OIG and House of Representatives Add Fuel to Competitive Bidding Fire

Providers concerned about the threat of national competitive bidding for HME got some bad news last month. On June 12 the Health and Human Services (HHS) Office of Inspector General (OIG) issued a report saying Medicare and its beneficiaries pay too much for certain medical equipment and supplies and steps such as competitive bidding and inherent reasonableness price reductions are needed to bring costs under control.

Much of the OIG’s evidence was based on cost comparisons between what providers charge other payors—most notably the Department of Veterans Affairs (VA)—for HME and supplies and what providers charge Medicare.

The report, which the OIG issued at the request of Senator Thomas R. Harkin (D-Iowa), did not make clear that the Medicare price includes a service component not included in the VA price and in the price of many other payors. This makes the comparison invalid, says the American Association for Homecare (AAHomecare).

Yet on June 19, the House Ways and Means Committee approved its version of HR 4954—a bill whose primary purpose is creating a Medicare prescription drug benefit, but which also includes phasing in competitive bidding for some HME within 3 years and creating a $40 co-payment for home health care services.

This bill will most likely be merged with a version of HR 4954 the House Energy and Commerce Committee was marking up at press time. The combined bill may come up for a vote as early as September. If it passes, it will be sent on to the Senate.

“It is very unfortunate that we appear to have the House of Representatives going on record as supporting competitive bidding and the home health co-pay,” says Thomas Connaughton, CEO of AAHomecare.

However, the game is far from over, Connaughton stressed. Congressional representatives who oppose competitive bidding and the co-pay may push to have these provisions removed from the bill. In addition, the association has worked hard to secure opposition to Medicare competitive bidding among some Senators. Finally the industry could even find an unlikely ally in the Centers for Medicare & Medicaid Services, which in May issued a written opinion that said “it is premature [for the OIG] to declare that competitive bidding is either an appropriate or an inappropriate reimbursement mechanism.”

Still, it is crucial for all industry members to contact their Congressional representatives when they are home during the July and August recesses, Connaughton says. “We just want to make sure they are so tired of hearing of these issues that they don’t want to go near them in September,” he says.

AAHomecare Confronts Competitive Bidding at Leadership Conference

With Congress considering national competitive bidding and the Office of Inspector General (OIG) releasing a report indicating that the Centers for Medicare & Medicaid Services (CMS) overpays for HME, American Association for Homecare (AAHomecare) members came to Washington, DC, on June 5-7 in search of heroes.

“Unfortunately, in our current legislative climate, we need every home care hero we can find,” said Steve Knoll, the newly elected AAHomecare chairman in his incoming remarks to the more than 100 association members gathered in the nation’s capital for the association’s annual legislative conference.

From left, Bill Miller of The MED Group, Les DeFelice of DeFelice Mobility Inc, and Asela Cuervo, JD, of the American Association for Homecare discuss competitive bidding with Mark Wynn, PhD, team leader for the CMS competitive bidding project.

Members listened to presentations by key health care leaders, such as keynote speaker Senator Max Cleland (D-Ga); Donald Young, MD, president of the Health Insurance Association of America; Thomas R. Barker, senior outreach and policy advisor for CMS; and Mark Wynn, PhD, team leader for the CMS competitive bidding project.

Among some they found the heroes they were looking for. “Count me as an ally, count me as a friend,” Senator Cleland told the AAHomecare members.

But not all of the news was good. Dr Wynn reported that CMS saved about 20% across the board in the Polk County, Florida, competitive bidding project while surveys of consumer satisfaction remained high. Despite not saying how the customer surveys were conducted, if CMS plans to study whether other health care costs—such as emergency departments visits—had risen, or whether the results in Polk County would be relevant to more rural or more urban parts of the country, Wynn was supportive of competitive bidding. “If [national competitive bidding for Medicare HME] is passed, we now know a lot about how it should be implemented,” he says.

To ensure that legislators making up their minds about competitive bidding also considered the home health care industry’s evidence on how competitive bidding can force smaller companies out of business and reduce service and provider choice for beneficiaries, AAHomecare pulled out all the stops:

• Soap Box Consulting was hired to set up 100 to 150 meetings for AAHomecare members with their Congressional representatives and staff.

• Consumer advocates accompanied association members as they lobbied.

• Members were given lists of the key lobbying points—competitive bidding is premature, eliminate the 15% cut to the home health benefit, preserve access to Medicare Part B prescription drugs, make the 10% rural add-on permanent, reject adding a co-pay to the home health benefit.

