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As the calendar rolls into 2015, the state of the HME industry is heavily influenced by two terrible public policies implemented by the Centers for Medicare & Medicaid Services (CMS) -- their bidding program for durable medical equipment (DME) and the broken auditing process for providers and hospitals. These government policies, as well as other regulations, put financial strains on many businesses within the home medical equipment space. And when the providers struggle, it affects their ability to supply quality products and services to Medicare beneficiaries.

Already, Medicare patients are hurt by these policies. CMS has reported dramatic drops in utilization rates in bid areas for critical medical equipment such as oxygen therapy, power wheelchairs, and hospital beds. This is endangering senior citizens and people living with disabilities who endure more frequent and longer hospital stays without some of their home medical equipment. Thousands of Medicare beneficiaries are reporting problems accessing equipment prescribed by their physicians, as well as delays in receiving it.

And there are new hurdles on the horizon, as CMS prepares to expand the use of prior authorizations to more products.

From the provider side, Ron Jenkins, CEO of Respitec Medical in Longwood, FL, recently put the state of the HME industry in perspective. Jenkins told HME News there are signs of an industry in distress. “Unfortunately, friends are going out of business,” Jenkins told the paper. “I had one the other day say, ‘Please, just take my 50 patients.’ It isn’t easy.”

There aren’t any official counts of how many businesses, small and large, were forced to downsize, no longer service Medicare patients, or go out of business in the past year. But in 2013, the American Association for Homecare (AAHomecare) found that more than 92 percent of DME providers didn’t win a contract in the bidding process, and 38 percent of those companies went out of the business. Anecdotal evidence indicates that the number of DME businesses continues to decline, and many others struggle financially.

“It’s clear that these public polices ranging from the bidding plan to out of control audits are forcing providers to make very difficult choices about their businesses,” said Tom Ryan, president of AAHomecare. “Most providers are committed to improving the quality of life for senior citizens and people living with disabilities, but many government policies just make that task much more difficult.”

Furthermore, Ryan said the government’s ill-advised polices ultimately cost more taxpayer dollars than they save. It is widely believed that the most economical and humane way to treat an aging population is to allow seniors to stay in their homes as long as possible, a strategy that delays placements in costly nursing homes and other care facilities. Yet, the government continues to implement policies that make it more difficult for providers to supply Medicare beneficiaries with the critical equipment they need to stay in their homes longer, such as power wheelchairs, oxygen therapy, and hospital beds.

“CMS policies are often counter to what health experts and patient advocates say is best for aging senior citizens,” Ryan said. “But more and more, Congress is understanding that these policies need to be fixed. Lawmakers are standing up for their constituents and are willing to support changes that will improve their quality of life.”

The Medicare bidding program for DME, which has been riddled with flaws since it was launched in 2011, has been extremely troubling for providers.

Critics, including 244 economic experts from around the world, maintained from the beginning that the process implemented by CMS is more like price-fixing than competitive bidding because CMS arbitrarily assigns prices somewhere between the lowest and highest bids. The process is tainted by the acceptance of non-binding bids that have allowed providers to submit “suicide low-bids” with no obligation to provide the services or products if they win. In a move that greatly diminishes the program’s integrity, CMS has used all of the bids, including those of providers who did not accept contracts, to establish median bid prices. CMS estimates that seven percent of providers rejected contracts in Round 2, which skewed reimbursement amounts because even one flawed bid disrupts the payment calculations. And, the entire process is cloaked in secrecy because CMS never discloses exactly how the reimbursement rates are determined.

Congress, however, is poised to act.

Bipartisan legislation has been introduced in the House and Senate that would help stop the speculative bidding that has marred the program. The legislation will make all bids binding, necessitate proof of licensure for the next rounds of bidding, and required bidders to obtain bid bonds.

“This legislation isn’t a fix all, but it will restore some integrity to the process,” said Ryan. “The flawed bidding process has set unreasonably low prices that have forced businesses to close and good people to lose their jobs. This must stop. Lawmakers in Congress recognize that changes must be made in the bidding system to prevent their constituents on Medicare from suffering. We have to ensure that some of the most vulnerable people in our society have access to the medical equipment they need.”

With AAHomecare as a major catalyst, Rep. Renee Ellmers (R-NC) proposed legislation last year that would reform the Medicare audit process for DME claims. The legislation will increase transparency, education and outreach, and reward suppliers that have low error rates on audited claims. The AIR Act requires the reporting of error rates on audited claims after adjustment for those audited claims that have been overturned on appeal, mandates thorough education and outreach, removes for one year all suppliers who have an error rate on audited claims of 15 percent or less (restricting them to one random claim audit per year), limits look-back periods, and eases filing constraints on appeals.

Similar legislation is expected to be soon be refiled in the new Congress.

It has also become increasingly clear that CMS should establish a separate category for Complex Rehab Technology (CRT) to serve the unique needs of Medicare patients with disabilities and chronic medical conditions who require specialized products. The coverage policies, coding, and quality controls for standard DME are no longer suitable for the new technologies available for CRT patients. Access to this equipment is being threatened by the policies and regulations, and Medicare beneficiaries are again the victims.

But the good news is that the home medical equipment industry is gaining momentum. We have recruited new friends on Capitol Hill willing to support and advocate for Medicare constituents. We enter 2015 facing some stiff challenges, but with a growing coalition of lawmakers, providers, manufacturers, and patient advocates committed to making changes that will implement fair regulations and policies, while improving the quality of life for Medicare patients.


The American Association for Homecare represents providers of home medical or durable medical equipment and services who serve the needs of millions of Americans who require prescribed oxygen therapy, wheelchairs, enteral feeding, and other medical equipment, services, and supplies at home. Visit

The American Association for Homecare represents durable medical equipment providers, manufacturers, and others in the homecare community that serve the medical needs of millions of Americans who require oxygen systems, wheelchairs, medical supplies, inhalation drug therapy, and other medical equipment and services in their homes. Members operate more than 3,000 homecare locations in all 50 states. Visit


Beth Ludwick,, 202.372.074