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Homecare Associations Nationwide Urge Policymakers to Rescind Controversial Medicare 'Competitive' Bidding Rule
Date:4/13/2009

Bidding Program for Home Medical Equipment and Services Is Anti-Competitive and Harmful to Patients and Seniors

ARLINGTON, Va., April 13 /PRNewswire-USNewswire/ -- In a letter sent today, the American Association for Homecare and 27 regional and state homecare associations urged the White House Office of Health Reform and the leadership of the Department of Health and Human Services and the Centers for Medicare and Medicaid Services (CMS) to review and rescind the controversial CMS "competitive" bidding rule before it is implemented on April 18, 2009. The rule was issued in the waning hours of the Bush Administration.

This bidding program will lower quality and reduce access to care for seniors and people with disabilities. As currently designed, the program is actually anti-competitive and the structure bears no resemblance to earlier demonstration programs in Florida and Texas in 1997 and 1998. In fact, the current version of the bidding program will put at least 90 percent of providers -- many of which are small businesses -- out of work.

The letter was addressed to Mr. Charles Johnson, Acting Secretary, U.S. Department of Health and Human Services; Ms. Charlene Frizzera, Acting Administrator, Centers for Medicare and Medicaid Services; and Ms. Nancy-Ann DeParle, Director, White House Office of Health Reform.

"This is not the solution to Medicare's reform and it is certainly not the answer for patients and seniors," said Tyler J. Wilson, president of the American Association for Homecare. "This flawed regulation would wipe out small businesses across America and reduce quality and access to care for seniors and the disabled."

The bidding program would selectively contract with a small group of homecare providers, forcing out providers who use high-quality homecare equipment or provide critical patient services. The quality of, and access to, care for patients will be threatened due to forced cutbacks in homecare services -- cutbacks that will also increase the length and cost of hospital stays as the number of home medical equipment providers shrinks.

Home medical equipment and care is already the most cost-effective, slowest-growing portion of Medicare spending, increasing only 0.75 percent per year according to most recent National Health Expenditures data. That compares to more than 6 percent annual growth for Medicare spending overall. Home medical equipment represents only 1.6 percent of the Medicare budget.

Please find the full text of the letter below:

April 13, 2009

    Mr. Charles Johnson, Acting Secretary
    U.S. Department of Health and Human Services
    200 Independence Avenue, S.W.
    Washington, DC   20201

    Ms. Charlene Frizzera, Acting Administrator
    Centers for Medicare & Medicaid Services
    U.S. Department of Health and Human Services
    200 Independence Avenue, S.W.
    Washington, DC   20201

    Ms. Nancy-Ann DeParle, Director
    White House Office of Health Reform
    The White House
    Washington, D.C.  20500

Dear Acting Secretary Johnson, Acting Administrator Frizzera, and Ms. DeParle:

The American Association for Homecare and the 27 regional and state associations listed below, which represent providers of durable medical equipment (DME) and services, urge you to rescind the CMS competitive bidding rule published during the last hours of the Bush administration. The rule, which would re-implement Round One of the bidding program in the DME sector of Medicare, would reduce access to care and put thousands of DME providers out of business, eliminating jobs at a time when the federal government is trying to preserve them. The rule does not address the fundamental problems of the program that came to light during its brief implementation last year.

Because of flaws in the bidding program, Congress voted to reform and delay the program as part of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), enacted on July 15, 2008. CMS published an interim final rule on the bidding program on January 16, 2009, and that rule will be implemented on April 18, 2009, unless it is rescinded.

MIPPA addressed several near-term concerns with the program, but thoughtful and deliberate rulemaking by CMS was clearly expected by Congress, given the overwhelming level of congressional and stakeholder concern during initial implementation. The intent behind the MIPPA provisions on bidding was for CMS to correct the fundamental flaws of Round One of bidding, allowing for feedback from stakeholders through a comment period before CMS issued a final rule. This process did not take place and the flaws in the bidding program remain.

As currently designed, this bidding program will lower quality and reduce access to care for seniors and people with disabilities. Moreover, it will reduce competition, eliminating up to 90 percent of home medical equipment businesses in any market area where it is implemented. Many of these practices are small businesses already struggling under the current economic recession.

This bidding program allows the government to selectively contract with only a small fraction of current homecare providers, forcing out DME companies that provide high-quality equipment or provide critical patient services. Competitive bidding, which would ultimately drive national reimbursement rates, ignores the critical role of services required to provide care to people in their homes. It will result in fewer resources for service-related activities that patients and physicians have come to expect, which allow people to remain in their homes. The program does not adequately account for providers' ability to serve a geographic market. The program will produce a bureaucratic, anti-competitive price-setting system that would be similar to a closed-model HMO and would have the effect of government-mandated consolidation in the homecare sector.

