Home Health & Hospice Week

Controversy could throw a wrench into suppliers' bidding plans.

Heads up, durable medical equipment providers: Beginning in 2010, there could be only one supplier in the whole country for certain DME items.

During this month's meeting of the Program Advisory and Oversight Committee, the Centers for Medicare & Medicaid Services unveiled a plan to establish a nationwide competitive acquisition area for DME items with a significant national market through mail order, such as diabetic supplies.

"It received heavy criticism from the committee," reports meeting attendee Seth Lundy, an attorney with Fulbright & Jaworski's Washington office. "There's clearly a significant difference of opinion on the issue," he adds.

Nevertheless, CMS is not dropping its plans for the nationwide bid area - at least not at this time.

"We are currently working on the Notice of Proposed Rulemaking for DME competitive bidding, which should be published this summer," a CMS official tells Eli. "This issue will be addressed in the rule."

PAOC members questioned CMS' authority to establish a nationwide bid area, arguing that this was not the intent of Congress. But CMS maintains that it does in fact have such authority. It points to Section 1847(a) (1)(A) of the Social Security Act, which requires that the Department of Health & Human Services establish competitive acquisition areas throughout the U.S.

"We do not believe that the size of the area is limited by this section of the law," the CMS official says.

The agency also notes that last September, the Government Accountability Office issued a report on competitive bidding (GAO-04-765) that recommended CMS "consider using mail delivery for items that can be provided directly to beneficiaries in the home, as a way to implement a national competitive bidding strategy."

Nationwide Area Could Jeopardize Access

A nationwide competitive bidding area would "almost necessarily" put local suppliers out of business, Lundy says.

That fact seems to run contrary to the protections for rural communities included in the Medicare Modernization Act, which mandated the competitive bid system in the first place. CMS' proposal raises fundamental questions about what access for beneficiaries really means, Lundy observes.

"Certainly from the beneficiary and supplier side, [access] means something broader than just being able to make sure that somewhere, somehow you can buy supplies in the covered category," he notes.

Genuine access would also include brand and service access, for example. While there will be beneficiaries who prefer - and in some cases, due to disability, require - mail-order services, there are also beneficiaries who prefer the face-to-face contact that local suppliers offer.

Any nationwide competitive bidding area that would include the rural jurisdictions originally carved out of the program by the MMA "would likely mean that small local providers would not be winning bidders" in those areas, predicts Lundy.

Proposal Complicates Supplier Planning

Some members of the PAOC discussed going back to Congress for clarification on whether CMS actually has the authority to establish a nationwide bid area, Lundy reports.

But appealing to Congress could take time - and with suppliers getting ready to submit bids, time is of the essence. After all, suppliers will want to know in advance whether CMS will look at prices beyond the Metropolitan Statistical Areas in which they're bidding.

"To change the rules afterward would be an issue, because suppliers may have significantly different costs in providing services in different areas of the country," Lundy says.

Take action: In the meantime, suppliers with concerns about the nationwide bid area proposal may want to begin preparing their feedback for CMS.

"We welcome all comments on this issue upon publication of the NPRM," says the CMS official.