The Texas Alliance for Home Care Services and a Dallas provider filed a lawsuit today against the Department of Health and Human Services and the CMS for failure to conduct notice and comment rulemaking in order to specify financial standards that providers must meet under the DMEPOS competitive bidding program.

WASHINGTON — The Texas Alliance for Home Care Services and
a Dallas provider filed a lawsuit today against the Department of
Health and Human Services and the Centers for Medicare and Medicaid
Services for failure to conduct notice and comment rulemaking in
order to specify financial standards that providers must meet under
the DMEPOS competitive
bidding program
.

The suit, which was also filed on behalf of Dallas Oxygen Corp.,
was filed in U.S. District Court for the District of Columbia.
Multinational Legal Services, the legal arm of the Center for
Regulatory Effectiveness, is acting as attorney for the
plaintiffs.

The complaint also alleges that HHS and CMS have violated the
Freedom of Information Act by failing to publish the specific
financial standards, and that CMS is evaluating the Round 1 rebid
financial information submitted by bidders on an ad hoc basis
without actually applying any specific financial standards.

TAHCS and several other organizations and individuals have
called on CMS to release the financial standards to which the
agency is holding bidders — and on which it will determine
winning bids.

"On numerous occasions since the interim final rule, CMS has not
provided standards despite requests from the public," said Barry
Johnson, president of TAHCS.

According to attorneys, the suit asks the court to declare that
HHS and CMS have violated the Administrative Procedure Act, FOIA
and the Medicare statute. It also requests the court to:

  • Vacate the current interim final rule;
  • Require CMS to conduct proper notice and comment rulemaking on
    the proposed financial standards;
  • Provide the financial standards it is currently using to the
    plaintiffs; and
  • Enjoin the agency from further DME contracting until it issues
    a new final rule after considering public comments on the proposed
    standards.

Johnson said TAHCS is hoping that the suit can be settled before
CMS' September target date for naming the winning bidders in the
Round 1 redo, which is set to be implemented Jan. 1 in nine of the
nation's largest MSAs.

"This suit represents the substantial flaws associated with
competitive bidding. We trust that the court will recognize the
merits of the case and rule in our favor," Johnson said.

"We are hoping to win and to bring increased transparency to
health care reform efforts," added Bruce Levinson of the CRE. "We
believe that our efforts, if successful, will benefit both
beneficiaries and the entire [durable medical equipment]
industry."

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