Stakeholders react: 'These are suicide rates'

Friday, February 1, 2013

YARMOUTH, Maine – The steep cuts that CMS plans to implement as part of Round 2 of competitive bidding underscore the fatal flaws in the program, say industry stakeholders.

"The economists have said that it's bid low or die, and I think these payment amounts reflect that," said Cara Bachenheimer, senior vice president of government relations for Invacare.

Starting July 1, Round 2 payment amounts for certain HME will be, on average, 45% lower than the current fee schedule in 91 cities. For a separate national mail-order program, they will be, on average, 72% lower.

Stakeholders believe that even the largest HME providers can’t remain profitable under those payment amounts.

"There's no one I'm aware of who's making more than 45% margins on their business,” said Wayne Stanfield, president and CEO of NAIMES.

Speculation varies on the consequences of the payment amounts. Some foresee greater consolidation, with smaller companies closing their doors. Others say the situation is more dire than that.

"These are suicide rates," said John Gallagher, vice president of government affairs at VGM. "If they're implemented, I don't see more sales and acquisitions—I see complete collapse."

Stakeholders hope the steep cuts will serve as a wake-up call—for providers to push a market-pricing program to replace competitive bidding (they expect a bill to be introduced in the coming weeks), and for lawmakers to stand behind MPP en masse (94 co-sponsored a previous bill last year).

"If you look at the provisions of MPP, it does fix some of the fundamentally flawed areas within competitive bidding," said Seth Johnson, vice president of government affairs at Pride Mobility, said. "My hope is that these prices will serve as a shot in the arm to take action to stop this program."

Stakeholders also hope providers will join in pressuring CMS to be transparent about how it came to the new payment amounts and to come clean about the impact of competitive bidding on beneficiaries.

"We have to tell them passionately why this program is destroying patient access to care by destroying the industry that provides it," Stanfield said.


Based on the Round 2 winning bids, our industry is either completely masochistic or simply filled with ignorant and uneducated DME suppliers and providers.  There is not a single company out there right now that can possible stay even remotely competitive based on the new rates.  Only a "One Man Shop" can operate their business and at best make 10 -15% profit margin.  That's assuming that the owner is an operator who delivers and bills the equipment by him or herself and has ZERO employees. 

Consequently, the smart and prudent thing to do right now is for ALL providers to reject the CMS contracts.  This is the only way CMS will understand that these are in fact "suicide rates". CMS will be left with worthless contracts with no providers’ willing to fulfill the required capacity across their MSA.  

I realize that I am asking too much of the industry that has allowed this to happen in the first place and my request is unrealistic because there are many providers that will accept there rates just to stay in the game. However, the game is in the final two minutes and you are down by double digits. You are no longer playing the game. You are being blown out of the freaking stadium and all your fans have left (e.g., government legislators).  So is it really worth it to continue playing the game or does it make more sense to start the game over. 

Reject ALL contracts. That's the only way to reset this game. Otherwise, you have just signed up for a slow and painful death. Especially when you have to once again re-bid for these contracts in 3 years.  Make the smart choice: Reject them all!