The Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) competitive bidding program Round One Rebid window for bidding closes today. Many DMEPOS suppliers have been highly critical of the bidding process and its effect on the industry.

DOTmed spoke with Rob Brant, president of Accredited Medical Equipment Providers of America, (AMEPA) of North Miami Beach, FL, regarding the DMEPOS bidding program. AMEPA was started by Brant and other equipment providers in April 2008 in response to the original Round One results of the DMEPOS program. DMEPOS was part of the Medicare Modernization Act in 2003, with competitive bidding in ten metropolitan areas. The organization is national, but primarily focused in Round One areas. Brant explains that the results of the first competitive bidding were a steep reduction in equipment providers, and cuts in reimbursement.

"One of the first things that happened was reduction of 90 percent of the providers. Eventually the program was delayed by the MIPPA Bill of 2008. Congress delayed continuing the bidding program because of certain problems--the large reduction of providers and the fact that unlicensed, inexperienced, and out-of-state companies won bids while 90 percent of providers in the areas were removed from the program."

Miami: A Case in Point

In the Miami Tri-County area, Brant reports, 500 oxygen providers were reduced to only 44. Nine of the actual bid winners were not licensed as Medical Oxygen Retail Establishments, Brant points out, and had not handled oxygen services previously. "They had set up a low-end bid, and some were trying to sell their winning bid after the fact. You can sell your business including the bid contract; companies will bid without the intention of servicing patients--they don't even have a physical location in the area. They called up companies that did not win the bid and asked if they wanted to buy their company, essentially buy their contract. This situation has not been changed; you can still sell your business and transfer the bid contract to the new owner, turning the winning contract into a commodity."

Since AMEPA formed last year it has worked with the American Association for Homecare. The organizations advocate support for H.R. 3790, a budget-neutral repeal of the DMEPOS bidding program. "This bill offers the same savings without closing companies or limiting patient access to care," Brant stated.

H.R. 3790 was introduced in October by Representative Kendrick B. Meek (D-FL), with 118 co-sponsors. The bill has been referred to the House Committee on Energy and Commerce, and in addition to Ways and Means.

"We are hoping that the bill will be passed and that we can get a Senate companion bill, and we won't have to go through this program," Brant commented. Because, unfortunately, it became obvious that Medicare was looking at the company that could put the lowest number on a sheet of paper, but not actually if the company could stay in business, and provide services and equipment to patients. And that was a real problem."

In addition to the 18-month delay, MIPPA also imposed a 9.5% cut on the industry in order to take that delay. The Centers for Medicare and Medicaid Services (CMS) also found 63% of the providers were disqualified. If documentation required for the bid was missing, CMS would notify the provider 30 days prior to the deadline. That document review date just ended on November 21, 2009. However, Brant pointed out, these were the only changes through MIPPA. "You still don't have to have a physical location in or near the bidding area. You can still sell your business. And Medicare is still not going to evaluate whether the company can stay in business with any local bids sent in."

CMS has presented the DMEPOS bidding as an anti-fraud measure. In November, DOTmed reported on testimony from the Senate Judiciary Committee on Health Care Fraud. In those hearings, Deputy Secretary of the Department of Health and Human Services, Bill Corr, stated that that DMEPOS has particular risk for fraud. He also said HHS is employing new methods of analysis in using claims data to identify fraud and implementing new prevention techniques. Much of the focus is on suspicious spikes in DME claims. (See, DM 10690)

Brant says that in fact there is a disconnect between actual anti-fraud measures in the industry and the DMEPOS bidding. "The truth of the matter is that there has been a [recent] reduction of about 50 percent of the oxygen providers in many metropolitan areas. Miami is one of them. In Miami Dade County there were 401 oxygen providers in 2008. In October 2008 there was a mandatory requirement of accreditation and a minimum $50,000 surety bond. Those two requirements caused a 50 percent drop in providers. In addition, because of greater oversight, there was a 36-month payment cap in oxygen which began in January 2009 [in addition to the 9.5% cut]."

AMEPA wholeheartedly supports the surety bond and the mandatory accreditation. Brant says, "My own company, City Medical Services, has been in business since 1997 and I have been accredited by the Joint commission since 2000--back when it was just voluntary."

Accreditation involves unannounced inspections for two days, where surveyors accompany respiratory therapists from the companies to see how patients are set up, and perform audits on their charts to make sure the therapist is performing proper maintenance as required. The surveyors also check inventory and logs for oxygen. "That is what Medicare has used to ensure businesses are following guidelines. The stories about companies being run out of P.O. Boxes or mail drops are long over. The industry has actually been advocating for mandatory accreditation for many years but Medicare delayed this measure." Accreditation and the surety bond are the real anti-fraud measures, Brant emphasizes. "There is nothing in the DMEPOS program that really has any measures to address fraud and would have no real effect on fraud. The anti-fraud measure spoken of is really about limiting the number of providers with a real effect of just saving Medicare costs." In other words, reducing the number of providers will mean a reduction in the number of fraudulent providers.

Other effective oversight, which AMEPA supports, is a change from billing electronically with payment 30 days later to a prepay review, where CMS wants to see actual medical records, not a form that a doctor signed. "They want to see the doctor's actual notes that the patient needs a wheelchair, or that oximetry tests [are performed] for patients that need oxygen. So they have real anti-fraud and waste measures. But these are not connected to the DMEPOS bidding."

One of the more urgent problems with the bidding leading to a reduction in providers is a reduction in patient services. Brant points out that with the reduction in services, CMS may be saving money on the Part B side, but with the cutback in services, if a patient ends up in the hospital and can't be discharged, the costs are just going to be shifted to Part A, the hospital side of Medicare. "When providers are reduced, you have a patient access issue and a community resource issue. Especially in areas where there are often weather emergencies such as hurricanes or ice storms. The number of providers should not be reduced to where there are whole counties without a single provider. There are situations, such as in Dallas, where four counties do not have a single oxygen or respiratory device provider," Brant says.