It's hot and getting hotter

Wednesday, April 30, 2008

You know that old adage, "It's never as bad as you think it's going to be"? Well, you can't say that about national competitive bidding. It's the hurricane Katrina of reimbursement cuts, and threatens to split the industry apart at the seams and blow the roof off.
You have providers screaming at other providers for bidding, on average, 26% below the current fee schedule. Four different groups may file lawsuits against CMS for various reasons, all related to competitive bidding. Some providers in Florida, fed up with the bidding process, have formed an association for accredited HME companies. Guess they don't like AAHomecare.
No doubt about it, the industry is in a pickle and there's no easy way out.
Sure, competitive bidding has plenty of problems and appears to be a bureaucratic nightmare, but with providers bidding down prices so low, does anyone really think CMS will not move forward with it? The bureaucrats are positively giddy with the Round 1 results and can't wait to kick off Round 2, where they expect providers to discount prices down even lower.
What's more, and I'm sure this isn't lost on CMS, competitive bidding has forced the industry into a very tough spot. Providers-not CMS-decreased pricing by 26%. How do you argue that this cut is too much? What do you say: That providers bid out of fear of losing their Medicare business? That, as some contend, many didn't understand their costs and therefore bid too low? Good luck. Throw those lame excuses at any self-respecting businessman and he'll either laugh in your face or hold you in total disdain.
Of course, competitive bidding didn't happen overnight. Providers have had several years-years, mind you, not months-to get ready for it. I imagine some HMEs are sitting pretty right now. They used the past few years to rip cost out of their operations; to invest in technology that reduces deliveries; to get accredited; to develop product formularies; to seek out strong vendor partners; to diversify their payer mix away from Medicare; to dedicate themselves to building cash sales; and to help out with industry advocacy efforts.
If you didn't do any of this stuff, you are probably feeling the heat. And let me tell you, it's only going to get hotter. HME