DAVID BRUINSMA

With healthcare expenses rising, insurance premiums sky rocketing and provider reimbursement at its lowest, the words “healthcare reform” should have providers, employers and patients alike breathing a sigh of relief. Or will it?
The recent release of the final rule for competitive bidding for Durable Medical Equipment (DME) has added the Center for Medicare and Medicaid Services (CMS) to a growing list of insurance providers who have concluded that limiting the amount of available providers per service area will lower costs and assist in the prevention of fraud. In theory, this plan may have potential. In the real world, it guarantees the loss of jobs, the closing of companies, and most importantly the decline of patient care.

Under the proposed competitive bidding program, suppliers would be required to go through a bidding process and meet certain program standards in order to supply selected items to Medicare beneficiaries within the competitive bidding area. Winning suppliers would be reimbursed a single payment amount for each item equal to the median of the winning suppliers’ bids for selected items in the area, rather than the Medicare fee schedule amounts. It’s estimated that of the more than 300 DME suppliers in the Orlando area, an estimated 10 to 13 will potentially be awarded a contract. Granted, this does have the potential to weed out the fraudulent DMEs. However, it seems very likely that it will assist in creating a whole new form of fraud. Substandard care is also categorized under fraud and abuse. This reform urges suppliers to provide low quality equipment in order to remain profitable with the declining reimbursement amounts.

Competitive bidding also has the potential to create barriers to access for home medical equipment, diminish the quality of medical services beneficiaries receive, and eliminate small businesses. All of this to regulate the 2 percent of Medicare spending that DME represents. By its own estimate, Medicare predicts this program will reduce Medicare spending by 0.3 percent. What could this mean for the other service providers? Physicians and hospitals beware. If CMS is willing to take such drastic measures to conquer 0.3 percent, imagine what could happen to the scope of services that have a true impact on spending. What will they cut next, and how will it negatively impact our public?

As forceful as it is for Medicare to require beneficiaries to go to certain providers for their equipment, Medicare “Bennie’s” will still have some choice. Many third party and state insurance carriers have elected to completely eliminate the patient’s choice. Several Florida State Medicaid HMOs, as well as national third party insurance carriers, have terminated all existing contracts and entered an exclusive contract with a single provider. So much for the free market. Hasn’t history shown us that allowing companies to exist within a specific market without competition allows for the deterioration of service quality and the inflammation of cost?

Admittedly, when focusing on a specific spending chart, limitation of providers within a service category will undoubtedly reduce cost, at least within that category. But when speaking in terms of healthcare, isn’t it safe to assume that lowering quality in one area will certainly create more spending in another? For example, a recent study by AAHomecare showed a strong correlation between DME cuts and longer or more frequent hospital stays. The answer then may be to cut hospital stays, which would undoubtedly increase nursing home expenditures. The point is, by reducing quality and limiting access, there may be a temporary reduction in costs, but at what expense?

Insurance premiums are growing daily, out of pocket expenses are increasing, and quality of care is declining. Where does the public benefit in this?

David J. Bruinsma is general manager of Colonial Medical Supplies, a family-owned and operated Durable Medical Equipment provider with two
Central Florida locations.


July 2007