Moving the HME Industry Forward


The Insane are Running the Asylum

May 6, 2013

AMARILLO, TX – For the first 12 years of my life, I grew up in a state mental hospital. It was built in approximately 1900. The hospital was a series of buildings, roads, ponds, trees and horses located outside the town.

The facility had about 1,500 patients, many of whom would spend their whole lives there. My father was the hospital’s psychologist, and our family lived in a small home on the hospital property.

I ate with the patients, swam with the patients, and hung out with the patients. All of my babysitters were patients. It was a wonderful life. It also helped me understand what is real, and what is not real. My upbringing helps me understand competitive bidding.

My father was a cynic. He saw the irony, ridiculousness and hypocrisy in many things. When my father would observe something bordering on the absurd, he would say: “The insane are running the asylum.” That is exactly what is happening with competitive bidding.

Competitive bidding has no basis in reality. It is a farce. It is “Alice in Wonderland” where up is down, down is up, and every day we squeeze through the proverbial rabbit hole. I am up to my neck in dealing with competitive bid issues. Here are some observations that would make my babysitters roll their eyes and say: “That is insane!”

Observation # 1: The goal behind competitive bidding is to reduce the number of DME suppliers. The goal is NOT to reduce fraud. There are tools in place to accomplish that. The goal is NOT to reduce reimbursement, because there are tools in place to accomplish that. Pure and simple, CMS wants to get rid of a bunch of suppliers.

Observation # 2: In deciding whether or not a bidder is financially sound, the competitive bidding program is “on an island somewhere.” The review of financials has no basis in reality. I have seen large DME suppliers, whose financials are as strong as Wells Fargo Bank, get disqualified because their financials do not meet “secret, unknown, and unpublished” financial standards. I have seen DME suppliers, whose financials will not qualify them to obtain a car loan from a credit union, be deemed financially qualified.

Observation # 3: I have seen DME suppliers bid responsibly and have their bids rejected because their bids were too high. These suppliers have been in existence for decades, have a great reputation, and have a solid business model. Unfortunately, they are not invited to the party. To the contrary, I have seen suppliers submit suicide bids, be awarded a competitive bid contract in multiple CBAs (for multiple product lines), and have absolutely no ability to honor their obligations under the contract.

Observation # 4: This is the issue that frustrates me the most. Any business (restaurant, sporting goods store, DME supplier) needs a working capital line of credit from the bank. What bank wants to lend money to a DME supplier with the knowledge that the lion’s share of the supplier’s business will be taken away in three years if the supplier is not awarded a contract? In response to this concern, I have heard competitive bidding program officials respond by saying: “Well, the DME supplier just needs to move into other product lines.” This is an absurd response. No matter how you slice it, the primary customers for the DME industry are old people. When a person reaches 70, his body breaks down. He needs DME and the payor is Medicare. This is the real world. To say that the losing bidder just needs to go out and find other customers is “Alice in Wonderland.”

At this moment, we as an industry must have “tunnel vision” and a “one track mind.” Our focus needs to be convincing our elected officials of the absurdity of competitive bidding and the need for the program to be replaced by the Marketing Pricing Program.

We absolutely must enlist the help of our patients. Many in Congress will turn a deaf ear to “complaining businesses.” Senators and Representatives have experience hearing from (and ignoring) complaints from industries that are aggrieved because of government programs. However, Congress WILL listen to the single, largest monolithic voting block out there: our senior citizens.

I loved the patients that I grew up with at the state hospital. They were my friends, and I learned a great deal from them. However, they should not run the hospital.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, Amarillo, Tex.