Defective Medicare Bidding Program for Medical Equipment Forces Hardships on California Business Owners
Submitted by tcapuano on Wed, 04/03/2013 - 8:01am
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LOS ANGELES, April 2, 2013 /PRNewswire-USNewswire/ -- The controversial Medicare bidding procurement program for home medical equipment is forcing many small and large providers in California to lay off employees or close their businesses, developments that will likely disrupt the quality of service and products received by Medicare beneficiaries, says AAHomecare. Under the defective and dangerous program, the Centers for Medicare & Medicaid Services (CMS) is reducing reimbursements to providers an average of 45 percent when the bidding program expands to 91 new locations in July. Due to these arbitrary cuts, many providers say they can no longer supply Medicare patients with durable medical equipment (DME), which includes critical medical devices such as power wheelchairs, hospital beds, oxygen, and diabetic supplies. Some of their stories are heartbreaking. "Medicare has completely mismanaged the design and implementation of this bidding program," said Tyler Wilson, president of the American Association for Homecare (AAHomecare). "It is creating havoc for providers in California and across the country. And it is jeopardizing the health of some of the most vulnerable people in our society. It is time Congress and the Administration end this bad experiment and create a program that guarantees quality service, while offering businesses fair, market pricing." Wilson called the current program "a sham." CMS basically imposes a contract price anywhere between the lowest and highest bids that are made by providers. But at the same time, all the bids are non-binding, which has led some suppliers to make desperate "suicide" low bids in an effort to win contracts in enough equipment categories to stay in business. What destroys the integrity of the process is that even these ridiculously low bids are utilized by CMS to establish their unrealistic prices. "The entire process lacks transparency because CMS never discloses how these unrealistic prices are calculated," Wilson said. "This is government imposed pricing, not competitive bidding, and it is eliminating competition rather than increasing it." More than 240 economists, two dozen consumer groups, almost 200 members of Congress and the National Federation of Independent Business have sharply criticized the bidding program. After a request from AAHomecare, the US Department of Health and Human Services Office of Inspector General (OIG) has agreed to investigate the program. CMS has been harshly criticized by prominent economists and auction experts such as Dr. Brett Katzman, Interim Chair of the Department of Economics, Finance & Quantitative Analysis at Kennesaw State University. "While the CMS system does involve bidding, it is far from competitive," Katzman said. "Yes, there are winners and losers, but winners are chosen based on their willingness to game the system rather than their cost competitiveness. The problem is that the CMS system entices providers to "low-ball" bid whereas a true competitive bidding system would reward providers for being cost efficient." Throughout California, the dangerous and defective program is impacting providers, beneficiaries, and even entire communities. Here are some of their stories.