DMEOPEN has been organized by the undersigned Robert Brant of City Medical Services Inc, to seek fair treatment of all Medicare/CMS suppliers by government.
Thanks and Disclaimer
Thank you for supporting our efforts to save the DME industry and the beneficiaries we serve: We wish to express our profound gratitude to everyone for helping DMEOPEN inform affected parties of the impending disaster to small suppliers and working towards a fair resolution of CMS’s Final Rules.
By now most small suppliers realize that even in CMS’s own estimate approximately 20 suppliers will be initial “winners”. Then the 30% of those 20 will be calculated to produce “protection” for a mere 6 (30% times 20) small suppliers. Thus in the MIAMI CBA 98%-99% of all small suppliers will almost certainly have to close down their businesses. Our own numbers are even more pessimistic.
Disclaimer: It is our belief that the suggested actions proposed herein will be helpful in acquiring relief in the short or medium term. However, there are no guarantees. That means that regardless of what we or others do, all may still fail to get relief. That is why we urge everybody to take only such actions as they believe are in their own best interests, and to do so only after consulting with any and all persons they deem appropriate. We urge you to do only that with which you independently agree.
INTRODUCTION: As part of the Deficit Reduction Act of 2005 (DRA), Competitive Bidding for DMEPOS is underway. The Final Rule (CMS-1270-F), Published April 10, 2007, reads as if there is “Protection for the Small Supplier". Page 269 reaffirms the existence of this protection in the Congressional Mandate of the DRA: “We agree that section 1847(b)(6)(D) of the Act is entitled “Protection of Small Suppliers”.
PROBLEM: At first glance, the Final Rule appears to have protection for the small supplier, from page 271: Our target number of small supplier participation will be determined by Multiplying 30% times the number of suppliers that have met our bidding requirements.
However the 30% small supplier “Protection and Set Aside” which was being relied on by most small suppliers for their survival, is being interpreted: Not as 30% of all business in the Competitive Bidding Area (CBA), nor 30% of companies, nor 30% of bidders, but rather 30% of WINNING BIDDERS. Thus, if as anticipated the winning bidders are no more than 10-20, the 30% Protection would call for the 3 to 6 next lowest bidding small suppliers to be allowed to do business at the Pivotal Price. Thus out of some 400-500 current small suppliers in any CBA, less than 1% would survive.
ACTION: We have filed a complaint with the Small Business Administration. We were told by the SBA that ours is the first to discuss the effects of the Final Rule to the small business economy. The SBA told us that when the government requires a “Set-aside” to protect a minority interest, it is typically for a percentage of all business. Page 111, of the Proposed Rule (CMS-1270-P), Published May, 2006 stated: “Our analysis of DMEPOS claims data suggests that at least 90% of suppliers had Medicare allowed charges of less than $1 million in 2003.
IMPACT to Small Businesses: With that quote in mind, the Medicare DMEPOS community believed that small suppliers would make up the majority of bid winners not one percent of the entire DME small business community. The impact will be devastating:
1) Durable Medical Equipment businesses will close.
2) The Ancillary businesses of the DME industry will close: billing companies, small wholesalers, small repair companies, local manufacturer’s representatives.
3) Employees will lose their jobs, health benefits and competitive wages will be impossible to replace in this industry.
4) Strain on Unemployment Compensation and other “Safety Net” programs
5) As a result the Internal Revenue Service will lose Income tax and Social Security Tax
6) Inability of businesses to repay SBA loans
7) The Real Estate market will be affected as many businesses close or reduce their office/warehouse space when foreclosures are at an all time high.
8) The state will not be able to rely on small providers after they close when a natural or unforeseen disaster strikes
9) Patients will no longer be able to visit local providers to review choices of styles, sizes and manufacturers of equipment.
10) DME providers compete for business by providing the newest, technically advanced equipment by highly paid staff. By cutting costs, bid winners will be unable to provide premium equipment as real competition will end in favor of cost cuts.
It is our understanding that the SBA requires Mandatory Regulatory Impact Analysis, when a rule has a $100 Million impact on the small business economy. A modest projection of that impact on the 10 CBAs is well over $1 Billon. There is a reference of this report on page 318, paragraph 2, of the Final Rules. We have requested this report several times with Michael Keane, Head of Demonstration Projects at CMS, but he has not answered us.
HOW CAN WE HELP: We can fight this with the help of the SBA but everyone must act QUICKLY!!! We need everyone in the CBAs to respond to the Ombudsman QUICKLY! → ombudsman@sba.gov
Tell the ombudsman that you agree with City Medical Services complaint. Tell in detail how your small businesses (state the number of employees) and other small businesses (With less than $6.5 million in annual revenue) will be affected by the current rule. Then ask those small businesses to respond to the Ombudsman with their story as well. For Example:
a) Your Billing Service.
b) Your Billing Software Manufacturer.
c) Your Landlord.
d) Your Oxygen Concentrator Repair Company.
e) Your Local Independent Manufacturer’s Representative Company.
Please copy your email to rob@dmeopen.com
You may also send a Certified Letter to Michael Leavitt, Secretary of Health and Human Services. Fax the Return Receipt to 305-493-1495
If everyone does their part the Small Supplier can get the proper “Protection” that Congress intended, one that mirrors the ratio of small suppliers to large suppliers.
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