Stark Says He’ll Try to Stop Competitive Bidding

WASHINGTON

At a May 6 hearing convened by the House Ways and Means Health Subcommittee, sentiment swung to HME as Chairman Fortney “Pete” Stark, D-Calif., said he would try to stop competitive bidding.

Calling the program “somewhere between flawed and lousy,” Stark said he was unsure if repeal legislation could pass this year — round one of the program is set to take effect July 1 in 10 initial MSAs — but added he would work with the industry to try to block competitive bidding despite the costs of ending the program.

The lead-off witness at the hearing was acting CMS Administrator Kerry Weems, who testified that “[competitive bidding] will reduce beneficiary out-of-pocket costs, improve the accuracy of Medicare’s DMEPOS payments, help combat fraud and ensure beneficiary access to high quality DMEPOS items and services.”

But members of the subcommittee grilled Weems about problems with the program, including the disqualification of 63 percent of the bidders in round one, choosing median pricing rather than lowest pricing and not allowing willing providers to supply products at the lowest price.

Reps. Lloyd Doggett, D-Texas; Phil English, R-Pa.; Sam Johnson, R-Texas; Mike Thompson, D-Calif.; and Pat Tiberi, R-Ohio, all questioned Weems on a range of issues including fraud, transparency in the bidding process, inexperienced contract winners and accreditation, according to a report from the American Association for Homecare.

At one point, Rep. Xavier Becerra, D-Calif., pressed Weems on unaccredited subcontractors in the bidding program. While the acting CMS chief said the accreditation requirement applies only to contract suppliers, he also said it would be a “bad business decision” for a contract winner to enter into a relationship with a non-accredited company.

Becerra said subcontractors should be held responsible as well and highlighted the fact that those with no experience could be utilized. He also noted it seems counterintuitive to have competitive bidding yet limit the number of contractors, stating that a more open competitive process would ensure better prices.

But Weems’ troubles really began when Stark asked how round one prices were set from the bids. As Weems explained how median prices were determined to be the best choice, Stark commented, “Sounds like you’re price-setting to me. Sometimes you’re bidding, sometimes you’re not. It’s at your convenience.”

Stark also asked what CMS had learned from round one and what would change for round two. Weems’ response: “I can’t think of anything I would change.” Stark’s questions ended with, “I think I’ve seen you’re a useless witness.”

“There was not a single member of the [subcommittee who] was in support of CMS,” reported VGM’s John Gallagher, vice president of government relations for the Waterloo, Iowa-based member services group.

Other witnesses testifying at the hearing included Kathleen M. King, director, Health Care, U.S. Government Accountability Office; Peter W. Thomas, health task force co-chair for the Consortium for Citizens with Disabilities; and Thomas J. Hoerger, Ph.D., a senior fellow at the Research Triangle Institute (RTI), a contractor that studied the demonstration projects for competitive bidding.

But it was Tom Ryan, former AAHomecare chairman and CEO of Homecare Concepts, Farmingdale, N.Y., whose testimony on the industry’s concerns about competitive bidding drew the most attention. “This Medicare bidding program is a train wreck. But as this program jumps off the tracks, the attitude of CMS is clearly ‘full steam ahead,’” Ryan told the subcommittee.

Ryan called for an immediate halt to the program and said “the wide range of problems and questions about the program must be independently evaluated, and an alternative process to determine payment rates for home medical equipment must be explored.”

Accounts from various industry groups agreed Ryan made a good case for HME, presenting concerns over beneficiary access, unsustainable pricing and questionable contract denials without proper recourse.

“The Medicare bidding program is a poorly conceived and fundamentally flawed program that is now exhibiting many of the serious breakdowns that were predictable based on its failure to recognize and account for the true nature of the way home medical equipment is provided to Medicare beneficiaries,” Ryan testified.

“These breakdowns have been evident since the start of the round one bidding process in early 2007, throughout the bid evaluation process and right through the recent awarding of contracts … Errors and flaws that have emerged in round one of bidding will be embedded in the program if CMS rushes to implement round two in 70 additional areas in the months ahead.”

Though his remarks were well received, Ryan also found himself on the spot when Stark asked if providers were prepared to have their reimbursements adjusted downward to offset the budgetary cost of ending competitive bidding.

Stark noted the Congressional Budget Office said stopping the program would cost $6 billion over five years. Because Congress is working under a “pay-go” policy where expenses must be matched with reductions, the industry would have to come up with a way to pay for eliminating the Medicare bid.

Ryan answered “yes” when Stark asked if providers would be “willing to come up with $6 billion to get rid of bidding.”

“Stark said that he didn’t plan to wipe the slate clean and asked if the industry would be willing to pay for it,” Gallagher said. He added that Ryan’s response was “the only responsible answer,” but it has implications for the future of the industry. “The good news is that members of Congress are saying ‘Yes, this is a train wreck.’ The bad news is we have to find a way to pay for this train wreck …

“If providers are able to adjust to a realistic fee change and still provide service to beneficiaries, then we cannot just delay competitive bidding but repeal it,” Gallagher said.

Although the hearing has seemingly opened a crack in competitive bidding’s door, not all House members — or HME groups — had the same reaction to its outcome. Ways and Means Committee Ranking Member Rep. Jim McCrery, R-La., advocated going forward with competitive bidding, saying, “We have to hold out hope for helping to control cost.”

And an email from the Accredited Medical Equipment Providers of America summarizing the hearing pointed out there may be no quick fix. “It seems very clear that we can expect no help from Congress on the first round,” the message said. “It also seems almost as clear that we can expect little or no help on the second round either.”

There’s no doubt the short timeframe to delay round one is a stumbling block for providers, with only a few weeks until its July 1 implementation. After the hearing, a report from Congress Daily included this quote from Stark on a possible legislative fix: “We’ll look at it, try to find a solution, and as I said, if we don’t do it this year, we will definitely do it next year, but that may be too late.”

To view a full transcript of the hearing, visit http://waysandmeans.house.gov/hearings.asp.