HCFA sets timetable for next competitive bidding demos


HHBR Washington Correspondent

BALTIMORE – The Health Care Financing Adminis tration (HCFA; Baltimore) drew a wide audience of home care trade groups, manufacturer representatives, consumer groups, and others to its open public meeting Oct. 5 to discuss the agency’s future competitive bidding demonstration projects for durable medical equipment orthotics prosthetics and supplies (DMEPOS).

HCFA announced there will be several more demonstrations over the next two years, with the next one taking place in Region C durable medical equipment regional carrier (DMERC) Palmetto GBA. The first demonstration in Polk County, FL, which officially got underway Oct. 1 after DME supplier groups failed to stop it in the courts, is also in Region C.

The timing and location of the next demonstration came as no great surprise to industry observers. The Balanced Budget Act of 1997 (BBA) authorized the agency to implement up to five sites by 2002, and Palmetto GBA is now the only carrier with any experience in this area.

Instead, the purported aim of the open meeting was to give suppliers, consumers, and others a chance to weigh in on the items, services, and standards that should be included in the next demonstration. "I think it was good that it happened and very interesting to see the diverse group that showed up," said Steve Ackerman, president of Spectrum Medical (Silver Spring, MD). "But it will be interesting to see how much impact it has," he added.

Not everyone was that optimistic, however. "It was a contrived meeting to begin with," said one DME supplier, who noted that the agency’s first competitive bidding demonstration in Polk County, FL, was challenged in court on the basis that the agency had failed to provide adequate public notice for meetings related to that demonstration.

NAIT seeks to exclude infusion

Many suppliers argued that HCFA should hold off on the next demonstration until it has a chance to measure the results in Polk County. "No beneficiaries in Polk County have been subjected to the new competitive bidding rules in the area," the National Alliance for Infusion Therapy (NAIT; Washington) asserted in comments submitted to HCFA Sept. 27. "Yet, HCFA already has announced that the Polk County project shows that competition can work for Medicare beneficiaries."

According to NAIT, the Polk County demonstration merely demonstrates that competitive bidding can attract bids lower than current Medicare payment rates. "Whether the quality of care is improved or even maintained is still an open question," NAIT argued. "In addition, any purported savings cited for the Polk County demonstration must be weighed against the administrative costs, unrelated to patient care, which are associated with the competitive bidding program."

Those arguments from NAIT and other supplier and consumer representatives are fueling arguments to delay additional demonstrations until HCFA can assess the effectiveness of the first.

But nobody seriously expects the agency to follow that advice. So instead, many industry representatives are focusing their efforts on the development of adequate standards and the exclusion of certain items and services.

For example, NAIT argues that while the private sector has generally recognized professional services, such as nursing and pharmacy, as integral parts of the service provided, the Medicare program’s coverage policy for parenteral and enteral (PEN) "completely ignores the most important part of therapy – clinical services. Moreover, even though Medicare does not explicitly recognize the service component in the reimbursement of PEN, the fee schedule for PEN recognizes and accounts for those costs."

On the other hand, NAIT argues that the Polk County competitive bidding model for enteral nutrition, but not services, creates "a fiction that enteral nutrition is nothing but delivery of supplies." According to NAIT, this provides "a clear and distinct advantage to those providers who cut corners on providing the necessary care to beneficiaries."

In short, NAIT argued at the Oct. 5 meeting, PEN should be excluded from subsequent demonstrations. NAIT further argued that including PEN in a competitive bidding demonstration is complicated by the site in which the care is provided. "At the very least," NAIT argued, "HCFA should acknowledge that competitive bidding is not workable for patients who reside in skilled nursing facilities and should not target any elements of future demonstration projects to these patients."

Suppliers urge standards

Several supplier groups also zeroed in on the need for standards. In fact, the Health Industry Distributors Association (HIDA; Alexandria, VA) made this issue their top priority at the Oct. 5 meeting. According to HIDA, the Polk County demonstration’s standards are a sham because they fail to provide beneficiaries with assurance of quality and service and fail to provide suppliers with adequate quality and service benchmarks.

If HCFA does not require suppliers to comply with real’ standards, HIDA said the agency will set a dangerous precedent for future demonstration projects, business practices, and beneficiaries alike. Instead, HIDA emphasized that, in conjunction with the National Association for Medical Equipment Services (Alexandria, VA), it has developed a set of defined quality and service standards that "go beyond current Medicare Supplier Standards by guaranteeing a provider base made up of legitimate firms that are dedicated to meeting or exceeding benchmarks" in eight key areas. Those areas include product management, education, care, service human resource, compliance, ethics, and physical plant.

Unlike the standards for the Polk County demonstration, HIDA said these standards do not create barriers to new firms or additional regulatory burdens for existing firms. "Instead, they create an atmosphere in which only legitimate, dedicated, and qualified professionals can operate," HIDA concluded.