Thursday, February 12, 2009

WASHINGTON — At a congressional hearing yesterday, Rep. Heath Shuler, D-N.C., called for an end to national competitive bidding.

Shuler convened the hearing of the House Small Business Subcommittee on Rural Development, Entrepreneurship and Trade, which he chairs, to discuss the effects of the Medicare bidding program on small business. During the hearing, he noted, the majority of DMEPOS suppliers are small businesses but the "bidding program allowed many of the small suppliers to be outbid by larger, less knowledgeable firms."

CMS implemented Round One of the program July 1, but Congress delayed it two weeks later after an outcry from HME stakeholders. Passage of the Medicare Improvements for Patients and Providers Act July 15 ended the contracts that had been signed for the first round and made some changes to the program.

But in the waning days of the Bush administration on Jan. 16, CMS published an interim final rule to ramp the bidding program back up. The IFR was scheduled to become effective Feb. 17. On Feb. 6, however, CMS announced the agency was considering a 60-day delay under the Obama administration's instructions to review any regulations that had not yet taken effect. Comments on delay of the IFR are due today.

"In the next two months, the administration will review — and hopefully eliminate — the competitive bidding program altogether," Shuler said.

Several independent HME providers who bid in Round One testified at the standing-room-only hearing, which dovetailed with a Capitol Hill lobby effort sponsored by the American Association for Homecare.

Georgie Blackburn, vice president of Blackburn's in Tarentum, Pa., testified on behalf of AAHomecare that the bidding program is actually anti-competitive because it clears the marketplace of competition by reducing the number of eligible providers that can serve Medicare beneficiaries. "It will eliminate 90 percent of the home care providers — typically small, family-owned businesses — in any marketplace where it is implemented, "she said.

Blackburn also told the committee a program "whose primary selection criterion is product price represents a 'race to the bottom' that will jeopardize quality and access to care." She said her company, located in the Pittsburgh MSA, had a "learning curve" of several years on some aspects of home oxygen delivery. But companies "that had no experience providing patients with a product category or were not located in the MSA were offered winning contracts," she said.

Bill Griffin, president and CEO of Griffin Home Health Care in Charlotte, N.C., said his company has been providing home health care in the area for 25 years. Testifying on behalf of the North Carolina Association for Medical Equipment Services, Griffin told committee members he won no contracts in five categories in Round One because his bids were too high. "The fact that we were told that our prices were too high is a very clear indication that many providers/suppliers 'bid to win' rather than bid so as to fulfill the commitment of the bid contract," he said.

Other witnesses testifying at the hearing included Gerald Sloan, CEO of Progressive Medical Equipment in Lenexa, Kan., testifying on behalf of the Midwest Association for Medical Equipment Services; Rob Brant, owner of City Medical Services in North Miami Beach, Fla., and president of the Accredited Medical Equipment Providers of America; and Wayne Stanfield, president and CEO of the National Association of Independent Medical Equipment Suppliers. Dr. Alan S. Routman of Ft. Lauderdale, Fla., testified on behalf of the American Association of Orthopaedic Surgeons.

CMS Defends the Program

CMS was also represented at the hearing. The agency's Laurence Wilson, director of the Chronic Care Policy Group, said the bidding program "is expected to reduce beneficiary's out-of-pocket costs and ensure their access to high-quality DMEPOS items and services, bring Medicare's DMEPOS payments in line with current market pricing and combat supplier fraud, which is expected to result in taxpayer savings of billions of dollars."

He also noted that CMS set a 30 percent target for small provider participation in the bidding program and added that "results of the contracting process for the previous Round One were that 64 percent of all contract suppliers" were considered "small" because they generated annual revenues of $3.5 million or less.

When Shuler asked why CMS had published an interim final rule rather than a proposed rule, which would have allowed time for public comment, Wilson said that the bidding program had been subject to thousands of comments when it was first proposed.

He also said CMS plans to issue additional information about the bidding program in coming months, including a timetable for the Round One rebid process.

After the hearing, Rep. Blaine Luetkemeyer, R-Mo., said the subcommittee would draft a letter to Small Business Committee Chairwoman Nydia Velazquez, D-N.Y., and possibly recommend legislation.

For the complete testimony of the hearing witnesses, click below: