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April 2008
Competitive bid program to get congressional look
Medicare’s competitive bidding program for durable medical equipment will be questioned at a House Ways and Means health subcommittee hearing next week.
Medicare officials have touted the program as a major way to save money and reduce fraud in sale and rental of equipment, prosthetics, orthotics and supplies. According to Medicare officials, the first round of bids resulted in a roughly one-quarter drop in the price of equipment.
Equipment dealers have argued that the bid process was flawed and that it will put many longtime small dealers out of business because they will be shut out of the program.
“We have heard from both suppliers and beneficiary advocates that the DMEPOS competitive bidding program is not working as well as it is supposed to,” Rep. Pete Stark, D-Calif., the panel’s chairman, said in a statement. “I look forward to hearing their concerns, as well as from CMS, as we consider whether changes need to be made before the program is further expanded.”
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Leavitt’s cut-the-cake Medicare solution
Everyone familiar with Medicare’s financial situation knows something must be done. Starting in October, the federal government will begin selling its Medicare trust fund bonds to keep the hospital portion of the program solvent. By around 2019, those bonds will be exhausted.
HHS Secretary Michael O. Leavitt keynoted a forum on Medicare today and met with health reporters to give his views on Medicare’s future. Without a change in course, he says, Medicare is “drifting toward disaster.”
Three things are needed to change course, Leavitt says:
- Separate the commitment to change course from the political pain of doing so. In other words, as long as members of Congress are going to be held answerable for every change in Medicare policy, they won’t have the political courage to make necessary painful changes any time soon. So Leavitt suggests some kind of extraordinary mechanism — perhaps like the way military base closures are adopted — so that Congress can set in place a series of “triggers” for action when the problem reaches a certain point.
- Change the framework of Medicare “to make value replace volume.” As it stands now, the more procedures, office visits, prescriptions, etc., that are involved, the more everyone in the health care system is paid. Medicare even pays for mistakes that lead to further medical treatment. One way to change the payment dynamic, Leavitt says, is to introduce competition for services based on price and consumer satisfaction, similar to the Medicare Part D prescription drug program.
- Address the demographic problem in which fewer and fewer workers are paying for higher and higher Medicare costs. That probably means current beneficiaries who can afford to do so will have to pay an even greater share for their coverage. Leavitt says those who have the capacity to pay more should pay more.
Leavitt acknowledges that these changes, which are not specific Bush administration policy, aren’t likely to be implemented soon.
But he suggests that the sooner Medicare’s course is altered the better. And he chides the presidential candidates — all of them — for not spending more time talking about this issue because it’s likely to impact whomever is elected, certainly by the time a second term rolls around.
One way to change course, he suggested, is the “cut the cake” solution he and his brother used to use when there was only one piece of cake left. One brother would cut the cake, the other got the first choice.
That means the parties have to devise a solution that is so fair, both will be willing to accept the outcome.
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Leavitt: ‘How much for that knee replacement?’
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| Photo by Kimberly Smith/AJC |
At a briefing with reporters this morning, Leavitt noted that Medicare pays for about 255,000 knee replacement surgeries a year but there is no set price on how much it costs, nor is there any competition in terms of cost or quality. He’d like to see that changed.
What if everyone involved in a knee replacement surgery received a lump sum for the procedure and then divided that payment among themselves? The surgeon would get so much, the anesthesiologist would get so much, the radiologist would get so much, the hospital would get so much….
Then, what if groups that did knee surgeries competed against each other? Which group offers the best price and who has the best reputation for quality? Leavitt says if Medicare paid for services that way, it would go a long way toward reducing the cost of health care because Medicare sets the pace for how medicine is paid for.
If you bought a new car the way you buy a surgical procedure, Leavitt said, you’d go to the hospital with no idea how much the car would cost. A few weeks later you’d begin to get the bills for the car’s chassis, the paint job, the transmission, the salesman’s fee, the showroom fee … and don’t forget some exorbitant payment for the coffee you thought was complimentary.
