ATLANTA — Two days after CMS released the long-awaited list of DMEPOS competitive bidding contract holders, HME stakeholders were sifting through the Round 1 competitive bidding data — and what they find could be crucial to the future of the industry.
"We need to be doing what we and a lot of folks are doing: analyzing how good a job [the Centers for Medicare an Medicaid Services] did," said Cara Bachenheimer, senior vice president of government relations for Elyria, Ohio-based Invacare Corp, on Friday. "And we need to be broadcasting it to Capitol Hill."
Already, Bachenheimer said, legislators have heard from CMS.
"At 4:30 Wednesday afternoon, every office on Capitol Hill got an e-mail blast with this incredibly optimistic e-mail … CMS is moving to the next stage, contract holders are announced, they are all accredited and life is great."
But is it?
"For lack of any other information, that's the truth," Bachenheimer said. "They [legislators] need to hear the entire story."
While Bachenheimer said Invacare was still in the throes of its analysis and she could not say CMS "did it better or worse or the same job [as in the original Round 1]," the real story is starting to emerge, and it doesn't appear to be the one CMS is telling.
John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers, was outraged at what he found in analyzing the Pittsburgh CBA contract holders.
"The biggest surprise was the degree to which CMS has exported the care of western Pennsylvania Medicare beneficiaries to out-of-state firms with no presence in the Pittsburgh market," he said. "Fifty-eight percent of Pittsburgh [metropolitan statistical area] bid winners are from out of state with no current base of operations in the entire 5,700 square miles of the Pittsburgh MSA. Fifty-eight percent!"
CMS said that 76 percent of contract suppliers already had a presence in the service areas and 90 percent had experience in the product category.
"CMS made a big point of stressing that the bid winners they had selected have multiple locations to adequately serve beneficiaries," Shirvinsky continued. "This may be true of the current Pittsburgh area bid winners, but not out-of-state interlopers. Consider: 73 percent of standard power wheelchair and scooter winners listed out-of-state locations; 43 percent of CPAP locations are located outside Pennsylvania; 44 percent of enteral providers; 37 percent of oxygen providers and 44 percent of hospital bed suppliers. This is an outrage and a clear detriment to our vulnerable Medicare beneficiaries."
Rose Schafhauser, executive director of the Midwest Association of Medical Equipment Suppliers, also analyzed the Kansas City CBA.
"I was surprised by the number of national companies that were awarded several contracts versus the first failed round," she said. "I was also surprised at the number of contractors in states … that do not have current locations in the Kansas City MSA." For example, she said, of the 10 contract holders for standard power wheelchairs, scooters and related accessories, only three are in Kansas City.
Schafhauser said such figures are worrisome to MAMES members.
"[Those] who have been offered a few contracts are concerned about the amount of national companies that received multiple contracts and are now worried if they will be able to compete for the referral," she said. "There is such a small window to educate the Medicare beneficiaries of who they can use for their medical equipment — there will be mass confusion."
In Florida, the surprises were equally concerning, if not more so. CMS said repeatedly that all contract holders were in good standing with Medicare. However, Sean Schwinghamer, executive director of the Accredited Medical Equipment Providers of America, said his organization discovered "companies out of business, companies under audit, companies that previously lost their licenses due to fraud and companies on the verge of bankruptcy due to audits and who, at the last minute, were removed from audit with no explanation."
Schwinghammer said his main concern about the bid winners is a lack of experience in the category.
"Some companies have never done CPAP for example, and they won," he noted, adding, "So many are not in the area [and] they will need to subcontract, but there is almost no time to do that."
In its notification to contract holders on Wednesday, CMS said that they must disclose any subcontractors to the agency by Nov. 18.
Shirvinsky said providers are rightly furious about the program, which is, despite the late announcement of contract holders and delayed education of providers, beneficiaries and referral sources, still scheduled to go into effect Jan. 1, 2011.
"There is a lot of anger and frustration at a government that is so willing to stomp out the hard work of so many small business owners who have toiled for so many years to take care of the needs of the elderly, the disabled and the infirm," he said. "[Providers] are incredulous that a program that is so clearly and irretrievably flawed could actually be within a few weeks of enactment."
