Tuesday, January 26, 2010

There is a "For Rent" sign in front of a 5,200-square-foot office/warehouse space facing Atlantic Avenue in Delray Beach, Fla. The difference between this sign and the thousands of other signs advertising vacancies in South Florida is that this could be the key to repealing the competitive bidding program for DMEPOS.

It has been six months since the "For Rent" sign was placed in front of All Florida Medical Supply, a Medicare HME provider that had been serving the community since 1994. A month after the decision was made to close, an auction was held in early October in an attempt to repay creditors.

All Florida Medical Supply was a founding member of the Accredited Medical Equipment Providers of America (AMEPA). I last spoke with one of the owners at Congressman Ron Klein's town hall meeting in June 2008. The owner explained that he was not sure how much longer he could stay in business with a 9.5% cut in reimbursement, a 36-month cap on oxygen reimbursement,  accreditation and surety bond requirements, and Round 1.2 of competitive bidding on the horizon.

All Florida Medical Supply's closure is a grim reality that has many legislators considering H.R. 3790, an alternative plan to the bidding program. Unfortunately, the senior policymakers at CMS will likely use a familiar game plan to assure the program moves forward:

4    The two categories with the lowest reimbursement savings, negative pressure wound therapy (NPWT) and Group 3 complex power wheelchairs, were removed from the program. NPWT and complex power had an average savings of 15%. Several MSAs had savings of at or below 10%. With those categories removed, even if bidding was identical to what it was the last time, the average savings will jump above 30%.

4    Historically, bid prices have been lower in each subsequent round of bidding. Bid prices dropped an average of 2% between the bidding rounds in the demonstrations in Florida and Texas and another 5% in the Round 1 bid of 2008. Those factors will also guarantee savings of more than 30%.

4    Medicare lengthened the period of time between the announcement of the bid prices and the announcement of bid winners, so Congress will have little time to react to any unqualified bid winners.

The timing could not be any worse for the industry. When the bid winners are announced on Sept. 1st, Congress will be out of session. They will resume activities on Sept. 13th, after a five-week recess. Congress is then projected to adjourn on Oct. 8th so they can focus on their re-election campaigns. As the 111th Congress ends, it is very unlikely that any meaningful legislation will be passed. Therefore, the last chance to get involved to repeal competitive bidding must be decided by the end of May.

Bid winners and bid losers will likely suffer the same fate. As cash flow shrinks, manufacturers and banks will not be paid, employees will be laid off and eventually commercial real estate properties will be faced with increased vacancies. Additionally, the ancillary businesses, such as local distributors and billing services, will most certainly close.

If this scenario is described to legislators, H.R. 3790 will pass, the closure of 90% of local providers will be avoided and patients will continue to receive the quality products and timely services that they are accustomed to. It may be too late for All Florida Medical Supply, but not for other providers and their beneficiaries. hme

Rob Brant is general manager of City Medical Services in North Miami Beach, Fla., and president of AMEPA.