Competitive bidding: Industry message falls on 'sympathetic ears'
WASHINGTON - CMS received 6,300 certified bids for the first round of national competitive bidding, an agency official told a subcommittee of the House Small Business Committee at a standing-room only hearing last week.
Although that number's higher than the industry's estimate of 2,000 bids, it's still much lower than the 15,000 bids CMS expected. But Laurence Wilson, director of the agency's Chronic Care Policy Group, told subcommittee members that CMS was closer to its target than one might think, because 15,000 includes multiple bids by individual providers.
However CMS massages the numbers, 6,300 bids "isn't a heck of a lot," said Georgie Blackburn, who testified before the subcommittee on behalf of AAHomecare.
"When you break it down by the number of competitive bidding areas, the number of product categories, and the accredited providers who are able to bid in each area, participation still has to be much lower than they expected," said Blackburn, vice president of government relations and legislative affairs for Blackburn's in Tarentum, Pa. "Not that they'd ever admit that."
The Subcommittee on Investigations and Oversight held the hearing to discuss whether small providers would be able to compete under competitive bidding. The subcommittee heard from Wilson and six others representing various parts of the industry.
During his testimony, Wilson argued that competitive bidding would help prevent fraud and save money, while still ensuring beneficiary access to high-quality products. The program, he said, does two things to help small providers--those with $3.5 million or less in annual revenues--compete: It allows them to form networks, and it includes a 30% target for small provider participation.
The industry argued that few, if any, providers formed networks. According to testimony submitted by John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers (PAMS): "Providers had to gather for the purpose of submitting a combined bid at agreed-upon prices and to somehow not violate federal or state antitrust laws. In other words, they needed to find a way to agree upon pricing without actually discussing or fixing prices. That's a neat trick if you can pull it off.
"No one was able to form a network in the Pittsburgh CBA," Shirvinsky said. "It was too onerous."
The 30% set-aside, the industry argued, doesn't prevent the program from "radically reducing" the number of small providers.
The industry appears to have an ally in the subcommittee.
"It was refreshing to hear our message fall on sympathetic ears," said Health Aid of Ohio President Carol Gilligan, who testified at the hearing. "It was exciting to see CMS put to task. Every member of that subcommittee came out firing at CMS."
The industry doesn't know yet what form the subcommittee's support will take. The industry appealed to the subcommittee to support H.R. 1848, a bill that would, among other things, exempt rural areas from competitive bidding and allow "any willing provider" to participate if they meet standards and accept the rates set by winning bidders.
"They don't think Tanner-Hobson goes far enough--that's the tenor I got," said Invacare's Senior Vice President of Government Relations Cara Bachenheimer, who attended the hearing. "If they could wave a magic wand, they'd make competitive bidding go away."