Medical suppliers say Medicare bid rules flawed

U.S. Rep. Mark Sanford toured ABC Medical in North Charleston with owner Jamie Smith last week. Smith said he will lose nearly half of his patients on July 1 because Medicare will no longer reimburse his distribution business.

Paul Zoeller

A group of small-business owners who distribute medical supplies to elderly patients got a chance last week to air their grievances about federal Medicare regulations to South Carolina’s newest congressman.

When U.S. Rep. Mark Sanford, R-S.C., asked the group last week for more information about Medicare’s competitive bid program, an issue he said came up on the campaign trail earlier this year, he got an earful.

“The real problem with it is if you’re not awarded a contract, you have to stop participating in the Medicare program altogether,” said Daniel Gooch, president of the S.C. Medical Equipment Services Association.

Medicare, the national health insurance program for the elderly and permanently disabled, has set up an auction process to secure the most competitive prices for some categories of medical supplies. It “replaces outdated Medicare prices with lower, more accurate prices,” starting on July 1, the federal government’s Medicare website explains.

It’s a controversial cost-savings measure for the entitlement program, which is expected to go broke after 2024, according to a 2013 Kaiser Family Foundation report.

Gooch said small-business suppliers compete on quality and customer service, not just low prices, and that larger companies pitch very low “suicide” bids to Medicare, making it impossible for smaller suppliers to compete.

“We believe that the process — the auction process — that is used to conduct these bid contracts was terribly flawed,” Gooch said. It could force some medical suppliers in South Carolina to go bankrupt, he said.

Jamie Smith, owner of ABC Medical LLC in North Charleston, was the host at the meeting with Sanford on Wednesday. It was one of several stops the former governor and newly elected congressman made around Charleston during a trip to his district.

Smith said because of Medicare’s competitive bid program, he will lose 46 percent of his patients on July 1 because Medicare will no longer reimburse ABC Medical to distribute supplies. “When you have companies from California servicing this area, there’s going to be a lot more admittance to the hospitals,” said Smith. “And guess what? It’s cheaper for that patient to be at home than it is for them to be at the hospitals.”

An out-of-town company can’t offer the same level of personal service that ABC Medical can offer patients in Charleston, Smith said, and that could have medical repercussions.

The group offered Sanford a copy of a proposed bill, H.R. 1717, that would reform Medicare’s competitive bid system. They encouraged him to cosponsor the legislation in Congress.

“The whole point is to come by, get a little bit better appreciation,” Sanford said Wednesday. “Today is a series of roving town hall meetings, if you want to call it that.”

Reach Lauren Sausser at 937-5598.