Bidding in Riverside: 'It's really dirty'

Sunday, May 4, 2008

RIVERSIDE, Calif. - Officials at Pride Mobility Products have demanded that the Department of Health and Human Services begin an immediate investigation into suspicious bids and relationships in the Riverside, Calif., competitive bidding area (CBA).

In a letter last week, Pride Chairman and CEO Scott Meuser notified Secretary Michael Leavitt that "18 of the winning standard power wheelchair category bidders had all of the following in common: price, manufacturer and consultant." These bidders submitted prices that were as much as 70% lower than the current Medicare fee schedule.

By sending the letter and making their suspicions public, Pride officials have added another reason to the growing pile of reasons for delaying competitive bidding.

"What all the stakeholders in the industry have been working to do is show that competitive bidding is a flawed process, and this is one of the most significant flaws we've found," said Kirsten Delay, Pride's senior vice president of sales management and operational planning.

Providers in Riverside echoed Pride's findings. They spoke of a group of providers working with one consultant and one manufacturer (not one of the well-known industry names) to set prices.

"It's really dirty," said a provider in San Diego.

A provider in Riverside described one of the winning bidders as "a man with a single office with no rehab department or warehouse, just a storefront."

"To find out that there were providers who had help from a manufacturer to make sure their bid was low enough to win--that's what really irritated me," the provider said. "We weren't asking for advice, but all our manufacturers' reps were really clear that they couldn't talk about competitive bidding. They were very careful."

The accusations against the winning bidders in Riverside raise anti-trust issues, industry sources say, but it's not that black and white.

"Just because providers were working with the same consultant in and of itself isn't bad; there are certain things that have to converge," said one source. "The question is what was said, what was done, what were the motives."

Industry attorney Neil Caesar agreed.

"There certainly seems to be evidence suggesting further investigation is warranted, but it is unclear whether we have a consultant who simply came up with the same information based on similar factors or whether there was an active interaction among the suppliers who won the bid," he said. "It's also unclear whether consistent price recommendations trigger the price fixing rules."

If Leavitt decides to pursue the matter, he'll likely turn it over to the Federal Trade Commission or the Department of Justice, Caesar said.

"If you think CMS is bad, wait until you meet these guys," he said.

Pride officials said they now plan to look for potential impropriety in other CBAs.

"Right now, Riverside seems to be the most glaring concern, but Riverside is simply the first area where we've done a detailed investigation," said Pride's Seth Johnson, vice president of government affairs.