Competitive bidding: Avoid these legal landmines

Monday, April 25, 2011

Competitive bidding has created several legal landmines for providers, particularly when it comes to subcontracting, purchasing and marketing, warn industry healthcare attorneys.


Several months into competitive bidding, contract suppliers are still struggling to craft subcontracting agreements that satisfy their business needs but don't violate anti-kickback statutes and the supplier standards, says Jeff Baird, a healthcare attorney with Brown & Fortunato in Amarillo, Texas.

"For example, the contract supplier will want the subcontractor to handle intake and assessment and, unfortunately, the CBIC and the NSC have said you can't do that," he said.

But that doesn't mean the contract supplier has to relegate its subcontractor to the role of equipment jockey, Baird said.

"The subcontractor can educate; they can set up equipment; they can handle repairs; they can sell their inventory to the contract supplier," he said.


Baird says contract and non-contract suppliers are also chafing against the restrictions associated with purchasing the assets of another company.

"The CBIC just recently came out with a statement that says, 'Look, you're going to have to purchase all the assets associated with all the competitive bidding contracts in all the competitive bidding areas that were awarded to the contract supplier,'" he said. "If I have a client in Florida who has won 35 contracts, that client can't go around  and sell the 35 contracts separately and make a bunch of money. Either they sell it or they don't. That has caused problems."


There's a "substantial power play" going on for referrals in the competitive bidding areas, says Neil Caesar, president of the Health Law Center in Greenville, S.C.

"I've started noticing, and I expect this will dramatically continue, that the regionals and nationals who, by winning bids or acquiring bid winners, are offering convenience, simplicity and assurance to referral sources," he said. "They're saying, 'Go with us; you don't have to pick and choose providers; we have won everything; we can be your one-stop shop.'"

While some may perceive this kind of marketing as unfair, it's usually legal, Caesar said.

"Not only is it legal; it's what business is all about," he said. "For a lot of the suppliers out there sticking out their tongues at CMS for implementing a burdensome program, they should be spending more time looking over their shoulders at the regionals and nationals and what they're doing."