Leavitt hopes to spearhead a demonstration project in bundling Medicare payments for some high-volume surgical procedures before the Bush administration ends next January. The Medicare Payment Advisory Commission recommended a similar course at a meeting three weeks ago to bundle payments to doctors and hospitals. MedPAC is expected to formalize the recommendation in June.
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‘Medicare: Drifting towards disaster’
That’s the topic of a forum of think tanks convening Tuesday to hear from Health and Human Services Secretary Michael O. Leavitt.
The forum skews conservative headed by the Heritage Foundation, The Galen Institute and the American Enterprise Institute
“Medicare is indeed drifting toward disaster,” says the e-mail announcing the forum. “HHS Secretary Michael Leavitt will provide new insights and information on the disastrous fiscal path that Medicare is on, threatening access to health care and the health of the U.S. economy.”
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Senators seek meeting with Leavitt
Seven Republican senators have called for a meeting with Health and Human Services Secretary Michael O. Leavitt over concerns about how Medicare handled a competitive bid process for 10 categories of medical equipment that has resulted in hundreds of companies being shut out of future business with the program.
“The vast majority of rejected bidders were informed that they had not submitted sufficient financial information, when in many cases, bidders have evidence they had,” the letter continued.
The senators also express concern over reports that some of the selected bidders are headquartered far from the areas where they won contracts and have never served those areas.
Officials from the federal Centers for Medicare and Medicaid Services met with congressional staffers Monday to attempt to explain how the bidding process worked. According to one source familiar with the discussion, congressional staffers expressed a lot of frustration at that meeting with how the bids were handled.
Under a provision in a 2003 Medicare law, CMS held a year-long round of competitive bids in 10 metropolitan areas including one covering Palm Beach, Broward and Miami-Dade counties. Only companies that won the bids will be allowed to deal with Medicare for those items after July 1.
Although the names of the companies have not yet been released, industry officials say only 44 providers of medical oxygen in the three-county area were selected out of 501 providers.
Before the bids were announced, the providers warned that the system would reduce patients’ access to equipment. CMS argued that the bids would significantly reduce fraud that has plagued the industry and would lower cost to beneficiaries.
Since the bids were announced, providers have argued that CMS did not follow the rules it originally established and that the bids were mishandled resulting in hundreds of companies being disqualified for clerical errors caused by the contractor hired to handle the bid process.
Rob Brandt, CEO of City Medical Services in Miami, said his bids for two contracts were rejected by CMS because the contractor, Palmetto GBA of Columbia, S.C., said one document was missing from each of the bids.
But Brandt said his bid was reviewed by a law firm and that 69 other medical equipment providers also say their bids were rejected because the contractor claimed paperwork was missing. Brandt said the contractor may have mishandled hundreds of documents. The contractor referred all inquiries to Medicare.
CMS spokesman Peter Ashkenaz said, “If a supplier believes they submitted all the proper documentation, they should contact CMS’ contractor, who along with CMS has an established process for a case-by-case review of the concerns.”
Brandt said bidders didn’t know that there may have been a problem with their applications because Medicare changed its bidding rules last fall, six weeks after his and other companies submitted their bids. Before the rule change, the companies had been promised that they would be notified if any documents were missing from their bids. But he said the rule was quietly changed weeks later to eliminate the notification requirement.
Ashkenaz said CMS had hoped to use an electronic system for monitoring applications that would have allowed the agency to contact bidders who did not submit all their documents.
But, he said, that did not work.
“So we changed the request for bids … to state that each submitter would need to make sure that each bid was fully complete - just like they must do for all federal contracts. And we told them four different times that they would need to check their submissions. We did update the on-line bid submission system to allow bidders to check the status of their hardcopy bid documents and to be able to confirm the submissions were received.”
The Senate letter was signed by Sens. George Voinovich, R-Ohio, Arlen Specter, R-Pa., Pat Roberts, R-Kan., Richard Burr, R-N.C., Johnny Isakson, R-Ga., John Cornyn, R-Texas, and Jim DeMint, R-S.C.
