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.