There is no going back

Thursday, September 22, 2011

WASHINGTON - HME industry stakeholders, led by AAHomecare, are taking more formal steps toward an alternative competitive bidding system.

In August, AAHomecare's board of directors approved a market-based pricing system for HME that it hopes can replace competitive bidding, and earlier this month, the association blasted the news to members in an email bulletin. The system is largely based on the work of Prof. Peter Cramton, a vocal critic of the program, with several modifications and additions.

"There are people who are not going to love this proposal," said Tyler Wilson, president and CEO of AAHomecare. "But you need to look at it in reality, instead of in isolation. If we do nothing, we're faced with the current program rocketing ahead into Round 2. It's not an option of doing nothing and going back. The option is not doing this and having the program go forward."

The system includes Cramton's clearing price structure (a provider who submits a market price at or below the "clearing price" would be required to accept a contract), bid bonds and performance guarantees, and several other of the professor's recommendations.

But the system also modifies and adds to Cramton's ideas by, for example, reducing the size of the affected areas (market pricing by county or aggregates of counties in more rural areas, rather than metropolitan statistical areas) and reducing the number of affected product categories (a limit of two per county).

"The idea is not to cover Cleveland from top to bottom for every product," Wilson said. " So if you don't win a bid for beds and CPAP, you're going to be excluded from those product categories, but hopefully your menu of products is large enough that you can get beyond that."

Stakeholders believe the system is the best bet at protecting the industry.

"Even our champions in the House have made it clear for months that they support repealing the program, but that doesn't mean they support returning to the status quo," said Seth Johnson, vice president of government affairs for Pride Mobility Products. "They support repealing it and replacing it with some alternative that results in savings but not the negative outcomes we're seeing in Round 1 and that would be multiplied tenfold with the expansion of Round 2."

A wide range of parties, including state associations and other industry groups like NAIMES and The VGM Group, were involved in developing and vetting the system.

"No one wants to say we're bowing to competitive bidding, because we're not," said Rose Schafhauser, executive director of the Midwest Association of Medical Equipment Services, and a member of AAHomecare's State Leaders Council. "Our No. 1 goal is to show how bad this program is, but we have to be realistic that they're going to want something from us to eliminate the program."

Stakeholders are now working double time on the Hill to move the system from a set of principles to legislative specifics, and into a piece of legislation, all before the end of the year.