Watchdog Group Challenges CMS on Competitive Bidding

WASHINGTON — A regulatory watchdog organization is
punching holes in CMS’ DMEPOS competitive bidding
project, saying it is discriminatory, does not protect small
businesses and is not compliant with the Data Quality Act.

Jim Tozzi, a board member of the Center for Regulatory
Effectiveness, fired off a July 14 letter to Jeffrey Zients, deputy
director for management and chief performance officer of the Office
of Management and Budget, charging that CMS is inconsistent in
applying policy.

Tozzi, who headed the OMB regulatory affairs department during
the Reagan administration, compared DMEPOS competitive bidding with
CMS’ plans for Medicare Advantage competitive bidding. While CMS’
bid plan would “decimate the DMEPOS industry by preventing the
great majority of companies from supplying equipment,” Tozzi noted,
the Medicare Advantage plan is not similarly structured.

“There is a policy inconsistency within CMS,” he pointed out.
“Within the part of the agency responsible for Medicare Advantage,
competitive bidding is used as a pure price-setting mechanism.
Within the part of CMS responsible for durable medical equipment,
competitive bidding is used to exclude all but a relative handful
of winning companies from the Medicare market. We think this
inconsistency must be resolved.”

Tozzi said the CRE had already called on CMS to adopt a “small
business enhancement option,” which would:

• Establish, through competitive bidding, a single payment
  amount;
• Allow any qualified small business (as defined by the Small
  Business Administration) to supply products and services at a
  single payment amount; and
• Require that competitive bidding contracts be non-transferrable
  for no less than one calendar year.

In doing so, according to the CRE, another problem could be largely
eliminated: CMS’ questionable adherence to the Data Quality Act,
which requires the agency to “ensure that the information [it]
disseminates complies with the quality standards set by the OMB and
the agency before it is released.”

In comments before the Program Advisory and Oversight Committee
in June, Tozzi said CRE had highlighted CMS’ data quality
responsibilities with respect to five specific competitive bidding
issues: Level II HCPCS codes, beneficiary demand, supplier
capacity, composite bids and pivotal bids.

“In order to fulfill its data quality responsibilities, CMS
needs to release for PAOC and public review and comment the
agency’s algorithm for calculating the supplier capacity for each
product category in each of the bidding areas, as well as the
pre-dissemination review record demonstrating the algorithm meets
Data Quality standards,” the CRE said.

Tozzi copied last week’s letter to CMS Acting Administrator
Charlene Frizzera. And she’s not the only one who will see it,
according to Waterloo, Iowa-based member services group VGM .

“Both the OMB and CMS are viewing the CRE Web site,” VGM told
members. “As such, all providers, including those that were not
included in the first round of competitive bidding, are urged to
submit comments responding to Tozzi’s letter to the OMB.”

Read Tozzi’s letter in full. Comments can be posted
on the CRE Web site.