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Lawmakers: don’t cut Medicare-financed nursing homes
More than 40 bipartisan members of the House have sent a letter to House Speaker Nancy Pelosi and Minority Leader John Boehner urging them to stave off possible cuts in Medicare funding of nursing home care.
The lawmakers object to a Bush budget proposal to eliminate the inflation adjustment for skilled nursing facilities. That is estimated to have a $1 billion impact on nursing homes next year. The letter notes that other proposed regulatory changes would slash another $4.7 billion from nursing homes by 2013.
According to the American Health Care Association, the combined cuts would mean a nearly $19 per patient per day reduction in Medicare nursing home reimbursements next year.
“We are deeply concerned about the impact that cuts of this magnitude would have on America’s most vulnerable seniors and the workers who care for them,” said the letter co-authored by Reps.Tim Walz, D-Minn., and Chris Shays, R-Conn.
“At a time when Congress is working to stimulate economic activity and jobs growth, these Medicare cuts would jeopardize direct care jobs - 86 percent of which are held by women whose salaries are modest and whose families depend on receiving annual cost of living increases. We feel strongly that that these dedicated direct care workers are a key reason we have seen meaningful quality improvement in skilled nursing care in recent years.
“Nursing homes already operate on razor-thin margins, the lowest of any health care provider group. Without stable Medicare payments, many SNFs will lack the resources they need to continue to invest in the building facilities and health information technology necessary to providing the highest quality of care.”
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Part D thresholds increase for 2009
Medicare beneficiaries will pay more out of pocket for their prescription drugs next year, according to figures released by the Center for Medicare and Medicaid Services.
The Part D standard benefit deductible will increase from $275 to $295 and the initial coverage limit — the threshold amount shared by the insurance company and the beneficiary — will increase from $2,510 to $2,700.
Once that amount is reached, beneficiaries will be on their own. This is the so-called doughnut hole. It currently ends when a beneficiary has spent $4,050; next year it will end when the beneficiary has spent $4,350.
Generic drugs will cost slightly more, although far less than brand-name drugs. They’ll increase from a minimum charge of $2.25 to $2.40 per prescription.
Meanwhile, CMS announced that private Medicare Advantage managed care plans will receive a 3.6 percent payment increase next year.
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AARP launches ‘Keep Medicare Fair’ ads
AARP launches an ad campaign Wednesday in an effort to avert higher Medicare premiums.
The association for those 50 and older supports paying doctors more, but is trying to avoid having the boost in physicians’ pay show up in higher Part B Medicare premiums a year or two from now.
“We cannot keep shifting the costs of a broken health care system on to the backs of older Americans. We hope to raise awareness about the fact that people in Medicare have already seen their premiums skyrocket and should not be hit with even higher bills,” said AARP Senior Vice President David Sloane.
As part of its campaign, AARP has launched a new Web site KeepMedicareFair.org and is taking out ads in a number of inside-the-Beltway publications seen by lawmakers, including CongressDaily, CQ Today, The Hill, Politico and Roll Call.
The association’s AARP Bulletin, mailed to 23.5 million addresses, also features an article on the Medicare issue.
“Our 39 million members are already geared up for this debate because they’re tired of shouldering the burden of skyrocketing health care costs,” Sloane said. “Whether they’re already in Medicare or planning for their retirement, AARP members will be watching to see whether their representatives in Congress vote to keep Medicare fair.”
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Doctors pay a House call
Hundreds of doctors from around the country Wednesday will be calling on the House and Senate urging lawmakers to boost their Medicare reimbursement.
Congress dodged the issue in December when it agreed to delay a scheduled 10 percent Medicare fee cut for six months.
The docs plan a rally Wednesday morning across the street from the U.S. Capitol and then will be visiting the local House and Senate members. They’ll be urging support for a bill by Sen. Debbie Stabenow, D-Mich., that would eliminate the pay cut and replace it with a formula that increases reimbursements to more closely reflect medical inflation.
