Lack of Transparency in Bid Process Frustrates Stakeholders

ATLANTA–In questions raised during a recent CMS competitive
bidding teleconference, a persistent issue popped up again: the
agency’s lack of transparency in how it is implementing the
program.

During the June 21 open call, The Med Group’s Don Clayback,
senior vice president of networks, asked whether estimated
capacities for each provider would be totaled for comparison with
others. Officials with Palmetto GBA, CMS’ Competitive Bidding
Implementation Contractor, told him they couldn’t “go into
specifics as far as our internal processes.”

Later, they told another caller who voiced similar concerns that
they weren’t “trying to be coy,” but that bid evaluation was “an
internal process” and further information could not be given.

“So it’s not a transparent process,” the caller responded.

No, industry experts note, it’s not. And there’s nothing to
force CMS to make it that way, either.

“The rule is written in a way that allows a lot of discretion in
how [CMS] implements competitive bidding,” said Washington attorney
Asela Cuervo, Law Offices of Asela Cuervo. “There’s a lot of
administrative process that just is not defined under the
rule.”

That makes the process of bid evaluation very subjective,
according to Cuervo.

“It’s a black hole,” added Cara Bachenheimer, vice president of
government relations for Elyria, Ohio-based Invacare Corp. “You put
together a bid, based on hopefully fairly informed, educated
analysis of your operation, but how is CMS going to look at that
data? We have no idea.”

For example, Bachenheimer said, CMS has said that it would throw
out unreasonably low bids. But exactly how “unreasonable” would be
defined, CMS has not said.

“[CMS] released the financial ratios several weeks ago, but do
they have pass-fail measures?” Bachenheimer questioned. “Who knows?
If you submit a bid, you can figure out what your numbers are, but
presumably they’re making some analysis of those numbers to
determine whether you’re financially viable. What in their view is
financially viable–and what’s not?”

The fact that CMS was provided such huge discretion in the
competitive bidding statute means the industry does not have much
leverage, she pointed out, noting there’s nothing to compel the
CBIC to reveal its bid evaluation criteria.

What’s more, providers can’t appeal the bid decisions, so they
have no way of knowing what happened at any stage of the evaluation
process if, for example, they lose a bid.

“It could be a simple mathematical or clerical error,”
Bachenheimer said, but the bidder may never know.

Bachenheimer stressed the importance of getting the
industry-backed Tanner-Hobson bill, H.R. 1845, passed. In addition
to its “any willing provider” provision–which would allow
qualified providers who had submitted a bid to continue doing
Medicare business–the bill would require due process protections
and bring congressional oversight into the program. (See HomeCare Monday, April 2.)

According to Bachenheimer, H.R. 1845 and its Senate companion S.
1428 would “make a dramatic difference in how CMS carries out this
program and their accountability in the process.

“Legislative relief is our only opportunity,” she said.

Clayback added that it would help providers put together bid
information if they only had more detail about how the bids would
be judged.

“When everything is being done behind closed doors, people are
concerned [about] mistakes or misinterpretations that might occur,
and how do you become aware of those?” he asked. “That’s really
what the issue is. Fine, they don’t want to tell us, but [although]
it isn’t specifically required, it may help facilitate the
process.”

For a transcript of the June 21 teleconference, click here.