PAOC Sets ‘Right Tone’ on NCB, but Will CMS Fix Flaws?

BALTIMORE — Industry representatives said they left
Thursday’s meeting of the Program Advisory and Oversight Committee
cautiously optimistic that their concerns about the myriad issues
surrounding national
competitive bidding had been heard.

There was, however, no doubt that CMS is intent on implementing
the project, they said.

“I thought the meeting reviewed a number of important issues
related to the operation of the program,” said Walt Gorski, vice
president of government relations for the American Association for Homecare
and a PAOC member. “I think we have a way to go, but clearly, the
tone of this meeting was a step in the right direction.

“Keep in mind that CMS has no discretion. They have to move
forward with this program under the mandate of Congress,” he
pointed out, noting that only Congress can repeal the bidding
project.

The 17-member PAOC was formed to advise CMS on the restart of
the bidding program, with Round One now set to be implemented in
January 2011 (see top story). The bidding window will open this
fall.

The meeting included information on how CMS believes it has
improved the online bidding system; program requirements and bidder
responsibilities; financial documentation; licensure, accreditation
and subcontracting requirements; new supplier issues; and mail
order for diabetic testing supplies.

Seth Johnson, vice president of government relations for
Pride
Mobility Products, Exeter, Pa., said he, too, was somewhat
encouraged by the session.

“Overall, I thought that Jonathan Blum, the new director of
[CMS’ Center for Medicare Management], set the right tone and made
it clear that the new administration wants to work with the
industry in an open and collaborative manner,” Johnson said. Blum
chaired the all-day meeting.

Cara Bachenheimer, senior vice president of government relations
for Elyria, Ohio-based Invacare, was more cautious in her
assessment.

“The PAOC did a really good job of pulling out some of the
fundamental things CMS needs to address,” she said. However, she
added, “It’s difficult to tell if CMS is going to take the PAOC
seriously. That’s a question mark. It is very much an outstanding
issue whether CMS is willing to resolve what consumers and
providers see as fatal flaws in the program.”

While a number of serious issues remain, the meeting showed the
agency at least seems open to hearing the concerns, other
stakeholders said.

PAOC member Doran Edwards, MD, of Advanced Healthcare Consulting
in Columbia, S.C., said the agency is working to elevate the
caliber of bidders by requiring that they be licensed in the state
where they are bidding to provide services before they place their
bids. He also noted the bidding process should be more
user-friendly. And he hopes some low-ball bids will be eliminated
by requiring back-up documentation such as invoices and also by
prohibiting the transfer of contracts when winning bidders sell
their businesses.

New providers bidding for an area where they have never had a
presence before will have some added restrictions, Edwards said. In
addition to being accredited and holding a surety bond (both of
which are required of DMEPOS providers by Sept. 30 and Oct. 2,
respectively), they must be licensed where required, provide a plan
of care and show they can handle the workload.

“These are all positive steps, and these are improvements that
need to be done,” Edwards said.

Serious Issues Unresolved

Several critical issues that have not been resolved relate to
awarding contracts to providers who have no experience in that
product category or no presence in a competitive bidding area, and
how CMS determines capacity for the CBAs.

“[The PAOC] clearly felt very strongly that you can’t possibly
award a contract to someone who has no experience in that area,”
Bachenheimer said.

During a public comment period, the point was hammered home by
provider Rob Brant of City Medical Services in North
Miami Beach, Fla., who told the group that someone new to the CPAP
business, for example, would likely formulate a bid based only on
what the equipment costs.

A bidder unfamiliar with sleep therapy would not take into
account the total cost of providing the services, Brant explained,
noting that only a provider experienced in providing CPAPs —
those who are “learning to live with” Medicare’s new policies
— would understand all the requirements, which now encompass
multiple patient visits.

Another point of controversy was the financials requirement.

According to Brant, the PAOC “raised the issue about three years
of financials being reduced to only one,” he said. “The PAOC felt
that this will allow unqualified companies without long-term
history the ability to continue to place unrealistic low bids in
order to win and make a name for themselves in the marketplace or
to sell their business.”

But the day’s central discussion focused on capacity, said
meeting attendee Dave McCausland.

“Certainly the most discussed, debated and contentious topic of
the day was ‘capacity,’ how CMS calculated capacity and how much a
winning bidder could really grow and in how long. A major point of
concern was situations where a winning bidder had little if any
history for a specific product, within a specific competitive
bidding area, and they were believed, assumed, expected to manage
20 percent of the market capacity,” said McCausland, senior vice
president of planning and government affairs for The ROHO Group, Belleville,
Ill. That’s “not really reasonable,” he said.

At question is how CMS calculated capacity in the initial Round
One. The agency determined the number of winning bidders based on
their stated capacity to grow their business, but stakeholders have
argued the numbers of providers who won contracts to service the
CBAs were way too few.

“They miscalculated the number of providers needed to service
the beneficiaries in the competitive bidding area,” Johnson said.
“They didn’t have enough to fill up the capacity bucket.”

During the comment period, McCausland suggested that CMS
establish a minimum threshold “of demonstrated, historic capacity
within the pool of bid winners, just like they have a threshold for
a minimum percentage of small provider winners.”

Capacity “remains an issue to explore,” said AAHomecare’s
Gorski, adding that and numerous other issues related to access and
quality could be addressed as the PAOC meets again in the
summer.

Johnson said CMS official Joel Kaiser noted the competitive
bidding Interim Final Rule addressed only those changes stipulated
under last year’s Medicare Improvements for Patients and Providers
Act; the slowed
timeline for Round One allows CMS to work with the
industry.

In that time, Johnson said, “clearly, providers need to continue
to educate their legislators on the negative impacts of competitive
bidding and the effect on the beneficiaries they serve. That
advocacy effort needs to continue.”

Working with the industry is what the PAOC intends to do,
Edwards said. “We will try to remove the landmines before all this
rolls out,” he said.

But Bachenheimer said she hopes the program will never roll out.
“Nothing is set in stone as far as I’m concerned,” she emphasized.
“Obviously, we want to get rid of the program.”

An overview of the PAOC and a list of committee members are
available on the
CMS Web site.