No matter what flavor of healthcare reform makes its way to President Barack Obama’s desk, Congress will increase oversight aimed at combating fraud in the durable medical equipment sector.
But some in the industry say the government is creating a hostile business environment under the auspice of reform.
Michael Reinemer, vice president of corporate communications at The American Assn. for Homecare, an industry group for healthcare providers, equipment manufacturers and other organizations in the homecare community, told MassDevice that his agency has no beef with the new provisions in the healthcare reform bills, which include criminal checks for providers wishing to get Medicare billing status and heftier penalties for fraudulent claims. The association supports many other measures to crack down on people creating sham companies to dupe Medicare, including requiring dealers to be accredited by CMS and take out a $50,000 surety bond to operate, he added.
But there’s one issue in this sweeping age of reform that has this industry’s hackles up.
Starting early last month, the Centers for Medicare and Medicaid Services began rolling out a “competitive bidding” process in nine cities with high incidences of fraud. CMS says the new process will both cut down on malfeasance and control Medicare costs. It’s part of tougher restrictions the agency created in order to put the clamps on a sector that has seen more than its fair share of fraud, including two separate high-profile busts late last month in Los Angles and Houston. Those cases resulted in the arrests of more than 40 people for allegedly participating in scams to bilk Medicare using false claims.
The competitive bidding mechanism was part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Here’s how CMS describes it:
“Under the program a competition among suppliers who operate in a particular Competitive Bidding Area (CBA) is conducted. Suppliers are required to submit a bid for selected products. … Bids are evaluated based on the supplier’s eligibility, its financial stability and the bid price. Contracts are awarded to the Medicare suppliers who offer the best price and meet applicable quality and financial standards.”
Reinemer pulls no punches in describing the competitive bidding process.
“It’s anti-competitive,” he said. “The problem with this is that it puts 90 percent of people out of business.”
The industry has taken more than its fair share of lumps, Reinemer said, pointing out that durable medical equipment providers have taken repeated reimbursement cuts from CMS over the past 10 years.
“I can’t think of any sector that has been cut more dramatically than this one,” he said.
The competitive bidding process is doing more harm than good, putting unnecessary pricing constraints on an industry he describes as mostly “mom and pop shops.” And the idea that competitive bidding is a way to control fraud is “b.s.,” Reinemer added.
“We advocated for 30 years to get the bar raised, to stop giving supplier numbers to criminals,” he said. “That’s why whole thing is frustrating.”
At DeviceTalks Boston, Tyler Shultz will give attendees an inside look at Theranos and how he was able to sound the alarm after he realized the company was falling apart. Shultz will take attendees behind the story that everyone is talking about: the rise and fall of Elizabeth Holmes and her diagnostic company, Theranos.
Join Shultz and 1,000+ medical device professionals at the 8th annual DeviceTalks Boston.