Kathleen Weir Vale is CEO of Hope Medical Supply Inc. of San Antonio and Corpus Christi
Originally printed in Caller.com June 18, 2012
CORPUS CHRISTI — As a lifelong provider of home medical equipment and services in the Corpus Christi area, I recently shared some of my concerns about a new Medicare bidding program for those items with Marjorie McColl Petty, Regional Director of the Department of Health and Human Services. Here is a summary of the points I made:
For three generations, since 1941, Hope Medical has been serving Texans. Our patients, mostly the elderly, use Medicare, Medicaid and private insurance. We employ 49 people in Corpus Christi and San Antonio.
Our health care sector, called "durable" or home medical equipment and services (HME), is largely composed of small, independent facilities throughout the country that deliver wheelchairs, walkers, oxygen and other items to patients coming home from the hospital or after a doctor's visit.
The HME sector arose from the need to shorten expensive hospital stays and get patients back home to recover. Did you know that one day in the hospital costs Medicare more than an entire year of equipment rental for home oxygen therapy? My company and others like it are a low-cost means of preventing far more expensive institutional care by reducing visits to the emergency room and the hospital.
HME is not the culprit behind ballooning health care spending. HME spending as a proportion of total health care spending has decreased over time. It now accounts for about 1.4 cents of each Medicare dollar.
We understand that the government needs to cut spending in order to reduce the deficit, but HME has already been cut. In the last five years alone Medicare has cut HME reimbursement by 27 percent overall. Reimbursement for home oxygen therapy has been cut by roughly two thirds. And, Medicare no longer pays for the equipment needed for that therapy after three years, even if the patient still needs it.
For months, I have been preparing my company's bid for Round 2 of Medicare's badly designed "competitive" bidding program. Round 1 began in nine areas around the U.S. This round expands it into 91 additional areas, including the Austin, Beaumont, El Paso, Houston, McAllen and San Antonio metropolitan areas. By 2016 it will cover the entire country.
But hundreds of economists have warned Congress that, as currently designed, this bidding program will fail to live up to its promise to cut costs. This large group of experts, which includes several Nobel Laureates, has pointed out several design flaws that doom the program to failure.
The worst is nonbinding bids. As with any auction, providers submit bids at whatever price they want. However, because they are not bound to accept a contract even if they are the lowest bidder, they can lowball without any consequences.
Lowball bids drive prices below sustainable market levels. This means that the bidding program will decimate our sector, dramatically reduce Medicare beneficiaries' access to care, and cost at least 100,000 jobs. Many small businesses have already closed as a result of Round 1. A vast expansion of the program will be devastating.
That's why at least 30 patient advocacy groups, including the Muscular Dystrophy Association, the National Family Caregivers Association, and the American Association for People with Disabilities, oppose Medicare's current bidding program for HME.
Auction experts have designed an alternative program that would set prices at competitive levels and save Medicare the same dollars the current system promises to save — but without limiting patients' access to care. It is called the Market Pricing Program. It requires providers to accept contracts at the prices they bid. Contracts are offered from the lowest bidder to the next highest until the need for each product is met.
We work hard to get patients covered when physicians order wheelchairs, walkers, hospital beds, oxygen, prosthetics, orthotics, and other equipment. These are much needed home health care items. If reimbursement for HME continues to be cut and this sector fails, how are patients going to stay out of the hospital?
We are asking HHS and Congress to take further cuts to HME off the table and adopt the Market Pricing Program. We are already struggling with reduced reimbursement. If Medicare's bidding program continues, estimated job loss is huge. Worse, access to cost-effective care for seniors and people with disabilities is on the line.