Ohio congressional delegation calls on CMS to suspend bidding program

WASHINGTON, D.C., June 17, 2013—As turmoil escalates with disclosures that the Centers for Medicare & Medicaid Services (CMS) awarded contracts to unlicensed home medical equipment providers, the Ohio congressional delegation asked CMS to suspend the controversial bidding program that selects suppliers to provide durable medical equipment (DME) to Medicare beneficiaries.

“We request that CMS suspend the July 1 implementation of this program so that Congress can examine the full extent of these flaws and develop an appropriate solution,” stated the letter, which is signed by 14 House members from Ohio. In addition, Sen. Rob Portman (R-Ohio) wrote a separate letter, saying he is “concerned about the impact of allowing unlicensed/non-registered firms to provide products and services to Medicare beneficiaries in the state of Ohio.”

The dangerous and defective bidding program is slated to expand from the initial nine areas to 91 new locations on July 1. But momentum is growing to delay the expansion. The latest setback for the program are disclosures that in Ohio, Tennessee, Maryland, and other states, contracts were awarded to bid winners that were not licensed to serve Medicare patients.

CMS required that those bidding to provide oxygen, power wheelchairs, walkers, feeding tubes, diabetic testing materials, and other DME products have all licenses and accreditations in place by May 1, 2012. Providers who didn’t submit bids because of these licensing requirements are stunned and dismayed that unlicensed competitors not only submitted bids, but won contracts. This is a public relations disaster for CMS, as it creates potential health risks for Medicare beneficiaries. It could be the foundation for legal challenges from providers.

“How can CMS violate its own rules and let unlicensed providers submit bids and actually win contracts? Worse yet, how can CMS let this happen again as evidenced in Round 1?” said Kam Yuricich, Ohio Association of Medical Equipment Services executive director. “We have many dedicated providers who are subjected to excessive audits from CMS that drain time and resources, yet the agency implements a bidding program that eliminates many of these responsible, compliant businesses and allows unlicensed providers to service Medicare beneficiaries, who are some of the most vulnerable people in our society. It’s time for Congress to act and fix the DME procurement process.”

In their letter, the Ohio delegation tells CMS Administrator Marilyn Tavenner that her agency awarded nearly 80 contracts to providers that are not licensed and/or registered to serve Medicare beneficiaries in the state.

“CMS clearly states in the ‘Request for Bids,’ a document that spells out the rules for suppliers to initially compete, that ‘every supplier location is responsible for having all applicable licenses for each state in which it provides services,’ ” the congressmen wrote. Their letter adds that the Ohio Department of Commerce has registration requirements for certain products in the bidding program and separate registration is needed through the Ohio Respiratory Care Board for other products.

The congressmen also questioned the integrity of the bidding program. “Since these bids came from providers not properly licensed and/or registered in Ohio, they should not have been included in the pool of applicants for the bidding program,” the letter states. “Neither should their bid prices have been included to determine median pricing for affected product categories. These bidders may have prevented other bidders from being offered contracts, and most likely skewed the bid price, polluting the entire contractor selection and bid price calculation processes.”

With the July 1 expansion of the program approaching, the Ohio members of Congress signed on to the letter asking CMS to suspend it include Rep. Joyce Beatty (D), Rep. Steve Chabot (R), Rep. Marcia Fudge (D), Rep. Bob Gibbs (R), Rep. Bill Johnson (R), Rep. Jim Jordan (R), Rep. David P. Joyce (R), Rep. Marcy Kaptur (D), Rep. Bob Latta (R), Rep. Jim Renacci (R), Rep. Tim Ryan (D), Rep. Steve Stivers (R), Rep. Pat Tiberi (R), and  Rep. Michael Turner (R).

The American Association for Homecare has also learned that 100 unlicensed providers in Maryland were awarded contracts, and that the practice is rampant in California, Michigan, New York, Pennsylvania, and Tennessee.

In a belated attempt to address this serious blow to the program’s integrity, CMS has sent letters to unlicensed and/or unaccredited contract winners stating that they must have everything in place by July 1. However, even with this extension, it’s unlikely that these companies can become legal providers by the new deadline.
Representatives Glenn Thompson (R-Pa.) and Bruce Braley (D-Iowa) have asked their colleagues in the House to join them in pressing CMS to delay Round 2 of the program. In the letter to CMS, the congressmen cite the shocking “lack of transparency” in the bidding process and “improper vetting” of bidders. They urge CMS to delay Round 2 “to allow for adequate investigation and correction of the significant problems that have been identified.”

Thompson and Braley assert that there are “significant distortions of the bid prices in every bidding area nationwide” because low bids, sometimes submitted by unlicensed providers or those who later refused to sign actual contracts, were still used in setting the reimbursement rates for products and services. Meanwhile, consequences of the bidding process continue to impact providers that did not win bids.

Dominic Bartone, president of Hock’s Pharmacy & Medical Supply in the Dayton, Ohio, bidding area, said he will have to terminate 20 workers, which is nearly half of his workforce. “We were not awarded any of the bids even though we thought we have submitted reasonable prices for the services we provide,” Bartone said. “My company currently services six counties with free prescription delivery and medical supplies. I know that CMS thinks that this bidding process will cut down on waste and abuse, but the reality is it is going to cripple jobs growth and harm consumers. I employ 42 persons currently and with the program as it stands now I will be laying off 20 persons and denying services to many of our patients. The closest company that was awarded a bid was a company 90 minutes away from Dayton.”

Many believe that the solution to Medicare’s bidding problems is H.R. 1717, the Medicare DMEPOS Market Pricing Program Act of 2013. The bill was introduced by Representatives Tom Price (R-Ga.) and John Larson (D-Conn.) in April. “It’s a fair procurement system based on three core principles: market-based prices, binding bids, and transparency,” said Tyler Wilson, president of AAHomecare. H.R. 1717 currently has 122 cosponsors. Learn more at www.aahomecare.org.