CMS refused to give lawmakers the list of winning bidders for the first round of the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) program and took a swipe at the industry by reminding that the suppliers had originally asked that the names of the winners be kept secret, even though the industry now wants the list released. Providing the list would confuse beneficiaries, the agency states, and it would be inappropriate to announce the winners before notifying the losing bidders.
“At the request of the DMEPOS industry, the Request for Bids, which outlined the requirements governing the bid submission and evaluation process, indicated that bidder information could only be disclosed in an anonymous or aggregate format and that proprietary information would be protected from disclosure,” CMS states in an Aug. 30 response to Rep. Jason Altmire (D-PA) and Ralph Hall (R-TX), who wrote the letter that 136 Democratic and Republican members signed. “Further, standard procurement rules prohibit disclosing the identities of bidders until after contracts are final.”
The DMEPOS bidding process is not complete until CMS signs the contracts, and it does not sign the contracts until all of the contract suppliers have agreed to participate. The agency anticipates that the contracts will be signed by all parties by the end of September, according to the letter. There were 1,011 suppliers who submitted bids and 1,287 contract offers were sent to 364 suppliers in early July (see story). If offers are turned down, CMS will reach out to other qualified bidders to meet market demand. The agency will notify losing bidders of the reasons they did not qualify for the program when the contracting process is complete.
The bipartisan group of lawmakers requested the list of winning bidders so they could determine whether the suppliers are up to the task of providing the equipment to a greater number of beneficiaries. “Without knowing the identity as well as the appropriate overall qualifications of these providers, we cannot evaluate the program’s impact in terms of quality and access to care for seniors we represent,” states the letter to CMS.
The industry group AAHomecare said releasing the names of the winning bidders in September does not give lawmakers enough time to determine whether those suppliers are up to the task and to educate beneficiaries. Another industry concern has been that big suppliers will win a disproportionate share of the contracts, but CMS Deputy Administrator and Director for the Center for Medicare Jonathan Blum said in July that 48 percent of the winning bidders are small suppliers, which is higher than the 30-percent goal.
The first round of DMEPOS bidding in 2008 went badly. Some winning bidders in the first round did not have the financial resources to supply the large number of beneficiaries they were responsible for, and some had never supplied the type of equipment for which they had won bids. Also, several winners were not licensed to provide those devices and services or they did not have locations in the areas they were supplying. Congress, consequently, delayed the program and demanded a rebid.
CMS says losing bidders may subcontract with winning bidders, but that isn’t enough to appease medical equipment suppliers. Industry backs bipartisan House legislation with 252 cosponsors that would scrap the bidding program. That bill (HR 3790) has no Senate companion.
This is the second instance of lawmakers and stakeholders complaining about a lack of transparency in various aspects of the DMEPOS program.
On a second front, CMS is being sued for not releasing the financial standards it used to determine whether the winning bidders are financially stable. The lawmakers’ request for the winning bidders does not affect that lawsuit, according to the Center for Regulatory Effectiveness, which is involved with the suit. But the issues are the same, the CRE states: In both instances, CMS is not being open about how the program is run so no one can hold the agency accountable.
CMS expects the program to save $17 billion over 10 years. In nine areas of the country, payments in nine product categories will drop 32 percent on average. That’s on top of the 9.5 percent reduction that was implemented when competitive bidding was delayed in 2008. Medicare has been paying above market price for home medical equipment, CMS says. For example, Medicare pays an average of $173 for oxygen concentrators. When the competitive bid amounts kick in next January, that price will drop to $116, a 33 percent reduction.
CMS plans to enlarge the bidding program in its second round in line with a health reform mandate. — John Wilkerson (jwilkerson@iwpnews.com)