Rob Brant is the owner of City Medical Services, North Miami Beach, Fla., and president of the Accredited Medical Equipment Providers of America
Editor's Note: Among other arguments against competitive bidding, provider Rob Brant believes one of its goals has already been achieved: The number of oxygen providers has dropped significantly since last year, even though the bidding roll-out was delayed after an implementation of only two weeks. "In April 2008, there were 501 oxygen providers listed in the Miami MSA," he reported. "Today, medicare.gov states that there are only 388 oxygen providers listed in the Miami MSA, a reduction of 113 providers."
After attending a June 4 meeting of the Program Advisory and Oversight Committee, held to discuss the rebid of Round One, Brant sent along these thoughts.
"Medicare told me they resolved the problems from last year's competitive bidding program, but if you hear differently at the PAOC meeting, I want to know about it."
That's what Congresswoman Ginny Brown-Waite, R-Fla., who serves on the Health Subcommittee of the House Ways and Means Committee, told me during a meeting in her Washington office.
Unfortunately for her constituents in the Round One Orlando MSA, little has changed. The competitive bidding program in DMEPOS is still a bid without financial accountability that will allow unqualified companies to low-ball bid to achieve their goal: not the ability to continue serving patients but to sell their company after winning the bid.
Lowest Bidder Selling Out to the Highest Bidder
A key fundamental flaw, which still exists, is that bid winners can still sell their companies and transfer their bid contract to the new owners. This resulted in companies that had no intention and ability to provide products and services to patients offering unrealistic low bids with the intent of selling a worthless business for something.
In the Polk County demonstration project a large national company bought a bid winner, and the concept snowballed from there. Last year, bid winners received calls from desperate bid losers asking to buy their companies. When common sense revealed that a bid-winning business could not survive with an average 26 percent cut in reimbursement, bid winners began calling existing companies announcing that their businesses were now for sale.
When the topic came up at the PAOC meeting, CMS officials explained that Medicare providers will always have the right to sell their companies. One of the first suggestions from the public comments was by a provider in a Round One MSA. She suggested that if the program continues, bid winners should not be allowed to transfer their contract to the new owners. I applaud this idea and feel it would help keep bids at an attempted honest level.
No History of Providing Products and Services
This was a topic that nearly the entire PAOC committee questioned: "How can a company that has never provided products and services before be allowed to win a bid?" PAOC members commented that "you don't want on-the-job training when it comes to products that provide life support."
The most basic argument floating around the table was that these companies would place unrealistic low bids in order to win without knowing the requirements of providing expensive services. When asked for an explanation of why this still exists, a CMS representative answered, "It will increase competition."
During the public comment period, I used my time to talk about how the new CPAP requirements would affect the uninformed bidder. I explained that a company that does not currently provide CPAP would most likely choose to bid based on the least expensive CPAP machine available.
CMS' new policy, which began in November, requires a premium CPAP device with download capability, multiple visits to the patient's house to assure compliance and additional time spent downloading reports and communicating with the doctor to make sure that the patient is using the device according to the new requirements.
Obviously a company that has never provided CPAP before will bid at a much lower rate based on a single delivery of the least expensive CPAP compared to the actual provision of premium products and necessary services.
Licensure
One of the only significant changes [in the bidding process] is that CMS will now disqualify companies that do not have state oxygen and home medical equipment licenses in place before they bid. Unfortunately, only a few states require licensure, and it was not made clear whether the license would be sent with hard copy documents or if CMS would check each applicant against state records.
Last year, nine of the 44 oxygen bid winners in Florida's Miami and Orlando MSAs did not have medical oxygen retailer licenses from the Florida Department of Health. Additionally, CPAP and enteral feed bid winners from California, Ohio, New York and other states failed to obtain a home medical equipment license from Florida's Agency for Health Care Administration. The previous Round One bid required providers to be licensed.
When CMS was made aware of the unlicensed bid winners, those companies were not disqualified. When asked, CMS stated that those companies would have to wait until they obtained the proper licenses before they could participate as bid winners, but they were merely following state laws.
Transparency
Other issues were brought up about needing only one year of financial records compared to three, and new subcontracting rules that require subcontractors to be accredited. But providers located hundreds of miles outside an MSA could still win a bid without having any subcontract agreements in place proving they could service an area.
The underlying problem is that the members of the PAOC and attendees still do not know how CMS evaluates a company's ability to cover an area, how capacity is calculated and what constitutes a valid bid that a business could live with without declaring bankruptcy. When asked at the meeting, CMS answered that [last year] they did question a bid that they thought was too low, but the bidder provided an invoice to prove the company could purchase a product at that price. The question about providing the product to the patient, training the patient, billing Medicare and providing maintenance and service was never discussed.
The PAOC did a commendable job in trying to make the competitive bidding program work, but by the end of the day, the only thing that was clear is that the outcome from this version may be another rebid of Round One in 2011.
Rob Brant can be reached at rob@amepa.us.