Your tires are flat, but only on one side

 - 
12/06/2018
Jonathan Temple

Imagine you are having a problem with your car. You need it looked at, so you take your car to an expert to get it checked out at and diagnosed. You know you have problems with your car, but you want someone else to assess your car’s problems.

The mechanic looks at your car and he is immediately puzzled. There are so many oddball problems with your car. The expert wants to know how this car came about. You tell him: “At one time this car ran great, but over the years, so many changes have been made to this vehicle, it now has a lot of peculiar issues. The vehicle just doesn’t do what it used to do.” You reveal to the expert that you got this car at CMS Auto. “Ah, yes!” the expert says. “I know this vehicle very well.” The expert grabs the published service bulletins and begins to read them to you.

First of all, there’s a bulletin about the tires. It says here, “Even though all four of the vehicle’s tires appear to be flat, they are only flat on one side. Most all the tires appear to be mostly round. There is no need to replace the tires.”

The next bulletin is about a loud noise coming from the motor. It says, “In the event a loud noise is heard coming from the motor, the recommended fix is to turn up the radio; once the radio is turned up, the engine noise goes away.” There is no need to repair the engine.

Another bulletin addresses multiple warning lights illuminated on the dashboard. It recommends “disconnecting the lights or covering the lights with electrical tape so drivers will not see the warning lights.” No need for repair.

As funny as this story sounds, it is not far from fiction in regard to CMS’s response to the DME competitive bidding program and the woes providers have faced for a few years now and in the newly released ESRD Final Rule. As providers, we keep saying this vehicle (competitive bidding and the rates that are applied to most of the country) is broken down and needs major repair. CMS continues to say nothing is wrong—after all, the tires are only flat on one side.

Auction theory expert Peter Cramton said it was “a never before seen” bidding process. It makes little sense and creates several adverse incentives that, ultimately, impose unnecessary costs on patients, Medicare and DME providers. Are we really saving money?

The Medicare bidding process is hurting patients, according to a new study from the Pacific Research Institute, a public policy think tank based in California.

“The current Medicare bidding process, while well-intentioned, hurts patients by denying them access to medically-necessary supplies and equipment,” Wayne Winegarden, MD, senior fellow in business and economics at Pacific Research Institute and author of the study, said in a statement. “The process has led to diabetes patients not receiving testing supplies and COPD patients not receiving home oxygen when needed.” This is from an outside expert.

In the markets where CMS implemented the CBP, the NMQF study found that there were 42 additional deaths and twice as many hospitalizations as in unaffected markets. Clearly, the NMQF study found that CMS’s report (the one that said everything was fine) was incorrect. CMS wants us to cover these warning lights with duct tape, but it’s not going to work!
Even with all this research that showed the CBP was harmful to beneficiaries with diabetes, CMS implemented the program nationally for mail-order supplies and supplies obtained from retail channels. This move eliminated more than 98% of suppliers that provide mail-order diabetes supplies. Do we want more small businesses to close? DME companies are closing all over the country.

Information obtained through the Freedom of Information Act retrieved by DME industry advocates from data.medicare.gov shows the estimated number of DME suppliers and locations have dropped by nearly 38% nationwide. As I have stated before, I believe that number to be much higher due to the number of suppliers who chose to sell out to larger companies.

CMS clearly admits there are problems with the current CBA and current reimbursement rates, when they issued a final rule that updates payment policies and rates under the ESRD Prospective Payment System (PPS). The rule also included changes in the current CBP. These changes do not address the immediate need for a rate increase.

AAHomecare President and CEO Tom Ryan deemed the Final Rule a net positive that reforms future rounds of the bid program and offers relief to rural providers. He also noted that it reflects recognition on CMS’s part that the bid program has problems and a willingness to work with the HME industry to fix it. However, the work isn’t done, he said.

The final rule does not contain two provisions that both HME stakeholders and many members of Congress supported and urged CMS to add to the final rule: The broader application of the 50-50 blended rate relief to all non-bid areas and retroactively applying Consumer Price Index (CPI) adjustments in CBAs based on the increase in the CPI from 2013 through 2018. How does CMS ignore Congress?

The current CBP contracts will end on Dec. 31st, after which any Medicare credentialed DME provider may provide DME for Medicare beneficiaries. The idea of contracts means that contracted providers would have potentially more patients to provide for, thus improving their margins. On Jan. 1, 2019, the potential pool of Medicare beneficiaries will have to be spread among many providers at razor thin or even negative margins.

On one hand, CMS admits there are problems with the CBP; on the other hand, CMS failed to address the immediate problems with the current rates that are unsustainable per many industry experts and Congress. I believe many DME companies are hanging on by a thread, hoping the changes the industry was looking for would be contained in the ESRD Final Rule. The final rule leaves me scratching my head wondering why CMS is allowing pricing generated under this clearly flawed program to stay in effect. Congress clearly sees the issue with the current system and has requested rates for DME to be increased. I fear many more DME companies will close their doors if relief is not provided now.

The question prevalent on the minds of many DME providers is this: Industry experts, outside experts, DME providers and even Congress agree the current rates are unsustainable; why is CMS taking so long to address obvious problems? Currently, CMS’s plan is to take the next two years to fix the CBP issues that may or may not address the current rates? Our industry clearly needs to get the attention of Congress to pass legislation that force changes. Asking and suggesting is not enough.

The DME industry, Congress and industry experts agree this vehicle (competitive bidding) is broken down and needs major repairs. CMS continues to say nothing is wrong; after all, the tires are only flat on one side.

Jonathan Temple is the owner of OxyMed in Birmingham, Ala.