Congress Considers Changes to Competitive Bidding for DMEPOS

As of press time, the competitive bidding program for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), authorized by the Medicare Modernization Act of 2003 (MMA), was scheduled to enter its first phase on July 1. Under the program, which will initially take place in ten competitive bidding areas (CBAs) or cities throughout the United States, only DMEPOS suppliers who have submitted winning bids and signed a contract with the Centers for Medicare and Medicaid Services (CMS) will be able to provide services to Medicare beneficiaries in these CBAs.

Except for some minor exceptions, suppliers that do not have a contract with CMS in these CBAs will not be reimbursed under Medicare, and beneficiaries’ Medicare expenses will not be covered unless they receive services from a contracted supplier. The second phase of the competitive bidding program will include 70 additional CBAs in 2009, and will expand to other CBAs at some point thereafter. For the first phase, only 325 winning suppliers have signed contracts with CMS to participate in competitive bidding. Of these suppliers, 50% are small suppliers with gross revenues of $3.5 million or less.

However, as the implementation date for phase one has recently passed, criticism of competitive bidding has increased, and the future of the program may be in question. Recently, at two hearings on competitive bidding, members of Congress and testifying witnesses expressed dissatisfaction about competitive bidding. The House Ways and Means Subcommittee on Health held a hearing on May 6 on the issue of competitive bidding. Chairman Pete Stark (D-Calif.), and other members of the subcommittee expressed concerns about beneficiaries having access to quality care under competitive bidding.

Speaking out

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The second phase of the competitive bidding program will include 70 additional competitive bidding areas in 2009, and will expand to other areas at some point thereafter.
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Peter Thomas, JD, general counsel for the National Association for the Advancement of Orthotics and Prosthetics, on behalf of the Consortium for Citizens with Disabilities (CCD) Health Task Force, of which the National Association for the Advancement of Orthotics and Prosthetics is a member, testified that the coalition believes that the competitive bidding program disproportionately impacts and unfairly places at risk individuals with disabilities and chronic conditions. Thomas testified that competitive bidding singles out vital assistive devices and technologies under the Medicare fee-for-service program to be provided by the lowest bidder while other benefits are not exposed to this potentially harmful practice.

He stressed that competitive bidding will result in decreased quality, decreased choice of supplier and choice of brand name products, as well as lesser access to appropriate care.

Thomas further said that the Medicare fee-for-service program currently allows the patient to have a choice of provider or supplier, makes price a constant variable, and makes suppliers compete for Medicare beneficiaries by providing high quality service, meeting patients’ needs, and establishing reliable and long-standing relationships with physicians who refer patients to suppliers.

Price vs. service

He argued that with competitive bidding, the sole variable becomes price, while service, patient satisfaction, patient choice, and access are presumed to be equivalent from one supplier to another and, therefore, become secondary factors.

As such, the fee schedule amount of an assistive device may decrease under competitive bidding, but so will the quality of care. Thomas further said that beneficiary choice will decrease as CMS received far fewer bids and awarded fewer contracts than expected.

O&P exempt

Orthoses and prostheses are currently exempt from the Medicare competitive bidding program. Congress agreed to separate treatment for O&P from DME in this instance because O&P care is not commodity-based and is highly clinical and service-oriented, unlike DME and supplies. However, in a fiscal environment where Congress is constantly looking to save Medicare dollars, the prospect that competitive bidding will be extended to part or all of O&P care is a constant threat.

The House Small Business Subcommittee on Rural and Urban Entrepreneurship also held a hearing on May 21 on competitive bidding. The witnesses presented testimony expressing concerns about beneficiaries receiving quality care under competitive bidding, especially in rural areas. There were also concerns voiced about the qualifications of suppliers under the competitive bidding program.

Following these hearings on competitive bidding, some members of Congress took action to address their concerns about competitive bidding. On May 15, Rep. John Tanner (D-Tenn.), Rep. David Hobson (R-Ohio), and Rep. Jason Altmire (D-Pa.), sent a letter addressed to Rep. Stark, urging that the implementation of the program be delayed for at least a year. More than 103 Representatives have signed the letter, and members of the House Committee on Ways and Means are discussing legislation to delay competitive bidding.

Possible delay

The legislation would likely pay for the cost of a delay in the program by reducing Medicare fee schedules nationwide for DME that would otherwise be subject to competitive bidding. Subcommittee on Health Chairman Stark, and Republicans Jim McCrery of Louisiana and Dave Camp of Michigan have been discussing the possible legislation.

Additional information

On May 16, six Democratic senators sent a letter about the competitive bidding program to Michael O. Leavitt, the Secretary of the Department of Health and Human Services. The senators asked for additional information about CMS’s education and outreach programs to help beneficiaries transition to competitive bidding. They also expressed concern about potential inaccuracies in the implementation of the competitive bidding program, such as reports that the procedures for the bidding process were unclear and inconsistent.

The senators were also concerned about the lack of publicly available data on the bidding process and its outcome. Furthermore, considering the issues already facing phase one of the competitive bidding process, the letter stated that CMS’s timeline for phase two leaves CMS little time to evaluate phase one and make improvements to the program.

Initial phase-in

Despite significant bipartisan congressional action to delay competitive bidding, the White House is strongly opposed to any changes to the competitive bidding program. The administration is moving aggressively to roll out the program and to follow the initial phase-in with a much larger implementation of competitive bidding in 70 other cities throughout the United States.

If a legislative delay does not push back the July 1 implementation date, it remains to be seen if competitive bidding will disrupt patient care to the degree that many fear.

Kate Romanow, Esq. is with Powers Pyles Sutter & Verville, P.C. in Washington, D.C.

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