Up next in Missouri: competitive bids?

JEFFERSON CITY, Mo. - A month after Missouri providers were forced to absorb a $27 million cut in DME expenditures, they're facing the threat of competitive bidding. An October report from State Auditor Claire McCaskill estimates the state could save an additional $5.4 million if it sought competitive bids for DME, like areas of Texas and Florida already do. The report, which state officials have agreed to evaluate, has left providers like Brady Vestal, the HME manager at Stephens Pharmacy in Bolivar, Mo., dumbfounded. "To cut $27 million, and now they're looking to cut another $5 million," said Vestal, who also serves as the Missouri chair of the Midwest Association of Medical Equipment Services. "To me, it cannot be explained." The report also recommends the state compare its reimbursement rates to those in other states, after a cost analysis of 1,139 items revealed the state paid more for 41% of items. A prosthetic device in Missouri, for example, carries a $2,440 reimbursement rate, while four of eight surrounding states pay $1,830. But Vestal said the report makes several "assumptions." Chief among them: "that competitive bidding would be immediately and easily applied to the state of Missouri." "There's no indication of the additional costs of implementing and monitoring a competitive bidding program, only a significant lack of understanding and knowledge of the industry," he said. The recommendation to competitively bid DME in Missouri is based on reported savings of 17% to 22% for Medicare's demonstration projects in Texas and Florida. Joan Cross, president of the Florida Association of Medical Equipment Services, said the first round of competitive bidding in Polk County did result in savings, but in subsequent rounds, those savings will diminish. "We're seeing, in the second round, that bids went up 3% to 5%," she said. "Once businesses are put out of business, what keeps existing businesses from raising their bids? There are no lower bids." Vestal also believes the reimbursement rates examined by the report were outdated. The report examines a 15-month period ending March 31, 2004, which is before reimbursement rates for oxygen, for example, were cut 10%, he said. MAMES plans to challenge the recommendations. Since DME comprises only 1% of the state's $6 billion Medicaid budget, Vestal hopes the state will shift its focus to more profitable sectors of the healthcare industry, such as hospitals and nursing homes.