OIG report finds some contract suppliers did not meet all licensure requirements

Thursday, May 26, 2016

WASHINGTON – A significant chunk of Round 2 contract suppliers did not meet all licensure requirements, according to a new report from the Office of Inspector General.

“Of the 146 suppliers covered in our audit, 69 suppliers met licensure requirements,’ stated the OIG. “However, 63 suppliers did not meet licensure requirements for some of the competitions for which they received a contract.”

An additional 14 suppliers need further research to determine whether they met licensure requirements, the agency said.

The OIG reviewed documentation for contract suppliers in 50 CBAs in 11 states: Tennessee, Ohio, Maryland, Louisiana, Virginia, New York, California, Florida, Georgia, Michigan and Mississippi. The documentation was obtained from CMS, the National Supplier Clearinghouse and the Competitive Bidding Implementation Contractorregarding the processes used to ensure that contract suppliersmet licensure requirements.

Round 2 of the competitive bidding program kicked off July 1, 2013 and will end on June 30.

Stakeholders have said they hope that lessons have been learned in the wake of the Round 2 licensure debacle, which led may states to implement licensure laws to limit low-ball bids from out-of-state companies that have no intention of servicing the contracts.

The OIG states that the licensure database CMS used when awarding Round 2 contracts was incomplete. The agency recommended that CMS (1) complete the research required to determine whether 14 suppliers had a proper license and make a licensure determination regarding those suppliers; (2) identify all applicable state licensure requirements to prevent suppliers that do not have all currently required licenses from receiving contracts in future rounds of the competitive bidding program; and (3) work with state licensing boards to better coordinate, identify, and maintain an accurate and complete licensure database of currently required State licenses. CMS concurred and discussed steps it had and will take regarding the first two recommendations. CMS did not concur with the OIG's third recommendation.