CMS briefs Congress on competitive bidding

Sunday, January 27, 2008

BALTIMORE – CMS slammed the home medical equipment industry as a hotbed of fraud during a congressional briefing on national competitive bidding last week, according to AAHomecare.

The association released the following report to members on Friday:

“During the briefing, CMS staff claimed that DME fraud is the largest area of fraud in the Medicare program, the biggest loss to the program and the biggest vulnerability in the program.

However, CMS staff did not describe their agency’s accountability for failing to prevent criminals from obtaining Medicare supplier numbers. Nor did CMS provide the math for how the DME sector, about 1.7 percent of Medicare spending, could account for the largest amount of fraud in the entire Medicare program, which spends more than $400 billion per year. The most recent National Health Expenditure data from CMS show that durable medical equipment is the slowest growing sector of Medicare, increasing 3.8 percent between 2005 and 2006 (from $6.7 billion to $6.9 billion). CMS estimates that the total cost of fraud across all sectors of Medicare is somewhere between $40 billion to $80 billion per year. So the agency’s own margin of error for calculating Medicare fraud is many times greater than the total DME spending in Medicare.

In reference to round one of competitive bidding, CMS stated the 10 Metropolitan Statistical Areas (MSAs) were chosen by focusing on the areas with the highest allowed DME charges. The winning suppliers for round one will be announced in March. For round two, CMS says they focused on MSAs with the largest population, which doesn’t explain why certain MSAs were included and other larger MSAs were not.

Some general comments made by CMS staff during the briefing and in response to questions are summarized below:

• CMS will release ZIP Codes and other information that will be included in each competitive bidding area (CBA) sometime later this spring. A detailed timeline for round two will be announced in the next four to six weeks.

• According to CMS staff, there is no product category for mail order diabetic supplies in round two because CMS is planning on having a national mail order diabetic program in the near future, which they are hoping can begin in 2010.

• On the topic of competitive bidding for complex rehab power wheelchairs, CMS staff acknowledged that complex rehab chairs require more of a service component than some of the other product categories, but claimed it is not very different from other areas of DME. They noted that suppliers should be submitting bids that include the costs of services and customization.

• For round two, CMS says a number of refinements have been made to the bidding process designed to decrease the burden on bidders including an updated bid submission system. Bid submission for round two will require suppliers to enter less information for their bids so that the process will take fewer hours. Also, for many suppliers there will be almost two-thirds fewer financial documents required.

• Pre-bidding items for round two will likely commence sometime this spring, and will include online registration and supplier education. A 60-day bid submission window will begin sometime this summer, and contracts for round two suppliers will begin sometime in the summer of 2009.”