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Medicare bidding program is target

By Carol Gentry and Mary Jo Melone
10/21/2009 © Health News Florida

Today Medicare launches competitive bidding for suppliers of medical equipment in nine metro areas across the country, including South Florida and greater Orlando. Officials project savings of 26 percent – potentially billions of dollars -- on home medical supplies such as power wheelchairs and beds.

But House members from Florida and other affected zones are trying to kill the program. The strategy, outlined in industry publications, is to get their language into the health reform legislation now being negotiated in Congress.

Sponsor of the bill, HR 3790, is Democrat Kendrick Meek of Miami. As of Tuesday, four other Florida House members were among the 18 co-sponsors. They say they’re out to protect patients, not the equipment suppliers.

”The goal is not necessarily to spare the industry as much as it is to protect Florida’s 3.1 million Medicare recipients,” wrote Meek’s spokesman Adam Sharon in an e-mail reply to questions from Health News Florida. The bidding system, he said, would lead to “disruption in service…and affect a population of Floridians for whom some of these products are life-giving.”

He listed problems that had been seen when the program was tried before, such as out-of-state companies winning bids for areas in which they had no local service personnel. But Medicare spokesman Peter Ashkenaz said those and other concerns have been addressed this time around.

Meek and others’ attempt to squelch competitive bidding comes at a time when leaders of his own party in Congress and the White House are trying to find savings in Medicare that can help pay for expansion of coverage to the uninsured. Not even Medicare advocates agree with Meek.

”We’re definitely overspending for a lot of these products,” said Paul Precht, policy and communications director for Medicare Rights Center. “Competitive bidding is a reasonable way of getting the price right.” 

But Miami medical-equipment dealer Rob Brant, president of the Accredited Medical Equipment Providers of America, says Medicare isn’t going to solve its money problems this way. Home medical supplies enable the elderly and disabled to remain at home longer, he said.

“We’re less than 2 percent of the entire budget, yet we’re saving Medicare 10 times as much,” Brant said. He charged that the bidding process will drive some firms out of business and permit larger, out-of-state companies to move in and take over.

Meek’s bill has 18 co-sponsors, according to the Web site www.govtrack.us. They include members of both political parties and tend to be from the competitive bidding areas.

Florida co-sponsors include Rep. Alcee Hastings, Ron Klein, Debbie Wasserman Schultz and Robert Wexler, all Democrats from South Florida. In response to a request for an explanation, Klein’s staff sent a letter he signed on the issue in March 2008, before CMS made changes in the program.

Meek’s bill has been sent to the Ways and Means Committee, where he is a member. HME News, an industry publication, said moderate Democrats in the Senate may make passage tougher there.

HME News quoted a lobbyist for a power-wheelchair company as saying the number of co-sponsors for Meek’s bill is a good sign. Seth Johnson, vice president of government affairs for Pride Mobility Products, reportedly said, “We're going to need that kind of support to work in the tight timeframe that we have to advance this bill this year."

Medicare has always paid a huge markup for home medical equipment, according to a series of reports from the Office of the Inspector General of the Department of Health and Human Services. The program pays the manufacturer’s suggested retail price plus a sum that the suppliers say they need to make service calls.

Not only are taxpayers spending way too much under this system, OIG reports, but beneficiaries are, as well, since they’re responsible for the 20-percent co-pay. Even those who have Medicare supplements are affected indirectly because costs affect insurance premiums.

An August OIG report on power wheelchairs said the package price in 2007 on standard power chairs constituted a markup over the supplier’s cost of almost 300 percent. Beneficiaries’ co-pay was more than half of what the supplier paid for the chairs wholesale. 

The Competitive Bidding Acquisition Program, authorized in 2003, is predicted to save more than $1 in every $4 that Medicare spends on medical equipment. In Florida, savings would be even greater, based on an analysis by this publication at the time. It found savings in Miami-Dade and Orlando areas of as much as 42 percent for diabetic supplies and 35 percent for an oxygen concentrator.

A Medicare patient in Miami or Orlando – areas affected by competitive bidding -- would spend about $250 less on a power wheelchair than residents of other parts of Florida. Taxpayers, meanwhile, would have saved about $1,000 for the chair.

But when CMS tried to implement the bidding system last year, Congress was besieged with complaints because only 325 of more than 1,000 bidders were approved for contracts. A lot of small suppliers  didn’t make the cut, and patient advocates worried that beneficiaries in some areas wouldn’t have service nearby.

So in last year’s Medicare Improvements for Patients and Providers Act (MIPPA), Congress voted to put the program on hold for a year and ordered CMS to rebid the contracts. That 60-day process begins today.

Except for Puerto Rico, the same areas are participating: Cincinnati, Cleveland, Charlotte, Dallas, Kansas City, Pittsburgh and Riverside/San Bernardino, Calif., plus the two mega-sites in Florida.

The South Florida site includes the big three counties -- Miami-Dade, Broward and Palm Beach – and four counties in Central Florida: Orange, Seminole, Lake and Osceola.

The items for rebidding are essentially the same, except for two that have been exempted, negative-pressure wound therapy supplies and the most expensive power wheelchairs, those for paralyzed patients. 
The items for rebid include: 

-- oxygen equipment and supplies 

--standard power wheelchairs and scooters 

--intermediate-complexity power wheelchairs 

--mail-order replacement diabetic supplies 

--nutrients and equipment for feeding tubes 

--respiratory devices, including anti-snoring Continuous Positive Airway Pressure machines 

--hospital beds 

--walkers 

--special mattresses to prevent bed sores

More information is available at http://www.cms.hhs.gov/DMEPOSCompetitiveBid/. 

--Carol Gentry, Editor, can be reached at 727-410-3266. Mary Jo Melone, a free-lancer in Tampa, can be reached through e-mail.