May 27, 2016

Respiratory Care Leaders: OIG Report Signals Fundamental Flaws in DMEPOS Competitive Bidding Program

Council for Quality Respiratory Care Calls for Legislation to Allow for Extended Phase-In of Medicare Cuts to Ensure Competitive Billing Program Pricing Does Not Jeopardize High Quality Patient Care


WASHINGTON – The Council for Quality Respiratory Care (CQRC) – a coalition of the nation’s leading home respiratory therapy providers and manufacturing companies – today warned that findings released from the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) signal fundamental flaws in the competitive bidding rate setting process for Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS). The respiratory care leaders emphasized that the report findings further demonstrate the need for legislation to slow down the implementation of scheduled Medicare cuts applying competitive bidding rates to noncompetitive bidding areas. It also raises serious concerns about the appropriateness of the current competitive bidding rates because the unqualified suppliers’ bids were included to set the rate. If they had been appropriately disqualified before the rates were set, the final rates would likely be significantly different.


The report, “Incomplete and Inaccurate Licensure Data Allowed Suppliers To Not Have Required Licenses,” concludes that of the 146 suppliers audited, 43 percent had not met State licensure requirements for at least some of the competitions for which they received a contract. It was unclear whether an additional 14 suppliers (9.6 percent) met the State licensure requirements as well. Further, the report suggests Medicare paid more than $1 million to the unlicensed suppliers.


“Considering that nearly half of the suppliers that were awarded contracts had not met basic State licensure requirements, we have significant concerns with the integrity of the DMEPOS competitive bidding rate setting process,” said Dan Starck, Chairman of CQRC. “The fact that unqualified suppliers’ bids were used to set rates means that the current rates are not correct, and applying them to noncompetitive bidding areas could create serious problems. This report punctuates the need for slowing down the application of these incorrect competitive bidding rates in noncompetitive areas. If these rates are too low, as we suspect, then there is even greater reason to provide a more reasonable phase-in period to monitor the impact on beneficiaries access to care and the quality of care they receive before CMS implements the second half of the cut on home respiratory therapy services.”


On July 1, CMS is scheduled to apply the remaining half of the cuts that results from applying competitive bidding rates currently used in urban areas to rural and other noncompetitive bid areas. CMS established only a six-month phase-in to assess the impact of the cuts, which is not sufficient time to understand the impact of the lower rates on beneficiary access to high quality care. CQRC supports the Patient Access to Durable Medical Equipment Act (PADME), legislation to provide relief to home respiratory therapy providers in non-competitively bid areas by allowing additional time for the implementation of the rate cuts.


“While not surprising, the OIG findings provide another reason why we need to delay the phase-in of the scheduled cuts,” added Starck. “Federal policymakers should carefully evaluate the risks for implementing cuts too fast and take measures to ensure access to quality patient care is prioritized and protected. We know that high quality home respiratory care keeps patients at home and out of emergency rooms, hospitals, and other institutional care settings. Applying a flawed rate to noncompetitive bid areas jeopardizes access to the care management services home respiratory therapy suppliers have historically been able to provide and that allow patients to remain in their homes.”


More than one million Medicare beneficiaries rely upon home respiratory therapies to treat Chronic Obstructive Pulmonary Disease (COPD) and Obstructive Sleep Apnea (OSA). Home oxygen and sleep therapies allow patients to live independently, remain at home with their families and maintain quality of life.


To learn more, visit cqrc.org and follow CQRC on Twitter at @TheCQRC.



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Millions of Americans are living with COPD and Obstructive Sleep Apnea, experiencing acute respiratory failure, or living with neuromuscular diseases. These individuals rely upon home respiratory therapies to remain at home. Learn more about home respiratory therapies and how they can help.

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