Two Congressmen are calling for an inspector general investigation of the Centers for Medicare & Medicaid Services' durable medical equipment competitive bidding, after reports of contracts awarded to companies not in compliance with program guidelines.
As CMS prepares for a second round of DME bidding this summer, Pennsylvania Republican Glenn Thompson and Iowa Democrat Bruce Braley told HHS Inspector General Daniel Levinson they "fear that the program has been moved forward in a manner outside of established guidelines, for the purpose of achieving a budgetary outcome that is incongruent to the real market value of items or services in a given competitive bidding area."
Earlier in June, Thompson, Braley and 225 other House members asked CMS Administrator Marilyn Tavenner to delay the second round of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding, citing a lack of accreditation and licensing among several dozen vendors awarded contracts during the first round of bidding in nine metropolitan areas in early 2011.
In Tennessee, at least 30 of 98 companies awarded DMEPOS contracts by CMS lacked a state license and in Maryland, 68 of the 138 selected contractors lacked a state license, according to the lawmakers.
Thompson and Braley said that those and awards in other states seem to deviate from CMS's quality standards and accreditation DME rules, which require companies without specific product accreditation or state licenses to be removed from the bidding program.
Tavenner did respond to the House member's inquiries earlier this month, telling them that CMS voided 30 of the 98 DME contracts in Tennessee -- a move that also left Thompson and Braley skeptical of the agency's ability to accurately gauge the need for medical equipment at local levels.
"If CMS believes 68 suppliers are adequate for the state of Tennessee, why were 98 suppliers awarded contracts? This raises serious questions as to how CMS determines demand in a given competitive bidding area and the capacity of suppliers to adequately service this area," Thompson and Braley wrote to the OIG.
The two lawmakers asked inspector general Levinson to investigate specifically whether "CMS intentionally awarded contracts to these unlicensed companies in an attempt to set a predetermined price point for DMEPOS categorized products."
Braley suggested that CMS' bidding program may be in effect "imposing regional monopolies" that reduce choices for Medicare beneficiaries and could "replace local providers who know patients and their unique needs with faraway corporations."
Thompson and Braley are co-sponsoring a bill, the Transparency and Accountability in Medicare Bidding Act, that would delay CMS's implementation of DMEPOS round two competitive bidding until the licensing and accreditation flaws are addressed.
Also, the American Association for Homecare recently filed a lawsuit against HHS, citing the same concerns over licensing and trying to prevent the second round of bidding. The Association wants the agency to "redetermine successful bidders, and recalculate the payment amount, in every state where the secretary accepted bids from unlicensed bidders, after eliminating all contracts and bids from unlicensed bidders."
Responding to the 227 representatives' original letter, CMS Administrator Tavenner said that the DMEPOS competitive bidding program, which was created through the 2003 Medicare Modernization Act, has been fairly successful, replacing "outdated, excessive fee schedule amounts with market-based prices."
And citing the CMS Office of the Actuary, Tavenner added that the competitive bidding program could save the Medicare Trust Fund $25 billion over the next decade and also save seniors using the medical products some $17 billion in coinsurance and premiums.