What the NPRM does not say is just as important as what it says, and it is all ripe for comment.

After more than a month to digest the long-awaited Notice of Proposed Rule Making (NPRM) on national HME competitive bidding, AAHomecare has many concerns about competitive bidding as mandated by the Medicare Modernization Act of 2003 (MMA). The association supports fair competition, and believes that managing program costs and promoting competition are important for Medicare. However, they must be accomplished in a way that protects patient choice in fee-for-service Medicare as well as access to quality care.

The MMA model will harm small providers, reduce beneficiary access and choice, and severely limit—not enhance—competition. What is more, AAHomecare disputes the claim that competitive bidding will significantly reduce Medicare HME expenditures. The administrative costs of implementing the new contracting system will be daunting.

Competitive bidding will significantly limit patient choice in traditional Medicare. Currently, beneficiaries who are dissatisfied with the products or services they receive from an HME company can choose another provider. That is part of Medicare’s compact with millions of beneficiaries who have chosen to stay in the traditional program, at a greater cost than joining a Medicare Advantage plan. Those who enroll in Medicare Part C, on the other hand, pay less but agree to restricted choice of provider. Those in fee-for-service Medicare have not agreed to a restriction on their ability to choose the best provider, based on quality, price, range of service, and long-standing relationship.

HME providers should be aware of the next steps in the process, and prepare to respond as appropriate.

• June 30: comments on NPRM due to CMS
• June 2006: Quality standards are expected to be released by CMS
• Summer 2006: Accrediting organizations apply for deemed status
• Late 2006: Final rule on competitive bidding expected
• October 2007: Competitive bidding goes into effect in the first 10 Metropolitan Statistical Areas (MSAs)

To obtain a copy of the NPRM from the Federal Register of May 1, go to the AAHomecare Web site at www.aahomecare.org. The proposed rule is under “Breaking News.”

In commenting on the NPRM, among other issues, HME companies will want to evaluate CMS’ methodologies for selecting the initial 10 MSAs for 2007; setting payment amounts and weighting of items within product categories; and estimating consumer demand and supplier capacity. The specific items to be competitively bid, designated MSA areas, and suppliers’ quality standards are not addressed in the proposed rule.

The Hobson-Tanner solution
The Medicare Durable Medical Equipment Access Act of 2005 (HR 3559) was introduced last summer by Congressmen David Hobson (R-Ohio) and John Tanner (D-Tenn) to address some of the most onerous provisions of competitive bidding. This legislation is critically important to protecting beneficiaries and preserving the nation’s small business home care infrastructure, which is an important part of the answer to the looming Medicare and Medicaid crisis.

HR 3559 would amend several competitive bidding requirements included in the MMA to protect patient access to home care and allow qualified small providers to participate in the program. HR 3559 would:

• require that competitive bidding not be implemented until HME quality standards are in place;
• require the Secretary to exempt rural and smaller MSA areas—those with populations under 500,000—rather than give Health and Human Services an option;
• allow all qualified providers that are small businesses, and that submitted a bid below the current allowable, to participate at the competitive bid rate;
• restore the right of providers participating in the program to administrative and judicial review, including the bid amount and the terms of contracts.
• exempt items and services unless savings of at least 10% can be demonstrated, compared to the fee schedule in effect on January 1, 2006; and
• protect beneficiary access to care by requiring CMS to conduct comparability analyses for areas that are not competitively bid to ensure that rates are appropriate to costs and do not reduce access to care.

All HME providers should step up efforts to line up House support for HR 3559. As of this writing, there are 109 cosponsors, with somewhat more Democrats than Republicans signed on. We especially need more of the latter to cosponsor the legislation. When asked, members of Congress will respond to constituent demands for access to quality services, and to the need to preserve the small business HME infrastructure in their communities.

Ann Howard is director of federal policy for AAHomecare, Alexandria, Va. She can be reached via e-mail: ahoward@aahomecare.org.