What has been the impact of the national roll out of competitive bidding

In a recent HME Newspoll, we asked HME providers to share how their businesses have been impacted by the national roll out of bid pricing. More than 100 responded. Here is an excerpt of what they said.

This pricing has been the most devastating thing we've had to contend with in health care for the last 25 years. The caps and the cuts have left us completely crippled. We can't sustain this for very much longer!

Dave Boroughs, Riverside Medical, Savannah Tenn.

We closed multiple locations and laid off 30% of our staff, mainly RTs.

The national roll out of bid pricing has been devastating to our business. We have had to cut employer paid benefits, reduce staff, remove multiple items from our products and services, become more aggressive in collection efforts, suspend ordering from multiple vendors and create our own competitive bid process for most items that we do currently provide. Vendors were invited to bid for our business as an all or nothing package by DME categories. In addition, we have had to turn to cash sale items into a way to supplement our losses and sustain business until the new administration fixes the damage that has been done. Many of our competitors have closed their doors. We have survived by the skin of our teeth due to the fact that we also provide pharmacy services and state bid contract medications. Had it not been for these private contracts, we would certainly be in a much different situation.

Melissa Hammett,
Professional Care Pharmacy, Monroe, La.

We have lost key employees and as a result we are not available to be in the patients homes like we were in the past. The patient is the one suffering and they don't understand why Medicare has done this to them. We are having patients call us in our local area that were set up with companies in Nashville. Due to the distance, they are not servicing their patients. These patients want to change to our local company but they are in their cap and we will not take them. While I am on my soapbox, I do not understand how the advantage plans can say they are following Medicare guidelines when in actuality it is only the payscale they are following. We should not have to get an authorization every year nor every month. With the reduction in staff, this is putting a hardship on providers. I am an advocate for pre-authorization on DME and thereby eliminating the need for needless audits. It is time our industry unites. The best thing our company has done is become a member of AAHomecare. They have grass root efforts that are having a positive impact and gaining support of our Congress.

The reimbursement rates are very unrealistic and it is hurting not only people and businesses in rural areas but the entire industry.

Rodney Askay, West River Health Services, Hettinger, ND 58639"

Our biggest competitor is a national. They continue to provide less patient care and good service. We have patients trying to switch to us on a weekly basis. Unfortunately, because of the "capped" status, the patient is unable to switch. Of course, they know this and don't care about service.

Although I am not in a rural area, what has transpired in our area is the majority of private insurance companies has lowered reimbursement to the rural price in our area, dropping reimbursement 30% to 45 %.

We are doing everything we can do to survive. This industry will fail at the current reimbursement rates.

Jeremy Killough, Southeastern Home Oxygen Service, Columbus, Ga.

We are using personal savings in the (futile?) hope that there will be some bid relief, or that at least the 2016 bid relief payments will help to alleviate some of that debt. We are also exploring options to sell or close the business because we can't survive operating as we are now.

CMS's assault on HME began in the 90s with the Medicare Modernization Act. It mandated that DME companies compete by bidding against each other. This became an auction—not against other providers, but a stand-off with CMS. Naturally, CMS won in doing Congress' bidding: Congress lacked the backbone to admit they wanted to defund DME. It's been a slow, painful death. But they've gotten what they wanted: the shutdown of an industry of small, service-oriented businesses. Another fiendish arrow in CMS's quiver since the war began has been the accompanying Kafkaesque bureaucratic documentation requirements. Those alone made our services marginally profitable without even considering the very first fee cuts, not to mention the auction. They've won. We all need to face it, close up shop and get a life.

Kathleen Weir Vale, HOPE medical Supply, San Antonio

New bid pricing has caused us to stop providing many items. In most cases, the customer tells us that they can not find anyone to supply the items or do the necessary repairs. It looks as though it may get worse in June. Our government wants to destroy our industry and it looks like it has succeeded.

We will be billing non-assigned from now on.

We have debt now of $100,000, (when) we were debt free before the price reduction. I have not received a salary for over 11 months as an owner. We still cannot pay for our equipment and have to continue to finance. With rent, utilities, payroll, insurances and bonds, we still cannot pay the bills. Why does CMS not cut on their administration costs. I am sure there is a lot of waste there. Also, the patients pay for Part B monthly, but they are the ones that really get cheated—no service, cheaper equipment, etc.

Diane Friend, Valley Home Health Care, Roanoke, Va.

As a result of the pricing cuts, we have reduced staff to a skeleton crew, dropped products and services offered/billed, and can no longer care for our patients as efficiently or thoroughly as we previously did. We as a company are hurting; the patient is suffering as well.

Rich Waltman, HealthCare Plus, Polson, Mont.

