CMS Details Round One Damage Claims Process

BALTIMORE‑CMS has proposed a process to evaluate damage
claims from Round One bid winners whose contracts were terminated
when Congress delayed the competitive bidding program
after a two-week run in July of 2008.

“Any aggrieved supplier that was awarded a contract in
2008 for the Round One DMEPOS competitive bidding program and
believes it has suffered damages is eligible to submit a
claim,” the agency said.

Included as part of CMS’ 2010 physician fee schedule
proposed rule, set to be published in the July 13 Federal
Register, a section of the massive 1,128-page document details
the claims process, along with the information any bid winners who
do file claims will have to submit.

The Medicare Improvements for Patients and Providers Act
(MIPPA), passed by Congress on July 15, 2008, ended the first round
of bidding after its July 1 implementation following complaints
from beneficiaries and an outcry from HME stakeholders. CMS is now
gearing up for a Round One rebid in nine of the original 10
competitive bidding areas (minus Puerto Rico), with the bid window
to open this fall.

While CMS said it was not suggesting there would not be
legitimate claims for damages, the agency included a list of
factors to be “considered” by Round One winners before
deciding to submit a claim.

Among them, CMS noted that winning a contract “did not
guarantee any amount of business or profits from the bidding
program.” The agency also said the contract stipulated that
CMS would not pay for
any expenses incurred for the work performed under the contract,
and that providers were allowed to keep any new customers they may
have obtained as a result of the bid implementation.

“Based on these reasons and because there have been so few
inquiries or responses to the reference in the MIPPA to damages
(fewer than seven suppliers),” CMS said, “we believe
that as few as 1 percent of the 329 winning suppliers may make a
claim for damages. However, as a high estimate, we would estimate
that approximately 76 percent of the suppliers (250) may submit a
claim.”

Subcontractors are not eligible to submit damage claims.

In determining whether damages are warranted, CMS said it would
look at the provider’s estimated and historic capacity and
any expansion plans that were submitted as part of the bid, and
also would review actions taken to meet the provider’s
“responsibility” under contract law to mitigate
expenses following a stop-work order.

No damages will be offered for the cost of bid submission.

The fee schedule would take effect Jan.1, 2010, and any claims
must be filed within 90 days of that date, CMS said. The claims are
to be submitted to CMS’ Competitive Bidding Implementation
Contractor (Palmetto GBA), which will conduct the first level of
review and then make recommendations to CMS.

Also in the new fee schedule rule, CMS proposes revising the
definition of a “grandfathered” item to include all
rented items within a product category. “Thus, if a supplier
chooses to become a grandfathered supplier for any item in a
product category, it must agree to be a grandfathered supplier for
all items it is renting in that product category at the time the
competitive bidding program goes into effect, rather than making
separate grandfathering choices for each individual Health Care
Common Procedure Coding System (HCPCS) code.”

CMS will accept comments on the proposed physician fee schedule
rule until Aug. 31. See the full text of the proposed rule for
instructions on commenting at http://www.federalregister.gov/OFRUpload/OFRData/2009-15835_PI.pdf

See a fact sheet on the proposed claims process at
http://www.dmecompetitivebid.com/palmetto/CBIC.nsf/DocsCat/852573EE00644C00852575E60067B814

See a fact sheet on the proposed grandfathering provisions
at
http://www.dmecompetitivebid.com/palmetto/CBIC.nsf/DocsCat/852573EE00644C00852575E600673BDF