In shock: CMS seeks to not only spread bid rates but also bundle payments

Friday, February 28, 2014

WASHINGTON – Last week’s proposal to expand competitive bidding nationwide was likely a rude awakening for HME providers who have been sitting on the sidelines thinking that the program wouldn’t directly affect them, say stakeholders.

“Many folks thought it was going to crash and burn,” said John Gallagher, vice president of government relations for The VGM Group. “Folks that haven’t been engaged better get engaged.”

Under the Affordable Care Act, CMS is required to either expand the bid program or apply bid rates to non-bid areas by 2016. In an advance notice of proposed rulemaking published Feb. 24, the agency seeks comments on developing a methodology to adjust rates in non-bid areas based on bid rates; and on bundling payments for certain DME, including complex rehab and enteral nutrition.

Stakeholders are particularly concerned about the prospect of bundled payments.

“Is their whole goal just to reduce payment levels, which is what you always suspect,” said Cara Bachenheimer, senior vice president of government relations for Invacare. “Are they looking for specific directions or just creative ways to change the payment methodology? There’s not a sufficient amount of information.”

The bundled payments would include all related equipment, supplies and service. That would make for difficult business decisions for providers, say stakeholders.

“How do I know how long this person is going to need this equipment or how many supplies they will need,” said Denise Leard, an attorney with Brown & Fortunato.

Nothing in the proposal seems to address the underlying problems with the existing program, including lack of transparency and non-binding bids, say stakeholders.

“We’re analyzing the proposal and the statute itself,” said Jay Witter, vice president of government affairs for AAHomecare. “We’ve got some concerns with the way it’s written. We’ve already talked to members of Congress about it and we need to build as much pressure as possible.”


Is history repeating itself? Not! I have been in the industry for over 33 years. Back then you could rent an item for almost ever. It was called the" Days of the Golden Commode." Now we can call it the Rusty Commode.

There is no other industry that that is forced to rent an item for almost ever. I do not see the government asking to rent Battleships, Jet aircraft or Guns. That would be impractical.

One problem that our government created, both the Democrats and Republicans, is they have, and will elimate any personal or financial responsibility from the end user. the end user can do what they want with our equipment and if they break it, so what. If they misuse it, over use it or don't use it. It does cost them a thing.

I guess our industry brought this on ourself. We sign sign lower and lower contracts in fear of losing our customer base. Some believe that if I can make $10.00 on one item just think what I can on a hundred of them? I believe that 90% of HME providers do supply excellent service. Unfortunately the remaining 10% is what has received all of the attention. They have found ways to make that $10.00 into a $100.00. Making it look like every provider in our industry is getting rich. We do provide a service. Our paying sources will never know what they have until it is gone.

I am sorry for rambling on.

Spreading the competitive bid rates to non bid areas has been the goal all along, if you didn't realize that you must have been blind. Now we as an industry will be unable to argue the rates because we have set them ourselves. The resolution to all of this nonsense will only be realized when the consumer becomes a player in this game. That will happen when more and more mom and pops exit the field and the consumer is unable to acquire the products that the aggregators are unwilling to supply because of profitability, undue paperwork requirements, etc. etc. etc.

John, you are right to some degree that we brought this on ourselves- we let the media smear our industry with stories about fraudulent companies without responding. Medicare did an excellent job of putting the blame on providers when the blame was obviously theirs- they did not properly vet companies, and then turned around and used the DME industry as a scapegoat when the media started asking questons. And this gave us accreditation, bonds, competitive bidding, face-to-face,  and now bundling.

I think this is just becoming an extension of the ACA- they want to take over DME, because you know the government always does a better job than the private sector!/sarcasm. Maybe we can all have cushy government jobs in a few years!

The goal of CMS is to WALMARTIZE our industry. The big boxes allready sell eye glasses and I understand Kroger is doing CPAPS. Just think of the overhead our vendors would be able to shed if they only had to deal with 10 or 15 large companies. They would  need no more than 3 or 4 sales folks and would be able reduce every other overhead department by 70%. My God just think of how thier prices would drop with the shear volumn in manfacturing.  Look what Home Depot and Lowes and all the other big boxes have done to the little guy. Also with dealing with the big boxes there will be a lot less fraud. Sure we will still have Complex Power Mobility Companies but again the big guys will take over the business. They are doing it now.


Mark my words in ten years most of us DME's will be gone. There is one more thing in life besides death and taxes. CHANGE, CHANGE CHANGE. Look what the internet and cell phones have done. Most young folks do not have land lines and almost all of them do not have watches. Change. The News Paper industry will be gone in ten years and many brick and mortar retail stores will be gone. People will go on line to shop and UPS will bring it to your door the next day. No need to waste time and money driving to the store. It's happening as we speak.

Our company Medirest was not offered a contract and if we would have, I am not sure I would have accepeted it. Furthermore we all decided that we were not going to be a delivery boy for these out of  state bid winners. They are a disgrace to the industry. In the Birningham / Hoover CBA only one DME recieved contracts for all catergories and that was Lincare. HMMM! I wonder how that happen.

Finally I said it more than once all and that is if of us DME's who did not recive contracts at all or for a few catergories had to to due was not to sub contract. By doing so we could ave more than likely stop Round II.

Please do not think that I am a naysayer  (if there is such a word) or a doom day person.

PS My company is somewhat fortunate in that we do a good amount of Complex Rehab and Orthotics. Since last July Medirest has become a much smaller business.


My wife and I have invested our life savings when we bought MediRest in 2007. I will do whatever it takes to stay in business.


Just for the record I am a retired CPA who worked in 4 different industries as a Controller, CFO and HR before asquiring MediRest. I have a very knowlegable dedicated and seasoned staff. Thank the Lord for that .



Jim Fallon