Dave Sayen, Gorman Health Group, LLC

Giving Away the Store

Guest Blog by Dave Sayen, SVP of Gorman Health Group, and former CMS Region 9 Administrator – and on CMS’s executive team responsible for standing up the CMS Competitive Acquisition program

Foreword by Mimi Grant of ABL Organization:

CMS has proposed payment rule changes for the Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) program. The DME proposals in the rule aim to increase access to items for patients and simplify Medicare’s DMEPOS Competitive Bidding Program (CBP) to drive competition and increase affordability. The process for re-competing contracts with suppliers currently in effect under the DMEPOS CBP has not yet been initiated. As a result, current contracts for the DMEPOS CBP will expire on December 31, 2018. Beginning January 1, 2019, and until new contracts are awarded under the DMEPOS CBP, beneficiaries may receive DMEPOS items from any Medicare enrolled DMEPOS supplier. (CMS release, 7/11/18)

Since ABL Member Dave Sayen, now with Gorman Health Group, was the CMS Region 9 Administrator – and on CMS’s executive team responsible for standing up the CMS Competitive Acquisition program, we asked him to share a few words on this subject – and he has plenty! – in this Guest Blog:

Giving Away the Store

Does anyone remember the Sopranos? In one episode Tony’s brother-in-law who owns a sporting goods store runs up a gambling debt with the mob. Tony and his pals ‘bust out’ the business. They run up all his lines of credit until he goes bankrupt and they keep the money. It is beginning to feel that is what is happening to the USA.

Case in point: On July 11 the CMS issued a proposed rule that (among other things) makes significant changes to the fee schedule for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies, or DMEPOS. The current system called Competitive Acquisition was instituted in 2011 and has yielded considerable savings to the government and beneficiaries. Projected savings under the current program are $25.7 Billion over 10 years in benefit dollars. From the start the industry has argued that the program harmed beneficiaries by impeding access to products. This assertion has never been proven. It is true that a lot of small suppliers left the program, but for the most part they had a small Medicare business. The approach was to solicit bids for the largest volume items, and set prices in a particular area to the median bid.

Now in an unprecedented giveaway of your tax dollars, the bids will be keyed to the ‘lead item’ or the highest price of an item in winning bids. That adjustment yields a modest spending uptick of $10 million over 5 years. But wait, there’s more. The agency hasn’t begun the process to re-compete the Competitive Bidding Areas for 2019, so there will be a lapse before the new program is implemented (which could take years); meanwhile suppliers get a blend of the current rate in their area and the rate in the non-competition areas which are higher, basically the old fee schedule the whole program was designed to correct. This piece, along with some other technical changes will cost $1,050 million over 10 years. That is how they state the number in the cost estimate section of the rule. I guess they didn’t want to say a billion dollars like Austin Powers might put it.

I wish the so-called conservatives running things in Washington would be a little more conservative with our money.