Providers fear the worst

‘CMS has really done themselves a number this time around’
Friday, May 6, 2016

YARMOUTH, Maine – Far-flung contract suppliers were a significant concern in the original Round 2, but it could be worse in the upcoming re-compete, HME providers say.

For hospital beds in the Little Rock, Ark., competitive bidding area, for example, there is only one contract supplier, Camden Medical Supply, with a billing address, not even in the area, but in the state. The rest of the suppliers have addresses in North Carolina, Texas and Alabama.

“In the original Round 2, there were local companies on the list, including local branches of national companies,” said Ted Oury, manager of Diamond Medical Equipment & Supply in Little Rock. “This time, almost nothing.”

Even with local companies in the mix for the original Round 2, there have been access issues, Oury says, so he can’t imagine what it will be like on July 1, when CMS transitions to new pricing and suppliers.

Just two weeks ago, Oury says he received a call from a discharge planner trying to make arrangements for a bed for a Medicare beneficiary. He told her he didn’t have a contract for beds and, therefore, couldn’t help her.

“She said, ‘I can’t find a bed anywhere,’” he said. “That was on a Friday. I know for a fact that this patient didn’t discharge until Tuesday. Medicare could have bought four beds for the cost of that extended hospital stay. I see it all the time.”
The situation is even worse for nebulizers, a new product category, in the Boston bid area. None of the contract suppliers have billing addresses in the area or even the state—the closest is in Alabama. The rest? Florida, Texas, Mississippi and Puerto Rico.

“CMS has really done themselves a number this time around,” said Gary Sheehan, president and CEO of Cape Medical Supply in Sandwich, Mass. “In some respects, they’ve done us a favor. We’re already getting push back from case managers asking, ‘What are we going to do?’”

While concerns about out-of-state contract suppliers are very real, there may be instances where the supplier operates a hub-and-spoke business model. Its billing address may be outside of the bid area, but it may have an office locally that might not serve patients but does serve as a delivery point for the area.

“We’re in markets that are 500 miles away, but we have three drivers and an RT and a warehouse guy there,” said Joel Marx, chairman of Medical Service Company in Cleveland.

Also, in the original Round 2, suppliers that didn’t have a presence in an area made plans to subcontract or to “sell” their contract to local suppliers. In the Round 2 re-compete, however, there will be much less of that happening, providers say.

“That might have worked the first time, but providers are smarter now,” Oury said. “Two-plus years into it, they realize they shouldn’t have taken that offer.”


I  would like to echo the comments made regarding the way CMS has selected suppliers for this round.

We are in Orange County Callifornia and had contracts for Oxygen, Standard (Manual and Power) Wheelchairs, Scooters, and related Accessories, Hospital Beds and Related Accessories, Walkers and related Accessories in the previous round. We received no bids in this round and only one other local company received any bids for Orange County.  All other bids were given to large  companies located out of the area or  out of state. 

We developed our business by providing the highest quality and quicker service than the big boys in our area were able to provide.  The discharge planners in our area are having a difficult time finding a provider who can meet the service standards they are accustomed to.  I feel badly for them and for the Medicare patients who are going to be severly underserved for the next three years.

Really, no one saw this coming?  We get to pay the salaries of 1000s of government employees (who have never dispensed a piece of DME in their lives) to figure out ways to nail DME suppliers to the wall.  

The entire set up is contradictory.

Accreditation , demanded by CMS says  DME retailers must have a street address that a customer can actually go to, not a mail box address.  Yet Competitve bidding makes the beneficiary supplied by a DME supplier who is located hundreds of miles away.  Ther is no special , one on one, relationship here.

CMS: If an item is ordered by the physician, and the patient did not truely NEED that item.  CMS remedy is to recoup the money from the middleman, the DME supplier.  The physican is not fined.  The beneficiary is not responsible.  It is the supplier who gets money recouped after the fact or is accused of fraud and waste.

Competitive Bidding: Cut the price....cut the number of suppliers....This won't be a problem.   CMS always did set limits on what they would pay for a HCPCS.  Now we pay $$$$$ and pay administration costs of competitive bidding to do the same thing.  There are other ways.  E.G. nebulizers: Why do we pay the salaries of thousands of claim processors to process a nebulizer 13 times.  A nebulizer is minimal in cost as a purchase, but CMS demands you drag this out for 13 months.

Competitibe bidding costs money!  From the CMS website "Under current Medicare rules, you own these types of equipment after renting for 13 months. When you switch to a Medicare contract supplier instead of using a "grandfathered" supplier or other non-contract supplier, your 13-month rental period will start over, so you won't own the equipment until after the new rental period ends. This will extend your rental period and result in additional months of coinsurance. However, the amount you pay may be lower because the amount you'll pay will be based on the new payment rates under the new program."

Now beneficiaries (many are not tech savvy ) are told to "go on line" and find where they stand in current competitive bidding situation.  Really? This is serving the Beneficiary.  

This whole thing need scratched before we end up with No DME providers except a few "Big Box" outfits who will shovel the DME out like a Walmart.  This was doomed from the start