Competitive bidding: Dominoes start to fall?

The ears of officials with at least one state Medicaid program have perked up since Medicare announced a 32% reimbursement cut, on average, as part of competitive bidding.

Officials in Ohio e-mailed Kam Yuricich at the Ohio Association of Medical Equipment Services (OAMES) in July, asking her what she thought about the new bid amounts that will go into effect in nine areas, including Cleveland and Cincinnati, on Jan. 1.

"Ohio Medicaid pays at or below Medicare, so right now, they're waiting for us to try and explain these crazy rates," said Yuricich, executive director.

The bid amounts in Cleveland and Cincinnati for oxygen equipment and supplies were the second and third lowest of the nine areas at 37% and 34% below the current allowable.

In Yuricich's response to officials, she planned to criticize not only the way the program was designed and implemented but also the shortsightedness of applying Medicare reimbursement for Cleveland and Cincinnati to Medicaid reimbursement for the entire state.

"Even if you set aside the faults with the program, the fact remains that those bids were submitted for a specific population and a specific geographic area," she said. "How do you apply them to a more mobile population--one that includes kids--in rural communities? It's apples to oranges."

There's a lot at stake in Ohio. Back in 2008, when CMS took its first crack at competitive bidding, officials in the state filed an adjustment to the Medicaid allowable, which, ultimately, they had to withdraw when Congress delayed the program. Additionally, officials have tried to cut reimbursement for oxygen on numerous other occasions and have tried to implement competitive bidding for incontinence supplies--measures that OAMES has been able to beat back.

"There is history here," Yuricich said. "It's an ongoing discussion between our association and officials."

While other state associations haven't heard from their Medicaid programs yet, they're waiting for the shoe to drop. Rose Schafhauser of the Midwest Association of Medical Equipment Services (MAMES) has her eye on Kansas Medicaid in particular. Like Ohio officials, Kansas officials picked right up on the bid amounts in 2008.

"We're trying to get the message out there of the harm these bid amounts would do," said Schafhauser, executive director. "We're starting to build up our tool box in case we need to go back to Medicaid."

For the time being, state associations plan to let some sleeping dogs lie.

"We're preparing, but we almost don't want to bring it up with Medicaid," said Beth Bowen, executive director of the state HME associations in North Carolina and Virginia. "We don't want to fan the flames."