CRE Questions ‘Secrets’ of Competitive Bidding

WASHINGTON — Bruce Levinson, senior staffer for the Center
for Regulatory Effectiveness, a regulatory watchdog organization,
is wondering what CMS is hiding.

During a March 10 Open Door Forum for home health, hospice and
DME, Levinson posed a question about the financial standards the
agency is requiring bidders to meet in the DMEPOS competitive bidding
project. The bid window for the Round 1 rebid closed in
December, and the program is set to be implemented in January
2011.

“When will [the Department of Health and Human Services] be
specifying those standards?” he asked.

“If you could submit an email, that would be great,” a CMS
representative replied, giving out the address for Joel Kaiser,
director, CMS Division of DMEPOS Policy.

Levinson emailed Kaiser and other CMS staff members that
afternoon. As of March 18, he was still waiting for a response.

Even a petition from the CRE to CMS to release the financial
standards has elicited no response. On Wednesday, CRE head Jim
Tozzi went on the record about the issue at a meeting of the
Program Advisory and Oversight Committee at CMS headquarters in
Baltimore.

That the agency hasn’t released the financial standards it plans
to hold bidders to is puzzling at the least, Levinson said.

“Why is CMS doing this? What about this competitive bidding
program are they doing that is so — I hate to use the word
‘wrong’ — but what are they trying to hide?” he asked. “Why
is CMS handling it in this sort of odd manner, one that does not
allow for transparency?”

‘Something Out of Kafka’

Last year, Levinson pointed out, President Obama issued an “open
door directive” that called for transparency throughout government
agencies. “CMS does not seem to be adhering to the spirit of that
[directive],” Levinson said.

The bidding program “is not open, it is not fair and it is ripe
for abuse. It’s not because of the HME companies; CMS is creating a
situation ripe for abuse” since any company can be eliminated
because of unstated standards, Levinson said. “This is the very
antithesis of what Congress and the president want to
accomplish.

“This is not something out of Congress,” Levinson added. “This
is something out of Kafka. [Bidders] are required to meet these
standards, but they are not allowed to know what they are. And you
are punished for not complying because you’re not given a
contract.”

CRE has another concern about CMS’ DMEPOS competitive bidding
program, Levinson said, because small businesses that do not win
contracts will be shut out of the program. Levinson said CRE has
asked CMS to allow small providers (“small” as defined by the Small
Business Administration) to participate in the Medicare program if
they accept reimbursement prices that result from the bid. However,
CMS has indicated it wants to cut back on the number of DME
providers in Medicare.

The way the current program is structured, Levinson said, is
“against everything the president has said.” It would kill hundreds
of small businesses, cost thousands of jobs.

“The secret financial standards seem to be another way to close
the small providers out,” Levinson said.

The HME sector of health care, he continued, “is one of the few
businesses that touches most people that is not too big to fail.
CMS appears determined to turn this industry into a too-big-to-fail
industry like Wall Street. There is no reason why they cannot allow
small vendors to participate at the single-payment amount.”

Which circles back, he believes, to the question of why CMS is
operating the competitive bidding program in a non-transparent
fashion.

“Not releasing financial standards, making a pretense of asking
the PAOC for advice, putting pressure on small companies —
what is CMS hiding?” Levinson asked. “Someone needs to take a look
at how CMS is administering this … There’s a real problem
here.”

‘I’m Staying Alive’

Levinson also pointed out that it isn’t just providers and HME
stakeholders who are complaining about competitive bidding. Every
day, the CRE hotline receives calls from beneficiaries, and
Levinson listens to them all.

“The beneficiaries care about this, they are frightened and they
are angry,” he said. The calls are posted on the CRE Web site
(www.thecre.com/Forum/), where visitors can also hear
the actual recorded calls or leave their own comments. Of the
hundreds of calls CRE has received, Levinson noted, he has not
heard one that favored competitive bidding.

“We have had a number of people saying online, ‘I understand you
have to save some money,’ but I have not heard any support for this
program,” Levinson said, noting that CRE has sent some 60 to 70 of
the calls to CMS.

“We have told CMS about this. They have to hear this,” he
said.

Levinson himself was surprised at “how devoted beneficiaries are
to their suppliers,” he said. Callers from all over the country,
both men and women, some in good health, some in very poor health,
have called in to object to competitive bidding and, in many cases,
laud their suppliers. Levinson has heard stories of providers
coming out in snowstorms to deliver equipment and showing up when
the power goes out to ensure their patient is OK.

As one caller from East Chatham, Conn., said: “This company has
been great with me since I got released from the hospital. I spent
a long time now on a machine. I’m alive. I’m staying alive. I have
a positive attitude towards life, and this company has been very
good with me … Don’t put the small companies out of
business.”

Said Levinson, “There is no reason to put the small businesses
out [of the program]. Until they allow small businesses to
participate — all the qualified small businesses — I
think there will be a cloud over CMS, and they are not going to
have the trust of the beneficiaries.”

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