WATERLOO, Iowa — If legislators on Capitol Hill thought the jobs outlook was already grim, wait until Wednesday.
That's when scores of home medical equipment stakeholders meet with their congressional leaders as part of this week's Legislative Conference hosted by the American Association for Homecare — and when they'll share the results of a new report projecting HME job losses of more than 100,000 if competitive bidding is implemented as planned.
In addition, according to the study by the Waterloo, Iowa-based VGM Group, some 39 percent of providers in competitive bidding areas are likely to go out of business should the Centers for Medicare and Medicaid Services' plan for DMEPOS competitive bidding be instituted.
The controversial project, which was initially implemented in July 2008 and subsequently delayed by Congress due to a myriad of problems, is on target to begin again on Jan. 1, 2011, in nine of the country's largest metropolitan areas. Round 2 of the program will involve 79 areas as it currently stands; a provision in the Senate's health care reform bill would add another 21 cities for a total of 100.
"Competitive bidding is set to cost more than 80,000 American jobs in bid areas over the next three years," said VGM's Alan Morris and Mark Higley, who utilized Round 1 contract award data in conjunction with provider and demographic statistics provided by Melbourne, Fla.-based The Weeks Group to reach their conclusions. According to VGM, "the 'domino effect' of destroying the infrastructure of the home medical equipment delivery model will bring job loss totals well over 100,000."
The two analysts noted yet another sobering statistic: An estimated 93 percent of local providers will not be awarded competitive bidding contracts.
"As a result of the original bidding process, only 7 percent of local providers were awarded contracts … CMS expressed the likelihood that rebid results are likely to very closely resemble those stemming from the original bidding process," the analysts said.
Since CMS is not allowing any provider who does not win a contract to accept the new Medicare reimbursement and remain a Medicare provider, those who do not win contracts will face some serious consequences, according to the report, among them:
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12,000 HME employees would probably lose their jobs in Round 1, with the most — an estimated 3,739 — in the Miami area.
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42 percent of non-contract providers are likely to go out of business, a figure that corresponds to reports that the average HME provider gets 42 percent of its revenue from Medicare. "If 42 percent of all revenue is taken from a sector of an industry, it's likely the resulting consolidation will result in a reduction of an approximately equal percent of existing companies," the analysts said.
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Medicaid and private insurers will reduce payment rates due to the program. "Generally, Medicaid and private insurers follow Medicare's lead when setting reimbursement rates for DME," Higley and Morris noted. "Bid rates will undoubtedly result in significant reduction in payment from all payers, only reinforcing the fact that more than 100,000 jobs will be lost as a result of direct and indirect effects of the program."
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Contract suppliers will lose on average 33 percent of their Medicare business and 14 percent of their overall patient base. The new Medicare reimbursement in nine categories is expected to drop by double digits, but in addition, the report says, "the average DME will only receive four of six bid category contracts, based on original Round 1 results."
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Finances will not allow for significant shifts in jobs from non-Medicare suppliers to Medicare-contracted suppliers. "The anticipated reductions in Medicare reimbursement will be such that suppliers awarded contracts will not have the financial wherewithal to take on additional staff," the analysts said.
All of this is not good news for a Congress that is now focused on jobs legislation.
Stakeholders are hoping that the information will compel lawmakers to sign on to H.R. 3790, the bill that would eliminate competitive bidding.
Bill Cheek of Carmichael's Home Medical Equipment in Monroe, Ga., has never been to a legislative conference before, but despite the tough economic times, he decided to pony up the funds and go this year.
"[It's] a small price for me to pay to go to Washington to take care of my employees and my patients and save their livelihood and mine," said the 18-year veteran of the HME business.
