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Ten years ago, proponents of Competitive Bidding in DME tried to create an argument that, "You can walk into a Walgreens and buy the same equipment for half of what Medicare purchases it for.
Now with the DMEPOS Bidding program's re-bid rates, the reverse is true.
The old rationale behind the program is no longer the case, as the proposed reimbursement rates Medicare intends to pay the Round One lowest bidders are 50% to 60% lower than what can be purchased from the largest chain pharmacy stores or their discounted online websites.
Ranked #32 in the Fortune 500, Walgreens, the largest chain pharmacy in the world, sells some DME items in their stores and online including walkers. Their location in North Miami Beach, Florida is running a current "Sale Special" on folding walkers without wheels for $89.99. You can actually purchase a similar walker on Walgreens.com for the same price which ships in 4 business days and takes an average of 9 days to arrive at your door.
But beginning in January, the lowest bidders in South Florida will have to provide the same walker, plus collect prescriptions, physician documentation, deliver it, set-up the equipment, instruct the patient, collect beneficiary paperwork, bill Medicare, and wait about a month to be reimbursed $39.60 from Medicare (HCPCS Code E0135).
That reimbursement is 56% lower than Walgreens "Sale Special" or online price. If the patient has a secondary insurance policy, which is not Florida Medicaid, and the supplier wants to go through the expense, they can try to collect an additional $9.90 in co-payments. In Cincinnati, the lowest bidder will be reimbursed $36.06 by Medicare, a rate 60% lower than Walgreens.
If the largest national pharmacy sells the item online for $90, what makes Medicare officials think that the same items can be delivered and set-up by trained licensed technicians, so patients can be discharged from hospitals for less than $40?
What is Wrong with This Picture
The medical equipment industry involved with the Medicare Program is unlike any other industry in America. There are many examples but only one reason, it is run by bureaucrats who do not understand business and do not care about end results.
The identical walker may be purchased at a pharmacy chain or an accredited and bonded Medicare supplier. The products are the same, but the requirements between pharmacy and Medicare DME provider is very, very different.
PHARMACY - A patient can go to the pharmacy and purchase the item and leave the store. The patient has the product, the pharmacy is paid and the transaction is completed.
Medicare DME Provider - In the Medicare program, Providers have very different processes and requirements for the same item.
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Staff must collect and evaluate documentation from the Doctor including: the diagnosis, length of need, doctor's signature, and doctor's notes stating that there is no alternative for the patient's "daily living" other than the walker, and proof that the patient can use it properly.
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The Delivery Technician must review with the patient the company's Notice of Privacy Practices, their Medicare Complaint Policies and Medicare's 26 Supplier Standards. Additionally, the patient fills out and signs a Blanket Assignment Agreement which gives the supplier the authority to bill and collect reimbursement from Medicare. All documents must be signed to prove that they were received. All of those forms must be saved for at least 5 years.
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When all the paperwork is collected, the billing department enters all of the data from the delivery. Medicare is then billed using approved billing software, which typically requires ongoing usage fees.
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The company then waits to be paid 80% of the claim by Medicare, which typically takes 30 days. If the claim is randomly chosen for an audit it may take 6 months to a year to be paid. Once Medicare pays the claim, if the patient has a secondary insurance policy, the company can bill the secondary insurance for any possible co-payments or deductibles.
These are some of the mandatory requirements of Medicare for a $40 item. For more complicated equipment in the bidding program, such as Oxygen or Respiratory Assist Devices the requirements are greater. In addition and unlike a cash transactions in a pharmacy, all Medicare DME company locations must post surety bonds and be accredited like hospitals. The costs typically run 15% of the company's annual operating expense
So what is wrong with this picture?
EVERYTHING
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