Don't balance Florida's budget by adopting competitive bidding for DME

Monday, December 31, 2001

Effective Oct. 1, 2001, the Florida legislature has mandated that the state's Medicaid program run a statewide competitive bidding project. The purpose? To cut $1.3 million from the Home Health Funding budget. The only information that we at FAMES know for certain is that we'll be given the opportunity to ask questions during the Request for Proposals (RFP) development period.

Bob Sharpe, deputy secretary for Medicaid, said in a recent letter to FAMES that we can expect notice of the RFP in the Florida Administrative Weekly at least 28 days before the proposals are due. As for the parameters under which the project will be run, the funding involved to run the project or what will happen if the project is a failure (or even how to determine the success or failure of the project), we have not been able to obtain any information.

While I certainly understand Florida's budget cuts and the need to decrease the budget, I am not certain that the competitive bidding process was researched thoroughly - as a cost-saving measure - prior to being passed into law. Certainly, the wealth of knowledge, information and experience that FAMES members could bring to the table was not solicited. Some of the information we could have provided may have made our state leaders realize that their desire to increase home health visits by licensed nurses by 11% and home health aides by 13% (effective Jan. 1, 2002) should not come as a result of punishing the DME industry. Nursing services have received a spending increase each year since 1997. The DME industry reimbursement schedule has remained the same since 1989 with no cost of living increase since that time.

Instead, we got a 3% across-the-board reimbursement cut in the mid-1990s. Many of the items we provide to patients - the majority of whom are chronically ill children - are currently reimbursed based on the manufacturer's cost or the provider's invoice. This form of reimbursement not only ignores the cost of delivery but does not even cover the cost of shipping and handling charged to the provider for the supply. It would be impossible to competitively bid on items that are being reimbursed at, or below, our cost. Most individuals that run a business understand that a profit must be made to continue to run that business. Medicaid already pays below the standard reimbursement fees charged in our industry. The current fee schedule is almost exactly that for the products in the Medicare competitive bidding demonstrations now being tested in Polk County, Fla. and San Antonio.

Many individuals think of the DME industry as a "goods only" industry and overlook the service and professional component when funding is debated. As an industry, we are expected to provide not only the equipment necessary for the patient, but to offer free delivery and set-up from trained professionals, as well as 24-hour, on-call service. We are also expected to provide, in the event of a failure, free replacement, plus rent-to-own financing with zero interest and zero replacement cost, as well as a full warranty for the manufacturer's recommended time. Many furniture and appliance stores offer some of these privileges as well, but they are allowed to set their own price for the items and services offered. The professional component of our industry is frequently ignored when fee schedules are planned yet AHCA requires that the DME industry have (or contracts with) a licensed respiratory therapist or registered nurse when setting up many types of equipment. The state of Florida also has mandated we must maintain a state license, have professional and general liability insurance to retain our FDA oxygen permits, occupational licenses, and property insurance.

These fees add up quickly. And this is only the paperwork. Our employees like their paychecks and health insurance and, perhaps, an occasional pay increase. The power companies, water companies and phone companies have all increased charges over the years, yet the DME industry is asked to bear the cost of a budget cut, once again, to fees that have not risen since 1989. The truly tragic part of all of this is that we are hardly noticed in the budget planning process until cuts are needed or our services are affected. We are a hard-working industry. We aide in the healing process and provide long-term quality assistance to those with chronic debilitating illnesses. It is time that our Florida legislators opened its eyes and realized that the few companies that have committed the fraud in our industry do not represent the majority of the companies that provide a valuable and necessary service.

- Joan A. Cross is president of the Florida Association of Medical Equipment Suppliers. HME