|
https://homecaremag.com/topics/competitive-bidding/cre-postpone-request-20101020/
CRE's Tozzi: Call in the Exterminator
Oct 20, 2010 10:38 AM
WASHINGTON — According to Jim Tozzi of the Center for Regulatory
Effectiveness, the theory behind various types of auctions has been studied
by economists for fifty years — and he thinks CMS should have studied it a
little harder.
On Monday, the Washington-based regulatory watchdog organization
sent a letter under Tozzi's signature requesting that CMS postpone Round 1 of
competitive bidding "until the agency's auction
rules are revised to conform with accepted [principles]."
Tozzi cited a Sept. 26 letter to Congress from University of
Maryland economist Peter Cramton and more than 160 others blasting the bid program's flaws.
"CRE is not aware of any auction program in existence which
violates accepted auction [principles] as seriously as does CMS DMEPOS
competitive bidding program," Tozzi wrote. He added the economists'
letter explained that unless the bidding program is fixed, it would lead to a
situation "in which suppliers become increasingly unreliable, product
and service quality deteriorates, and supply shortages become common. Contract
enforcement would become increasingly difficult and fraud and abuse would
grow."
In an interview Friday, Tozzi — who has served as deputy
administrator of the Office of Management and Budget — said it is small
wonder CMS has delayed releasing the names of the Round 1 bid winners after a
program integrity review raised what the agency called "red flags." While examining the contract winners for
possible fraud, Tozzi said in his letter, CMS should "use this period to
assess the agency's bidding rules for non-compliance with established auction
[principles]."
Said Tozzi, "If you show that the CMS bidding program
violates the most fundamental principles of auction theory and if you show
the principles have been around for a minimum of a half-century, then you can
go to other people in the executive branch that may weigh in on this.
"So, CRE is going to take Professor Cramton's work and is
going to develop a white paper that shows why the CMS competitive bidding
program is in violation of accepted metrics of auction theory," he
continued. "We are going to approach economists in the administration
who will understand the theories of this violation and we are going to go to
the Federal Reserve Board, the White House economic advisors and the Federal
Trade Commission."
The goal, he said, is to "get people outside CMS interested
in the problem.
"We have to move this from CMS to other individuals in the
administration that will realize a non-binding competitive bidding program is
not sustainable," Tozzi said. "When you have a bidding system where
the bids are not binding, you're going to have every possible roach crawl out
from every rock around � and you are going to get all kinds of
snakeheads coming out of the bushes. They can manipulate the process because
if it is not binding, they can bid very low or they can bid very high."
Read Tozzi's letter in full in a post on the CRE website.
Read the economists' letter to CMS in full.
View more competitive
bidding stories.
|