Single-source contract ‘promotes favoritism’

Monday, August 28, 2017

AMARILLO, Texas – HME providers in Texas have solid ground to stand on when it comes to their criticism of a new Medicaid contract that makes Medline a single-source provider of 244 DME supplies, says an industry attorney.

Pam Colbert, a member of the Health Care Group at the law firm Brown & Fortunato, outlined a number of ways the contract violates Texas law in her complaint on behalf of Alliance Medical Supply, a provider in San Antonio.

It’s anything but competitive

Per the Texas Government Code and the Texas Health and Human Services Procurement Manual, the “fundamental premise underlying public procurement is the requirement of equal opportunity allowing all qualified responsive and responsible vendors an opportunity to obtain the government’s business,” Colbert writes in the compliant.

“The sole source contract provided to Medline from Superior does not have a valid justification for awarding Medline exclusive right to provide hundreds of DME supplies that numerous, local, participating Texas DME supplies are currently providing,” she wrote. “Superior’s sole source, exclusive contract with Medline diminishes, not stimulates, competition. The contract clearly promotes favoritism and does not secure the best work and materials at the lowest price, for the best interests of the taxpayers and property owners.”

It eliminates choice

Colbert points out that HHS this past June established “MCO Policy Guidance on Preferred Provider Arrangements” in direct response to recent efforts by several MCOs to establish preferred provider arrangements for medical supplies. The goal: to protect the ability of Medicaid recipients to choose the network participating DME supplier they prefer.

“Superior has already begun to remove the ‘choice’ of suppliers as evidenced in its notice that it is automatically cutting off current suppliers’ DME services to members as of Aug. 31,” she wrote. “Further, Superior advised Alliance on a recorded call on July 7 that, ‘Patient does not have a choice starting Sept. 1—it will automatically go through Medline.’”

It increases the chance for fraud

Colbert also points out that as part of the contract, Medline does not have to submit prior authorizations for any supplies. Furthermore, Superior has authorized the company to fill in and complete doctor’s prescriptions.

“The removal of these compliance elements certainly lends itself to opportunities and implications for ‘kickbacks,’ upcoding, providing services not medically necessary and billing for services not provided,” she writes. “Exclusive removal of controls for one, large, exclusive DME supplier certainly puts Texas Medicaid funds at risk for fraud and abuse.”