Medicare "Competitive" Bidding Program Designed to Eliminate Competitors

This morning, the House Small Business Subcommittee on Healthcare and technology held a hearing to find out how Medicare's bidding program was impacting small businesses. Tammy Zelenko, CEO of AdvaCare Home Services represented AAHomecare. Here is her oral statement:

"Good morning Chairman Ellmers, Ranking Member Richmond, and members of the Subcommittee. My name is Tammy Zelenko. I am president and CEO of Advacare Home Services, a small business in the Pittsburgh area. We serve about 2,000 patients, with a staff of 49 employees in four locations.

Advacare specializes in respiratory care. We serve patients with COPD or other lung diseases, along with a variety of frail seniors who need help in order to live safely in their own homes. You may know us as providers of durable medical equipment and services, or DME.

 DME is an essential and extremely cost-effective component of our nation’s continuum of care. For a few dollars per day, homecare providers like me enable patients to be discharged from hospitals to home. We help control the nation’s healthcare costs:  DME equipment and services allow Medicare to reap savings by preventing hospital and ER visits and reducing expensive institutional care.

DME represents expenditures of just 1.4 percent of the annual Medicare budget. Falling payment rates and sharply rising regulatory burdens make it extremely hard to continue providing quality services without compromising care. 

As a member of the American Association for Homecare and the Pennsylvania Association of Medical Suppliers, I am very grateful to you for holding this hearing. The poorly designed bidding program has needlessly harmed hundreds of small providers like me and has eliminated 85 percent of providers from participating in the program in the nine areas included in Round One. 

How can we have a truly competitive program if the program is designed to eliminate competitors?

As the bidding program now expands to another 91 areas throughout the United States, small providers face severe cuts and arbitrary exclusion from participating in Medicare. There is no doubt thousands of good providers will be driven out of business as a result of this expansion. With 10,000 baby boomers turning 65 every day, need for cost-effective homecare is rapidly growing. Unfortunately, this bidding program is destroying the infrastructure to help meet that demand. 

In spite of the rhetoric from Medicare about set-asides for small providers, let’s be clear:  This bidding program is anti-small business.  It is a business and job killer.

We do not oppose market-based pricing or a well thought-out auction system. In fact, we endorse an alternative system developed by auction experts who design bidding systems for a living. 

We are often the eyes and ears of the elderly people living in their homes. We create a customized care plan based on physician orders and patient-specific goals and we communicate critical information to the physician.  This is what enables patients with acute care or chronic needs to remain in their homes—safe and independent.

However, there are costs to providing this level of care. These are not simple “commodities” we are providing.

As a small business owner, I have been able to compete against the local, regional, and national providers within my market. Each year I gained market share, grew my business, and received recognition due to the outstanding service that my company provided.

But all of that changed overnight when the bidding program went into effect. The bidding program, for me and thousands of providers like me, has created the biggest barrier to my company’s survival.

The government should not ration benefits or otherwise bar qualified providers from serving Medicare beneficiaries.

As I prepared for the bidding program, I made my business as lean and efficient as possible. I invested in electronic medical records, purchased GPS tracking devices, and invested in a new billing system.  I believed these changes would prepare us. I was wrong.

This is the first year that I did not grow my company. The first time that I had to pass all of the healthcare premiums increases on to my employees. And the first time I had to limit reimbursement for continuing education.

Before the bidding program began, my company competed based on the level of service we provided through education, clinical assessment, and follow up. But now, because of severe design flaws, this bidding system has eliminated my opportunity to compete in my communities where I have invested in physical locations, inventory, vehicles, and highly trained staff.

In closing, more than 200 economists and auction experts have warned CMS that the current bidding program will fail if significant modifications are not made. These experts designed an alternative called the Market Pricing Program. It achieves sustainable, market-based pricing. It preserves access to quality care. AND it gives small providers like me a fighting chance for survival.  

Please give us that chance by enacting the Market Pricing Program.  

Thank you."