In My View: Thoughts from the PAOC

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 [email protected].