Lawmakers seeking delay in competitive bid program

By James Harrison

Eddie Jenkins had a rough time sleeping Sunday night.

Jenkins, a director at Hixson’s Access Family Pharmacy, was restless. He knew that on Monday, July 1, his role at the pharmacy would change. Instead of providing service to longtime customers who had come to rely on the business as a supplier of medical equipment, Jenkins would be the bearer of difficult and confusing news: “You have to go somewhere else.”

The message wasn’t quite that simple. Throughout the day, Jenkins told patrons whose needs are covered under Medicare that his pharmacy was no longer an approved supplier for basic durable equipment—items like wheelchairs, crutches, blood pressure monitors, oxygen tanks and beds.

“We had to turn them all away today,” Jenkins said. “It’s been maddening, probably 50 to 60 people since 9 a.m. And most of them had no clue.”

The customers were unaware that Monday marked a deadline for a new competitive bidding process for Medicare suppliers to go into effect.

Until now, beneficiaries could choose suppliers for their medical needs. But the new program limits the number of suppliers to those that have preapproved contracts from the Centers for Medicare and Medicaid Services—the federal arm that offers health coverage for 100 million citizens.

The goal is to streamline Medicare costs and deter potential fraud.

Access Family Pharmacy was not approved for a contract under the new program. In fact, the pharmacy, which is one of the oldest in Chattanooga, didn’t even bother bidding for one. Competition from larger, more national Medicaid suppliers that could underbid them was too great, Jenkins said.

“There were several companies in Chattanooga that did submit bids and did win, but they’re national companies that have branches in every state and most cities in the country,” he said. “None of the independent suppliers bid.”

Jenkins said Access Family Pharmacy had anticipated the change and would be able to continue offering other services to customers. The company offers a diverse range of services, many of which are still covered through Medicare. But he feared for other small, local pharmacies.

“With this, it’s a no-win for both the business and the patient,” he said.

The new program was implemented nearly two weeks after members of the Tennessee congressional delegation conducted a probe on approved suppliers to ensure that patients would have access to equipment needed and vendors would be able to meet needs on a level playing field. The group found that several vendors did not meet state licensing requirements.

Marilyn Tavenner, CMS administrator, informed lawmakers that of the 98 suppliers approved for the new program in Tennessee, 30 were not up to standard and would have their contracts voided. Still, Tavenner defended the program, saying in a June 14 letter to Rep. Chuck Fleischmann that the program had already reduced out-of-pocket costs for beneficiaries, provided savings to taxpayers, and limited waste and fraud.

Tavenner said she expected more savings.

“The CMS Office of the Actuary projects that the program will save $25.8 billion for Medicare over 10 years and save another $17.2 billion for beneficiaries through lower coinsurance and premiums,” she said.

Still, members of the delegation—which includes all congressmen and senators except for 8th District Rep. Stephen Fincher—are asking for a delay.

On June 24, members of the group sent a letter to Tavenner to request that implementation of the program be postponed and that “strongly urged” her to allow qualified bidders who were not awarded contracts to rebid. Some lawmakers, including Fleischmann, have signed on as sponsors of a bill that seeks to replace the process with a market pricing program.

Tyler Threadgill, press secretary for Fleischmann, said the congressman wanted a solution to replace the process, calling it an “embarrassment.”

“Rep. Fleischmann continues to be concerned about the impact Medicare’s oversight had on median pricing and how the unsound competitive bidding process will affect Tennessee beneficiaries’ access to durable medical equipment and services,” Threadgill said in an emailed statement. “He is pleased that CMS listened to the concerns expressed by the majority of the Tennessee delegation in our May 20 letter and re-examined the contracts for suppliers in Tennessee; however, the program remains deeply flawed.”

According to one letter from the group, similar issues have occurred in Maryland and Ohio with the implementation of the new bidding process.

To view a list of local Medicare suppliers, click here.