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Homecare Provider Testifies on Downside of Medicare 'Competitive' Bidding Program Before House Energy and Commerce Subcommittee

WASHINGTON, Sept. 15 /PRNewswire-USNewswire/ -- A home medical equipment provider testifies today about the negative impact of Medicare's controversial "competitive" bidding program for durable medical equipment and services.

Karen A. Lerner, a registered nurse and wound care specialist at Allcare Medical, in Sayreville, NJ, will tell the House Energy and Commerce Subcommittee on Health that the bidding program, as designed by the Centers for Medicare and Medicaid Services, "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."  Lerner is a member of the American Association for Homecare and the Jersey Association of Medical Equipment Services. See statement below and see full testimony at

Providers of home medical equipment 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 durable medical equipment, therapies, services, and supplies in the home.

The "competitive" bidding program for home medical equipment and services is scheduled to take effect in nine metropolitan statistical areas in the U.S. in January 2011 including Charlotte, Cincinnati, Cleveland, Dallas-Fort Worth, Kansas City, Miami, Orlando, Pittsburgh, and Riverside, Calif.  An additional 91 areas are scheduled to start the bidding program later in 2011.

A study conducted by health care economic consulting firm Dobson | DaVanzo & Associates, released yesterday, found that the Medicare bidding program for durable medical equipment may limit Medicare beneficiaries' access to home medical equipment and services and could reduce the quality of products that Medicare consumers rely on. (See text of study at

A bipartisan bill in Congress, H.R. 3790, would replace the Medicare bidding program with other types of cost savings and reduce reimbursements to home medical equipment providers, but preserve patient access to medically required equipment and services in the home.  So far, the bill has 255 cosponsors in the U.S. House of Representatives with broad bipartisan support. More than half of both the Democratic and Republican delegations in the House support H.R. 3790.

Patient and consumer groups that support the elimination of Medicare's bidding program for durable medical equipment include the ALS Association, the American Association for Respiratory Care, the American Association of People with Disabilities, International Ventilator Users Network, the Muscular Dystrophy Association, National Emphysema/COPD Association, National Spinal Cord Injury Association, and Post-Polio Health International, among others.

Statement by Karen A. Lerner, RN, MSN, ATP, CWS

Registered Nurse, Wound Care, Support Surface & Rehab Specialist for Allcare Medical, Sayreville, NJ for House Energy and Commerce Subcommittee on Health on "Medicare's Competitive Bidding Program for Durable Medical Equipment: Implications for Quality, Cost and Access"

September 15, 2010

"Thank you for the opportunity to testify about Medicare's bidding program for home medical equipment.  My name is Karen Lerner and I am a Registered Nurse and a Wound Care, Support Surface and Rehab Specialist for Allcare Medical in Sayreville, New Jersey.  Allcare has been in business since 1963.  We have 200 employees and serve about 25,000 patients per year.

Allcare Medical is a member of the Jersey Association of Medical Equipment Services and the American Association for Homecare.  

I am here today representing the homecare 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.  And I anticipate that once CMS announces which providers have won contracts, we will have an even stronger case to make to Congress on why lawmakers must stop this program before it causes irreparable harm.

We agree with 255 members of the House of Representatives who believe this program should be scrapped. Numerous consumer and patient advocacy organizations also believe the bidding program should be eliminated. They include the ALS Association, the American Association for People with Disabilities, and the Muscular Dystrophy Association, to name a few.  

The fundamental flaw in the design of this bidding program for durable medical equipment is that it treats home medical equipment and services like a simple commodity. In fact, effective home-based care for our nation's seniors and people with disabilities is an integral part of the continuum of care that helps move patients swiftly from hospital to the home. It helps to keep people out of nursing homes and the emergency room, and properly administered, it reduces hospital readmissions.  Home medical equipment, services, and supplies such as oxygen therapy, wheelchairs, and hospital beds, help people live independently in the most cost-effective setting.

Many frail, elderly and disabled Medicare patients require multiple items of medical equipment.  Imagine the chaos that will occur when a caregiver must call 5 or 6 different companies to coordinate the medical equipment needs of a patient who requires a hospital bed, support surface, oxygen, enteral feeding and a walker.

Clinical Perspective of Competitive Bidding

As a nurse and Assistive Technology Professional who helps patients get fitted for the right type of wheelchair, I am in contact with patients every day. It scares me to think of what will happen to these patients if this bidding program becomes reality.

