WATERLOO, Iowa — While HME providers in rural areas might think they're off the hook for the time being when it comes to competitive bidding, economist Ken Brown says they better think again.
According to new research conducted by Brown, a Ph.D. who has completed several studies on the effects of competitive bidding, rural areas will also take a hit from the bidding program even though they're not in Rounds 1 or 2.
In his most recent research, commissioned by VGM Group, Brown looked at the marketplace in five rural states: Iowa, Montana, North Dakota, Wyoming and West Virginia. His findings indicate a 40 to 50 percent decline in HME providers in Iowa, Montana and West Virginia; a 15 to 25 percent decline in North Dakota and a 35 to 45 percent decline in Wyoming.
As national companies close branches across the country because of financial instability and an average 32 percent cut in Medicare reimbursement resulting from Round 1 of the bid, Brown said rural areas will not be exempt from the loss of jobs — and the resulting loss of access and service for Medicare beneficiaries.
Brown, the Lawrence M. Jepson Professor of International Economics at the University of Northern Iowa-Cedar Falls, documented the financial struggles of several large, national HME companies.
"If these firms are having trouble surviving in this business climate, then it is quite likely that the small, independently owned suppliers that cannot take advantage of the economics of scale that go along with a national presence are having financial difficulties as well. A significant number of suppliers will fail," Brown wrote in his study.
He estimates that approximately one-third of independent HME providers are already operating at a loss.
Brown found that when patients aren't located close to providers, there are negative consequences, including:
- A reduction in the number of rural providers reduces the proximity of patients to their supplier.
- Oxygen and other respiratory patients will be at much greater risk during power outages, which are often more common and of longer duration in rural areas.
- Respiratory patients will have diminished access to portable tanks, which will lead to reduced ambulation and lower quality of life.
- Increased dependence on more costly institutional care.
- It will take longer to get equipment repaired. For a complex rehab patient, that could mean confinement to bed for extended periods of time, which increases the chance of developing pressure sores or contracting pneumonia.
A loss of providers in rural areas could have a "significant impact," Brown cautioned.
"This will have a number of negative, unintended consequences that must be considered when deciding whether or not to move forward with competitive bidding," he said.
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