Congress members call for open and transparent oversight of Medicare 'competitive' bidding program

Letter to CMS Cites Need for Open and Transparent Oversight of the Bid Program

A bipartisan group of 136 members of Congress recently requested that the federal Centers for Medicare and Medicaid Services (CMS) disclose the list of homecare providers whose bids were used to calculate home medical equipment reimbursement rates under the Medicare "competitive" bidding program. See letter at www.aahomecare.org.

"Without knowing the identity, as well as the appropriate overall qualifications of these providers, we cannot evaluate the program's impact in terms of quality and access to care for seniors we represent," states the congressional letter to CMS Administrator Donald Berwick, M.D.

While CMS intends to release this information in the fall after contracts are finalized, members of Congress are calling on CMS to share this information now to make sure that the disastrous mistakes of the 2008 Round One of bidding are avoided and to uphold President Obama's pledge of "transparency and open government."  

"We want to ensure that qualified providers have been chosen to provide these items and services to our constituents," said the congressional letter to CMS.  "The healthcare community will again have very serious problems if it turns out once more that these companies are unable to provide sufficient access to quality items and services or do not have the financial ability to operate under the new contracted rates."

When CMS held its Round One bid for home medical equipment in 2008, Congress halted implementation and called for a re-bid of the program after numerous problems emerged. For example, under the Round One bidding in 2008, Medicare contracts were granted to providers that were not appropriately licensed and lacked experience with the devices for which they were awarded contracts.

The American Association for Homecare, which represents durable medical equipment providers, is encouraged by the House letter and urges CMS to comply with this important request.  The congressional letter, sent on August 11, asked CMS to respond by August 20.  At the time of this press release, the Association is not aware of any response so far by the agency.

"We are pleased that so many members of Congress understand the need for transparency and the urgency of this request," said Tyler Wilson, president of AAHomecare.  "Transparency for the bid process is critical given past problems with this whole program.  If CMS delays the release of information until fall, it will impede the ability to assess the impact of the bidding program on Medicare patients.

"One of our concerns is that providers who submitted low, desperation bids out of their perceived need to remain a Medicare supplier could well determine the government's reimbursement rates – even if those companies ultimately declined to actually provide the equipment at those rates."

The Medicare bidding program for home medical equipment uses a degree of economic coercion to force homecare providers to submit bids necessary to win a contract. Because Medicare is the largest third-party purchaser of home medical care, its market power effectively coerces providers to bid at reimbursement rates low enough to ensure the opportunity to continue serving Medicare beneficiaries. Ultimately, the below-market rates achieved through this bidding program may be unsustainable, reducing competition in the long term and reducing seniors' access to care and choice of providers.  

In the first round of the bidding program in 2008, 90 percent of qualified providers were barred from serving Medicare beneficiaries for the bid-upon items.  Congress delayed the implementation of the initial bidding program in 2008 to allow for needed changes. The home medical equipment sector paid for that delay by taking a 9.5 percent nationwide reimbursement cut. However, CMS ignored congressional intent, did not address the flaws that precipitated the delay two years ago, and is now charging headlong into the program in 9 of the 10 largest metropolitan statistical areas in the U.S. An additional 91 areas will be subjected to the bidding process next year.

A bipartisan bill pending in Congress, H.R. 3790, calls for the repeal of the Medicare bidding program for home medical equipment and it would substantially reduce reimbursement rates for the equipment but preserve the nation's vital, cost-effective homecare infrastructure. That bill is supported by 255 members of the U.S. House of Representatives.