I almost posted this over a month ago, but didn't have time to smoothly tie this to Bush Economics, although the link is there.
Medicare has always had the power to reimburse whatever it wants for equipment. Rather than cut rates and take the heat, they came up with a cockamamie process that does more to drive small companies out of business and reduce choice than anything else.
The New York Times has chosen to attack the messenger, rather than a flawed process, claiming that our industry's lobbyists (until lately, I think we had 2) are unduly influencing Congress. We have always been the neglected step-child of Medicare, accounting for about 2% of expenditures. We have never had effective lobbyists until now, when the problems are so widespread, and the losers, once again, are everyone but large corporations.
What follows is a screed on this process; a process that has been fraught with fraud and incompetence.
First, a link to the Times editorial:
http://www.nytimes.com/...
Are we on a race to the bottom?
It seems that way in my industry, and it looks that way in greater society as well.
I work with Home Medical Equipment. Wheelchairs, Hospital beds, Commodes; and nowadays more and more: ventilators, enteral pumps, gradient sequential compression pumps, low air loss beds, hi-tech wheelchairs and intermittent suction, as we respond to the need to provide people dignity and independence, and society savings, by helping to keep people out of institutions. Its what we do, and we are getting pretty good at it.
But for Medicare beneficiaries, things are about to change. If you haven’t heard about competitive bidding, stick around. It is my industry’s "Race to the Bottom."
We are paid by what is known as "fee for service." Rather than getting flat fees for providing everything (like a nursing home or hospice) or set amounts for certain conditions (like hospitals do with DRG’s) we get paid each time we provide something. The service side of our business (things like assembly, delivery, adjustment, instruction, warranty service, etc) is thought to be paid for out of the price of the product.
Medicare costs for society continue to increase. Fees first established before 1980 form the basis for all that has followed. They have been tweaked, twerked and convoluted over the years, but there has not been a consistently applied method of dealing with changes as diverse as innovation and the effect of outsourcing to China.
Rather then adopt a methodology to address these issues (admittedly a daunting task) the government has decided to allow fees to be set by a bidding process. Sounds good on the surface, but the way it is being done is proving to be a disaster.
The government has decided to group equipment and supplies into categories, and put these items out to bid, using all the confusion the bureaucracy can muster. The early results are anything but encouraging. As a consumer, it will mean that the company that provides your wheelchair may end up to be different from the one that provides you with your hospital bed, from the one that provides your mattress, from the one that provides your CPAP, from the one that provides your oxygen. While that example is extreme, such scenarios can result. Ask a nurse or doctor about "continuity of care." This attacks it.
Of the tens of thousands of providers around the country, 85% are considered small businesses by Medicare, doing under 3.5 million per year in business. Medicare has shown their "commitment" to small business in this country by announcing that their "target number is equal to 30%" of the winning bidders. Daunted by the whole process, 60% of the small businesses are choosing to not even submit bids, so in essence, the target is to reduce the number of small providers to 12% of their original number. Hardly a way to increase the traditional method of keeping prices down: competition.
As for the effects on the consumer, let me address the lowly "walker" used by many to assist in ambulation. Walkers can be sturdy, or they can be lightweight. Unfortunately, the lightweight walker costs the supplier more than the sturdy one, but for some people picking up and setting down an extra couple of pounds about 100 times a day can have an adverse effect. Which walker would you provide if you had to provide one based on competitive bidding? In one large metropolitan area, you can now get a walker from over 100 different providers. If this goes through you will be able to get it from 9.
As you may now guess, this competitive bidding will have an impact not just on the cost of products, but on the number of products on the market, and the number of people manufacturing them. The lowest cost item will win, so long as it meets minimum standards. Consumer choice will disappear.
Added today: Congress has heard from enough people to see that it is this WAY of doing it that it the problem, and so is including a delay, coupled with almost 10% across the board cuts, in larger bills being voted on this week.
Homecare's Industry Association