President Unveils New Regulatory Strategy: Will CMS Adhere?

The White House released a series of documents, including an Executive Order and two Memoranda, presenting the Administration’s regulatory strategy.  Transparency, flexibility, scientific integrity, and small business protection are cornerstones of the strategy — none of which are embodied in CMS’ DME competitive bidding program.

For example, the Administration’s Fact Sheet for the new strategy states that “Agencies must consider approaches that maintain freedom of choice and flexibility, including disclosure of relevant information to the public.”  In contrast to the new policy, the competitive bidding program strips freedom of choice and flexibility from millions of Medicare beneficiaries.  Instead of disclosing relevant information about the competitive bidding program, such as the agency’s specific financial standards that are required by law to be “specified,” CMS keeps them a secret.

The Executive Order states that “each agency shall ensure the objectivity of any scientific and technological information and processes used to support the agency’s regulatory actions.”  Competitive bidding is an economic process that subject to scientific inquiry and standards.  For example, the National Science Foundation has conducted research on competitive bidding and advised the FCC on the matter.  CMS’ DME competitive bidding program, however, violates accepted bidding principles and has been harshly criticized by almost 170 academicians.  A recent academic paper called CMS’ program “Designed to Fail.”

In an op-ed appearing in the Wall Street Journal discussing the regulatory strategy, President Obama stated that “today I am directing federal agencies to do more to account for—and reduce—the burdens regulations may place on small businesses. Small firms drive growth and create most new jobs in this country. We need to make sure nothing stands in their way.”  CMS’ DME competitive bidding rules not only stand in the way of creating jobs, it destroys them, decimating an industry dominated by reliable small businesses providing quality care to Medicare beneficiaries.  Jobs are larger DME suppliers who have repeatedly proven their value to beneficiaries will also be lost.

CMS’ DME competitive bidding program as currently designed and implemented is the antithesis of the standards and goals set forth in the President’s regulatory strategy.  Will CMS reform the program to comply with the new White House directives or will they defy them?