Round One Rates Add Up to Trouble, HME Stakeholders Say

ATLANTA--The fees are in, but the jury's still out when it comes to the impact competitive bidding will have on the home medical equipment market, according to industry stakeholders who got their first look last week at Medicare's reimbursement rates for round one of the program.

Late Thursday, CMS revealed its new allowables for the items included in the first round, with average savings across the 10 product categories at 26 percent. The agency also said 64 percent of the winning bidders fell into the small business category, surpassing its original 30 percent contract target for small suppliers, which CMS defines as those with gross revenues of $3.5 million or less.

While stakeholders proclaimed some of the new rates “doable,” many nevertheless said serious questions remain about the impact on beneficiaries and providers in the round one MSAs.

“The American Association for Homecare thinks the jury is still very much out on the question of competitive bidding and its impact both on beneficiary access to care and the quality of that care,” said Tyler Wilson, president. “The CMS perspective seems to be limited to focusing on payment cuts. After July 1 when the program is implemented, we will begin to get a sense of the services that contract providers may have had to eliminate in order to meet CMS' singular concern about home medical equipment pricing.”

Peter Kelly, chairman of the Council for Quality Respiratory Care, said the changes were “even more dramatic than anticipated.” The breadth of those changes, he said, “should cause policymakers--and all of us who care for Medicare's sickest beneficiaries--to stop and assess carefully the effect these changes will have on the health and well-being of elderly patients. Deep reductions in Medicare funding will eliminate key jobs at a time when the demand for quality is increasing and the economy is experiencing a downturn.”

CMS alerted bidders via three types of overnight letters that most received on Friday. Winning bidders received contracts. Suppliers whose bids qualified but were not in the winning range received a notice that they could receive a contract from CMS if a winning supplier decided not to accept the contract offer. Suppliers were also notified if they were disqualified and, if so, why. Bid winners were given 10 days to accept or decline the contracts.

But even some providers that won had reservations about what the program could mean to the industry.