CMS would use a proposed further delay in its competitive bidding program for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) to review "issues of law and policy," the agency says in a Feb. 10 Federal Register notice.

The proposed 60-day delay in the effective date of a rule implementing the competitive bidding program follows a Jan. 20 memo from the Obama administration asking federal agencies to consider delaying the effective dates of regulations, pending a review ("¹ Also see "President Obama Freezes Pending Bush Regulations For Review" - Medtech Insight, 26 January, 2009., p. 5).

CMS plans to review any comments received the week of Feb. 10 on the contemplated delay of round one of the competitive bidding program, and on the rule generally.

The agency issued an interim final rule Jan. 15 to move round one of the already-delayed competitive bidding program forward ("² Also see "Rule Calls For Durable Medical Equipment Competitive Rebids In 2009" - Medtech Insight, 19 January, 2009. p. 21).

While DMEPOS firms were granted a temporary reprieve last summer by Congress from participating in the program, they would have to participate again in 2009 under the final rule.

Economy Cited By Suppliers In Beef Over Bidding

Equipment suppliers spoke forcefully against the program at a Feb. 11 hearing by the House Committee on Small Business' Subcommittee on Rural Development, Entrepreneurship and Trade.

The suppliers, many of whom had testified in 2008 congressional hearings that the competitive bidding rules would put them out of business, cited the deteriorating economy and rising unemployment rates as a further reason to shut down the program.

"The bid program, as currently constituted, eliminates 90% of the homecare providers in a marketplace," testified American Association for Homecare board member Georgetta Blackburn. The exec also is VP-government relations for Blackburn's, a Pittsburgh home equipment firm.

Citing CMS statistics that 4,127 homecare DMEPOS suppliers servicing Medicare beneficiaries would be winnowed down to just 400 once the program goes into effect, Blackburn said "it constitutes a government-mandated consolidation of the marketplace that will lead to significant job losses precisely at a time where the government is making efforts to stimulate job creation."

CMS Reiterates Medicare Savings Argument

Before the competitive bidding program was initially delayed by passage of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), CMS estimated "that by 2010 the program [would] save Medicare and taxpayers $1 billion annually," stated Laurence Wilson, director of CMS' Chronic Care Policy Group.

Testifying before the subcommittee, he added that Medicare expects its gross spending on DME to reach $8.7 billion in 2009. The anticipated savings would "translate to lower coinsurance for beneficiaries," he said.

Several members of Congress, such as Small Business Committee subpanel chairman Heath Shuler, D-N.C., who held the Feb. 11 hearing, and House Ways and Means Committee Health Subcommittee Chairman Pete Stark, D-Calif., are sympathetic about the burden the bidding program places on equipment suppliers. But they are also adamant that spiraling Medicare costs be controlled.

For example, at his subcommittee hearing in May 2008, Stark told equipment suppliers that if they would not accept a competitive bidding program, they instead would have to face steep cuts in traditional fee schedule payments to make up for the savings Medicare would realize by the bidding program; MIPPA enacted temporary fee schedule cuts to make up the cost savings ("³ Also see "House Panel Weighs Alternatives To DMEPOS Competitive Bidding Program" - Medtech Insight, 12 May, 2008., p. 17).

Round one of DMEPOS competitive bidding originally was scheduled to go into effect on July 1, 2008. In response to vigorous protests from suppliers, however, Congress in mid-July 2008 delayed implementation of the program for 18 months ("⁴ Also see "Medicare Bill Becomes Law: Industry Focuses On What Didn’t Make the Cut" - Medtech Insight, 21 July, 2008., p. 5).

The competitive bidding program was authorized by Congress in 2003 to replace the current fee schedule-based Medicare payment system for certain products, including oxygen equipment, wheelchairs and sleep apnea therapies.

CMS Says Financial Documentation Burdens Eased

Equipment suppliers at the Feb. 11 hearing raised several complaints about the bidding process, some of which Wilson said have been addressed by MIPPA.

Suppliers previously had claimed that CMS created a burdensome financial documentation requirement that could impede participation in the program, and did not assure that subcontractors of winning bidders had to be properly accredited.

Wilson testified Feb. 11 that in the interim final rule, CMS reduces burdens on bidding suppliers by requiring financial documentation for only one year, rather than three. He also said that changes already made require subcontractors to meet the same accreditation requirements as contract suppliers.

Suppliers also complained that in last year's program, CMS frequently picked as winning bidders national supply chains who might have experience in some areas of the country at supplying some categories of medical equipment, but no experience in others states or other categories.

For example, the Florida Department of Health certified that nine of the 44 bid winners for oxygen supplies were unlicensed for supplying that service, Robert Brant, owner of City Medical Services, North Miami Beach, Fla., told the House subcommittee.

"This begs the question, how can a company place an accurate bid if they have never provided the service before?" he said.

In Kansas City, the Scooter Store, a national supplier of power wheelchairs headquartered in Braunfels, Texas, "won in every category in our MSA [metropolitan statistical area]," testified Gerald Sloan, founder of Progressive Medical Equipment, Kansas City.

"But one must ask, how did a company that has never provided oxygen services, hospital beds, complex rehab, etc., let alone in our MSA, be selected to do so?"

- Sue Darcey (s.darcey@elsevier.com)

CMS Weighs Changes To Competitive Bidding Program

More from Archive

More from Medtech Insight