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CQRC Releases New Report: Finds CMS' Competitive-Bidding Program for Home Respiratory Therapy Limits Patient Access and Drives Up Medicare Spending

Washington, DC, March 23, 2018 --( The Council for Quality Respiratory Care (CQRC) today released a new report that highlights the urgent need for policymakers to reform Medicare’s outdated payment methodology. The report outlines how the current payment system, called the competitive bidding program (CBP), restricts patients’ access to the oxygen and medical equipment they need, despite the Centers for Medicare & Medicaid Services’ (CMS) best intentions.

The new report provides an overview of a series of analyses and patient/prescriber surveys that demonstrate why payment reform is needed to ensure access to care for Medicare beneficiaries who rely upon home respiratory therapies to remain in their homes and out of institutional settings. This data shows that beneficiaries have lost access to specific services, including access to respiratory therapists. It also highlights work showing the difficulty hospital discharge planners have in making sure beneficiaries have the home respiratory therapies they need to leave the hospital and go home. Most importantly, it describes the work of the American Thoracic Society to evaluate patients’ quality of life under the current benefit.

These findings show that previous CMS statements suggesting beneficiaries are experiencing no problems under the current program do not tell the whole story. It also shows that the current payment policy has led to patient access problems and a reduction in the number of suppliers working with beneficiaries.

Dan Starck, Chairman of the CQRC, welcomed the release of the report by saying, “This report shows that it is time that CMS reform the flawed competitive bidding methodology with a set of rules that ensure Medicare patients with respiratory issues can have unobstructed access to the oxygen and home therapies they deserve.”

Since the competitive bidding program (CBP) was first implemented, CMS has used a methodology to set the payment rates that artificially lowers the rates. This means that at least half of the winning bidders are asked to accept contracts for rates that are below the amounts they bid. These rates are so low that providers cannot recover the full expense of providing services to patients across the country. In the early years, suppliers accepted these rates hoping for refinements to the methodology to make it look more like other government acquisition programs. Their ability to absorb these below cost rates in urban areas is no longer sustainable.

The problem has worsened as CMS has extended these rates to non-competitive bid areas, the majority of which are rural.

While the industry has largely insulated patients from the worst effects of the rate cuts, it has become increasingly difficult for home respiratory therapy providers to remain in business. For examples, one national home respiratory supplier has closed 87 locations in non-competitive bidding areas (CBAs), 44 locations in CBAs, and has laid-off 3,000 employees since the implementation of Medicare’s Modified Fee Schedule. Another large supplier has closed nearly 200 locations in non-CBAs, and at least one national supplier has reduced or stopped providing services in rural areas across 24 states.

As a result, the report details how “arbitrary payment cuts are driving providers from the market,” creating major implications for patient access to medically necessary services, compromising their health outcomes, and putting millions of Americans at risk.

Specifically, survey data compiled by the American Thoracic Society show patients receiving home oxygen therapy have a reduced quality of life because they lack the equipment to allow for their desired mobility levels, resulting in patient isolation and inactivity. Further, limited access to appropriate respiratory therapy and therapy adherence leads to increased use of healthcare resources.

Because more Medicare beneficiaries are experiencing a decrease in their access to oxygen and home respiratory supplies and services, many may end up relying on emergency departments, hospitals, and other post-acute care settings. As a result, “the cost of these more expensive settings will eliminate any of the savings CMS has achieved in the short-term under the competitive bidding program.”

“The CQRC, along with leading economists, is troubled by these trends and urges CMS to reform its competitive bidding program so that it achieves its original goals without jeopardizing patient access to necessary services,” added Starck. “By illuminating the serious problems created by the competitive bidding program, we are hopeful that this comprehensive report will shine a light on this very serious problem and lead to the creation of a new payment system that puts patients first.”

The full text of “The Rationale for Reforming Medicare Home Respiratory Therapy Payment Methodology” can be found here.

The CQRC is a coalition of the nation’s seven leading home oxygen therapy provider and manufacturing companies. Together, we provide in-home patient services and respiratory equipment to more than 600,000 (the majority) of the more than one million Medicare beneficiaries who rely upon home oxygen therapy to maintain their independence and enhance their quality of life. To learn more, visit and follow CQRC on Twitter at @TheCQRC.
Contact Information
The Council for Quality Respiratory Care
Sarah Rhoades

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