Providers fear the worst

YARMOUTH, Maine - Far-flung contract suppliers were a significant concern in the original Round 2, but it could be worse in the upcoming re-compete, HME providers say.

For hospital beds in the Little Rock, Ark., competitive bidding area, for example, there is only one contract supplier, Camden Medical Supply, with a billing address, not even in the area, but in the state. The rest of the suppliers have addresses in North Carolina, Texas and Alabama.

“In the original Round 2, there were local companies on the list, including local branches of national companies,” said Ted Oury, manager of Diamond Medical Equipment & Supply in Little Rock. “This time, almost nothing.”

Even with local companies in the mix for the original Round 2, there have been access issues, Oury says, so he can't imagine what it will be like on July 1, when CMS transitions to new pricing and suppliers.

Just two weeks ago, Oury says he received a call from a discharge planner trying to make arrangements for a bed for a Medicare beneficiary. He told her he didn't have a contract for beds and, therefore, couldn't help her.

“She said, 'I can't find a bed anywhere,'” he said. “That was on a Friday. I know for a fact that this patient didn't discharge until Tuesday. Medicare could have bought four beds for the cost of that extended hospital stay. I see it all the time.”
The situation is even worse for nebulizers, a new product category, in the Boston bid area. None of the contract suppliers have billing addresses in the area or even the state—the closest is in Alabama. The rest? Florida, Texas, Mississippi and Puerto Rico.

“CMS has really done themselves a number this time around,” said Gary Sheehan, president and CEO of Cape Medical Supply in Sandwich, Mass. “In some respects, they've done us a favor. We're already getting push back from case managers asking, 'What are we going to do?'”

While concerns about out-of-state contract suppliers are very real, there may be instances where the supplier operates a hub-and-spoke business model. Its billing address may be outside of the bid area, but it may have an office locally that might not serve patients but does serve as a delivery point for the area.

“We're in markets that are 500 miles away, but we have three drivers and an RT and a warehouse guy there,” said Joel Marx, chairman of Medical Service Company in Cleveland.

Also, in the original Round 2, suppliers that didn't have a presence in an area made plans to subcontract or to “sell” their contract to local suppliers. In the Round 2 re-compete, however, there will be much less of that happening, providers say.

“That might have worked the first time, but providers are smarter now,” Oury said. “Two-plus years into it, they realize they shouldn't have taken that offer.”