Editor’s Note: End-Users, Beware
- By Laurie Watanabe
- Sep 01, 2007
I am a sucker for a coupon. I also have a severe retail weakness for books — used and new, classics and contemporaries. I sign up for bookstore frequent-buyer programs and recently joined a consumer focus group expressly to earn vouchers for free books.
So I love getting a good deal on a good book. Once I see a bookseller’s price, I know I have choices: To buy or not to buy. I have never tried to talk down a bookseller’s price or held a sit-in protest at a cash register. As the consumer, I either pay what the seller says, or I go without.
That’s why part of this month’s cover feature on power chairs (page 34) was baffling to me. In the feature story, we sought to pinpoint power chair “hot spots” that suppliers should know about. During our investigation, we learned of a brewing storm: Prices of batteries are skyrocketing, thanks to incredible increases in the costs of lead.
In fact, prices of other commodities such as copper and aluminum are also soaring, which logically poses the question of how other wheelchair components — motors, wiring, electronics, frames and bases — could be affected.
This volatility couldn’t come at a worse time for suppliers in the first 10 competitive bidding areas (CBAs). Suppliers are submitting bids that they pledge to honor for three years. But how can suppliers be expected to submit long-term bids with commodities prices in such serious flux? How can the Centers for Medicare & Medicaid Services (CMS) reasonably expect suppliers to forecast commodities prices three years from now when industry experts can’t give accurate price predictions 30 days in the future?
CMS did not return our repeated calls for comment.
So we polled industry insiders. While MK Battery’s Dennis Sharpe couldn’t say where prices will go from here, he did explain why we’re in this predicament.
“When prices for raw materials go up, the customer either pays for it, or they don’t,” he says. “The normal way of doing business in any industry other than ours is you raise prices, and if somebody decides they don’t want to buy your product because it’s too expensive, then they don’t buy it.
“But in our business, we’re up against this artificial ceiling established by a payor. It’s just very frustrating… We’re locked into this reimbursement structure that doesn’t accommodate for that. How much sense does it make to tie yourself to a fixed reimbursement rate?”
So when it comes to the latest Harry Potter hardback, booksellers compute their costs and business needs, then set their prices. As a consumer, I can choose to buy or not to buy.
But when it comes to a medical necessity like a wheelchair or seating system that could change or even save a life, the actual end-user is left out of the process. Instead, CMS in effect becomes the consumer — a consumer that gets to set its own prices, regardless of how much the equipment and accompanying services actually cost. And if CMS’ decision deprives a beneficiary of crucial equipment or deprives a supplier of his ability to stay in business… so be it?
CMS is supposed to have thought through this competitive bidding process. But this current plan sounds so short-sighted, perhaps CMS should look into buying a new crystal ball… unless crystal prices are too high.
This article originally appeared in the September 2007 issue of Mobility Management.
Laurie Watanabe is the editor of Mobility Management. She can be reached at email@example.com.