Mike Coughlin

My company was a winner in the first round of competitive bid in the
Dallas/Ft Worth area. We won all the areas that we bid including high
end rehab power chairs. We are a RESNA certified ATP company.

However, we would have been a big loser had competitive bid been fully
implemented. Let me explain.

We bid a very low price base on the fact that we would have a quasi
monopoly. Some 75% to 85% of my competitors were supposed to be
eliminated from the market that I had won. However, that was not the
reality!!!

CMS devalued the value of my contract! CMS was allowing subcontracting
after the winners were announced. It was my understanding that
subcontract were to be included with a company’s bid (which is what my
company did).

Companies that did not win a contract and wanted to stay in business and
keep their referral sources made deals with contract winners to
subcontract to those companies. THIS WAS NOTHING MORE THAN KICKBACKS!
These losing companies were still going to be the company that their
referral source contacted and they were still going to provide equipment
that they purchased. The winner company were just going to be their
billing company and earn a percentage of the billed amount. This type
of activity had been prohibit by Medicare law. However, when I
complained to CMS representatives in Dallas, they were not going to do
anything about these arrangements.

I had created several financial forecasts spreadsheets that depicted
many scenarios but none that indicated that my company’s market share
would not at least triple. Well that was not going to happen from the
numerous kickback deals being made by some the larger companies in the
market that were not contract winners.

I gave CMS a price based on a restricted market and significant growth
in my market share. That was what the entire bidding concept was
about. Only a few companies in the market and winners still had to
compete with each other. Because CMS was going to allow kickbacks, my
company was also going to have to compete with companies that had lost
the bid.

CMS was getting what they wanted – lower prices but mostly fewer vendors
to deal with. But they were not going to uphold the terms of the
bidding criteria and therefore CMS was allowing activities that if I
were to do them today (in a non-competitive bid environment), I would be
fined, suspended by CMS and possibly incarcerated.

Will I bid the same way on the next round of competitive bidding?
Absolutely! I want to stay in business! I cannot give up 40% of my
revenue and be confident that my company will survive.

Competitive bidding is going to do the following:

1. Give CMS lower prices (they could to that by simply reducing the
allowable, so that is not the reason for competitive bidding)
2. Give CMS fewer companies to deal with / monitor.
3. Give beneficiaries fewer choices and more hassle finding a vendor
and far less service!
4. Give the American taxpayer more fraud and abuse. I believe that
about 20% of the vendors that won contracts in Dallas/Ft Worth
were corrupt. So competitive bidding was not going to eliminate
fraud and abuse, I believe it was only going to make it grow.
Some of those companies that lost were desperate and would do
whatever they had to to survive. And since many of the winners
were bad characters, their opportunity to continue and grow their
illegal activities was only going to increase.

CMS needs to monitor the activities of their vendors more closely. I
welcome CMS inspections. I know I am doing things the correct way and I
know that everyday many of my competitors are not. However, they are
not being caught and punished. I would increase CMS inspectors (good
ones – not some of the ones that have come to my business) by 400 or 500%.
President
CVI Medical
Corporate Name: Braemar Consultants, Inc.

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