CRE Petitions to Halt Competitive Bidding

WASHINGTON — The Center for Regulatory Effectiveness has
filed a petition to compel the Centers for Medicare and Medicaid
Services to halt DMEPOS
competitive bidding until it publishes financial standards for
the program as required by law.

Bidding for the Round 1 rebid is currently underway, with the
bid window scheduled to close on Monday. CRE, a regulatory watchdog
organization, has already challenged CMS’ handling of the program
saying it is discriminatory, does not protect small businesses and
is not compliant with the Data Quality Act.

Jim Tozzi, a CRE board member, said that CMS has not yet
responded to the petition, which was filed Nov. 20.

“The easy way out for CMS is to not answer the petition,” Tozzi
said. “If they say no … I can go to court. But I can’t go to
court for a long time unless they act on it.

“I think they are going to have a hard time in court if they do
not release that document,” Tozzi added. “We have the petition, the
complaints and we are going to work on some congressional
investigations of the program. We have enough time [before it is
implemented] to change the program somewhat.”

Round 1 is set to go live Jan. 1, 2011.

In its petition, CRE points out that the Social Security Act
“prevents CMS from awarding competitive bidding contracts to any
entity unless they meet the agency’s specified financial
standards.

“Because no such standards have been specified, no contracts may
be awarded,” the petition says, noting that the same issue cropped
up in the initial Round 1, which was aborted because of numerous
problems. The petition also points out that CMS did not disclose
its financial scoring system in that round.

“Congress found the agency’s lack of transparency on this issue
to be unacceptable and prohibited any DMEPOS competitive bid
contract from being awarded unless the entity met the financial
standards ‘specified by the Secretary [of the Department of Health
and Human Services],’” the petition reads.

The petition points out that providers currently have no way to
know whether or not they are fulfilling the financial standards
when they place their bids. “There are currently no publicly
available objective financials standards or algorithm which a
qualified person, such as a company CFO or accountant, could use to
determine whether or not the entity met CMS’ financial
qualification requirements,” CRE asserts.

Yet, CMS has said that “if a bid is not bona fide, we will
eliminate the bid from consideration,” CRE notes.

CMS has “published only vague generalities as to what financial
standards have been decided upon by CMS,” according to the
petition. “If companies that do not meet the standards could
determine so prior to bidding, they could save themselves the
expense of developing and submitting bids,” the petition
states.

As well, the petition says, small companies might have expanded
their businesses to participate in competitive bidding only to
discover that “the debt taken to finance the expansion would then
make them ineligible for the CMS program.”

The petition is the second time CRE has
challenged CMS to make changes to the bidding program. CRE has
already called on the agency to allow any small provider who fits
the accepted governmental definition to participate in Medicare at
the competitive bidding price. Currently, CMS has said only the
winning providers will be allowed to service Medicare patients in
the nine Round 1 bid areas, a plan that stakeholders say could
eliminate 90 percent of providers from the program.

Tozzi doesn’t think CMS will go for that idea. “All regulators
have the same DNA,” he said. “When you have waste, fraud and abuse,
the old bureaucratic solution is to minimize the number of firms to
regulate. They want to get the numbers [of HME providers] down to a
small number.”

Even as the CRE team continues to challenge CMS on bidding
issues, hundreds of providers and beneficiaries have aired their
complaints about the program on the CRE Web site. Waterloo,
Iowa-based VGM has encouraged its members to funnel complaints
about competitive bidding to CRE so it can track them.

“They are really being hurt,” Tozzi said about HME providers.
“They’re mainly worried that very few of them are going to be
around — and they’re right.”

As to the complaints from beneficiaries, Tozzi said, “their
major concern is, anyone can sell us the hardware; we’re worried
about the service.”

A look at the Web site forum with its 24 pages of comments shows
beneficiaries to be almost panicked about their care prospects, and
that is echoed by providers’ comments.

One Boston-based respiratory company reported: “A small DME
company in Massachusetts is deciding not to continue in the
Medicare program and will be filing Chapter 11 soon. Twenty-nine
out of 75 oxygen patients are capped. We were approached by this
company to help them out. Unfortunately for the patients, the
company cannot find a provider willing to service 29 capped
patients who all require tanks and liquid. These patients were sent
a letter stating that in 30 days they will not have a
provider.”

Wrote a beneficiary: “Right now, I have a company that I enjoy,
they’ve always been there for me, midnight, 2 in the morning, if
the power goes out. They’re bringing me down extra oxygen when I
need it and I’ve grown to depend on [them]. I’ve had them for 12
years and I don’t want somebody coming in and telling me that I
have to use somebody from another town or another area or even
someone else in this town because I feel this is my right and my
choice and it’s one of the freedoms I still enjoy and have.”

Tozzi believes the forum provides more than just a place to air
concerns. “CMS reads it; so does congressional staff. That shows
that these are real constituents and not just CRE.”

But he stressed that providers need to do more than post their
complaints on the CRE site. “What would be helpful is if they sent
[their complaints] to CMS and sent a copy to us,” Tozzi said. “We
will track it.”

Complaints should be mailed to the CMS Competitive Acquisition
Ombudsman, Tozzi said. “The reason is that the ombudsman’s whole
job is to look at complaints and they are not in the program, so
they are marching to a different tune,” he said. The ombudsman
reports to Congress.

Complaints can be sent to:

Ms. Tangita Daramola
Acting Competitive Acquisition Ombudsman
Centers for Medicare & Medicaid Services
U.S. Dept. of Health and Human Services
7500 Security Blvd.
Baltimore, MD 21244

Copies of complaints, along with permission for CRE to use them
in discussions with CMS, can be emailed to [email protected], or via
U.S. mail to:

The Center for Regulatory Effectiveness
1601 Connecticut Ave., NW, Suite 500
Washington, DC 20009

“Our strategy is to show [CMS] the complaints and hopefully,
they are going to have to do something to fix it. If we are going
to make any reforms in the process before [the implementation
date], we need those complaints.”

For more information, see the CRE Web site at www.thecre.com/blog/.

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