• Finally, industry representatives, including David Miller and Bill Miller of The MED Group, Lubbock, Tex; Knoll; and AAHomecare CEO Thomas Connaughton went to the White House and met with Mark B. McClellan of the President’s Council of Economic Advisers.

“This year, more than any other, we were effective on Capitol Hill,” Knoll says.

Florida Awards Medicaid Competitive Bidding Winners

Following a May 31 announcement by Florida’s Medicaid program administrator to institute competitive bidding for Medicaid oxygen equipment and supplies and hospital beds, the Agency for Health Care Administration (AHCA), Tallahassee, Fla, has announced four winners of the competitive bid contracts.

AHCA expect the winners—Rotech, Orlando, Fla; Mercury Medical, Clearwater, Fla; Care Med Respiratory Services, Tampa, Fla; and Central Medical Equipment, Harrisburg, Pa—to sign contracts with the state by the end of June.

For the purpose of the state’s competitive bidding system, AHCA divided the state into 11 regions and awarded a single winner for each. Rotech received bids for six out of the 11 regions, and Central Medical collected three more. Mercury Medical and Care Med Respiratory Services each received one bid.

However, just hours after AHCA’s initial announcement of the bid winners, the agency released another statement to suspend the bids that were set to be awarded to Central Medical Equipment. AHCA found that Central Medical Equipment had some licensure issues, says Deputy Secretary for Medicaid, Bob Sharpe.

Appearing to confirm provider expectations, in the cases of three of the four winners, AHCA awarded bids to the companies that indicated the most substantial monetary savings. No winning bid was granted to the provider with the highest technical score.

The announcement of the bids came as the Florida Association of Medical Equipment Services (FAMES) prepared for its court appearance against AHCA. FAMES has filed a lawsuit against the state in an effort to delay, if not eliminate, the competitive bidding project. The suit filed by FAMES was heard June 3 and 5. A ruling had yet to be announced at press time.

Legislative/Regulatory News

Region B DMERC Confirms 5-Month Appeals Delay
HME suppliers may find a significant delay in reimbursement for Medicare claims this summer since the Region B DMERC AdminaStar Federal is experiencing a 5-month backlog on appeals. The contractor has confirmed 21,772 claims in its review system, more than half of which are already past the 45-day point. With assistance from the Centers for Medicare & Medicaid Services (CMS), AdminaStar expects the problem to be resolved by November. Such delays will inevitably affect cash flow for suppliers. Jane W. Bunch, CEO of Jane’s Billing and Consulting, Marietta, Ga, says, “The 5-month backlog in appeals is devastating to the providers in Region B. It costs providers a lot of money, and they have to keep the equipment out on the patients while not getting paid.”

CMS Announces
Employer Identifier Ruling
A new regulation to simplify health insurance administration will take effect on July 30 of this year. In the May 31 Federal Register, the Centers for Medicare & Medicaid Services (CMS) has established a standard for a unique employer identifier and accompanying usage requirements. The ruling indicates that health plans, health care clearinghouses, and health care providers must use the identifier, for example, in connection with selected electronic transactions. This identifier is intended to improve the effectiveness and efficiency among Medicare, Medicaid, and other federal and private programs. Implementation will help meet some requirements as set forth in the Administration Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

State Watch

Texas—Texas HME providers may soon face Medicaid competitive bidding. On May 16, the Texas Health and Human Services Commission (HHSC) drafted a request for proposal for comment on competitive bidding for Medicaid DME/Medical Supplies. A vendor conference is scheduled for July 8, and proposals will be due August 16. Contract negotiations are to be held September 20, with initial operations slated for November 4, 2002.

North Carolina—It appears that competitive bidding is also ahead for North Carolina HME providers based on recent action taken by the North Carolina Department of Medical Assistance (DMA). The department contracted with a private firm to develop a request for proposal (RFP) to incorporate competitive bidding of HME, home infusion, and supplies. The DMA has not outlined a timeline for publication of the RFP, but the North Carolina Association for Medical Equipment Services (NCAMES) and the Association for Home and Hospice Care (AHHC) in North Carolina are joining efforts to halt the proposal in its tracks. They sent a letter to DMA pointing out the problems with competitive bidding that included a signature from the North Carolina Association of Pharmacists.

Midwest—New members of the Midwest Association for Medical Equipment Services (MAMES) Board of Directors Executive Committee were elected at the spring convention held earlier this year in Overland Park, Kan. Gary Miller of Mt Carmel Medical Equipment, Pittsburg, Kan, was named president for 2002-2003, and the new vice president is Dawn May of Pegler Home Health Care, Lincoln, Neb. For a complete list of the newly elected officers, visit www.mames.com.