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Errors Plague Medicare 'Competitive Bidding' Program in Ohio, Says American Association for Homecare

Program Will Put Medical Equipment Providers Out of Business and Disrupt Services to as Many as a Half Million Seniors and Disabled People in Ohio

ARLINGTON, Va., April 4, 2008 /PRNewswire-USNewswire/ -- A new Medicare bidding program for durable medical equipment (DME) scheduled to be implemented in the Cincinnati and Cleveland, Ohio areas on July 1, 2008, will put many DME providers out of business and will likely disrupt services for many of the 540,000 seniors and people with disabilities on Medicare who require DME services at home.

Last Friday, DME providers in the first ten competitive bidding regions received letters from the Centers for Medicare and Medicaid Services (CMS) explaining whether they had been offered a contract, been disqualified from bidding, or bid outside of the bidding range for a product. Those DME providers that did not receive contracts for a given Medicare item or service are shut out of the Medicare program for three years.

The American Association for Homecare has received word from hundreds of DME providers who say they have been improperly disqualified and thereby removed by CMS from the bidding process. That includes more than 10 documented cases of disqualified bidders in the Cincinnati and Cleveland areas.

The congressionally mandated competitive bidding program was designed to reduce the number of DME providers and reduce reimbursement rates for oxygen therapy, hospital beds, wheelchairs, and other types of home-based equipment and care in Medicare. Reimbursement rates are already set by Medicare and reimbursement rates for oxygen have already been cut by nearly 50 percent over the past 10 years. The DME industry has long argued that this new program will needlessly punish established, high-quality providers, reduce the DME industry's focus on service, and harm patient access to care.

"Whether you accept or reject the idea that a blind auction is a sound method for establishing health care reimbursement, one has to strongly question how this actual concept is currently being rolled out through the DME bidding program," said Kam Yuricich, executive director of the Ohio Association of Medical Equipment Services. "In my two decades of involvement in the home medical equipment industry, this is the most severe and life-threatening issue this small, but vital segment of our nation's health care delivery system has faced. It threatens to unravel respectable organizations that have provided years, sometimes generations, of service to their communities in Ohio."

"At the core of this problem is the public's inability to understand and trust the method for how 'winners' were selected because the Medicare program rules provide no transparency. Even more alarming, since losing these bids can be the death of your business, the rules do not allow for any formal appeal mechanism. Many of Ohio's congressional delegation have been strong allies in helping home medical equipment providers in Cincinnati and Cleveland work through the chaotic phases of the bidding program. Their efforts to protect the recipients and providers of important homecare services are commendable and represent the last line of defense for these small businesses that face serious harm to, or possibly elimination of, their livelihoods."

The DME industry consists primarily of small to medium-sized businesses serving relatively small service areas. The average DME company receives about 50 percent of its business from Medicare patients. Loss of this business will result in layoffs and business failure for many DMEs.

On Tuesday, Senator Sherrod Brown (D-Ohio) sent a letter to U.S. Department of Health and Human Services Secretary Michael Leavitt urging that Leavitt postpone further implementation of the competitive bidding program. Brown's letter said the bidding program "is seriously flawed and will undermine beneficiary access and quality of care for the millions of Americans that rely on the DMEPOS benefit."

Brown cited a list of questions that must be addressed as well as several Round One problems, including a defective application process characterized by "unclear instructions, unrealistic and constantly changing deadlines;" the overlooked role of small suppliers that require special protection; the short 10-day timeframe for evaluating contracts; and the incorrectly disqualified bids combined with the absence of an appeals process to correct mistakes made by CMS.

The American Association for Homecare is pursuing regulatory, legislative, and legal remedies to allow for review of the cases of those DME providers that have been disqualified and is calling for the suspension of the first round of the bidding program until questions about patient access and harm to DME providers can be fully assessed.

"The Secretary of Health and Human Services has called home-based healthcare 'radically' more efficient than institutional care, yet the federal government is determined to aggressively dismantle the nation's homecare infrastructure at a time when our healthcare system needs it the most," said Tyler J. Wilson, president of the American Association for Homecare. "DME spending is the smallest sliver of Medicare, less than two percent of spending, and is the slowest-growing segment. Taxpayers may ultimately face higher costs as hospital stays lengthen due to more complicated hospital discharge logistics, more emergency room visits, and cost-shifting from Medicare Part B to Part A services."


Michael Reinemer, American Assn. for Homecare, 703-535-1881;

Kam Yuricich, Ohio Association of Medical Equipment Services, 614-876-2424;

The Ohio Association of Medical Equipment Services (OAMES) is a non-profit trade organization established in February 1981 for the purpose of advocating the interests of home medical equipment (HME) providers throughout Ohio. OAMES is the premier Ohio source for industry business information, education, networking and a voice on state and national government issues affecting the HME services industry. Visit

The American Association for Homecare (AAHomecare) represents providers of durable medical equipment and related services and supplies as well as equipment manufacturers. AAHomecare members serve the medical needs of millions of Americans who require home oxygen equipment, wheelchairs and other mobility products, hospital beds, medical supplies, inhalation drug therapy, home infusion, and other medical equipment, therapies, services, and supplies delivered in the patient's home. AAHomecare's provider members operate more than 3,000 home care locations in all 50 states. See

SOURCE American Association for Homecare
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