The current marketplace - without competitive bidding - requires homecare providers to compete for patients on the basis of service and choice, to furnish the home medical equipment that makes the most clinical sense for the beneficiary. We are currently reimbursed under fee schedule in Medicare, which CMS and Congress have cut repeatedly and disproportionately over the past decade.  So the contention that the DMEPOS fee schedule is outdated and is based on pricing from 25 years ago is incorrect.  The home medical equipment sector has already seen reimbursement cuts of nearly 50 percent to the Medicare fee schedule over the past decade. The bidding program is not the way to address problems with the fee schedule. In the end, the flawed bidding system will simply reduce the number of bona fide competitors in the marketplace and create underserved, unhappy and unhealthy beneficiaries.

Despite all the quality assurance and measuring tools that CMS has previously touted, patients and even most physicians will not know if they are getting clinically appropriate equipment and services until negative outcomes appear.

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.  In these cases, which I believe will be increasingly common under the bidding program, costs will increase while patient care will be compromised and negative outcomes will become commonplace.

In my written testimony, I provide details about how this bidding program will affect home oxygen and diabetic patients and the negative impact competitive bidding could well have on patient care during a weather emergency or disaster.  

With respect to all of the promised savings and advantages of the "competitive" bidding program, I maintain that what sounds too good to be true, is too good to be true.  This ill-conceived program will single-handedly destroy the home medical services sector, harm the patients we serve and ultimately increase Medicare costs.

History of the HME Competitive Bidding Program

The problems associated with the first round of bidding in 2008 ultimately led Congress to delay the program in order for CMS to address the significant flaws.  

Unfortunately, CMS failed to make the necessary, substantive changes to address the problems.  They did not change how the single payment amount was determined nor did they listen to industry experts on how many homecare providers were necessary to service the patient population. During the recent new bidding for Round One we found:  

  • A provider in Ohio was offered a contract for a respiratory device but does not have a licensed respiratory therapist on staff, contrary to the bidding rules and contrary to Ohio law.
  • One of the largest homecare companies announced in July 2010 that it was offered 17 contracts in the first round despite the fact that in June 2010 it had $513 million in long-term debt outstanding, was considering restructuring or filing for bankruptcy and expects to lose up to $900,000 in the bidding areas in the first quarter of 2011.
  • Medicare officials said that during the bid evaluation, they did not trust the financial information submitted by providers 30 percent of the time.  In these cases CMS adjusted the provider's capacity to serve the marketplace.  CMS established rules but did not play by those rules when it saw fit.  These actions could have lowered the accepted single payment amount.

Lack of Government Transparency

Let me speak to the issue of transparency. 136 members of Congress believe that CMS has not shared enough information about the program.  Transparency is intended to protect the public. The lack of transparency masks deficiencies in the program and makes it impossible to evaluate fully the way CMS reached its various decisions at every stage of the process.  CMS' unwillingness to share even the most basic information about the program raises serious questions. From an administration that touts its openness and transparency, we have seen none with this program.

Savings Are Questionable

Let me turn to projected savings that are supposed to come from bidding. The extraordinarily low bid rates will be unsustainable over a three-year contracting period.  The argument that the prices determined through the bidding process are indicative of "true" market pricing is completely unfounded.  The bid system established skewed incentives, resulting in prices that reflect a desperate need to preserve their business and ability to serve people. In the most recent round of bidding, a power wheelchair provider submitted a low bid, was offered a contract but had no intention of accepting the contract.  CMS did not adjust the payment rate to reflect this.

Not an Anti-fraud Tool

On the question of fraud prevention, first let me say that home medical equipment providers have no tolerance for fraud. But arbitrarily limiting the number of legitimate providers in the marketplace will do nothing to stop those whose only intent is to defraud the Medicare program.  CMS must do a better job of monitoring claims and the billing credentials given to those who would scam the system.  The HME community should not be penalized when CMS grants Medicare billing credentials to a Post Office box or to an empty closet. The government is simply not doing an adequate job of site inspections before awarding supplier numbers.

CMS has already taken numerous strides to reduce the potential for fraud. These steps include provider accreditation, quality standards, supplier standards and a mandatory surety bond that took effect last October.  The home medical equipment sector has supported tougher enforcement to keep criminals out of Medicare, but the fact remains that historically, CMS has done an extraordinarily poor job at this task.  


As a nurse and with direct experience in the home medical equipment field, I believe that this program will increase costs rather than save money.  Patients that I see will suffer through limited access to clinically appropriate equipment and services.  It will reduce the quality of equipment beneficiaries receive and many will end up in the hospital.  And it will kill jobs at a time when the Administration is promoting job creation.

This program cannot be fixed as it is 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."

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

SOURCE American Association for Homecare
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