November 13, 2013

Healthcare Paradigm Shift

The government has set out to reduce its expenses by continually cutting reimbursement rates for Medicare. Those of you reading who do not have Medicare but have a policy with private insurance companies like Cigna and Aetna, realize that even they are following suit with pricing schedules. Medicare has become the industry standard of reimbursement rates. Medicare has cut reimbursement amounts significantly across respiratory, mobility equipment and negative pressure wound therapy. One way in which Medicare has cut costs is by creating the Competitive Bidding program.

Some Facts about CBAs

Competitive Bid Areas (CBAs) were initially launched in 2011 in 9 geographical areas.

Today there are 91 major metropolitan areas under the competitive bidding guidelines.

Competitive bidding is a process in which health care providers bid, much like auction bidding, and submit what price they will accept for a good or service. If Medicare accepts their bid the company is ‘allowed’ to accept Medicare patients. However, if Medicare does not accept their bid, then the company cannot accept Medicare patients and must only do business with individuals who carry a private insurance policy or no insurance policy.

The Obama administration is standing firm on the decision to keep CBAs intact. Jonathan Blum, a deputy administrator at the centers for Medicare & Medicaid Services, claimed that the program has “saved more than $400 million in its first two years of operation without diminishing beneficiary access to quality equipment or resulting in negative health outcomes for beneficiaries.” However, The CBAs that the Obama administration set in place have caused countless small businesses to go bankrupt, close their doors, or consolidate with larger companies. Many patients have seen the negative effects these CBAs have caused in the healthcare industry such as limited product lines, degraded equipment quality and, often in rural areas there are no equipment providers within a 50 mile radius.

Additionally, competitive bidding drives down the reimbursement price for all equipment and supplies offered in the metropolitan area affected by the CBID. This means that while a patient may prefer a specific CPAP mask, the medical equipment company can no longer afford to provide that mask at the CBA allowable reimbursement rate. Many masks are more expensive than what insurance companies are willing to reimburse, causing patients to see a limited number of supplies available to them.

Medical equipment companies are going through a paradigm shift. Often, this shift causes the company to strive for more collection of patient co-pay’s upfront as well as cutting down on idle inventory stored in warehouses.

American’s are going to see a one size fits all type of healthcare in the near future. With the expensive price of healthcare products and a lack of willingness to pay for those products, many healthcare options will cease to exist. Whether that lack of willingness comes from insurance companies or the patient, CBAs will force the variety of healthcare products and services to shrink.

Breath of Life (BoL) understands that every patient needs therapy that fits their lifestyle and we do not want to place them in a box. BoL has found creative solutions to fit our patient’s lifestyles by providing equipment that allows for therapy autonomy and excellent customer support.

Additionally, Breath of Life is pleased to announce that,

Breath of Life has been awarded a contract in the DFW CBA for Respiratory therapy equipment.

The competitive bid contracts are scheduled to begin January 1, 2014. As a contract winner for the Dallas/Fort Worth area, Breath of Life will supply stationary oxygen concentrators, portable oxygen concentrators, PAP therapy equipment and supplies to those with qualifying needs. If you have questions or concerns whether your current provider has been awarded a contract, we will be happy to assist you. Please contact us at