Seniors and People with Disabilities Will Pay Steep Price for Medicare’s Bid Program

Homecare Association Calls for an End to the Controversial Bidding Program that Will Cost Thousands of Lost Jobs and Business Failures and Will Not Save Money for Seniors

Seniors and people with disabilities who rely on home medical equipment and services will pay a steep price under Medicare’s controversial and mislabeled “competitive” bidding program for durable medical equipment.

The U.S. Department of Health and Human Services (HHS) announced today that bidding in nine of the country’s largest metropolitan areas could save Medicare as much as $17 billion over 10 years for home medical equipment and services. But those alleged savings are the result of “suicide bids” from providers in this ill-advised race to the bottom that will put thousands of homecare providers out of business and reduce patients’ access to care. Recognizing that the program is bad healthcare policy, a bipartisan group of 252 lawmakers in the House of Representatives support legislation that would repeal the bidding program.

“The bid prices announced by HHS today will translate into unsustainable reimbursement rates for homecare providers. Over time, it will make it harder for seniors and people with disabilities to get the home medical equipment and services they require to live independently in the most cost-effective post-acute setting – their own homes.”

The Medicare bidding program uses economic coercion to force homecare providers to submit unsustainable bids necessary to win a contract. Because Medicare is the largest third-party purchaser of home medical care, its market power effectively coerces providers to bid at unsustainable reimbursement rates to ensure the opportunity to continue serving Medicare beneficiaries. Ultimately, the below-market rates achieved through this bidding program will force thousands of businesses to close, reducing competition in the long term and reducing seniors’ access to care and choice of providers.

Congress delayed the implementation of this bidding program in 2008 to allow for needed changes, and the home medical equipment sector paid for that delay by taking a 9.5 percent nationwide reimbursement cut to pay for the projected savings from the initial round of the program. However, the Centers for Medicare and Medicaid Services (CMS) ignored congressional intent, did not address the flaws that precipitated the delay two years ago, and is now recklessly charging forward with the program in nine of the 10 largest metropolitan statistical areas in the U.S. An additional 91 areas will be subjected to the bidding process next year.

A broad, bipartisan group of 252 members of the House of Representatives has cosponsored legislation in Congress, H.R. 3790, to stop the bidding program and replace it with a fiscally responsible measure to reduce payment rates for homecare but preserve the ability of home medical providers to continue serving Medicare beneficiaries.

Other organizations that support the elimination of Medicare’s bidding program for home medical equipment include the ALS Association, the American Association for Respiratory Care, the American Association of People with Disabilities, International Ventilator Users Network, the Muscular Dystrophy Association, National Emphysema/COPD Association, National Spinal Cord Injury Association, Post-Polio Health International, and United Spinal Association, among others.

“This bidding program will further reduce reimbursement rates for home medical care which have already been cut to the bone,” Wilson said. “The program will only make it harder to receive medically required homecare. Over time, the country will see spending soar in other parts of Medicare because the bidding program will push spending into longer hospital stays and ER visits.”

Unintended negative consequences of the bidding program include:

• REDUCED ACCESS TO CARE AND SERVICE DISRUPTION – This bidding program will restrict consumer access to care and choice for home medical items and services, and it will trigger a race to the bottom in terms of quality. Less expensive items will be provided to patients. The program will disrupt the continuum and coordination of care between doctors, discharge planners, patients, and home medical equipment providers. With a loss of providers, expedient deliveries of items and services will be eliminated.

• HIGHER SPENDING IN MEDICARE – The bidding program will increase Medicare costs. It will lead to longer, more expensive hospital stays and more physician office visits, nursing home admissions, and emergency room visits.

• LESS COMPETITION, NOT MORE – The bid program is anti-competitive because it reduces the number of competitors. About 90 percent of home medical service providers would have been barred from the Medicare program in the first round of bidding conducted in 2008.

• LOSS OF JOBS AND SMALL BUSINESSES – The bidding program will result in the closing of thousands of small businesses and result in as many as 100,000 job losses nationwide.

To read the full release, visit the AAHomecare Newsroom.