Cash flow has really gone down. When payroll and credit card roll around, it is really tough. We are completely debt free and pay credit card off monthly, but have had to take money from company savings twice this year. We have had a few employs leave and haven't rehired.

We have laid employees off and have had to borrow money to stay open. If things keep going as they are, we will not be able to provide equipment to our customers much longer. We service a very rural, impoverished are.

Lana Cochrane, Personal Medical Equipment, Anna, Ill.

A lot of our clients and referral sources are upset that we no longer accept assignment on products affected by the roll out. It has resulted in a drastic drop in referrals and sales.

We have been really impacted with the decrease in our TriCare contract, which is based on the Medicare non-rural rate, with a further 20% discount. Now MediCal is looking to do the same.

We have always run a lean staff. We have had to lay off two clinical staff. No one has insurance as costs have increased over $50,000 in the past three years. My 64-year-old partner was on a call out last evening from 0100-0500 hrs. Anyone looking to buy a good used DME?

Bob Forbes, Advantage Home Oxygen, DuBois, Pa.

We are located in San Antonio, and the continued decrease in reimbursement affects all areas. We are a military city and the Medicare patients are always on a waiting list and no one even wants to do business with Tricare due to their contact of 65% of the Medicare allowable, which is already ridiculous. We service the military and are applying for Medicare and Medicaid, but in reality what for, with the way the reimbursement is going. You can't run a business like this and service patients' medical needs. We are a minority, veteran-owned company just trying to stay afloat.

Brandy Hill, Patient Solutions, San Antonio

Hopefully we will still be in business within six months. Pray for our industry.

The 50%-plus cuts within six months in the rural areas during 2016 have seriously affected cash flow and margins. We are currently working on a 0% operating margin, depending on the month. Additional cuts to oxygen are devastating!

We're losing a substantial amount of revenue, causing serious changes in business practices, including decreasing product lines, going non-assigned, decreasing deliveries.

Brian Dirksen, Genesis Home Medical Equipment, Davenport Iowa

The biggest impact has been a reduction in customers. We receive near daily complaints from past and potential customers of lack of service and response form bid winners.

We have had to push more of the expense onto the beneficiary. Many people cannot afford extra expenses in a rural area. How can I be expected to deliver equipment in a rural area on such slim margins? My costs have not decreased, but my income sure has. We are the only locally owned DME in the area with our doors still open. Soon the nationals will have all the business and be able to dictate cost.

Gary Morris, GME Medical, Lynchburg, Va.

We moved out of the Medicare business in July of 2016. It's been tough, but we're gaining ground.

Michael Wofford, Appalachian Medical Services, Calhoun, Ga.

I have been in this industry for almost 40 years and I have seen a lot of crap come and go from CMS, but this is by far the worst I have ever seen. CMS can change reimbursement rates in the middle of a rental period, but we cannot change our assignment decision in response? What BS. I have laid off long-time employees and cut benefits like health care, but there is no way to make up for 50%-plus cut in Medicare.

Don Chrysler,National Home Health Care, Amarillo, Texas

We will be letting go of an RT and cutting on service.

We've dropped hospital beds/trapeze/lifts/air mattresses, cut our staff by over a third, shelved expansion plans, and gone into debt. Even with these changes we may not survive.

We had to stop accepting new referrals from Medicare and all the HMOs (because they pay even less than Medicare now), effectively closing our business. We delivered products 60-90 miles away on a daily basis, but we could not continue to do so because we were losing money on 80% of the items we were delivering.

S. Holland, Eleos Home Medical, Mobile, Ala.

I feel that the patient is the one that will suffer from the way the bid works. We have a location in a bid area and our main office is in rural area. We have had tons of patients in the bid area that can't get the services they need and are being turned away by the bid winners because they can't keep up. It is increasingly difficult to keep going with the cuts—some below our cost—especially for the capped rentals that we have to bill for over a year and maintain the equipment. It is ridiculous to expect us to keep taking care of people at that rate.

Kathy Driver, Mike's Medical, Clinton, Okla.

We simply cannot accept Medicare assignment on most items currently outside a very narrow service area. You are supposed to do the same amount of work for a 50% reduction in revenue; it is impossible

Al Neumann, Corner Home Medical, St. Paul, Minn.

We have had significant downsizing of staff, impacting patient care. In some scenarios, reimbursement is not covering cost of goods. Patients get upset and want immediate service, but you simply cannot staff. Medicare demands the same touches and service levels, and has broad medical necessity requirements, but it has reduced fee schedules to barely cover or not cover basic cost of goods, delivery, and claims costs.

We are billing unassigned for some product lines. Patients will have much higher out-of-pocket expenses. There are some products where our purchase price is higher than the reimbursement. We are also cutting value-added services. The only reason our DME has stayed in business is that it is part of a multi-service line home care agency. If we were a stand-alone DME, we would have been out of business at the end of 2016.

