Monday, June 16, 2008
Competitive Bidding for Medical Equipment Likely to Be Delayed
From CQ Today
By Alex Wayne, CQ Staff
Five years ago, Congress passed a law to require competitive bidding among companies that provide home medical equipment to Medicare beneficiaries. Now, the Democratic-controlled Congress is set to order a delay of the bidding process, at the behest of equipment suppliers and groups representing Medicare beneficiaries.
What happened is, by some accounts, a classic Washington story. The change in direction has come about because of widespread complaints about how the bidding process has been set up and because medical equipment dealers and their clients, Medicare beneficiaries, are a potent political force.
For suppliers, a delay in competitive bidding can’t come soon enough. In the first round of bidding, for Medicare business in 10 metropolitan areas, the Centers for Medicare and Medicaid Services (CMS) selected just 1,335 winning bids from 6,209 applicants.
Losing a bid to serve Medicare beneficiaries will be a “death knell” for the many small businesses that make up much of the industry, says Michael Reinemer, vice president for communications and policy at the American Association for Home Care, which represents the industry.
But CMS says that forcing suppliers to bid for Medicare business based on price will wring substantial savings out of a program that has long been honeycombed with fraud. Medicare spent about $10 billion last year on what is called “durable medical equipment,” like oxygen concentrators, hospital beds and powered wheelchairs, according to the Government Accountability Office. About 10.3 percent of those payments, or more than $1 billion, were considered “improper,” GAO has reported.
Acting CMS Administrator Kerry N. Weems told a congressional subcommittee May 6 that competitive bidding would save taxpayers $1 billion a year once it is fully implemented in 2010 and that it would also lead to lower co-payments for beneficiaries.
“Requiring suppliers to submit bids, including information on price, accreditation and financial standards, will ensure access to high-quality medical equipment at a more reasonable price to beneficiaries and the Medicare program,” Weems said.
CMS officials say that medical equipment suppliers are grossly overpaid, compared with the prices their products fetch on the open market. For example, Medicare pays $2,380 for an oxygen concentrator, used by people with respiratory problems. The same device can be bought on the Internet for $677, according to Weems’ testimony.
Reinemer called that comparison “outrageous” because the price Medicare pays for a piece of equipment includes the costs of its delivery, installation and maintenance and the cost of educating patients on how to use it. “It’s not apples to oranges,” he says of the comparison. “It’s apples to desks.”
A Powerful Lobby
And for now, the concerns of medical equipment suppliers and Medicare beneficiaries are taking precedence over cost-cutting. Equipment suppliers operate in every congressional district in the country and give hundreds of thousands of dollars to lawmakers in every election cycle. People associated with just five large suppliers — Invacare, Sunrise Medical, Medline Industries, Covidien and Apria Healthcare — have contributed more than $368,000 to campaign committees in 2007-08, according to CQ Moneyline. The American Association for Home Care’s political action committee has chipped in an additional $59,550.
On June 12, Rep. Pete Stark, D-Calif., the chairman of the Ways and Means Subcommittee on Health, introduced legislation (HR 6252) with the subcommittee’s ranking Republican, Dave Camp of Michigan , that would delay the bidding process for 18 months and force CMS to give suppliers more assistance submitting bids.
Senate Finance Chairman Max Baucus, D-Mont., and ranking Republican Charles E. Grassley of Iowa both promised that their competing Medicare bills (S 3101, S 3118) also would have delayed the bidding process.
Baucus said many Medicare beneficiaries are “confused about what this new program means for them and are concerned that they won’t be able to get care from someone in their own community.”
Lawmakers from across the political spectrum have cosponsored Stark’s bill, including House Minority Leader John A. Boehner, R-Ohio, who has received more than $14,000 this election cycle from people associated with Ohio-based Invacare. The company is his second most generous campaign donor, according to the Center for Responsive Politics.
Aides to lawmakers say flatly that campaign contributions from the industry have not influenced their positions. And to be sure, equipment suppliers won’t get their delay for free. The Stark bill would cut Medicare payments for the products that would have been subject to bidding by 9.5 percent nationwide starting in 2009.
“We have been at the receiving end of cuts and freezes for years and years and years,” Reinemer said. “We haven’t had any news to celebrate, really, in Washington for many, many years. All we really want is to have our issues to be taken seriously and to get a full hearing, and we feel that is finally beginning to happen.”
Camp “is firmly in support of competitive bidding,” said his spokesman, Sage Eastman. “The problem is not with the program; it’s with its implementation.”
Boehner spokesman Kevin Smith said, “Mr. Boehner believes the bidding process, as mandated by CMS, won’t serve the needs of seniors who count on this program to deliver the highest-quality health care at the lowest possible cost. A temporary delay is warranted so we can fix this problem.”
Suppliers, Medicare beneficiary groups and their congressional allies say CMS botched the bidding process from its start last spring, giving suppliers conflicting information about what documentation they would have to provide to have their bids considered, and then rejecting nearly half the bidders because of a lack of accreditation or missing information.
CMS never published in the Federal Register or anywhere else the financial standards that it expected bidders to meet, the Home Care association said in a lawsuit it filed last week to stop the bidding process.
But Weems said CMS went out of its way to help bidders, including setting up a special Web site for the bid and holding conferences to explain the process. If the number of suppliers is winnowed by the results of the bidding, Weems suggested, that might be a positive development. In his testimony, he said “substandard suppliers” with “less-than-satisfactory business practices” are “a substantial problem in some areas of the country.”
A CMS spokesman provided information on the bidding program, including Weems’ testimony, but said officials were unavailable at press time to respond to follow-up questions.
CMS said in a statement last week that it does not discuss pending litigation as a matter of policy.
“However, stopping or slowing the competitive bidding program for durable medical equipment will only mean that Medicare beneficiaries will lose or delay their chance of saving money when they buy or rent their medial equipment and supplies from fully accredited suppliers,” CMS spokesman Jeff Nelligan said in the statement.
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NACDS supports delay in competitive bidding program
From National Association of Chain Drug Stores
ALEXANDRIA ,Va. (Jun. 13) The National Association of Chain Drug Stores released a statement today praising the introduction of legislation that will delay and reform Medicare’s competitive bidding program for durable medical equipment, prosthetics, orthotics and supplies.
H.R. 6252, the Medicare DMEPOS Competitive Acquisition Reform Act of 2008, was introduced Thursday by House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif. and Health Subcommittee Ranking Member Dave Camp, R-Mich., along with original cosponsors Ways and Means Committee Chairman Charles Rangel, D-N.Y., Energy and Commerce Committee Chairman John Dingell, D-Mich., Energy and Commerce Health Subcommittee Chairman Frank Pallone, D-N.J., and House Minority Leader John Boehner, R-Ohio.
According to NACDS, the Centers for Medicare and Medicaid Services has excluded diabetic supplies sold at retail pharmacies from the competitive bidding program in part because of the unique nature of this disease and its impact on beneficiaries. While providing meaningful safeguards and enhancement to the program, the sponsors of the bill rejected harmful proposals to freeze and/or cut the fee schedule for these products or expand competitive bidding to include diabetic products sold at retail pharmacies.
In a letter to the bill’s sponsors, NACDS declared its strong support for the Medicare DMEPOS Competitive Acquisition Reform Act. “We thank Chairman Stark, Ranking Member Camp, and all the bill’s cosponsors for siding with Medicare beneficiaries and recognizing that interaction with pharmacists is critical in proper diabetes management,” said NACDS president and chief executive officer Steve Anderson. “H.R. 6252 will ensure that suppliers are treated more fairly and that beneficiaries continue to have access to necessary items and services.”
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