WASHINGTON — Home medical equipment advocates fearing a catastrophe at a Sept. 15 House hearing on competitive bidding instead said they were heartened by much of what they heard — and "fired up" to push even harder against the Medicare program.
"It fortified my spirit," said Georgie Blackburn, vice president of government affairs for Tarentum, Pa.-based Blackburn's, who attended the packed hearing in Washington. "With approximately 14 weeks until competitive bidding rolls out in nine MSAs, our representatives recognize it may have flawed methodology, it may have unintended consequences just as providers and various economists have stated since the initial Round 1."
"This is something that should fire up our industry to press even harder," said John Shirvinsky, executive director of the Pennsylvania Association for Medical Services. "We have a big fight, and in spite of everything that is working against us, we came off pretty well."
Providers were dreading the outcome of the hearing after seeing the list of panelists scheduled to testify before the House Energy and Commerce Subcommittee on Health. The committee called the hearing to "examine the conception and implementation of the competitive bidding program, the implementation of the Round 1 rebid and its potential effects on patients, providers and suppliers."
But of seven witnesses, only one industry representative was invited: Karen A. Lerner, a registered nurse and wound care specialist at HME provider Allcare Medical in Sayreville, N.J.
Witnesses for the government included Laurence Wilson, director, Chronic Care Policy Group, CMS; Daniel Levinson, inspector general, Office of the Inspector General, Department of Health and Human Services; and Kathleen King, director, health care, Government Accountability Office. In addition to Lerner, a second witness panel included Alfred Chiplin, managing attorney, Center for Medicare Advocacy; Nancy Schlichting, president and CEO, Henry Ford Health System, Detroit; and William Scanlon, a health policy consultant who has previously served as managing director of health care issues at the GAO.
Lerner: 'This Program Cannot Be Fixed'
Stakeholders were heartened, however, when representatives on the committee largely displayed marked skepticism about competitive bidding. Originally implemented in 2008, Congress delayed the problem-plagued program after a 15-day run.
"Just about every legislator who spoke expressed some reservations," Shirvinsky observed. "This hearing had 'set-up' written all over it. And given the very small role we were given to play as an industry in the panel presentations today, the amount of hard work that AAHomecare, state associations and others did in communicating with Congress and staffs clearly showed."
"You only had one or two members of this committee — this committee, which is really going to be deciding our fate — that support the program as it stands," observed Rob Brant, owner of City Medical Services in Miami and president of the Accredited Medical Equipment Providers of America. "The majority was vocal against it."
"It was not a one-sided hearing at all," added Cara Bachenheimer, senior vice president of government relations for Elyria, Ohio-based Invacare, noting that CMS was "repeatedly peppered" with questions about how it planned to assure that beneficiary access to care and quality equipment were protected. "A lot of people are keenly interested in the job CMS is doing. CMS now knows there are a lot of people on Capitol Hill who are scrutinizing their project."
Hearing-watchers universally lauded Lerner for her poised, precise presentation, saying she did a great job of stating the industry's concerns. Noting that Allcare is a member of the Jersey Association of Medical Equipment Services and the American Association for Homecare, Lerner began by saying she was representing the home care community.
"My goal is to explain why this competitive bidding program — as designed by CMS — will not achieve its desired outcomes and will in fact reduce access to care for Medicare beneficiaries, lower the quality of that care, increase costs and kill jobs," she said.
Lerner challenged the efficacy of the program on a number of points. The program's "fundamental flaw," she said, was treating HME and attendant services as a simple commodity rather than as "an integral part of a continuum of care that helps move patients swiftly from hospital to the home."
As a wound care specialist, she said, "It scares me to think of what will happen to these patients if this bidding program becomes a reality."
CMS' position that it has quality assurance and measuring tools in place is questionable, she said. "Patients and even most physicians will not know if they are getting clinically appropriate equipment and services until negative outcomes appear," Lerner said. "If every patient who needed a cushion or support surface were placed on the least-expensive skin protection device, most of those patients' pressure ulcers would worsen and they would end up in the emergency department or be admitted to hospitals for surgical debridement."
Lerner also noted that despite its assertions, "CMS failed to make the necessary substantive changes to address the problems [from the initial Round 1]. They did not change how the single-payment amount was determined, nor did they listen to industry experts on how many home care providers were necessary to service the patient population."