In a press call about the bid winners, CMS brushed aside questions about the design of the program, which has been challenged by 166 economists who detailed its shortcomings in a letter to Rep. Pete Stark, D-Calif., that was passed on to CMS. Stark, chairman of the House Ways and Means Subcommittee on Health, had tentatively scheduled a hearing on the bid program after Congress returns to Washington Nov. 15.
Jonathan Blum, deputy administrator and director, Center for Medicare, told reporters that he had met with two of the economists, but he dismissed their concerns.
"I believe our model is superior to other recommendations that are out there," he told reporters.
That also shocked stakeholders.
"I was astounded by CMS's response to the reporter's question regarding the recent letters from the economists and auction experts that the competitive bidding program is fatally flawed," Shirvinsky said. "To dismiss the concerns of [166] accomplished experts as little more than a misplaced concern that bidders would refuse to sign contracts was unbelievable. Either CMS is incredibly dense in understanding what was communicated to them or they were brazenly dishonest in spinning the reporters away from the very serious misgivings that were actually expressed."
Schwinghamer noted wryly that CMS "never admits to mistakes and greater mistakes result. There are no bidding experts at CMS, the national experts reject CMS' efforts soundly, yet CMS refuses to even consider that the program is flawed and even destructive.
"It is," he continued, "an insult to the intelligence of providers and Congress. Someone needs to lose their job over this."
In the wake of the revelation of bid winners, CMS sent other information to providers who did not win contracts giving the reasons for their elimination. Via a FedEx communication from CMS, non-winning providers heard a lot of reasons, according to AMEPA.
"We have received much feedback," AMEPA officials said in a communication to members. "Some were told they did not meet undisclosed standards and [had] missing documents, others were told there were problems with financials, still others were told it was simply price."
Yet there were discrepancies, AMEPA said.
"Companies were told by CMS that they did not meet certain standards. However, these companies won bid contracts two years ago using the identical information on the applications that was disqualified in the rebid," AMEPA officials reported. "Companies were disqualified because they were missing documents. However, during the early review period, they were told their applications were complete."
As well, according to AMEPA, "Companies were not chosen because their bids were too high. However, they now have proof that their bids were the same or lower than less experienced and less viable companies."
The organization suggested that providers noticing such discrepancies draft a one-page letter to their legislator explaining the situation and forward it to AMEPA (info@amepa.us), which will take that information to Washington.
With time draining away before implementation of competitive bidding, stakeholders are clinging to hope that something positive can happen to thwart the rollout in Congress' lame duck session.
"It is unclear how long they will be back for the lame duck session. It is unclear if [Rep. Stark] will have a hearing. It is unclear if we have time to push for the Meek bill," said Bachenheimer.
However, she added, "They have to fund the government with continuing resolutions and they have to do the doc fix — it expires Nov. 30."
The doc fix, which would remedy a scheduled percent reimbursement cut for physicians, could be the legislative vehicle on which to hang H.R. 3790, the bill that would eliminate competitive bidding. Introduced by Rep. Kendrick Meek, D-Fla., the bill has 257 cosponsors — 60 of whom are not in the new legislature that takes its seat on Jan. 1. Meek himself lost his bid for a Florida Senate seat to Republican Marco Rubio.
"The Meek bill lives in the lame duck session, and we will see what kind of movement we get," Schwinghamer said. "We have people ready to sponsor a new bill in the new Congress if necessary. We still have 197 [congressmen], a majority from the Republican party, who agree with the concept of repealing a bad program, which is a fantastic start if you need it."
In any case, HME providers must continue to fight because there is too much to lose, industry advocates said.
"The trickle-down effect of this program is bad for small business, bad for the patient's freedom of choice and bad for local communities who lose their local companies," said Schafhauser, adding that once those companies are gone, they are gone forever. "We can only hope that Congress will have the foresight to see that this program has devastating effects that will be very difficult to fix and therefore it must be eliminated."
Shirvinsky said that "everyone with a half a lick of sense now understands that this was a poorly designed and fatally flawed program — everyone except CMS.
"Congress needs to take ownership of this outrage and stop it before it does any actual harm — whether physical harm to Medicare patients or economic harm to our providers and their employees," he said.
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