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Competitive bidding process changes things for durable medical equipment providers

  • The Wichita Eagle
  • Published Monday, July 1, 2013, at 8:18 p.m.

A new bidding process for durable medical equipment providers takes effect this week, and some area providers will fare better than others.

The system, required by the federal government, was rolled out in more than 90 metropolitan areas, including Wichita.

The Centers for Medicare and Medicaid Services said it will use contract suppliers and a competitive bidding program in an effort to reduce costs and prevent fraud.

For Steven Palacioz, owner of Advanced Medical Concepts, 7718 W. Douglas, the good news came on Friday.

Palacioz received contracts in all five areas in which he bid. Those included power chairs, hospital beds, walkers and support surfaces.

“If I had not received those bids, I’d be singing a different song today,” he said.

Palacioz, who has owned the business for about 20 years, said about 99 percent of his business is generated through purchases of those items through Medicare.

Competitive bids were required supplies such as oxygen and various medical equipment, including standard wheelchairs and scooters, continuous positive airway pressure (CPAP) devices, hospital beds, walkers and negative pressure wound therapy pumps. The businesses that won bids will be able to receive payments from the Medicare system.

The mandated program is in place in Sedgwick County and most of Harvey, Butler and Sumner counties, along with some areas of Reno, Kingman, Cowley, Reno, Marion and Chase counties, according to a regional CMS spokeswoman.

For Medicare recipients, this means that they will have to use an approved contract supplier to receive their equipment if they want the purchases covered by Medicare.

Although his bids were accepted, Palacioz said he opposes the idea behind the competitive bidding process and supports a bill in Congress to stop it.

“The whole thing is unbelievable. ... You work your whole life to build a business and you can have it taken away so easily,” he said.

“There’s House Bill 1717 that proposes a market-based paying system that would easily allow all to participate but at a lower rate instead of just completely shutting down companies.”

At this point, he said he expects substantial growth for his business because others in the market can no longer receive Medicare payments for equipment for which they didn’t win the bids.

Co-owner Brian Lindsey at Broadway Home Medical, 808 S. Hillside, said his company received two of the six bids for which it applied: oxygen and support surfaces.

“It’s a good thing and a bad thing,” Lindsey said. “There’s a lot of cases where they didn’t pay enough to actually make it worthwhile because they cut some of the rates so low.”

However, Lindsey said the two areas they won “still pay a little money” and he hopes the impact on business will be minimal.

For the last few years, the company has been diversifying into retail sales and now has one location that is cash only. Broadway Home Medical has been in business since 1994 and has 14 employees.

But Lindsey said worries about the bigger impact on patients in the area and how they will be served, especially because some of the bid winners for the Wichita area aren’t located in Wichita or even in state, he said.

“Almost half of them are out of state or the city looking to contract with locals to meet the needs,” Lindsey said.

So far, Broadway Home Medical doesn’t plan to take any of the subcontracts it has been offered because the payments aren’t sufficient for the work required.

Officials at other companies, such as Michelle Daniels, location manager at Firstcare, 650 N. Carriage Parkway, Suite 80, said they are working to connect customers with businesses, mostly local, to that won the bids in the areas where they need equipment.

Daniels said she does not foresee a big impact on business because Firstcare has a niche in respiratory services. It won bids on oxygen, walkers and hospital beds, she said.

Required mail program

CMS is also implementing a national mail-order program for diabetic testing supplies. It will require people to use a national mail-order contract supplier.

According to a news release, “rather than having an approved amount of $78 for 100 test strips and lancets, Medicare’s approved amount will be around $22 – and your copay will go from $15 to under $5.”

Medicare encourges people to check with their medical supplier or visit www.medicare.gov/supplier to see if their supplier is part of the new program or is being grandfathered in.

Reach Kelsey Ryan at 316-269-6752 or kryan@wichitaeagle.com. Follow her on Twitter: @kelsey_ryan.

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