Industry suffers collateral damage

Monday, June 30, 2008

Sometimes you’ve just got to suck it up and move on. It’s not pleasant. It makes you angry. But you’ve got to do it. That’s how a lot of providers feel these days about the industry’s deal with Congress to delay national competitive bidding for 18 to 24 months. To secure this deal, which may be law by the time you read this, the industry agreed to a 9.5% reimbursement cut nationwide for all product categories included in Round 1 of the program. That’s a chunk of change, but nowhere near the 26% average cut for the same products in Round 1 of NCB.

“In a world of sucky situations, this one sucks the least,” a provider told me in mid-June.

I agree. From just about every way you view it, competitive bidding, as currently designed, stinks. A 9.5% cut stinks, too, but only about a third as much.

“Better to lose a leg than have them shoot you in the head,” another provider said.

What’s more, if the program goes forward, CMS has the authority to expand the 26% cut to the entire 2009 fee schedule. That will hurt all providers.

Of course, if you won a bid and have (had) visions of building marketshare and revenue, you may feel differently. The bill to delay competitive bidding will terminate Round 1 bids and re-bid them in 18 to 24 months. I’ll be honest, that bothers me. It seems unfair. The winners jumped through all of CMS’s hoops, and you can’t blame some of them for wanting competitive bidding to go forward.

A provider who favors the bill to delay competitive bidding said he “feels” for Round 1 winners. But, he added, “On balance, this is the best deal for the industry because I think the alternative is more dire.”

Other providers, for various reasons, also want the bidding program to continue. They’ve told us as much. Unfortunately, these providers, in the short term, are akin to collateral damage. It could not be helped.

The bottom line here is that bidding, as currently designed, is bad for providers (lost jobs), bad for beneficiaries (second-rate service) and bad for taxpayers (higher payments for hospital and institutional care). It does not make sense to proceed with a program this flawed.

What’s more, with a new administration set to take office in November, if the bidding delay goes through, the industry can make its case that the program should be dismantled for good.

Nobody likes a 9.5% pay cut, but most providers can probably find a way to absorb it and move forward. The same can’t be said about the competitive bidding guillotine.