Industry Battles Bungled Bid Exclusions in Congress, Court

ATLANTA–As complaints of mishandled bids continue to pour in,
industry organizations including the American Association for
Homecare, VGM and the National Association of Independent Medical
Equipment Suppliers are rallying providers to fight what many see
as yet another miscarriage of justice in a fatally flawed
program.

AAHomecare has received more than 100 complaints from providers
about improper disqualifications in round one of competitive
bidding, the association said last week, and has sent a letter
detailing the errors and impact of the program to CMS and the CBIC
as well as to members of Congress.

The goal of the letter, addressed to acting CMS Administrator
Kerry Weems, is to “extend the 10-day window for accepting
contracts in round one. In addition, the association is reiterating
its call for a suspension of round one of the bidding
program,” AAHomecare said.

Additionally, the association said Friday it is working with
several law firms that are exploring legal action to stop round one
of competitive bidding.

According to AAHomecare:

–There is mounting evidence that a large number of suppliers
participating in round one were improperly and unfairly
disqualified from the process because of missing data. Many of
these disqualified bidders can show that they did in fact provide
the proper data to CMS and should not have been disqualified.

–Home care providers that have been offered contracts need more
time to assess the economic impact of the newly established single
payment amounts in each competitive bidding area to properly
estimate their ability to serve the area.

–The bid evaluation process and contracting process have far
exceeded the projected implementation timeline, leaving little time
for suppliers to prepare for increased demand for services and
educate the affected beneficiaries, providers and referral
sources.

–Errors have consistently occurred throughout both the bidding
period and contract award process. Due to the magnitude of the
issues at stake with this program, the association strenuously
calls on CMS to be fully transparent and allow for an assessment of
the application of financial standards criteria, data that
illustrates the calculation of the single payment amount for HCPCS
codes in each competitive bidding area, and how many suppliers
actually participated in the bidding process.

One such error appears to be a CMS “bait and
switch.”

Like many HME suppliers who received a disqualification letter
for round one of competitive bidding, Richard Pennington, vice
president of Alliance Medical of Ontario, Calif., was astonished by
the news. Particularly because, according to Pennington, on page 2
of CMS’ initial request for bids from May 31 of last year, which
was available through the CBIC Web site, CMS said, “beginning
10 business days before the bidding window ends, suppliers will be
notified if there are any missing hard copy attachments.”

But Pennington discovered that on Sept. 13, 2007, a short time
before the round one bid window closed on Sept. 25, 2007, page 2
was altered.

“When you go to their Web site now and you look for their
RFBs, this original has been removed and it has been
replaced,” said Pennington. “The second page is a
revised page. When you look at that second page, item No. 4 has
been stricken. Now No. 4 says ‘the system will remain open for at
least 15 days after the bidding window ends to allow bidders to
check the completion status of their electronic bids and verify
receipt of hard copy documents by the CBIC.’”

Pennington took his complaint to the CBIC, which he said refused
to provide any documentation on what Alliance Medical submitted. So
he contacted his congressman. And VGM.

Pennington met with Rep. Joe Baca, D-Calif., on Monday.
“This is a travesty what they’re doing to us,”
Pennington said. “My complaint is that you gave me the rules,
I followed the rules, and you changed the rules after I was done
submitting my bid, which I did on July 20, 2007… In my heart,
I don’t think it’s right.”

Waterloo, Iowa-based VGM’s John Gallagher, vice president of
government relations, agreed, saying that two other providers also
have come forward with copies of the original RFB.

“Obviously CMS changed the Web site from the
original,” said Gallagher, who advised providers who feel
they were unfairly disqualified from round one to speak out
immediately.

As for VGM, Gallagher said, “the approach that we are
taking is two-fold. First is getting members of Congress involved.
The other part is that many of these [providers] had lawyers and
accountants put their packets together. That tells us that CMS has
people looking at the packets who don’t really know what they’re
looking at … It’s a violation of due process, so we’re
looking at it from a legal standpoint.”

On Thursday, NAIMES President and CEO Wayne Stanfield confirmed
that the organization is indeed teaming up with VGM and Greenville,
S.C.-based Health Law Center to weigh the possibility of legal
action that would “stop CMS from implementing round one of
the national competitive bid for DME.”

“Suppliers were excluded, without recourse, for a myriad
of technical reasons, many of which have proven to be errors within
CMS’ own evaluation process,” a NAIMES press statement
said.

NAIMES has sought the counsel of a Washington, D.C., law firm to
determine the feasibility of seeking relief in federal court,
Stanfield said, and attorneys have advised the group that there are
constitutional concerns within the law, as well as the
regulations.

Meantime, the organization is asking “any supplier who was
excluded because of technical reasons to step forward and share
your story with us and your willingness to become plaintiffs in
this case.” NAIMES said it will select suppliers with the strongest
cases from each of the 10 CBAs to participate in the lawsuit.

VGM’s Last Chance for Patient Choice has committed initial
funding for the effort, and NAIMES said it will make a decision on
whether to go ahead with the suit possibly early this week.

Amarillo, Texas-based Brown & Fortunato is also
“researching the possibility of filing lawsuits on behalf of
HME companies whose applications were rejected because of an
alleged failure to submit financials when, in fact, the companies
did submit financials. If lawsuits are filed, then they will likely
request an injunction,” according to Jeffrey S. Baird,
chairman of the law firm’s Health Care Group.

However, Baird said, “Before filing these types of
lawsuits, we must first address the “Judicial Review”
section of the [Medicare Modernization Act], which says, in part:
‘There shall be no administrative or judicial review under section
1395ff of this title, section 1395oo of this title, or otherwise,
of … the awarding of contracts under this section.’ The legal
question is whether this prohibition extends to the situation where
an application is rejected as a result of the CBIC’s
mistake.”

Since providers started receiving notification letters from CMS
just over a week ago–telling them they had won a contract, might
win a contract or had been disqualified–email alerts from
AAHomecare, VGM, NAIMES and various state and regional associations
have encouraged disqualified providers to step forward.

With CMS’ 10-day deadline for accepting or rejecting the round
one contracts set for April 3, the organizations and other industry
leaders are urging individual providers to contact the CBIC, CMS
and their congressmen with complaints.

“By switching to a system that rewards a small number of low
bidders, Medicare is turning the home medical equipment sector from
a system that competes on quality and service to a system that
treats home care like a commodity,” said AAHomecare President Tyler
Wilson. “Service has always been an integral component of home
care, and that concept is being lost under the competitive bidding
process.”

To read AAHomecare’s letters to CMS and those on Capitol Hill,
visit the association’s Web site at
www.aahomecare.org.

Add a complaint to AAHomecare’s list, to fill out the
association’s “Competitive Bidding Feedback Form,” or
contact Alex Bennewith, senior manager for government affairs, at
[email protected].

To alert VGM about a round one bid complaint, send
information/documents via fax to 800/568-7039.

To report an issue to NAIMES, which is seeking information from
providers who were disqualified in every CBA, send an email,
including all contact information, to [email protected].
Information may also be faxed to 434/572-6889.