Message No. 1: Stop Competitive Bidding

Washington — HME stakeholders went to Washington earlier this month with a message. Lots of messages, in fact.

In 300 Capitol Hill visits, more than 250 providers and others attached to the industry asked senators and representatives to stop competitive bidding, reform Medicare’s oxygen payment system, repeal the 36-month cap, restore the 9.5 percent cut to complex rehab and adopt the American Association for Homecare’s 13-point anti-fraud plan.

“Nobody’s here because times are good,” said AAHomecare President and CEO Tyler Wilson. “Most of us think HME is under assault. People feel their backs are against the wall. Everyone is fighting mad, and all of us are looking to change the direction Medicare is heading.”

On the list of asks, however, competitive bidding was the headliner for most participating in AAHomecare’s lobby day, held in conjunction with the association’s Legislative Conference June 1-3.

“Our mission from Florida was really to talk about competitive bidding,” said Rob Brant of City Medical Services in North Miami Beach, Fla. “What is happening with oxygen affects us, but if we don’t get some help on competitive bidding, we’re dead.”

John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers, agreed. “Nine out of 10 DME providers are targeted for elimination,” he said during a discussion panel. “Everyone likes to think, ‘Maybe I can be that one guy.’ But you know what? You can’t all be that one guy. Companies are going to fall.”

The industry got some sympathy from Rep. Betty Sutton, D-Ohio. “The way in which the [competitive bidding] program was carried out left a lot to be desired,” she told the conference. “The application process was exclusive and muddled. The bidding process … disenfranchised qualified providers while reducing access to needed devices and therapy.”

Although the program was eventually delayed, Sutton noted, “to many of us in Congress it seems that CMS took the letter of the 2008 delay but not the intent, which is the most important part.”

Sutton had earlier spearheaded a sign-on letter asking CMS to halt the bidding program before the Interim Final Rule took effect April 18. The letter, which garnered signatures from 84 representatives in the House, pointed out that of thousands of providers in the initial bidding areas, only 376 were deemed to have met the bidding program requirements.

“That seems absurd,” Sutton said. “As a growing number of seniors enters the Medicare program, it’s important that we take care to maintain an adequate number of qualified providers to address demand for care in the home.”

Brant lamented, however, that the legislators from his state were not all as supportive. While some said they didn’t want bidding to go forward, others said they thought changes to the program could make it work. “And some said if you want it to stop, you’re going to have to pay for it,” Brant said.

Even if CMS tweaks the program, he added, “the bottom line is if you lose a contract, you’re out of Medicare.”

Summed up AAHomecare’s Wilson, “It’s critical that we hold Congress’ feet to the fire and talk about killing the program and driving a stake through its heart.”

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

The industry got a bit of good news at a June 4 meeting of the Program Advisory and Oversight Committee when CMS announced the Round One rebid would not be implemented until January 2011, although the bidding window will open this fall. (See page 10 for a tentative timeline.)

At the meeting, CMS officials presented information on improvements to the online bidding system, 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 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. “The PAOC did a really good job of pulling out some of the fundamental things CMS needs to address,” agreed Cara Bachenheimer, senior vice president of government relations for Elyria, Ohio-based Invacare. 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 CMS is working to elevate the caliber of bidders by requiring that they be licensed in the state where they are bidding. 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.

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

But 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, Brant told the group that someone new to the CPAP business, for example, would likely formulate a bid based only on what the equipment costs.

He explained 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 not only a premium device with download capability but also multiple patient visits.

Another point of controversy was bid winners who sell their companies.

“Many winning bidder companies last year tried to sell their company once they secured a bid,” Johnson said. “The issue raised at the PAOC was that CMS should prohibit the sale or transfer of a winning bid, essentially to force winners to provide products and services at the agreed upon bid price, and also hopefully prevent bottom-feeder bids that are simply submitted to secure a bid only to turn around and sell it.”

But “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,” said meeting attendee Dave McCausland, senior vice president of planning and government affairs for The Roho Group, Belleville, Ill.

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.

“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,” McCausland said, adding that “is not really reasonable.”

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

That issue and others related to access and quality could be addressed as the PAOC meets again. Working with the industry, Edwards said, the PAOC “will try to remove the land mines before all this rolls out.”

But Bachenheimer said she hopes bidding will never roll out: “Obviously, we want to get rid of the program.”