Memo Opens Window to Shut Out Competitive Bidding

WASHINGTON — Just hours after becoming the nation’s 44th
president, Barack Obama gave the HME industry more time —
maybe — to work on derailing DMEPOS competitive bidding.

On Tuesday afternoon, Obama Chief of Staff Rahm Emanuel issued a
memo directing federal agencies to hold off on all pending
regulations until the new administration has had the opportunity to
study them. For regulations that have already been published in the
Federal Register but have not yet taken effect —
including the interim
final rule on competitive bidding, published Jan. 16 —
the administration will consider extending the effective date for
60 days.

The rule was to take effect Feb. 15, but under the memo, that
date could be extended to April 16.

The memo does not automatically suspend or retract the interim
final rule, which includes instructions for a rebid of Round One in
2009 (see CMS
Issues Interim Final Rule on Competitive Bidding, HomeCare
Monday Special Alert, Jan. 15). Neither does it extend the
comment period for the rule, which ends March 17. It also does not
rescind rules already in effect, such as the post-cap payment rules
for oxygen issued in November.

Still, a possible extension in the effective date of the new
competitive bidding rule was encouraging news, industry
manufacturers and providers said.

“With regard to the recent CMS interim final rule on competitive
bidding, this provides us an opportunity to work with the new
administration to review this rushed regulation that had no public
or industry input,” said Cara Bachenheimer, senior vice president
of government relations for Elyria, Ohio-based Invacare Corp.

CMS’ first attempt at competitive bidding was halted July
15, two weeks after implementation, by the Medicare Improvements for Patients and Providers
Act. The law mandated a number of changes to the bidding
project and delayed its implementation after providers in Round One
detailed numerous problems with CMS’ bid submission process and
review of financial documentation. Of 6,500 bids, CMS offered
contracts to only 329 providers in the first 10 bidding areas.
Resulting reimbursements were cut by an average 26 percent.

But Bachenheimer said CMS addressed few of the issues
surrounding the troubled bidding program in its new rule. “Our goal
with regard to the agency moving forward under MIPAA’s directive is
to work more collaboratively with the new administration to: 1)
educate them about the fundamental flaws of the bidding program;
and 2) have them suspend the rule while the agency, in conjunction
with affected parties, can reshape the rule to address those
fundamental flaws,” she said.

Seth Johnson, vice president of government relations for
Pride
Mobility Products, Exeter, Pa., said extension of the rule’s
effective date “provides a new opportunity to get the new
administration to retract the whole interim final rule.”

Toward that end, numerous industry organizations are urging
providers to contact their legislators to press for their support
in halting the new bidding rule. This time, they said, they feel
like they have a lot more leverage thanks to supporters in Congress
and the ravages of a devastated economy.

“It’s not as though we haven’t learned [from the last time],”
said Georgie Blackburn, vice president of government relations for
Blackburn’s
Pharmacy in Tarantum, Pa., noting that there now are people
with muscle in Washington “who want to hear what we have to say.
People who worked with us so well and so efficiently last year are
still there.”

And many of them are concerned about the reappearance of the
bidding program, according to Johnson, noting committee leaders on
both sides of the aisle were “alarmed” when CMS released the rule
in the last hours of the Bush administration. “I think we have a
leg up from where we were a year ago,” he said. “I do think the new
administration will want to make sure they are paying appropriately
for items and services, but I do not think they are wedded to
moving forward with this competitive bidding program.”

Johnson noted another message that might be particularly
important to this administration: Competitive bidding does not
create jobs.

“When you look at the message that he ran on in his campaign and
the state of the economy today, President Obama continues to state
that it is his administration’s priority to create jobs,” Johnson
pointed out. “And he … believes there needs to be an increase
in home health care. Clearly, when you look at competitive bidding,
it is counter to the administration’s priority.”

“I can’t imagine that anyone in D.C. can embrace a program that
would put 90 percent of providers [in the affected areas] out of
business,” added Blackburn.

“Last time, 501 oxygen providers in [the Miami bidding area]
were reduced to 44,” said Rob Brant, president of the Accredited Medical Equipment
Providers of America. “Four hundred power wheelchair providers
were reduced to 25. Do we really want to do that?”

The few changes to the interim final rule and its implications
for beneficiary access and small business point up the importance
of fighting it, Brant said. “People thought because it was delayed,
that was the end of it. But it’s not. It is not magically going to
go away. We have to end it.”

View a PDF of the text of the interim final rule.