What are the alternatives to administrative pricing?

[leejgbt]

The following was published in a DME trade newsletter. With all the suggestions here I thought I would gather your solutions and forward them to Mr. Stanfield.

What Are The Alternatives To Administrative Pricing

Editorial Commentary by Wayne Stanfield

On several recent trips to DC to meet with Congress, NAIMES was told in no uncertain terms that ending administrative pricing was the goal of the current DME bidding program, AND that there MUST be an alternative to set market prices if the current program was to be repealed. In fact, one staffer said that a straight repeal of the current program won’t happen.

If administrative pricing has to go, the next obvious question is “What should replace this farce run my CMS? I don’t know about you, but I don’t see a long list of solution being offered by anyone. I’m the first to admit that I don’t have one.

If the fee-for-service system we have now must be changed to a market-based solution, what can be done to have the market set the prices at a realistic value? Are there others ways to set market prices other than this debacle that CMS has thrown at us? So far, only one has been offered, the auction proposal from Dr. Cramton.

Unless we can realistically set market prices, we will never get out from under the belief by Congress and CMS that we are paid too much. We will forever be under pressure to lower prices until we can prove by some method that our fee are really market driven. Again, despite not wanting to embrace an auction for DME, the industry certainly hasn’t offered any alternatives. It is my firm belief that fighting for status quo is a sure path to disaster. I believe that a solution that sets market prices could also end this constant push to reduce fees further. It would be hard for Congress and CMS to argue and cut fee if in fact they were set by the market in complete transparency.

In order to move to any real solution, the DME benefit must we redefined and rewritten to match the 21st century world. We are operating under 25 year old rules that have been patched so much, little of it makes sense anymore. As an example, the 2011 Medicare Trustees Report to Congress, DME is still defined like this:

Durable medical equipment (DME). Items such as iron lungs, oxygen tents, hospital beds, wheelchairs, and seat lift mechanisms that are used in the patient’s home and are either purchased or rented.

I don’t know about you, but I have a warehouse full of iron lungs and oxygen tents, along with a few wheelchairs with wicker seats.

How are we ever going to get out from under this cloud of who we are and what we do until we get Congress and CMS to see beyond politics. It is certain that few politicians and even fewer bureaucrats have a grasp of DME. They spend all of their time taking back what they paid us last month.

Redefining the DME benefit and rewriting the regulations governing us is the very first step in making sure that the supply of DME services can meet the growing demand. Interestingly, that also happens to be the first step under the Cramton proposed auction. Certainly destroying the DME industry to solve the perceived waste, fraud, and abuse problem is not the answer.

One of the problems with the current CMS bidding program is they tried to fit a square peg in the round hole by trying to use a “Dutch auction” to offer “selective contracting” without changing DME policy. They developed their program in the dark without any input from experts or the DME industry. Then that kept the key elements of the bidding program secret to allow them to manipulate the outcome to meet their goals.

Since it looks like we are going to have to replace the current bidding program to end it, the conundrum for the DME industry is what to replace it with.

Like it or not, here’s the list of alternatives on the table:

1. Repeal and replace with an auction proposal as offered by Dr. Cramton.

2. _____________________________________________

3. _____________________________________________

4. _____________________________________________



Please fill in the blanks, but remember nothing will work unless it ends administrative pricing and is an alternative to the current program. Your input is welcomed.

[Janknitz]

I don't quite understand all the terms and mechanics discussed in that newsletter because I am not in the buisness, but I think DME's have to take some responsibility for the issue as well and I don't see that addressed anywhere.

I'm talking about the "fantasy billing" DME's do to try to increase their Medicare reimbursement in subsequent years by stating it costs them many as much as a machine and supplies cost RETAIL to provide them. I'm referring to things like the billing one of our posters got charging over a THOUSAND dollars for a Quattro mask. Here's what the DME billed her for her initial set up, understanding that Medicare was only going to pay the much lower allowable fees, regardless of what it said on the DME bill:

$331 – One month rental of PR Systerm One Pro machine (Mediare allows around $100 per month, depending on which state)
$835 – PR System One humidifier (Medicare allows around $100 for a one time purchase)
$980 – Mirage Quattro FF mask (Medicare allows around $100)
$164 – Headgear (Medicare allows around $35)
$125 – Tubing (Medicare allows around $35)
$33 – Filter (Medicare allows around $15)

Total charge was $2469.34!!!!!!!!! OMG!

Even the Medicare allowable fees are MUCH higher than these same items can be purchased for RETAIL online from reputable dealers. I don’t quibble that B&M DME’s deserve more than online dealers because they supposedly provide service (some actually do!) and the billing is a b*tch, but this type of fantasy billing is WAY out of line. How can patients—who are consumers, after all—insurers and the government make heads or tails out of a fair pricing structure that will give the DME’s a reasonable profit when games like this are played??? Seems like the housecleaning needs to start at home.

