Competitive Bidding 'Antithesis' of Obama's Executive Order

WASHINGTON — Could a presidential executive order be the key to revising, if not repealing, the DMEPOS competitive bidding program? The answer could depend on whether or not President Obama is keen on enforcing the order, according to a spokesman for the Center for Regulatory Effectiveness.

"We hope it is a mechanism that can be used. A lot depends on how interested the [Centers for Medicare and Medicaid Services] is in following the administration's new policy," said Bruce Levinson of the CRE, a watchdog organization that has challenged CMS on its implementation of competitive bidding, as well as its failure to divulge financial requirements for bidders. "And a second part is, how willing is the administration in enforcing the new policy?"

In his Jan.18 executive order and two accompanying memoranda, Obama called on government agencies to "strike the right balance" in regulatory oversight and not placing undue burdens on business.

"This order requires federal agencies [to] ensure that regulations protect our safety, health and environment while promoting economic growth," the president wrote in an opinion piece in the The Wall Street Journal. "And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive �

"I am directing federal agencies to do more to account for — and reduce — the burdens regulations may place on small businesses," Obama added. "Small firms drive growth and create most new jobs in this country. We need to make sure nothing stands in their way."

According to the new strategy, regulations must be cost-justified and coordinated, transparent and science-driven. Federal agencies must also consider regulatory approaches that "maintain flexibility and freedom of choice for the public," including disclosure of information.

Levinson, whose career is built around scrutinizing government rules and regulations, said of competitive bidding he couldn't think of any other existing program that is the "absolute antithesis" of the president's call for flexibility and preserving freedom of choice, not to mention small businesses.

"You're literally decimating small businesses," Levinson said of the bidding program. "It's probably one of the most needlessly job-crushing rules — because of the way it was designed rather than being inherent in the mandatory statute — that I have ever seen. It is excessively burdensome," he continued, adding that the president's edict "stresses scientific integrity. This is a scientific discipline, and [CMS'] competitive bidding design fails every test."

With predictions of thousands of small HME business closures and industry job losses that could reach 100,000 under the bidding program, the president's action does seem to offer an opening for its review.

"The president's executive order on regulations � does provide us with an opportunity to bring up competitive bidding and other onerous Medicare regulatory issues with the White House," said Michael Reinemer, vice president of communications and policy for the American Association for Homecare. "We drafted a letter to President Obama � that outlines some of our concerns and requests a meeting." (See "AAHomecare Asks Obama to Review HME Regs".)

Provider Tom Ryan, president and CEO of Homecare Concepts in Farmingdale, N.Y., was cautious about the possibility the new strategy could effect any change in competitive bidding.

"We continue to try to get clarity on what the costs are to run this program. That is one of the biggest unknowns where there is no transparency," Ryan said. "Just what does it cost to run the program? They are putting a lot of dollars into administration, and any savings they are talking about should be net of administrative costs."

The project is also killing business and jobs, he said. "Providers are already beginning to go out of business, so if Obama is truly going to be saying what are the regulatory burdens costing in jobs, we can pretty much say that competitive bidding is costing jobs," Ryan said. "But, of course, if they just have a one-sided argument and look at the cost savings and not at the net savings, then we are at an unfair disadvantage."

For his part, the CRE's Levinson is hopeful the edict will have some impact. The executive order calls for a retrospective analysis of existing rules, he pointed out, and the competitive bidding project would certainly be a candidate for revision or modification. "It fails the standards set forth in the president's documents," he said, noting the CMS program's lack of transparency, inflexibility, inefficiency and immense burden on small businesses.

"You're crushing small businesses," Levinson reiterated, "and, for that matter, some large businesses." He believes it is up to providers and beneficiaries "to clearly raise CMS' awareness of the new requirements that the White House is imposing on their regulatory operations." Then it becomes a question of whether CMS will comply and whether the White House will enforce the order.

As far as the bid program goes, however, it still comes down to Congress, said Cara Bachenheimer, senior vice president of government relations for Elyria, Ohio-based Invacare Corp. The executive order is "good for messaging," she said, "but in the end, CMS is unlikely to change the bidding program without Congress changing the current law."

Read the executive order, titled "Improving Regulation and Regulatory Review."

Read the president's opinion piece in The Wall Street Journal, titled "Toward a 21st-Century Regulatory System."

Read a CRE commentary on the executive order at www.thecre.com/blog/.

View more competitive bidding stories.