Said Lerner in closing, "This program cannot be fixed as designed. Therefore, it is the recommendation of JAMES, AAHomecare and a large number of patient organizations that Congress must immediately stop the implementation of this bidding program and work with the HME community to ensure accurate pricing, while at the same time ensuring access to quality care for Medicare beneficiaries."
Access, Quality Concerns Ring a Bell
Committee members picked up Lerner's theme, hammering away at several issues including access to care and quality of products. "We heard those two words countless times," Bachenheimer said.
"Patients and suppliers have concerns that competitive bidding will reduce access," said Rep. Joseph R. Pitts, R-Pa.
Rep. Kathy Castor, D-Fla., wondered about contracts offered to non-local companies with little experience.
"It is really going to save Medicare money and is it going to preserve access for beneficiaries?" asked Rep. Ed Whitfield, R-Ky. "Many of the experts I talk to believe this program is poorly designed."
Whitfield said he was particularly concerned about access to providers in rural areas. Three-year bid contracts "combined with the fact that relatively few providers are … winners, results in fewer competitors the next time bidding occurs because there will be a lot of people trying to get out of this business," he said.
CMS' Wilson said the agency received 6,215 bids from 1,011 suppliers and made 1,300 contract offers to 364 suppliers in the nine Round 1 areas. (The agency has said it will release the names of the winning bidders this month.)
Subcommittee Chairman Rep. Frank Pallone, D-N.J., queried Wilson specifically on the access issue. "What if there is an accessibility problem?" he asked.
"We believe we have offered enough — more than enough — contracts to suppliers in all these nine areas," Wilson responded. "If a supplier has a problem, maybe we lose one, we certainly have enough providers. If we need one, we can certainly go out and offer another one a contract."
"What happens if CMS identifies a reduction in quality?" quizzed Rep. Betty Sutton, D-Ohio.
"I guess that could take many forms, perhaps targeted intervention. If it was a broad-based concern we'd have to take swift action," Wilson replied.
A skeptical Pitts also addressed Wilson on the quality issue, saying, "You claim $17 billion [in savings] over 10 years without compromising quality or access."
"We will have processes in place," Wilson said, "underlying features that address quality. One thing that is different from 2008 is active claim surveillance. [We can] see who is providing the care, who is getting the care, whether there are any concerns, more hospitalizations, greater utilization. We will be looking very closely and we will have a plan in place to deal with problems as they arise."
That response concerned AAHomecare's Walt Gorski, vice president of government relations. "CMS appears to have a lot of programs in place to ensure quality. It's unfortunate, however, that we don't know how those programs will operate. What we heard was, 'We will have this in place, we will have that in place,'" Gorski said. "But there are no assurances that those programs will function properly."
Enrollment 'Flaw,' Fraud Incentive?
Fraud and abuse was also a hearing topic, as Wilson, King, Levinson and Scanlon each touted competitive bidding as an anti-fraud measure.
Responding to a question about his assertion of vast overpayments in the system, OIG's Levinson said, "We're talking about 11 million patients at a cost of about $10 billion a year. About half [the claims] are paid in error. It might not be fraud, it might be lack of documentation. Documentation is really the lifeblood of the program. When we are talking about an error rate that high, that speaks to a systemic problem.
"The nexus of fraud with overpayment," he continued, "is that if you have too much of a disparity between the acquisition cost and the prices, that does provide an incentive for those masquerading as legitimate DME providers."
That also bothered stakeholders.
"For the first time, the OIG explicitly said that when there are items that are overpaid, that encourages fraud," said Gorski. "That statement baffles me. Scam artists are not providing the items, they are just billing the code. And they shouldn't have been able to bill the code if CMS did its job by monitoring the people allowed in the program."
Levinson apparently agreed with that latter. "Enrollment has been a fundamental flaw for many years," he said. "When our investigators went to Florida [some years ago] and banged on doors — or tried to bang on doors because in some cases there were no doors to bang on — they found that one-third of 1,600 DME providers that had numbers didn't meet the most basic standards like having a physical location, having regular hours. So it is quite clear that it is too easy to gain access. Solving that enrollment issue would greatly deter fraud."
There was no follow-up to Levinson's comments. Blackburn felt there should have been.
"I would have liked the testimony and the questioning to tear that issue apart, noting that CMS is in charge of the contract process with the National Supplier Clearinghouse, which admitted to not having enough staff to complete their due diligence when granting provider billing numbers," she said. "I would have liked to hear CMS' reasons for contracting again with the NSC after the admission."
