CMS prepares report on CB demos

Saturday, May 31, 2003

LAKELAND, Fla. and SAN ANTONIO —CMS’s competitive bidding demonstration projects are over, and reimbursement levels have returned to normal for participating providers. That said, many HMEs who took part still have a bad taste in their mouths.

“The day before it began, (CMS) called and asked if we had enough equipment, and if we were prepared,” said Mary Miller, president of Encore Respiratory, which took part in the Polk County demo. “His words were: ‘The flood gates are going to open.’ It never happened.”

The San Antonio demo ended Dec. 31. The Polk County demo concluded Oct. 31. All that’s left now is for CMS to issue a final report evaluating the projects, and that’s expected to come out sometime this year, possibly by late summer.

At this point, CMS officials feel the projects went “extremely well.” Reimbursement on equipment and services dropped on average 20% and saved the Medicare program $4.8 million, said one CMS source.

When it comes to complaints by Miller and other participating providers that they never made up in volume what they lost in reimbursement, a CMS source said: “We never promised anything in terms of exact volume. We were up front and said there will be multiple suppliers and you will have more volume than if you didn’t win.”

Big deal, say providers like Albert Vale, owner of Hope Medical Supply in San Antonio.

“The thing they were interested in was reducing price and they did,” said Vale. “We saw a reduction in profitability. If the cuts were to stay, you start looking for ways to cut down on your services and the beneficiary is the one who starts taking the cut.”

At Suncare Respiratory Services in Winter Haven, Fla., which participated in the Polk County demo, area manager Delora Herndon said the company did not cut services to make up for the reimbursement cut.

“We ate it,” Herndon said. “But a lot of people cut corners — they had to.”

Reducing reimbursement through competitive bidding straps providers into a financial straight jacket, Herndon said. When gas prices rise or other unexpected costs hit participating providers, their profit level plummets even further.

Competitive bidding also shows that government bureaucrats and politicians still don’t understand the HME industry and all its costs, Vale said.

“We’re the only industry that delivers and they don’t think that is worth anything,” Vale said. “Our delivery men are not just delivery men. They have a lot more training to instruct the beneficiary in how to use those items. This is not a-run-of-the-mill delivery man.”

Now that it’s all said and done, Miller sums up competitive bidding this way: “It wasn’t wonderful — nor was it that severe on us. I always refer to it as doing business as usual. Nothing changed other than our pricing. And that stunk because we still had to provide the same for a lot less money.” HME