Industry gathers 'ammunition'

Friday, April 12, 2013

BALTIMORE – Industry stakeholders believe CMS may have shot itself in the other foot when it released the names of the 799 suppliers who won 13,126 contracts as part of Round 2 of competitive bidding.

“There are glaring problems with this list,” said Wayne Stanfield, president and CEO of NAIMES. “CMS has failed on every level: They have selected unqualified companies; they have given hundreds of contracts to suppliers that have no ability to fulfill them. It goes on and on.”

The list of contract suppliers follows the release on Jan. 30 of the single payment amounts—an almost unbelievable 45% and 72% below the fee schedule, on average, for HME and diabetes supplies, respectively.

Stakeholders say the “glaring problems” in the 307-page list include the small number of contract suppliers (799 for 91 areas in Round 2 vs. 356 for nine areas in Round 1) and the small number of local contract suppliers in any given bid area (some estimate a one-to-four ratio of local to non-local suppliers).

“If you take Apria (in Pearl City, Hawaii) out of the CPAP category in Honolulu, the next company that comes up is 3,000 miles away in California,” said Rob Brant, CEO of AMEPA. “One is 6,000 miles away in Florida.”

CMS says it awarded 90% of contracts to suppliers that are “already established in the bid area, the product category or both.” Stakeholders say it was a calculated move to report the information this way. By contrast, in Round 1, the agency broke it down: 76% of contracts to suppliers already furnishing the items in the bid areas, and 97% of contracts to those with experience with the items.

“They’re lying through their teeth,” Stanfield said.

Stakeholders are also taking CMS to task for awarding 63% of the contracts to small suppliers, those with $3.5 million or less in gross revenues. While this may seem like a positive, when you consider how few contract suppliers there are and how few of them are local, it becomes alarming.

“I don’t know how they’ll serve the sheer volume of beneficiaries,” said Cara Bachenheimer, senior vice president of government relations for Invacare. 

Stakeholders plan to weave all of this into a powerful case for delaying the start of Round 2 on July 1 and, ultimately, replacing competitive bidding with a market-pricing program (MPP).

“It’s going to provide us with some good ammunition,” Bachenheimer said.


Multiple supplies outside of the Sacramento Arden/Arcade were awarded contract while locate suppliers were excluded include companies based in Reno, NV, Riverside, CA and Florida.  These supplies do not have a location in the area and have never serviced customers in the area.

There is no doubt that the selection process is deeply flawed and while the 45% discount is bad enough, I find it amazing that all of the nationals secured contracts. They obviously bid these rates for a reason (eliminate or reduce competition and gain market share), and the low ball bids cannot be blamed on the few rouge bidders that are amongst the winners. These bid rates were by design, not by accident. IMHO.