Stark Says He’ll Try to Block Competitive Bidding

WASHINGTON — At a Tuesday afternoon hearing convened by
the House Ways and Means Health Subcommittee, sentiment swung to
HME as Chairman Fortney “Pete” Stark, D-Calif., said he would try
to stop competitive
bidding.

Calling the program “somewhere between flawed and lousy,” Stark
said he was unsure if repeal legislation could pass this year
— round one of the program is set to take effect July 1 in 10
initial MSAs — but added he would work with the industry to
try to block competitive bidding despite the costs of ending the
program.

The lead-off witness at the hearing was acting CMS Administrator
Kerry Weems, who testified that “[competitive bidding] will reduce
beneficiary out-of-pocket costs, improve the accuracy of Medicare’s
DMEPOS payments, help combat fraud and ensure beneficiary access to
high quality DMEPOS items and services.”

But members of the subcommittee grilled Weems about problems
with the program, including the disqualification of 63 percent of
the bidders in round one, choosing median pricing rather than
lowest pricing and not allowing willing providers to supply
products at the lowest price.

Reps. Lloyd Doggett, D-Texas; Phil English, R-Pa.; Sam Johnson,
R-Texas; Mike Thompson, D-Calif.; and Pat Tiberi, R-Ohio, all
questioned Weems on a range of issues including fraud, transparency
in the bidding process, inexperienced contract winners and
accreditation, according to a report from the American Association
for Homecare.

At one point, Rep. Xavier Becerra, D-Calif., pressed Weems on
unaccredited subcontractors in the bidding program. While the
acting CMS chief said the accreditation requirement applies only to
contract suppliers, he also said it would be a “bad business
decision” for a contract winner to enter into a relationship with a
non-accredited company.

Becerra said subcontractors should be held responsible as well
and highlighted the fact that those with no experience could be
utilized. He also noted it seems counterintuitive to have
competitive bidding yet limit the number of contractors, stating
that a more open competitive process would ensure better
prices.

But Weems’ troubles really began when Stark asked how round one
prices were set from the bids. As Weems explained how median prices
were determined to be the best choice, Stark commented, “Sounds
like you’re price-setting to me. Sometimes you’re bidding,
sometimes you’re not. It’s at your convenience.”

Stark also asked what CMS had learned from round one and what
would change for round two. Weems’ response: “I can’t think of
anything I would change.” Stark’s questions ended with, “I think
I’ve seen you’re a useless witness.”

“There was not a single member of the [subcommittee who] was in
support of CMS,” reported VGM’s John Gallagher, vice president of
government relations for the Waterloo, Iowa-based member services
group.

Other witnesses testifying at the hearing included Kathleen M.
King, director, Health Care, U.S. Government Accountability Office;
Peter W. Thomas, health task force co-chair for the Consortium for
Citizens with Disabilities; and Thomas J. Hoerger, Ph.D., a senior
fellow at the Research Triangle Institute (RTI), a contractor that
studied the demonstration projects for competitive bidding.

But it was Tom Ryan, former AAHomecare chairman and CEO of
Homecare Concepts, Farmingdale, N.Y., whose testimony on the
industry’s concerns over competitive bidding drew the most
attention. “This Medicare bidding program is a train wreck. But as
this program jumps off the tracks, the attitude of CMS is clearly
‘full steam ahead,’” Ryan told the subcommittee.

Ryan called for an immediate halt to the program and said “the
wide range of problems and questions about the program must be
independently evaluated, and an alternative process to determine
payment rates for home medical equipment must be explored.”

Accounts from various industry groups agreed Ryan made a good
case for HME, presenting concerns over beneficiary access,
unsustainable pricing and questionable contract denials without
proper recourse.

“The Medicare bidding program is a poorly conceived and
fundamentally flawed program that is now exhibiting many of the
serious breakdowns that were predictable based on its failure to
recognize and account for the true nature of the way home medical
equipment is provided to Medicare beneficiaries,” Ryan
testified.

“These breakdowns have been evident since the start of the round
one bidding process in early 2007, throughout the bid evaluation
process and right through the recent awarding of contracts …
Errors and flaws that have emerged in round one of bidding will be
embedded in the program if CMS rushes to implement round two in 70
additional areas in the months ahead.”

Though his remarks were well received, Ryan also found himself
on the spot when Stark asked if providers were prepared to have
their reimbursements adjusted downward to offset the budgetary cost
of ending competitive bidding.

Stark noted the Congressional Budget Office said stopping the
program would cost $6 billion over five years. Because Congress is
working under a “pay-go” policy where expenses must be matched with
reductions, the industry would have to come up with a way to pay
for eliminating the Medicare bid.

Ryan answered “yes” when Stark asked if providers would be
“willing to come up with $6 billion to get rid of bidding.”

“Stark said that he didn’t plan to wipe the slate clean and
asked if the industry would be willing to pay for it,” Gallagher
said. He added that Ryan’s response was “the only responsible
answer,” but it has implications for the future of the industry.
“The good news is that members of Congress are saying ‘Yes, this is
a train wreck.’ The bad news is we have to find a way to pay for
this train wreck …

“If providers are able to adjust to a realistic fee change and
still provide service to beneficiaries, then we cannot just delay
competitive bidding but repeal it,” Gallagher said.

Although the hearing has seemingly opened a crack in competitive
bidding’s door, not all subcommittee members — or HME groups
— had the same reaction to its outcome. Ranking member Rep.
Jim McCrery, R-La., advocated going forward with competitive
bidding, saying, “We have to hold out hope for helping to control
cost.”

And an email from the Accredited Medical Equipment Providers of
America summarizing the hearing pointed out there may be no quick
fix. “It seems very clear that we can expect no help from Congress
on the first round,” the message said. “It also seems almost as
clear that we can expect little or no help on the second round
either.”

There’s no doubt the short timeframe to delay round one is a
real stumbling block for providers, with less than two months to go
until it is implemented. After the hearing, a report from
Congress Daily included this quote from Stark on a
possible legislative fix: “We’ll look at it, try to find a
solution, and as I said, if we don’t do it this year, we will
definitely do it next year, but that may be too late.”

In the meantime, members of Stark’s staff and representatives
from AAHomecare held an initial meeting Thursday to explore the
possibilities of ending the program. And the House Small Business
Committee has scheduled its own hearing on competitive bidding May
21.