We have consolidated three locations into one. We no longer take assignment on walkers and bedside commodes or anything else under $50. We have also had to reduce head count and gotten further into debt.

We have cut down on service, reduced staffing hours and reduced inventory. We do not take any chances with questionable documentation. Our priority has shifted from taking care of the patient first, to trying to keep ours doors open.

The bid pricing will force us to eliminate positions, drop contracts and change our business model completely to remain viable.

The biggest impact has been meeting the cost of the items dispensed with the current bid pricing. We are losing money on each order dispensed.

The bid pricing is not sustainable and is evidence of misguided government.

We have been hit from all sides and the matching commercial fees are just starting to take the biggest toll. We are seriously considering dropping some of our third-party contracts. It's a tough decision when you've lost so much business already. Overall, we continue to search for ways to increase our overall bottom line, increase our retail presence and find profitable sweet-spots within the third-party payer world.

Lori Sears, Active Home Medical Supply, Lapeer, Mich.

With cuts in reimbursement, rigid Medicare guidelines for respiratory machines, and taking on more clients from locations closing or from winning the bid, it is hard to supply the new equipment and enteral products. There is not room for profit or error and we have continually been in the rears, continually trying to dig out. We keep hoping that our privately owned hometown company will make it. The national and hospital companies are crushing us. I do not understand how any company can get away with fraud, when we cannot even get our patients that need the equipment qualified by the rigid guidelines and let alone get a legitimate claim paid.

DeAnn Bauer, Belleville, Ill.

We are in a rural area of western Oklahoma. We are the only DME in our town now, as there were three at one time. These cuts have impacted us tremendously, to the point of having to get a loan to keep the doors open, and I am not sure how long that is going to help. We desperately need help quickly. If we are not able to keep going, I am not sure what out patients are going to do. These cuts have caused us to cut staff hours, reduce products we would normally carry, and not accept all new patients. Patients are having to wait on items longer, as the funds are just not available to purchase all items needed. Please help save the business. We love what we do and care for our patients, and don't want to see them have to do without.

There are insufficient profits from Medicare sales to cover overhead, make deliveries, and provide choice. We are especially damaged by a large number of Medicare/Medicaid referrals from other providers that are not providing equipment or services as the non-payment of deductibles and co-pays puts us immediately in the red. We have curtailed our catchment area and products as a consequence, and will file claims non-assigned when ever possible.

We live in a rural area and cover many counties that have no other DME services available to them. We are going to have to reduce our coverage area due to bid pricing. Bid pricing has eliminated our profit margin so we can not afford to deliver and service patients in other counties. What will those patients do then?

There has been over a 60% decrease in oxygen reimbursement over the last year and we're getting paid less than those in bid areas. I don't think I have to explain the IMPACT. It's devastating.

When reimbursement is less than cost, you can't stay in business. We serve residents in rural Kansas and can't continue to be in business under the current plan.

We are lucky to be diversified into other products and retail. It's the patients that are suffering with poor quality service, poor quality equipment, sometimes no service. I cant believe that there is not more complaining coming from patients. They are just letting it happen. We as suppliers can complain all we want; CMS does not care about us.

We are in a metro area, but all of our plans followed the Medicare rates and some even lower. We have had to adjust our service line and are still loosing money each month. No one seems to want to talk about this part of the deal. In six to 12 months, we will be gone.

The biggest impact has been a reduction of value added services and patient care.

We service a county in Montana that is bigger than the state of Rhode Island with a population of 7,000 people. I have laid off an employee (leaving it up to me and one other person to service this massive area). We have cut where we go and the services we provid, and are not breaking even with these rates. We are dying for the money from the Cures Act and praying that rates get established where we can service the patients we love. We are the only DME in the county and we can not increase profit by more patients. There are no more people. If we close, I am not sure how these patients will discharge out of the two hospitals we serve.

Jenn Morrisroe, Dillon Medical Supply, Dillon, Mont.

We have looked real hard at what services to continue/discontinue. Staffing cuts are on the table at this time also, which will further limit what services we can offer.

Tim Martin, ATTENTION Medical Supply, Newport, Ariz.

As a small town, locally owned business, the hardest part is telling the customers that you cannot afford to take care of them. I am having to say no all the time. As an example, the quality of hospital beds I use cost me more than Medicare pays. However, with the audits, very very few people "qualify" for a bed through Medicare. They need one, but the rules are over the top. I rent more privately than ever before. It is sad for the clients.

We stopped servicing Medicare patients. The transfer of patients has been costly and time consuming, so I'm not sure we are loosing less money. Regardless, we can't sustain the cut in the long run. The years we have serviced our patients are no value at all to the government. As long as they think they are saving money (even though time will show they are making things worse), they do not care about patients and the access issues that they are experiencing. It's taking months for these patients to get the supplies that they need.

