A rude awakening

Monday, April 30, 2007

I have to admit it: Like most Americans, I like the idea of competitive bidding. I mean, what's not to like? You put something out for bid, get a bunch of bidders, pick a winner or winners and go forward with a good service at a good price. At least that's how it's supposed to work. When it comes to competitive bidding for durable medical equipment, common sense tells you the same sequence of events should apply, producing a great price for CMS, and good products and services for beneficiaries.
However, does anyone, including CMS, really believe that will happen?
Competitive bidding for DME sounds like a good idea, until you realize that CMS must build a bureaucratic infrastructure to administer the program. Has a government bureaucracy ever run efficiently? I don't know for sure, but I suspect no. In fact, as AAHomecare Chairman Tom Ryan points out in our front page story ("Let the bidding begin"), CMS based the savings it expects to reap from competitive bidding on 5-year-old data. Since 2003, when President Bush signed legislation that mandated competitive bidding, a slew of Medicare reimbursement cuts have hit the DME industry. Those cuts include a new fee schedule for power wheelchairs and a 36-month cap on oxygen reimbursement. If you add up those cuts and others, can competitive bidding really save Medicare as much money as originally predicted? I agree with Ryan: No.
Yet CMS and Washington lawmakers continue to push on. Why? Industry attorney Jeff Baird has an answer.
"The purpose is not to save money," Baird said. "The purpose is to reduce the number of suppliers. Why isn't government imposing competitive bidding on doctors? Pharmacists? Hospitals? Labs? Hospice or home health? The government believes there are too many unsophisticated or unscrupulous providers. DME has been one of the few segments in the healthcare industry where you can have an 8th grade education and bill the Medicare program."
That said, Baird doesn't like competitive bidding, which, he says, "arbitrarily reduces the number of providers in the marketplace." If Medicare desires to do business with fewer providers, it could reduce the fee schedule through inherent reasonableness, implement mandatory accreditation and let market forces work their magic. Such a plan wouldn't eliminate all fraud and abuse, but it would significantly weed out those unsophisticated and unscrupulous providers.
Oh well. That's neither here nor there. Competitive bidding is coming. You've known this for three years, and you've had time to prepare, time to make your company more efficient and more able to weather the storm. If you've neglected to do so, you have only yourself to blame and should be preparing for a rude awakening.