HME Providers Look for Escape, "Just take my business over"

Adapted from HME News, HME Providers Look For Escape, by Leah Hoenen; Friday, April 25, 2014

We have blogged many times about Competitive Bidding for the HME/DME (Home Medical Equipment/Durable Medical Equipment) Industry.  (The Centers for Medicare & Medicaid Services (CMS) Medicare Prescription Drug, Improvement, and Modernization Act of 200, effectively known as H.R. 6331, or simply, Competitive Bidding)

Medicare Competitive Bidding and What it Means For the Consumer

We at Mountain View Medical Supply are a small, family owned and operated business and cannot competitively bid against the likes of CVS or Walgreens, so we made the decision to exit the Medicare/Medicaid provider program in 2009.  You see, the government Competitive Bidding program was tailored for large scale providers with many branch locations, so the mom-and-pop providers who couldn't compete or win bids, are struggling to survive.  As a result, some HME providers are asking other providers to purchase their businesses.  

"If CMS wanted to tear the industry apart and take the 'mom and pop' out of it, this bid has been successful," said Terry Luft, a vice chairman at Harrisbug, PA-based Dynamic Healthcare Services (DHS).  In April, DHS completed its third buy of this year, and after an acquisition is publicized, the company often receives several phone calls from other companies looking for an exit strategy, he said.  

In June 2011, Homecaremag.com took a poll asking providers, "Will you bid in Round 2 of Competitive Bidding?"  A shocking 60 percent of HME participants said they are trying to sell or close their HME businesses before Round 2 of competitive bidding.

Majority of Providers Want Out

Our HME/DME industry as a whole has been very vocal with Competitive Bidding concerns in Washington D.C., but not only did CMS continue with Round 2 bidding, a re-bid of Round 1 was launched in the first quarter of this year.  It is now clear that if Competitive Bidding has not reached your area, it is coming soon for those who have to go through Medicare/Medicaid for HME/DME.  

For those who can pay out of pocket, visit your local mom and pop shop!  Mountain View Medical Supply is one of the "lucky ones" who diversified by adding a second business (Laurel Uniforms & Apparel).  And even though it has benefited our business somewhat, it saddens us that several of our competitors have closed their doors in the Denver Metro area.  

"President Obama is committed to helping America’s small businesses grow and prosper." - The White House 

Medicare Competitive Bidding and What it Means For the Consumer

Chances are, you or someone you know have purchased or will have to purchase Durable Medical Equipment at some point. What is "Durable Medical Equipment"? According to Wikipedia.com, Durable Medical Equipment (DME) is a term used to describe certain Medicare benefits/items. The exact items are defined by Title XVIII the Social Security Act. Some examples are wheelchairs, iron lungs, hospital beds, blood testing strips, and only the seat-lift mechanism of a lift chair (why the seat, back and frame is not covered is still a mystery).

Competitive Bidding, or HR 6331, states among other things, that Medicare recipients will receive their DME from medical suppliers who have agreed to accept the lowest prices paid by Medicare for equipment and supplies they sell to Medicare recipients. Medicare’s intention is to reduce fraud and overall cost of DME, thus reducing the national deficit.

What they dont tell you, is that the reimbursement rate to suppliers is so minimal that only large, chain type suppliers will be able to participate in competitive bidding. In fact, all verbage in the application to be a provider is geared toward having many, many locations with one corporate office to make billing with Medicare simple. Volume, huge volume, is the only way to make any type of profit with this program. This eliminates any mom-and-pop medical supply shop from participating. Isnt that shame?

What does this mean to the Medicare Recipient? They still get the DME covered by Medicare, however where they get it from will likely change. In our experience, convenience is important for the population that Medicare serves, however recipients may no longer be able to patronize their neighborhood supplier unless that supplier is a competitive bid winner.

Another issue that has arisen with round one of the competitive bidding process is where consumers go for warranty issues for their DME. Because HR6331 is not clear on who is supposed to cover these issues, competitive bid winners are refusing to help consumers because if they do, any profit they made will be lost, and non-bid winners didnt sell the item in the first place, so why should they help? Imagine Joe, who is not able to get around without his walker, and on a fixed income, having to run around to get his broken walker fixed.

Round two of competitive bidding is in the works, because Medicare has decided it is working well. Are the best interest of our elderly population being served?

For more information from HME News, our industry voice, and CMS, visit:
Repairs
Competitive Bidding
Centers for Medicare & Medicaid Services