We have one location in a non-bid area. The biggest impact for us has been to drop certain categories, i.e. nebulizers/hospital beds/walkers, and only bill them unassigned for Medicare beneficiaries. We do enough cash business and non-Medicare business to most likely stay in business, but the patients have suffered as no one will take assignment on a lot of Medicare business.

Jim Lehan, Lehan's Medical Equipment, Rockford, Ill.

Bid winning companies are refusing to service areas (like ours) with extensive driving distances. We're getting cash sales in those areas because the beneficiaries are frustrated.

Our business has suffered greatly financially. We have also taken substantial reimbursement cuts from Medicaid and commercial insurances. I have had to decrease staff and cannot afford to provide raises or benefits any longer for existing staff. Cutting staff, costs, and service is the new norm for our 32-year-old business. Sad and frustrating.

Randall Cramer II, All-Med Equipment & Services, Cottonwood, Ariz.

Luckily we have a retail pharmacy to pay the bills while our DME division tanks. We've been able to eliminate positions due to employees quitting without laying anyone off. We've switched to non-assigned billing for lots of equipment, which has hurt us with referral sources.

We have simply stopped taking all Medicare jobs impacted by the 2016 rate changes. Clients must now private pay, and we file non-assigned if we have the proper documentation to do so. No providers in our areas are taking Medicare, except for oxygen jobs by Apria. Medicare clients are being told to change health plans. Clients are not happy. Ironically, we are doing financially better now than before we stopped taking Medicare claims. Plus, billing staff is reduced due to less audits and difficult claim documentation.

Paul Gammie, Gammie HomeCare, Maui, Hawaii.

I purchased this business in August of 2015. It has been established for more 20 years and we are located in the most heavily populated senior area in NJ and my nearest competition is about 40 miles away. I basically have no competition and operate from a beautiful showroom. My revenue in 2016 was reduced over $340,000 due to the Medicare cuts. I may not be able to keep my doors open and have put everything I have into this business, including liens on my home. I have between eight to 10 employees that rely on this business, along with hundreds of seniors. My projected revenue should have been sufficient to sustain and grow the business. Now I may lose everything I have, including my home and all personal assets. I would be more than happy to sue Medicare for my financial situation if I lose the business.

We have learned to deal with the stupidity of the government and no longer are we dependent of their stupidity. While we have compassion for the elderly, we have learned to take them unassigned and if they cant do that, we send them down the road. The most loyal and easiest patients stay with us. We have found that the biggest challenges are personality wise and unreal expectations wise—they move on to other options and then come back asking us to take them back, which we don't do. We are a profit business and the government is expecting us to act as a nonprofit, but they tax us like a for-profit. When they get their heads out of their asses, maybe we will consider taking these things back on, but probably not. Life is much better without the government shit.

We have been able to grow our volume but not quite enough to cover the cuts. The biggest thing is that we need to look at outsourcing some of our operations, such as billing, and cut the workforce. It's the only way to make it work. Unfortunately, we are like most DME companies who have a hard time dealing with that fact and have a hard time pulling the trigger.

Our patients have more to pay out of pocket. Those that are not capable of paying out of pocket drop their therapy, thus causing undo harm to their body and unnecessary hospitalizations.

These cuts have made it impossible to keep doing business in the rural areas. We have had to change our delivery systems, stop carrying certain products, and are looking to have layoffs of employees. It takes all the employees we have to do the mountains of paperwork and keep up with the regulations Medicare requires. You pay more to watch cable television than we get paid to provide life saving oxygen in a patient's home. We are already using our savings to keep the company going. I don't know how much longer we can survive. Then what happens to the patients? What happens to my employees? With these cuts everyone loses!

Lots of ABNs. Lots of non-assigned sales. Medicare beneficiaries can pay the difference. Medicaid patients are not allowed to, and THAT will be when bad outcomes hit the fan.

We have had to change our hours of operation, and have became much tighter on who we will accept for patients. We are no longer accepting assignment for most products and dropping those that are a loss.

We are no longer billing Medicare for DME as of March 15th. Not sure how this will impact my job since that was one of my responsibilities. Customers are having a difficult time finding locations that will bill Medicare.

Diane Dean, Jefferson Pharmacy

We were doing OK up until competitive bidding rates hit the Tricare contracts. How can you accept a nebulizer or CPAP on rental at 60% of bid rates? Now we are considering any means of reducing our expenditures and buying the cheapest equipment possible. We are trying to draw attention to this issue with both the Department of Defense and HealthNet, but so far no one is interested.

Victoria Peterson, Respiratory & Medical Homecare, El Paso, Texas