Editor's Note

Bitter Harvest

Round One’s numbers prove patients are reaping what CMS has sown.

• By David Kopf
• Feb 01, 2012

As the majority of the industry prepares itself for bidding on Round Two, the real impact of Round One of competitive bidding is starting to make itself apparent, and the results aren’t pretty. Just as this issue goes to press, noted competitive bidding critic University of Maryland economist and auction model expert Peter Cramton compared annualized 2011 data for Medicare claims to 2010 claims data, and found that claims for home medical equipment dropped by as much as 82 percent during 2011. Yes, youread that correctly: 82 percent.

I’ll give you a moment to pick your jaw off the floor. (I needed to do that, too.)

Looking at all the categories, Cramton’s research found the following:

• Complex rehab fell a whopping 82.1 percent.
• CPAP devices dropped 63.7 percent.
• Diabetic supplies plummeted 74.1 percent.
• Enteral nutrition declined by 65 percent.
• Hospital beds plunged 63.7 percent.
• Oxygen went down 61.7 percent.
• Standard power fell by a staggering 81.5 percent.
• Support surfaces spiraled 73.8 percent.
• Walkers tumbled 71.5 percent.

The Real Impact

From a business perspective, these figures are horrifying. Even if they are halved, the declines represent a considerable blow to providers located in Round One. Not only did NCB take an average of 32 percent bite out of reimbursement rates across NCB’s billing categories, but the volume of claims for those categories has been slashed until there is essentially nothing left.

However, there’s a deeper, and even more sobering aspect to this dilemma: If claims are going down by these percentages (or even a fraction of those percentages), then what is happening to the patients? Those wheelchair users, oxygen patients and diabetes sufferers aren’t going anywhere. They still exist. So, what’s does this mean for them?

A massive decline in access, as the American Association for Homecare astutely pointed out. While CMS hyped the bidding program as one that would reduce fraud by a massive degree, the only sizable change has been to drastically undercut patients’ ability to get the home medical equipment they greatly need.

This scenario gets particularly scary when you consider the diabetes and oxygen patients. According to the study, the increased risk of death was 106 percent for non-users of mail-order diabetic supplies. Their risk of hospitalization was 36 percent higher. Non-users of oxygen in the “narrow access group” faced a 79 percent higher risk of death and a 54 percent higher risk of hospitalization compared to Medicare beneficiaries who receive home oxygen therapy.

“The startling and dramatic numbers from Round One underscore the fact that the current competitive bidding program is dangerously flawed and must be stopped,” read a statement from AAHoemcare about Cramton’s study.

Going Forward

What is glaringly clear is that as the run-up to Round Two continues, providers and their patients face what could very well be a national healthcare crisis. Per this issue’s cover story, “Round Two Reality Check” (starting on page 16), providers in the 91 competitive bidding areas covered by the second installment of the bid program need to develop smart bidding strategies and business plans to deal with the business threat.

But they must also do something else: Providers must lobby Congress to shelve the competitive bidding program and replace it with the industry’s Market Pricing Program. This way, CMS can have a market solution and patients will still have access to care and equipment. The alternative, Round Two being implemented, is a scary thought indeed.

This article originally appeared in the February 2012 issue of HME Business.