Wednesday, April 3, 2013

Small Business Perspective on the Bidding Program, Part 2: Fraud Alert & The Fly In the Ointment

Mark Richardson continues his take on bidding program for home medical equipment – you can read the first entry here: A Small Business Story and An Alphabet Soup of Regulation.

Fraud Alert

Of course, over the years there have been examples of overpayments and fraud within our industry.  But so have there been like examples in every other sector of healthcare.  That is the cost of any government-regulated industry.  Everyone that I know in our industry however, is just as interested in eradicating fraud where it exists as the government is.  Our national associations often point out potential areas of fraud and abuse to CMS before they even happen.  Further, everyone that I know in the homecare industry considers their jobs a noble enterprise—taking care of patients in their own homes.  We play by the dizzying myriad of rules, 24 hours a day, 7 days a week, through snow storms, natural disasters, and every kind of hardship you can think of.  We do it not out of obligation to the government, but because we believe in the dignity of our patients who want to remain independent and able to recuperate in their own homes. 

But because CMS sees us all—the vast number of good, hardworking providers and the very few providers who take advantage of the system—through the same lens, they would like to dramatically reduce the entire number of providers in our industry in order to manage us more effectively.  That’s right—in an economy where roughly 10,000 Baby Boomers will turn 65 and become eligible for Medicare EVERY SINGLE DAY FOR THE NEXT 19 YEARS, CMS thinks that we need FEWER providers of home medical equipment—FEWER of the people that get patients out of expensive hospital care and back into their own homes where they can be cared for at a fraction of the cost.  And they think that if they can accomplish this that they’ll be able to reduce Medicare expenses as well.  (I don’t understand how making home medical equipment less accessible and increasing patient days in the hospital will save Medicare money, but that’s the theory that CMS, the guardian of the Medicare program has come up with.)

How will they accomplish these goals you ask?  Ironically, they hope to accomplish it by introducing some free market principles into the healthcare system.  There can’t be anything wrong with that, can there?  That’s exactly what’s always been missing in our healthcare system, after all, right?  Actually, the problem isn’t the theory—it’s the application of the theory that’s the problem. 

The Fly in the Ointment

On July 1, 2013, if nothing changes, CMS will implement Round Two of their so-called “Competitive Bidding Program” which will set payment amounts for DMEPOS, on average, 45% lower than the current fee schedule and will bar the vast majority of current DMEPOS providers across this country from the program.  CMS will finally attain its twin goals of reducing the number of providers and reducing Medicare costs—all in one single blow.  In actuality however, there is nothing “competitive” about this program, and the “bid” system that CMS designed is actually a fundamentally failed auction that promotes low-ball, or suicide bidding.  The prices that this program is generating will lead to a certain failure of my business and I have no doubt, of our entire industry as we know it in the near future if nothing changes.  If this flawed program is allowed to continue, jobs will be lost and hospital discharges of Medicare beneficiaries will slow down dramatically.

Don’t get me wrong; as a taxpayer in these troubling times I am not against the government trying to curb its spending.  But it should do so in a way that doesn’t harm the industry that it’s regulating.  Homecare is an integral, cost-saving part of the healthcare continuum and it should be nurtured, not devastated.  But implementing these prices and this misguided program will harm this industry.  It puts companies out of business by barring half of them from the Medicare program and subjecting the other half of them to prices that cannot be sustained.

Friday: What the Experts Say and What the Government Says (we’ll give you a preview: they don’t agree)

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