Can Pressure Stop Competitive Bidding?

Story updated on Nov 1, 2011

ATLANTA — CMS’
competitive bidding program has hit some well-reasoned
opposition of late from some of the nation’s top economists, and
even some negative press in various newspapers around the country.
Meanwhile, as of Friday, Round 1 bid winners had still not been
released, and speculation continued following the agency’s Oct. 14
announcement about the delay.

Despite CMS’ seeming indifference to opposition, are officials
feeling the heat? Rob Brant, founder of the Accredited Medical
Equipment Providers of America, believes CMS may indeed have
reneged on some of its contract offers based on companies being
under audit.

“Local providers, manufacturers and distributors in Miami and
Orlando have been contacted by companies claiming to be bid winners
looking to sell or purchase business,” reported Brant, CEO and
general manager of City Medical Services, North Miami Beach, Fla.
“Like in 2008, some ‘bid winners’ are out of state, inexperienced
and financially bankrupt. There is also word of bid winners who are
under 100 percent audit from the DME MACs or ZPICs, and CMS may be
concerned how that will look because there is a perceived
correlation between audits and fraud.”

Wayne Stanfield said he continued to believe the delay in
announcing bid winners signaled an even bigger concern for the
agency. “They don’t have enough contractors and that’s the only
reason for the delay,” said Stanfield, president and CEO of the
National Association of Independent Medical Equipment Suppliers.
“Simple logic says they would announce it if they had the contracts
in place. I don’t think politics has anything to do with it right
now. CMS has their backs to the wall.”

Following their Sept. 26
letter to House Ways and Means Chairman Pete Stark, D-Calif.,
last month the economists sought to press the advantage by sending
four additional letters to lawmakers regarding competitive bidding.
Sens. Kent Conrad, D-N.D.; Jay Rockefeller, D-W.Va.; Olympia Snowe,
R-Maine; and Rep. Dave Camp, R-Mich., all received the now familiar
analysis that expresses grave concerns and objections to the
bidding program. According to the American Association for
Homecare, the three highest-ranking members on the Senate Finance
Committee from both parties have received the letter, as have four
key House members.

In addition, Kerry Anne McGeary, a professor of health economics
at Ball State University, contributed a critique of Medicare’s competitive bidding
system in the Oct. 21 Indianapolis Star. McGeary wrote
that the program would “do little to create a free market and may
do more harm. A poorly designed process that probably should be
fixed will soon affect Medicare beneficiaries in Indiana and the
rest of the country …

“Unfortunately, in steps inconsistent with all economic reason,”
she concluded, “it seems that Congress and CMS are assessing a
larger weight to the costs already sunk into this program rather
than considering the marginal costs and benefits of a
redesign.”

The additional scrutiny of the program may be a contributor to
CMS’ delay in announcing bid winners, but Tim Pederson, CEO of
South Dakota-based WestMed Rehab, believes pressure from the
economists and in the press will likely not stop the bidding
juggernaut. “It appears the Round 1 rebid will move forward,” said
Pederson, who also serves as president of the seven-state Midwest
Association of Medical Equipment Suppliers. “I don’t know if it
will be on schedule, because CMS has not met its schedule for
information releases thus far. It will take an act of Congress to
reverse the entire program.”

Indeed, a CMS post last week notified stakeholders of a Nov. 8 call
on the bidding program for “non-contract suppliers.” According
to a report from Inside Health Policy, sources reasoned it
was unlikely the agency would schedule the call for losing bidders
if it wasn’t ready to announce bid winners. On Friday, CMS
scheduled another call about the bid program for referral agents on
Nov. 16. (See “CMS Sets Calls
for Bid Losers, Referral Agents” for additional information on
the calls.)

Even though CMS is moving pieces into place, Seth Johnson, vice
president of government affairs for Pride Mobility Products,
Exeter, Pa., said it’s still too early to tell whether the
economists’ letter and other correspondence — including a
letter from Rep. Bruce Braley, D-Iowa, to HHS Secretary Kathleen
Sebelius and CMS Administrator Donald Berwick calling for a delay
of the program — will make a difference.

“This strong independent evidence [from the economists] against
the structure of the CMS bidding program is clear and compelling,”
said Johnson. “CMS bureaucrats have taken some pause in [conveying]
the remaining information and scheduling educational forums
necessary to advance the program in an appropriate manner, which is
certainly a positive sign. In addition, CMS Administrator Berwick
has been silent on his plans for advancement of this program in
light of the economists’ findings, which is also likely a good
sign, since any issues that occur will be on his watch.”

Johnson characterized chances of legislative relief as “very
limited” when Congress returns to Washington the week of Nov. 15
for the lame duck session. “However, our chances appear much better
for getting some form of regulatory relief in light of the four
fundamental problems with the structure of CMS’ bidding program as
outlined by the 166 economists,” he added, “and also the program
integrity issues identified by CMS in recent weeks.”

If the unfavorable score from the Congressional Budget Office
can be reworked, former AAHomecare Chairman Tom Ryan believes the
road could be paved for a palatable industry solution. In August,
the CBO set the tab to
repeal the bidding program at $20 billion.

“The [CBO score] is flawed, and that has made a potential
pay-for flawed and unrealistic,” said Ryan, president and CEO of
Homecare Concepts, Farmingdale, N.Y. “Fix the score and let the
industry decide if we can pay for a more reasonable savings
estimate. We can garner the political support to offer up an
alternative before they have decimated the industry that I have
spent 30 years in as a caring provider.

“It may be a heavy lift,” Ryan said, “but there is always a
chance [for legislative relief]. The industry has not stopped
fighting, and I hope all HomeCare readers are in the
trenches fighting, because this is not over.”

View the letters to members of Congress and related articles
from the economists.

Read the letter from Braley to HHS Secretary Sebelius and CMS
Administrator Berwick on the VGM
website.

View more competitive bidding
stories.