DME supplier quality standards to guide competitive bidding should be adapted from accrediting bodies rather than developed by CMS, Program Oversight & Advisory Committee members recommended Oct. 6.

At the panel's inaugural meeting in Baltimore, Research Triangle Institute's Thomas Hoerger, PhD, characterized as a "consensus" the opinion among members that CMS should "not just start from scratch...but look at existing standards."

RTI has been contracted by the agency to formulate options for implementing Sec. 302 of the Medicare Modernization Act, under which durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) will be subject to competitive bidding.

The program will apply to 10 of the largest U.S. "metropolitan statistical areas" by 2007, extending to additional regions in 2009 and beyond. CMS plans to publish a notice for proposed rulemaking in the spring of next year, with a public comment period over the summer and a final rule to follow in the spring of 2006.

Hoerger suggested RTI and the panel "start moving toward specific standards - at the next meeting, if you desire." The panel is scheduled to reconvene Dec. 6-7. "We can bring some specifications...from existing organizations, and have you come up with an idea of [what] you would like to have considered."

Johnson & Johnson Federal Affairs Director Dan Waldmann submitted: "We have to have the standards in place, at least the general standards, before competitive bidding goes live." He emphasized fewer, broader criteria to participate, since "some bidders might be excluded on the basis of supposedly not meeting 'quality standards.'"

Invacare VP-Government Relations Cara Bachenheimer also advised "erring on the side of flexibility." She cautioned "sensitivity" toward "small organizations within the industry on how they can get up to speed and become accredited within a [given] timeframe." For his part, Hoerger acknowledged the need to avoid setting "standards too burdensome to small suppliers."

In addition to quality standards, Sec. 302 of MMA instructs CMS to "designate and approve one or more independent accreditation organizations" to certify standards adherence.

Joint Commission on Accreditation of Healthcare Organizations Executive Director Maryanne Popovich commented on the need for "whoever is determined to be an accreditor of the quality standards" to be reliable so the supplier is "protected."

JCAHO and the Rehabilitation Engineering & Assistive Technology Society of North America (RESNA) were among possible accreditors referenced by panel members.

Regarding implementation of the bidding process, RTI presented the panel with three options. First, a single contractor could conduct and evaluate bids in all applicable areas; alternatively, the four durable medical equipment carriers could preside over the bidding. The third option is that local contractors assume the role.

Some panelists were skeptical about the second option. "I don't really know what DMERCs you're dealing with that are so well-educated and can process responses to us," said Charles Dankmeyer, representing the American Orthotic & Prosthetic Association. "That certainly has not been my experience and I suspect not [the experience of] too many people around this table.... I would certainly not recommend that you use the DMERCs for this process."

Overall, panelists agreed to hold suppliers to robust standards for accreditation. "If we want to be thought of as professionals, reimbursed for professional services that go along with the materials we supply, we've got to set the bar at a certain level," Hoveround Corp. Medical Director Don Vliegenthart, MD, said.

Results of a congressionally requested study evaluating Medicare's competitive bidding demonstration projects suggest such safeguards should be in place before the program goes national in 2007, panelists stressed.

Lawrence Higby, president and CEO of Apria Healthcare, observed that his company initially considered - but ultimately opted against - bidding to supply for a product area under the pilot program.

Reviewing the entry criteria, he had noticed that "the quality standards were all across the board" and "not really as comprehensive as those you would want to establish," Higby recounted.

He suggested that an aspect that could affect overall quality of DMEPOS items and services is whether the bid-winner has an office or center in the same region as the beneficiaries.

Higby related an anecdote of a wheelchair supplier that purchased a bid-winning company in one of the demo project areas, and then shut it down, taking over the firm's contract. He suggested that quality for beneficiaries could be affected, as the supplier was presiding over the firm's contract from outside the region.

Mandated by the Balanced Budget Act of 1997, the DMEPOS competitive bidding demo projects occurred in Polk County, Fla. (October 1997-September 2002) and San Antonio (February 2001-December 2002).

At the meeting, CMS project officer Ann Meadow, ScD, presented a report on the pilots that has recently been submitted to Congress.

Rita Stanley Hostak, Sunrise Medical VP-Home Healthcare Group, expressed concern with a CMS site visit finding that "some wheelchair suppliers in [San Antonio] may have provided poor fitting/delivery and cut back on free accessories."

According to the study, site visits also uncovered "early concerns about urological supplies' quality in Polk [that] abated later as fees rose."

CMS attributed the quality discrepancy to an observation that some suppliers may have underbid in the first of two rounds in Polk County. Consequently, "if prices did not cover costs, suppliers had an incentive to offer inferior products or pursue other strategies that could limit product selection," the report states.

CMS concludes, however, that overall, "referral agents did not see systematic quality problems emerge." The report adds that "three-fourths of medical equipment users in both sites rated their equipment 'very reliable,' with one subgroup - surgical dressing users in Polk County - experiencing significant increase in reliability rates (41 percentage points)."

Regarding cost-effectiveness of the demos, CMS maintains that "savings estimates were about one-fifth relative to payments under the statutory fee schedule, and they compared favorably to costs of running the program." Administration costs were $4.8 mil. Savings since October 1999 totaled about $7.5 mil. for Medicare and $1.9 mil. for beneficiaries. Sec. 302 implementation costs are estimated at $6.9 bil. over 10 years.

Quality Standards Should Precede DMEPOS Competitive Bidding – CMS Panel

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