Round One Numbers Alarming: Of 1,005 Bidders, 630 Were Disqualified

WASHINGTON–Competitive bidding numbers gleaned from CMS
officials at a briefing for House of Representatives staff
ricocheted around the country last week, and while much of the data
was confusing, one thing was clear: Nearly 63 percent of the bids
in round one were disqualified.

Legislative staffers at the House briefing on Tuesday reported
CMS revealed that of the 1,005 unique bidders in round one, 630
were disqualified due to insufficient applications.

The news was startling, observers said, particularly because CMS
had initially expected more than 28,000 bidders across the 10
product categories and 10 MSAs in round one. As well, the
disqualification of so many bidders was inordinately high.

“The fact that CMS disqualified 63 percent of the 1,005
bidders in round one suggests that this whole process got seriously
off track somewhere,” said Tyler J. Wilson, president of the
American Association for Homecare.

The revelation served as a further indictment of CMS and its
execution of the competitive bidding process. The agency has
recently come under fire for improperly disqualifying properly
submitted bids, giving providers only 10 days to accept or reject a
contract offer and failing to notify providers of a deficiency in
their bidding documentation.

At the standing-room-only briefing, legislative staffers also
elicited the following data from CMS staff, according to
AAHomecare:

–The 1,005 unique bidders submitted 6,358 bids for the 10
product categories in the 10 bidding areas;
–1,335 contract offers were ultimately made to either 318, 316 or
206 unique bidders. (Different numbers were given, although
AAHomecare said the variation could reflect networks that
bid);
–1,254 contract offers were accepted (96 percent), which CMS said
would result in DMEPOS savings to Medicare of 26 percent.

In addition, according to Rob Brant, president of the Accredited
Medical Equipment Providers of America, a legislative staffer from
Texas told AMEPA that of the disqualified bidders, 404 were
reported to have bid too high to qualify, and that this was
determined after contracts were awarded. The staffer also said 283
were within the range to win but were disqualified.

“These numbers do not add up,” said Brant, whose
company, City Medical Services in North Miami Beach, Fla., bid and
was disqualified. “One explanation is that a single bidder
… could be a network of 20 companies, so the true number of
disqualified companies that bid could run [much higher]. That would
also affect the number of disqualified individual bidding companies
from 630 into the thousands,” Brant speculated.

Michael Reinemer, vice president of communications and policy
for AAHomecare, said he was hopeful CMS might clarify the figures
in another briefing for Senate staff held on Friday. A wrap-up of
what happened there should emerge this week, he said.

Both Reinemer and Brant said House staffers at the Tuesday
session questioned CMS officials about a variety of issues,
especially why bidders supposedly lacking documentation were never
informed.

According to Brant, “When asked repeatedly why they did
not inform applicants of the supposed missing documentation, one
CMS staffer used the analogy of making an application to college:
‘Colleges either accept your application or they reject it, they do
not call you to let you know that you didn’t put something
in.’ They added, ‘All of the applicants are big boys and they know
they are supposed to meet the requirements.’”

Staffers described CMS officials as “flustered” at
the questions; congressional staff were “skeptical”
about the CMS presentation and were “generally sympathetic to
the concerns raised by disqualified bidders in the first 10 bid
areas,” Reinemer said.

“From the feedback we’ve gotten … [congressional] staff
was very well informed about the issues that emerged in round one
and asked very pointed questions, so we hope this translates into
even broader [support] for the suspension of round one.”

Recently, the industry got a boost on that front when House
Minority Leader Rep. John Boehner, R-Ohio, called on Department of
Health and Human Services Secretary Michael Leavitt to delay round
one. Boehner, who supports the idea of competitive bidding, asked
for an immediate delay “until the mistakes and irregularities
can be remedied.”

On Tuesday, AAHomecare sent letters to chairmen of the House
Ways and Means Committee, the Ways and Means Health Subcommittee,
the House Energy and Commerce Committee, the Energy and Commerce
Health Subcommittee and the Senate Finance Committee detailing the
problems in round one and reiterating a call for its
suspension.

But even as the letters crossed Capitol Hill, CMS continued its
implementation of the bidding project–leaving some providers faced
with yet another tough decision.

Both Brant and Beth Bowen, executive director of the North
Carolina Association of Medical Equipment Services, said providers
in the Miami, Orlando and Charlotte CBAs had received contract
offers on Monday for product categories they were previously
notified they had not won.

“As mentioned in our letter to you dated March 20, 2008,
additional contracts would be offered if additional contracts were
needed. It has been determined that additional contracts are
needed,” read a letter from the CBIC.

The letter then outlined the offer but said documentation had to
be postmarked by Friday, April 25. That gave the providers only
four days to respond, Brant said.