ARLINGTON, VA – The American Association for Homecare has filed a federal lawsuit seeking to halt the Centers for Medicare and Medicaid Services’ “faulty implementation” of the durable medical equipment competitive bidding program, which is scheduled to begin July 1.
The suit, filed against Health and Human Services Secretary Michael Leavitt and CMS Acting Administrator Kerry Weems on June 9, seeks a “preliminary and permanent injunction ordering the HHS Secretary and the Administrator of CMS and their agents to cease the implementation of the competitive bidding program.”
The AAH argues that implementation of the bidding program has resulted in numerous violations of the Medicare Prescription Drug, Improvement, and Modernization Action of 2003 (MMA), the Small Business Act and the Administrative Procedures Act. The first round risks disrupting service to 3 million seniors and disabled people, AAH officials have said.
The suit contends that “the defendants’ failure to specify financial standards as required by the MMA is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” and that “AAH members are injured by the defendants’ unlawful actions or omissions because they have been excluded from providing items and services in the first round of bidding areas for which they submitted bids as a result of the legally defective competitive bidding program administered by CMS.”
CMS reported receiving about 6,200 bids from 1,005 suppliers serving 10 “competitive bidding areas.” The 23 percent of suppliers whose bids were accepted “were in the winning price range and met quality and financial standards,” CMS officials said.
CMS officials said 61 percent of the bids were priced higher than the winning range, and slightly more than half of those bids were disqualified because they didn’t meet other bid requirements. Another 16 percent of bids were disqualified even though they were in the winning range, officials said.
The first round of the bidding program is scheduled for implementation on July 1 in 10 metropolitan areas in the United States. The program is scheduled to expand to 70 additional areas in 2009.
The AAH contends that further damage could be done in the second round of bidding, in 2009. CMS has announced that it will extend the accreditation deadline for suppliers in those 70 metropolitan areas.
CMS has proposed using the Small Business Administration’s definition of “small business” ($6.5 million in total annual receipts) when determining whether a DMEPOS provider is defined as a “small supplier.” According to the AAH, in the final rule the CMS reclassified – in violation of the MMA, Small Business Act and the Administrative Procedures Act – a small supplier as having less than $3.5 million in annual receipts.
Two letters signed by 132 members of the U.S. House of Representatives in June urged the leaders of the Ways and Means Committee and its subcommittee on health to delay the "controversial and flawed" DME competitive bidding program. A similar letter from the U.S. Senate boasted 40 signatures.