[The Texan]

I find this interesting, the DME's blaming everyone but themselves...... ......I watch the EOB from my DME very closely and on many occasions I go on other websites and check their billing against the open market for the same item. All I will say is WOW, if the DME is paying open market price and then trying to resell them for what they bill insurance and Medicare, they are making BILLIONS. Even if they were realistic in their markup, they would still get more than I can buy it for. Yes, they have an overhead, but not to the tune of a 1000% or 2000% markup and if their overhead is that great, they screwed up big time.

I agree that the house cleaning needs to start at home in the DME field and when their house is in order, then they can say they are not being paid enough. Yes, I was a businessman in a very competitive field and I made a good living, as did all my employees, without gouging the public or the government. My family still has a business and sells to the government, has a very decent income, again without gouging.

[Otter]

Even the Medicare allowable fees are MUCH higher than these same items can be purchased for RETAIL online from reputable dealers. I don’t quibble that B&M DME’s deserve more than online dealers because they supposedly provide service (some actually do!) and the billing is a b*tch, but this type of fantasy billing is WAY out of line. How can patients—who are consumers, after all—insurers and the government make heads or tails out of a fair pricing structure that will give the DME’s a reasonable profit when games like this are played??? Seems like the housecleaning needs to start at home.

I think that's what Stanfield is getting at. As I read it, the article could be summarized this way: "The jig is up! WHAT THE FVKC ARE WE GOING TO DO?!!!"

[idamtnboy]

The following was published in a DME trade newsletter. With all the suggestions here I thought I would gather your solutions and forward them to Mr. Stanfield.

What Are The Alternatives To Administrative Pricing

Editorial Commentary by Wayne Stanfield
Unless we can realistically set market prices, we will never get out from under the belief by Congress and CMS that we are paid too much. We will forever be under pressure to lower prices until we can prove by some method that our fee are really market driven.

The problem with market pricing is there is always someone who is unwittingly willing to go broke proving he can sell you a product cheaper than the next guy. What you don't want are DMEs going belly up and leaving thousands of patients in limbo.

It would be hard for Congress and CMS to argue and cut fee if in fact they were set by the market in complete transparency.

The free market doesn't condone transparency. "No way am I going to let my competition learn how I set my prices!" On the other hand, some service businesses like auto mechanics and small print shops use industry published hour rate manuals to set prices. The DME industry should consider that approach, if it doesn't already have such pricing guidelines.

How are we ever going to get out from under this cloud of who we are and what we do until we get Congress and CMS to see beyond politics. It is certain that few politicians and even fewer bureaucrats have a grasp of DME.

Congress will never see beyond politics. That is a given and the DME industry needs to accept it and deal with it. Don't waste your time and energy trying to get politics out of the system because it will never happen. Politicians don't care to get a grasp of DMEs. [Keep in mind that top level bureaucrats in Government are political appointees. Don't lump them in with the rank and file.] They only care about what will get them elected again. But, Mr. Stanfield would undoubtedly be quite surprised at just how well the rank and file bureaucrats do understand DMEs. Rank and file feds and contractor staff are not out to gouge American businesses. They want to realistically work with them, but the rules from on high often foil their desires and efforts. Ask any Fed what is the greatest impediment to delivering good service to the American public and he will tell you, "Congress." The DME industry will need to promise not to complain to Congressman when they believe they are mistreated by rank and file bureaucrats. Nothing causes rigor mortis in the way feds deal with companies faster than the fear of being grilled by a member of Congress about why a certain company is not being catered to. When I worked for Uncle I came to realize that in the arena of procurement of goods and services real reform will never take place until a Congressman is willing to defend a Federal employee against a campaign contributing constituent.

The comments by others about the DMEs need to get their own house in order first is right on. How can politicians and the public not believe that DMEs are getting fat off taxpayer money when we look around at the entire medical industry and see marble palace hospitals being built, physician practices setting up expensive MRI and DNA labs, medical groups practicing in fancy brick high rise office buildings in the priciest parts of the city, and on and on? And we look at the EOBs from every medical provider and see them accepting as full payment reimbursements as low as 15% of the billed amount. Who's gouging who? Are reimbursers gouging the providers, or do providers gouge the poor souls who have to pay their own medical bill? The medical industry has a serious image problem, and DMEs are caught up in it, rightfully or not.

[leejgbt]

Just read the all the responses and I am very pleased with the comments as they are honest and blunt. I will leave this thread going for another week and then send the comments to Mr. Stanfield.