NCB comments: AAH urges caution

Sunday, July 2, 2006

WASHINGTON - In 20 tightly packed pages of comments submitted to CMS last week, AAHomecare raised plenty of concerns over Medicare's plan to implement competitive bidding for durable medical equipment.

Of utmost importance: CMS should revise its timeline to make sure it has time to do all that's required by year's end.

Among other things, CMS must select accrediting bodies, publish product categories, evaluate bids and educate beneficiaries and referral sources.

"This timeline is aggressive in light of the many critical steps that remain to be done," states the letter addressed to CMS Administrator Mark McClellan.

The industry had until June 30 to submit comments on CMS's 203-page proposal for competitive bidding. The proposal was published in the Federal Register May 1.

With so much unexplained, AAHomecare urged CMS to provide the industry with another opportunity to submit comments. Once CMS has published more information, it should issue an interim final rule and request a meeting of the Program Advisory and Oversight Committee (PAOC) on competitive bidding.

AAHomecare also made the following comments:

- Establishing the Competitive Bidding Area--CMS has no authority to extend competitive bidding areas outside an MSA in 2007 and 2009. The MMA clearly states that the competitive acquisition areas will be established in an MSA. Moreover, including a patchwork of areas within a competitive bidding area will make it difficult for contract suppliers to administer competitive bidding from an operations perspective.
- Quality Standards and Accreditation--The NPRM states that CMS will allow a "grace period" during which unaccredited providers can participate in the bidding process. If it fails to get accredited during the grace period, the bidder will loose its contract supplier status. Whether a supplier is accredited influences its bid amount inasmuch as accredited suppliers must bear the cost of complying with the quality standards. These costs are unknown until CMS publishes final quality standards. Consequently, unaccredited suppliers who lack experience with accreditation will not be able to accurately project those costs, skewing the pivotal bid point and the median bid downward.
- Market and supplier capacity--Under the methodology proposed in the NPRM, CMS would array the composite bids from lowest to highest and count up from the bottom until it identifies the point where the bidders' cumulative capacity is sufficient to service the MSA. This will be the winning, or "pivotal" bid. This methodology does not include any mechanism to "rationalize" the bids to ensure that there are no unreasonably low bids. Although competitive bidding is premised on the theory that suppliers will submit their "best bid," in fact there will be suppliers with small individual capacity who may submit a very low bid speculating that they will end up in the winning bid range based on other bidders' capacity.
- Rebate program--CMS's proposal to allow contract suppliers to offer rebates fundamentally conflicts with the longstanding rationale underlying the prohibitions on inducements and kickbacks in federal healthcare programs. This type of activity distorts patient decision making and undermines true competition among healthcare providers.
- Impact analysis--We believe that CMS has minimized the impact of competitive bidding on beneficiaries and small businesses. Competitive bidding will force about half of the current suppliers to go out of business.