Newest Competitive Bidding Debacle: Providers Might Have Misstated Bids

ATLANTA–An unknown number of home medical equipment providers
got an unwelcome New Year surprise: letters from Competitive
Bidding Implementation Contractor Palmetto GBA questioning their
bids and seeking further documentation.

Providers were given until today to respond to the inquiries or
face disqualification of their bids.

“We got a registered letter [on Dec. 28], and basically it says
that they are contacting us about an urgent bid evaluation that
could affect our bid and requires an immediate response,” said
Jerry Jeanes of Choice Medical in Denton, Texas. “The letter I have
has five HCPCS codes on it and says that they want a dealer price
list and invoice or something that details the actual cost for
these five items.”

Jeanes was one of at least 15 providers who reported receiving
the letters to Waterloo, Iowa-based buying group VGM last week,
according to Mark Higley, vice president-development. While it is
unclear how many providers received such letters or whether CMS was
sampling the bids or evaluating every single bid, the issue noted
in each of the letters VGM heard about was the same: the bids
themselves, Higley said.

“It is obvious that these letters are for bids approximately
one-tenth of the purchase price,” he said. “I don’t think these
were low-ball bids; the providers intended to submit an appropriate
bid, but now they could be disqualified.”

Higley said he believes some providers became confused by the
bid form, which called for them to calculate their capacity in
months but to enter the actual bid amount as a single purchase
price.

“My concern is that some providers bid a monthly rental amount
rather than the purchase price,” he said.

Jeanes is sure he did just that. “What I think happened in my
case is that when I looked at the instruction sheet I got from
CBIC, when you get to some of these HCPCS codes, [it] says that one
unit equals one monthly rental. So when I calculated my bid, I
deducted whatever the [discount] was I was going to reduce my
amount by and I divided the base by 10, and that was the amount I
provided.”

For example, he said, the allowable was $210.70 for a pair of
elevating leg rests. “I took my discount off of that, and divided
the balance by 10, and that’s what I submitted to them.

“This is my fault, obviously, based on what I interpret now to
be confusing instructions,” Jeanes said sadly. “We jumped through
all these hoops and spent all this money, and to be disqualified
because of this just makes me sick.”

The threat of disqualification is very real for Jeanes and the
other providers who received such letters, Higley said, because
their bids cannot be changed. The letters themselves reiterate
that: “It is important to note that bid amounts may not now be
revised. As stated in the [Request for Bids], once the bidding
window closes, all bids are considered final and no further
amendments to the bids are permitted.”

So what hope do recipients of the letters have?

“While the CBIC will not automatically accept bids approximating
one-tenth (the monthly rental amount) in a purchased item category,
there may exist a chance of bid acceptance if the provider
documents the acquisition cost and includes an explanatory letter
with the submission,” Higley said.

Government officials would not say exactly how many letters went
out, according to Walt Gorski, vice president of government
relations for the American Association for Homecare, who was
enlisted by Higley to pursue the matter with CMS.

As of Friday, Gorski said, CMS had not made a determination as
to what it will do. But providers who respond to the letters with
strong documentation could help their own cases.

“They want to see what we are telling them. A supplier has to be
very up front and say, ‘A mistake was made; I bid one-tenth of what
I wanted to bid,’” Gorski said.

“From AAHomecare’s perspective, in those cases when a supplier
bid one-tenth of what they wanted to bid, it would seem there would
be an easy patch,” he added. “Whether CMS will do that I guess
depends on how much it affects capacity. We are very concerned that
small suppliers who found this system very confusing to begin with
will be left out of the program because of a simple error. Even the
IRS lets you correct mistakes.”

For his part, Jeanes is hopeful that CMS will allow a fix to an
honest mistake. He was faxing all the requested documentation on
Thursday.

“I am going to send several pages from the instruction sheet and
show them I didn’t make this up and that there was a reason for
what I did and hope they will be forgiving and understanding,” he
said. “All I can do at this time is keep my fingers
crossed.”