Small businesses push back on competitive bidding during listening session

WASHINGTON – Representatives from AAHomecare and several home medical equipment (HME) companies participated in a virtual listening session hosted by the U.S. Small Business Administration (SBA) on June 23 to talk about the dangers of Medicare’s remote-item delivery (RID) model for competitive bidding, calling it a “great first step” in their efforts to delay the program.

Tom Ryan, president and CEO of AAHomecare, spoke at the session, pointing out that 85% of HME companies are small businesses and many will be “taken out of business” if the RID, which requires nationwide service capabilities, goes into effect as planned.

“The competitive bidding program, in the past, has contributed to a significant reduction in supplier locations,” he said in an interview following the hearing. “We’re talking about a 37% decrease in supplier locations since 2013 and our biggest concern is that, as proposed, the RID model will accelerate that.”

The urological/ostomy market will likely drop from hundreds of suppliers to seven or eight because of the RID model. Arkansas Ostomy, a four-person company based in Little Rock, Ark., that specializes in providing ostomy supplies, will not be among the bid winners.

“If this goes through, it’s going to force a lot of small businesses out,” said Heather Botteicher, BSN, RN, OMS, president, in an interview following the hearing. “I have no way to submit a bid.”

Small supplier networks: A myth that needs debunking, AAH says

Ryan pointed out the concessions that the Centers for Medicare & Medicaid Services (CMS) have made for small businesses – including the ability to submit bids as a network, but one that is capped at 20 businesses with $3.5 million in revenue – are not realistic.

“That is not enough to scale up and have a distribution network,” he said. “That’s one of the things we really wanted to debunk.”

Botteicher agreed that the idea of small supplier networks is not realistic. She said she only has a good relationship with one other small business in another state. “The two of us can’t tackle that load,” she said.

Ryan used the session to go on the record as asking CMS how many smaller supplier networks submitted bids in past rounds of competitive bidding.

“That wasn’t very popular and effective when they did it for 130 competitive bidding areas designed for smaller geographies,” he said.

‘A losing battle’ for small businesses

Ryan said the real stars of the session were the participating HME companies like Arkansas Ostomy and Diabetes Specialty Supply in San Antonio, Texas.

“It was a good opportunity to hear what the reality is from suppliers,” he said. “I think the suppliers that did speak articulated their story well. It’s a losing battle as a small business person – you’re taking them out of the pack every year.”

Botteicher said she’s most concerned about her customers, who feel like family. She said she spends the bulk of her time, not filling orders, but educating them and troubleshooting for them when there’s leakage or a skin breakdown.

“We talk every month,” she said. “It’s going to shake everything up in a bad way.”

David Griffin, owner and president of Diabetes Specialty Supply, is also most concerned about his customers.

“There’s going to be significant access issues,” said Griffin, who has Type 1 diabetes. “Customers aren’t going to be able to get ahold of anyone and they’re going to have long wait times. We already have customers come to us from companies that will likely win the bid, and we get those because we answer the phone, we offer personalized service and we’re easy to do business with.”

Let’s work together

Ryan reiterated the industry is ready to work with CMS on developing a competitive bidding program that increases – not decreases – competition. “At the end of the day, we’d like to roll up our sleeves and work collaboratively,” he said.

That’s the outcome Botteicher would like to see.

“I’m happy we had a voice and they were able to hear our concerns,” she said. “I am still hopeful that the SBA and Medicare can come together with a better option. I understand what they’re trying to do – stop fraud, waste and abuse – and I support that, but the means to end is not quite where it needs to be.”

Next steps

• AAHomecare is still working with champions on the Hill to initiate a congressional hearing on the RID model.
• The association is also working with champions to introduce bills in the House and Senate that would delay competitive bidding for continuous glucose monitors (CGMs) and urological and ostomy supplies.