This is not the solution to Medicare's reform -- and it is certainly not the answer for patients and seniors.

The current structure of the competitive bidding program bears no resemblance to earlier demonstrations. Unlike the 1997-98 demonstrations in Florida and Texas, the current version of the bidding program will put at least 90 percent of providers out of business and will harm Medicare beneficiaries' access to quality home medical equipment and services.

While proponents of this bidding program argue that it will reduce Medicare spending, the inevitable cutbacks in services will result in increased length and cost of hospital stays. Reducing access to quality home medical equipment and services will give many seniors no choice other than to leave their homes for nursing homes or hospitals. The equipment and service for medical oxygen therapy, for example, cost about $8 per day. This is far cheaper than an average daily cost of about $200 for a nursing facility and $5,000 for a hospital stay.

Home medical equipment and care is already the most cost-effective, slowest-growing portion of Medicare spending, increasing only 0.75 percent per year according to the most recent National Health Expenditures data. That compares to more than 6 percent annual growth for Medicare spending overall. DME represents only 1.6 percent of the Medicare budget.

Proponents of the bidding program have also claimed that it will reduce fraud and abuse in the Medicare system, confusing the price-setting mechanism with effective anti-fraud measures. However, long-overdue accreditation requirements for DME finally take effect this year, and surety bond requirements for DME also take effect this year. On top of that, the American Association for Homecare has presented to Congress a far more aggressive and comprehensive 13-point anti-fraud plan, which lays out tough, effective measures to stop waste, fraud, and abuse in Medicare's DME sector.

In summary, we believe that CMS should immediately withdraw the interim final rule for competitive bidding and identify the problem areas that led to the delay of Round One of the program. CMS should issue a proposed rule that solicits public comments on the implementation of MIPPA and other modifications and improvements to the program. Specifically, CMS should convene the Program Advisory and Oversight Committee immediately.

We support efforts to make healthcare more affordable and accessible. To that end, we urge you to review and rescind the flawed "competitive" bidding regulations because of the far-reaching negative impact it will have on patients and businesses nationwide. If you have more questions regarding our views on this issue, please contact me at (703) 836-6263.

Sincerely,

Tyler J. Wilson

President, American Association for Homecare

    Alabama Durable Medical Equipment Association
    Arizona Medical Equipment Suppliers Association
    Association of Indiana Home Medical Equipment Services
    Big Sky Montana & Idaho Association of Home Medical
     Equipment Suppliers
    California Association of Medical Product Suppliers
    Colorado Association of Medical Equipment Services
    Florida Association for Medical Equipment Services
    Georgia Association of Medical Equipment Services
    Illinois Association for Medical Equipment Services
    Jersey Association of Medical Equipment Services (New Jersey)
    Kentucky Medical Equipment Suppliers Association
    Maryland National Capital Homecare Association
    Medical Equipment Suppliers Association
       (Texas, Louisiana, Arkansas, Oklahoma, New Mexico)
    Michigan Home Health Association
    Midwest Association for Medical Equipment Services
      (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota,
      South Dakota)
    Mississippi Association of Medical Equipment Suppliers
    Nevada Association of Medical Products Suppliers
    New England Medical Equipment Dealers Association
      (Connecticut, Maine, Massachusetts, New Hampshire,
      Rhode Island, Vermont)
    New York State Medical Equipment Providers Association
    North Carolina Association for Medical Equipment Services
    Ohio Association of Medical Equipment Services
    Pennsylvania Association of Medical Suppliers
    South Carolina Medical Equipment Services Association
    Tennessee Association for Home Care
    Utah Medical Equipment Dealers
    Virginia Association of Durable Medical Equipment Companies
    West Virginia Medical Equipment Suppliers Association

CONTACTS: Michael Reinemer, 703-535-1881, michaelr@aahomecare.org or Tilly Gambill, 703-535-1896, tillyg@aahomecare.org.

The American Association for Homecare represents durable medical equipment providers, manufacturers, and other organizations in the homecare community. Members serve the medical needs of millions of Americans who require oxygen equipment and therapy, mobility assistive technologies, medical supplies, inhalation drug therapy, home infusion, and other medical equipment and services in their homes. The Association's members operate more than 3,000 homecare locations in all 50 states. Visit www.aahomecare.org.


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SOURCE American Association for Homecare
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