Gorski also took issue with that segment of the hearing.
"I think the biggest issue with fraud and abuse is that the government witness panel took no responsibility for allowing these providers into the program to begin with," he said. "You don't give a broom closet a provider number if you adequately did a site inspection. How does that happen if CMS and its contractors are doing their job?"
Brant felt Levinson's assertion did not reflect the new HME world that now requires accreditation and surety bonds.
"There was a panel of people from CMS, OIG and GAO who had a lot of old information prior to the implementation of the surety bond and mandatory accreditation, which cut in half the number of oxygen providers in Miami and Los Angeles," he said. "They keep talking about easy entry to this industry, but that no longer exists.
"I have CMS visiting my office every two to three weeks, which is normal for South Florida these days," Brant continued. "This whole story of things that happened years ago with fake storefronts is now irrelevant. It's been almost a year since mandatory accreditation and the surety bond were put in place."
What's with Oxygen Pricing?
Rep. Christopher Murphy, D-Conn., followed Levinson's remark, zeroing in on competitive bidding itself.
"What are the reasons to go to competitive bidding rather than coming up with a more reasonable fee schedule?" he asked Wilson.
Wilson gradually made his way to an answer. "The program is pretty unique for Medicare," he said, adding that there were competitive bidding demonstration projects before the final project. "There are not many other examples that would be even close to this type of program. This program has a unique set of challenges when it comes to fee schedules. There is a lack of information on true costs."
Legislators hit on numerous other issues, including the lack of transparency in the program, what sort of feasibility studies CMS had done on various subjects and, more pointedly, how CMS can justify reimbursing a provider $21 for portable oxygen when the cost to refill the system is at least $30 more than that.
Rep. Ralph Hall, R-Texas, directed that latter question to the government panel. "Can we get back to you on that, sir?" asked King.
"You have no opinion?" Hall queried.
"I would have a more considered opinion if I could get back to you," King replied.
Hall looked at Wilson.
"You can get oxygen for a lot less than that," the CMS official said, adding that he didn't have the figures in front of him and would respond after the hearing.
Throughout the discussion, legislators and panelists alike compared prices paid to providers with Internet and Veteran's Administration prices.
"It's infuriating to have unfair comparisons in pricing continually touted," said Blackburn. "One model has no patient intervention, education or other services and the model we operate under is mandated by a myriad of standards of care and documentation requirements — all costly and all service-intensive!"
"They clearly have no understanding of not just service but what the infrastructure costs," said Bachenheimer. "It's not free. Nobody seems to understand this."
Reps Ask for Answers
Overall, Blackburn said, "The questioning gave the definite impression that our legislators are cognizant that something must be done to lower the cost of DMEPOS as the demographic grows … but that they harbor reservations about the bid process, that quality of care is ensured and that this program is the definitive answer."
Several questions to the government panel went unanswered. That prompted legislators to say they would send in written questions to those witnesses.
"We have an unusual number of [committee] members saying they are submitting written questions," Rep. Pallone said to the government panel. "We will try to get them to you within 10 days and ask that you respond as soon as possible."
In the end, while stakeholders said they wished more industry representatives — particularly those from Round 1 MSAs — had been invited to testify, many said the hearing was a good foundation to build on for another: Rep. Pete Stark, D-Calif., chairman of the House Ways and Means Committee, is tentatively scheduled to hold a hearing on the issue later this month but is waiting until CMS releases the names of the competitive bidding contract-holders, Bachenheimer said.
"We're going to have to do our homework [for the next hearing]," Bachenheimer said. "But I think it sort of builds the momentum and the noise level."
Shirvinsky echoed that. "A lot of very good, very strong arguments were made," he said about Wednesday's hearing. "We clearly have a steep hurdle to get over, but this is not over by a long shot. We have clearly made enough noise — strong points, strong arguments — that this program is going to cause untold and unjustified damage to this industry sector."
"The dialog fueled our mission to stop this program and possibly replace it with a more effective way of lowering costs while protecting our patients and our businesses," Blackburn said. "I hope this helps to show our industry has made progress in its education of Congress. Now, we need to creatively give options to competitive bidding before it starts."
Opening statements from Reps. Pallone and Energy and Commerce Chairman Henry Waxman, along with a briefing memo and written testimony from all hearing witnesses, are available on the House Energy and Commerce website.
View an archived streaming version of the hearing or download the full video of the hearing.
View more competitive bidding stories.