Medicare Advantage plan fastracks contract suppliers

ST. PAUL, Minn. - It may be only one Medicare Advantage plan in one state, but it's still a development that's dropping jaws in the HME industry.

Two providers in Minnesota have notified the Midwest Association of Medical Equipment Services (MAMES) that they have received a letter from a Medicare Advantage plan in the state that says it's only doing business with competitive bidding contract suppliers.

“We're trying to get them to tell us their rationale,” said Rose Schafhauser, executive director of MAMES. “We're hoping that we can educate them about the flaws in the program, because they're putting too much trust in Medicare.”

In the same letter, the plan also says that, on Jan. 1, 2014, it's implementing competitive bidding pricing, which came in at, on average, 45% below the Medicare fee schedule for Round 2.

Consultant Mary Ellen Conway's best guess as to the plan's rationale: It sees contract suppliers as already vetted and more likely to stay in business.

“It costs them time and money to vet new providers, and they just don't want to go to the trouble,” said Conway, president of Capital Healthcare Group. “Also, maybe in that area, there are providers that did not win contracts that are closing.”

Even if that's the case, Conway says the plan is being shortsighted.

“Competitive bidding is an unsustainable program,” she said.

Medicare Advantage expert Tyler Poole is surprised the plan is going in this direction and he'd be even more surprised if more plans followed suit.

“If this were to happen on a wide scale, the carrier would be terminating hundreds—maybe thousands—of contracts to trim down to the very small number of folks that are eligible to supply DME under the program,” said Poole, vice president of operations at Benefits365. “You hear of instances where one particular carrier is making certain adjustments, but there's usually no blanket response.”

Schafhauser says even though the two providers that notified MAMES are contract suppliers, they have no plans to sign contracts until they get more information.

“They're fighting this and they're contractors,” she said. “I think every contractor out there agrees this program is not sustainable. They're not all jumping on the bandwagon for all the orders they're getting.”