to a contract supplier.

“There is still a lot of debate about the grandfathering of oxygen patients and the legacy of taking care of those people with existing reimbursement rates and codes in place,” he says. “There is quite a bit of dissension about grandfathered patients and how they're going to be taken care of.”

Richard also sees the possibility of patients in the round one CBAs receiving inferior equipment.

“It may be that the providers that bid low are going to look at buying the cheapest oxygen equipment that will fulfill the prescription and allow them to bill the codes appropriately for the patients that are receiving service,” he says. “That's the only way that they can probably continue to look at making a margin.”

Kim Snyder, Murrysville, Pa.-based Respironics' U.S. marketing manager, home respiratory care, says oxygen providers must understand their total costs in providing oxygen so they can make future bids that will allow them to maintain their businesses profitably.

SDB GETS HIT, TOO

In the market for treating sleep-disordered breathing, the rates seen under NCB are also troubling.

“Competitive bidding is an important challenge with 25 percent reductions in reimbursement codes for Medicare beneficiaries, putting them on par with or even ahead of some of the more aggressive HMO insurance companies in terms of reimbursement reduction,” according to Michael J. Farrell, senior vice president of Poway, Calif.-based ResMed's sleep strategic business unit.

“Our challenge will be to objectively and definitively show CMS how $1 spent in Part B of Medicare actually saves $5-plus in Part A of Medicare. These types of data would go a long way to ensuring that competitive bidding is contained.”

Adds Lewarski, “Prior to national competitive bidding, sleep therapy and devices appeared a bit recession-proof, with certain manufacturers still able to command a premium for interesting device features and benefits that have no scientific evidence supporting the use.

“With such a drastic cut, I think providers will start to look past this and seek more value in their sleep product purchases,” Lewarski says.

Competitive bidding will almost certainly limit access to technology that helps increase compliance, points out VGM's Pontzius. “Because of the vast reduction in the amount a provider is reimbursed, access to certain interfaces will also be limited or abandoned altogether,” he says.

Mastin says, like the oxygen market, there will be “fewer providers with slim margins servicing more beneficiaries.”