Bid Rates 'Devastating;' To Sign or Not to Sign?

ATLANTA — Home medical equipment providers were struggling to regroup over the July 4 holiday in the wake of Round 1 rebid rates — averaging 32 percent cuts across nine product categories — announced by CMS last week.

"I think everyone is kind of in shock at this point," said Cara Bachenheimer, senior vice president of government relations for Elyria, Ohio-based Invacare Corp. "If this is allowed to continue, this is devastating."

The new rates result from the Centers for Medicare and Medicaid Services' DMEPOS competitive bidding project, set in motion under the Medicare Modernization Act of 2003, and are scheduled to take effect Jan. 1, 2011, in the nine Round 1 cities: Charlotte, Cincinnati, Cleveland, Dallas, Kansas City, Miami, Orlando, Pittsburgh and Riverside, Calif. Contract winners will be announced in September.

The idea is to undercut current fee schedule reimbursements with lower rates determined by competing bidders. In a July 1 press conference, CMS officials said the Medicare bidding program would save $17 billion over 10 years.

But at what cost? Somber HME stakeholders said the new rates would decimate the industry, eventually drive up Medicare costs and throw the lives of beneficiaries in jeopardy.

"The bid prices announced … will translate into unsustainable reimbursement rates for home care providers," said Tyler J. Wilson, president and CEO of the American Association for Homecare. "Over time, it will make it harder for seniors and people with disabilities to get the home medical equipment and services they require to live independently in the most cost-effective post-acute setting — their own homes."

He said the country would eventually "see spending soar in other parts of Medicare because the bidding program will push spending into longer hospital stays and ER visits."

Bachenheimer said the sharply reduced rates — which come on the heels of a 9.5 percent cut the industry took as a pay-for to get the initial Round 1 (2008) delayed for 18 months — reflect stakeholders' worst fears: that providers terrified of losing Medicare's business would enter low-ball bids.

"I think it just validates the fundamental flaws of this program. It is the suicide bidding notion," she said. "You put in a suicide bid just to stay in the game … It's this artificial price-setting mechanism which has no rationale. It's a complicated gaming system. The problem is, nobody wins."