Home Health & Hospice Week

Winning suppliers face an uncertain future under new program.

Lucky suppliers who ended up receiving competitive bidding offer letters may not end up so lucky.

That's because the contracts for durable medical equipment bidding in round one are full of pitfalls, says the National Association of Independent Medical Suppliers. "It's not what it says that is as scary as what it doesn't say," says NAIMES' Wayne Stanfield.

One major problem is that there is no provision for a supplier accepting the contract to opt out once signed, says Neil Caesar of the Health Law Center in Greenville SC. "A supplier must have remedies if [the Centers for Medicare & Medicaid Services] breaches its obligations under the contract," he notes.

Suppliers also need an out if the cost and volume analysis they used to generate bids doesn't bear out, says Caesar, also NAIMES' vice president and general counsel. "It is illogical and unfair to expect suppliers to stay bound to a contract if CMS' actions or market forces result in a significant cost increase or patient volume decrease."

Another problem with the contracts was the lack of time suppliers had to decide if they would accept them, notes the American Association for Homecare. The 10-day window wasn't enough time, especially considering all the errors suppliers said they saw in the bidding process.

As part of its potential lawsuit, AAHome-care's legal firm is examining 150 cases of alleged errors or unfairness.

Not enough information: To make contract decisions, suppliers needed information such as which other providers in the competitive bidding area received bid offers, NAIMES contends. Suppliers had to accept bid contracts "in the blind," the association notes.

"That could leave a supplier accepting a bid in a CBA where one of the other bid winners is already in control of much of the market," the trade group lamented. "In such a case a supplier may not want to accept a contract in the face of such market dominance."

CMS did release the number of contracts offered in each CBA near the end of the consideration window, but it didn't identify winning bidders by name.

The highest number of contracts offered was in the Miami area for oxygen and hospital beds--both 44. The lowest was in four CBAs for complex rehab power wheelchairs--five contracts each in the Kansas City, Miami, Orlando and Pittsburgh CBAs.

Low Prices Make Bidding Tough

Winning suppliers also had to look at the low prices offered under bidding. The bid price was based on a median price among winning bids, NAIMES explains. For some winning suppliers, that meant a price significantly under their bid.

"The prices clearly indicate that there were low-ball bids in virtually every category in every CBA," NAIMES suspects.

"It is unfortunate that some suppliers deliberately bid low to skew the market and get rid of some competitors," Caesar observes. "It is more unfortunate that CMS doesn't appear to have expended any effort to safeguard against this."

Winning bidders also had to make hasty recalculations if they were offered a contract on one bid item but excluded from another, AA-Homecare notes.

And sometimes CMS offered a contract in only one area. CMS selected Physicians Choice Respiratory Services Inc., based in Port St. Lu-cie, FL to serve Orlando but not the Miami area, owner Steve Mamangakis told Cox News. But Physicians Choice actually doesn't have any customers in the Orlando area, while half its patients are in Palm Beach County. 

Note: For information on each CBA's offered bid contracts, go to www.cms.hhs.gov/CompetitiveAcqforDMEPOS/ and scroll down to "Downloads."