Over 4,000 business were removed from Medicare in Round One areas

Earlier this week, the Government Accountability Office released a study on the variety of problems with Round One DMEPOS Competitive Bidding Program (CBP). The program ran for two weeks, but was stopped by Congress on July 15, 2008 because of concerns about unqualified bid winners and patient access issues.
For the first time details which Medicare refused to confirm have been made public. Medicare has also acknowledged problems that industry associations have been warning legislators about including: unlicensed bid winners, inexperienced bid winners and a reduction in the majority of existing providers in each of the Competitive Bidding Areas (CBAs). Ironically, the report was released as companies in nine metropolitan areas are preparing to re-bid, under an almost identical set of rules in the first round of the program. Once the program is re-implemented, only bid winners can provide the majority of Durable Medical Equipment items for those local Medicare beneficiaries.

In one category, the report revealed an average 88% reduction in providers nationwide, which has caused great concern for providers, beneficiaries and healthcare professionals. Miami had the largest reduction of providers nationally: 91% of Oxygen providers, 91% of Support Surface Providers, 94% of Complex Wheelchair providers and 94% of Mail Order Diabetic providers.
Appendix 2 of the report is a detailed "Change in Number of Suppliers by CBP Product Category and CBA: 2006 - 2008". After calculating the difference between the 2006 existing companies and bid winners, 4,012 companies would have been unable to bill Medicare for any of the competitive bid items. It is important to note that the competitive bid items make up over 90% of what is typically billed by DME providers and the Negative Pressure Wound category was not included in our analysis, since that category was removed from the Round One re-bid.
Zachary Schiffman, President of US Medical Supply in Miami was one of the 276 companies which did not win a bid in the mail order diabetic category in the Miami MSA. "We have 250 employees and if we do not win the bid again, we will all most likely be unemployed."
Schiffman added "Despite the fact that so many diabetic providers were excluded from the program, I am concerned about the affects the program will have on patients who rely on quality diabetic testing supplies. Although Medicare boasts a reimbursement savings, there is no requirement for suppliers to provide brand name equipment. Patients will be stuck with the cheapest generic meters and testing supplies, which are more difficult for patients to use, require more blood to test and historically frustrate patients with inconsistent errors."
Jeff Rittenberg, CEO of Surfmed in Miami, was one of the few bid winners who won the bid in multiple categories, but he was also concerned about his company's ability to survive it, since he only won in four of the categories in the Miami MSA. "Our company won the bid in Enteral Supplies, Hospital Beds, Walkers and Support Surfaces, but during the two weeks that the program was operating our company did not receive a single order from any of the local hospitals in the Miami CBA and we have a location in the Mount Sinai Medical Center."
Rittenberg explained, "If a case manager is discharging a patient from a hospital and the patient requires a hospital bed, oxygen and a respiratory assist device, they are going to have to call and coordinate three separate bid winners to service that patient. The likely scenario is that the case manager will call the one company in the area that won the bid in all of those product categories." "Since I did not win the oxygen category and cannot service all of the categories, I might as well have been with the other 90% of the companies that did not win any part of the bid."
The calculations for the Miami and Orlando CBAs result in 2,034 companies excluded from the Medicare program. Industry experts believe that could translate to 15,000 to 20,000 workers unemployed in Florida alone.
Robert Brant, President of City Medical Services in North Miami Beach, said that win or lose the program would put his company and several ancillary businesses that he relies on "Out of Business".
"I have seven employees, and 80% of my business is through Medicare. When I close, it will affect the 30 plus employees that work for the local billing company that I use, the local accreditation consultant and the local company that repairs our oxygen equipment."
Roger Ribas, President of the Florida Alliance of Home Care Services (FAHCS) is concerned about the long term effects of the DMEPOS bidding program on affected Florida companies. "The closure of 2,000 companies in Florida is just scratching the surface", Ribas explained. "When the program expands into the Second Round, you can expect to see 10,000 companies close and 50,000 to 75,000 additionally unemployed in Florida. The next Round jumps from 9 areas to 70 and includes the Florida areas of Jacksonville, Tampa, Lakeland, Fort Myers, Ocala, Melbourne and Daytona Beach."
Click to review highlights from the GAO report