CMS Should Delay Competitive Bidding Program For Medical Equipment Because Of Improper Disqualifications, Group Says

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Medical Devices
Article Date: 09 Apr 2008 - 6:00 PDT

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CMS should further delay the implementation of a Medicare competitive bidding program for durable medical equipment because errors made during the initial selection process improperly disqualified hundreds of suppliers from participation, according to the American Association for Homecare, CQ HealthBeat reports (Carey, CQ HealthBeat, 4/7).

In 2008, the program will operate in 10 of the largest Metropolitan Statistical Areas and will apply to 10 of the top durable medical equipment, prosthetics, orthotics and supplies product categories. In 2009, the program will expand to an additional 70 MSAs and will continue to expand in future years. The program also will apply to additional product categories in future years.

CMS currently pays for durable medical equipment based on a listed price. Under the program, durable medical equipment companies will submit bids to CMS, which will select suppliers based on cost and volume or on the potential savings for Medicare beneficiaries. The 2003 Medicare law mandated the program as part of a larger effort to implement competitive bidding for CMS reimbursements. The program, scheduled to take effect on July 1, likely will result in an average 26% decrease in the prices of medical equipment in the 10 MSAs, CMS said (Kaiser Daily Health Policy Report, 3/21).

Acting CMS Administrator Kerry Weems said that the agency received more than 6,300 bids from medical equipment suppliers to participate in the program and will announce the winners of contracts by May. In addition, he said that small medical equipment suppliers, which CMS defines as suppliers with gross annual revenue of $3.5 million or less, accounted for 64% of those that won contracts.

Improper Disqualifications?
According to AAH officials, the group has received reports from hundreds of suppliers that CMS improperly disqualified them from the program. In an AAH press release, Heather Allan, executive director of the Florida Association of Medical Equipment Services, said, "We're alarmed about the volume of the mistakes made by Medicare's contractor tasked with evaluating bids and implementing the bidding program," adding, "A process this obviously flawed needs to be stopped, analyzed and corrected if it can't be done away with altogether. If it's not, the ramifications for Medicare beneficiaries and small businesses alike will be much worse than we anticipated."

In a March 26 letter to Weems, AAH President Tyler Wilson wrote, "In the case of suppliers improperly disqualified, they need to be reinserted into the supplier selection and contracting process." Wilson also requested that CMS disclose bidding data and the criteria used to evaluate suppliers during the selection process. According to Wilson, CMS should disclose the information because "errors and inconsistent guidance from CMS and its contractor have been consistently made throughout the bidding period and the contract award process."

Weems in an April 1 letter responded that CMS was "aware of the concerns outlined in your letter and can assure you that we are giving the matter our full attention," adding that agency officials would meet with AAH officials to discuss their concerns. In addition, Weems wrote that CMS used a "rigorous quality assurance program for all aspects of bid evaluation."

On Monday, Wilson said that the letter from Weems "couldn't be any less focused on the issues we've raised" and that AAH has worked "feverishly to make every member in the House and Senate aware of the problems in this program" (CQ HealthBeat, 4/7).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.