Anybody who is paying any attention to the Medicare competitive bidding program understands that the program is fatally flawed. We all know that just about every qualified expert in the field of auction design has agreed that the program breaks just about every rule that governs the auction process. We all know that the round two bid result that reduces reimbursements by 45 percent is not only unsustainable, but is truly bizarre.

But even with this general knowledge of such a horribly flawed, destructive and unfair process, many in the HME industry are still unmotivated to take up the fight for survival that is needed to get rid of the DMEPOS competitive bidding program.

Well, if you’re not mad yet, try this on for size: It now appears likely that CMS not only broke the rules of auction design, they also broke their own published bid rules. By doing so, CMS permitted unqualified, low-ball bidders into the bid process so that round two results could be rigged to realize huge cuts that would otherwise be unobtainable.

According to newly released research:

• CMS awarded bid contracts to as many as 33 bidders that do not hold a valid DME license in the state of Tennessee.
• In Maryland, 68 out of 138 unique companies were awarded contracts in spite of the fact that they do not currently hold the necessary Maryland Residential Service Agency (RSA) license.
• Fifty-eight contracts in the six Ohio bid areas are held by firms that are not appropriately licensed to provide items in that state.

CMS’ bid rules are very clear: “Bidding suppliers must ensure that copies of all applicable state licenses are RECEIVED by the NSC on or before May 1, 2012. Bids will be disqualified if the bidder does not meet all state licensure requirements for applicable product categories and for every State in a CBA.”

Did you get that? CMS’ own eligibility rules provide that bidders who do not hold the necessary state licenses “will be disqualified”—and not just some of their bids—all of their bids.

This means that the many long-distance bid winners who won many contracts in many multiple states—yes, these seem to be the very same companies who consistently disregarded the state licensure requirements of the bid program—should have been ineligible to bid in any state. This is an enormous blemish on an already-flawed bid program, and should invalidate the current round two single purchase amounts (SPAs).

Reps Glenn Thompson (R-Pa) and Bruce Braley (D-Iowa) are currently circulating a “Dear Colleague” letter within the U.S. House of Representatives urging CMS Administrator Marilyn Tavenner to suspend the scheduled July 1 implementation of round two to investigate this scandal. This is a critical development, along with the introduction of HR 1717, the market pricing program bill, to finally stop the Medicare competitive bidding program and replace it with something that is fair and honest.

Now is the time for everyone with a stake in the HME industry to stand up and be counted. Let Congress know that CMS must be held accountable for breaking its own rules.

The discredited round two bid prices cannot be permitted to take effect under the current cloud of suspicion. Tell Congress that CMS must suspend round two implementation, and that Congress must pass HR 1717 to fix a program that is clearly broken beyond repair.

by John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers, Harrisburg, Pa.

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