CMS canceled a meeting scheduled for Monday with an expert on auctions about his ideas to modify the design of the agency’s controversial competitive bidding program for durable medical equipment, Washington insiders tell Inside Health Policy. The meeting was canceled as another group representing DME suppliers notified CMS Monday of a forthcoming report that is expected to detail flaws in the design of the competitive bid program. The concerns about the bidding design come as the program kick off date — Jan. 1, 2011 — inches closer.
CMS last week delayed the announcement of first-round bid winners because of what it referred to as program-integrity concerns. The contracts were expected to be announced last month .
The agency had scheduled a meeting on Monday with Peter Cramton, a leading critic of the design of the Medicare competitive bidding program. It is not clear whether the meeting will be rescheduled. Cramton is a University of Maryland economics professor who specializes in the design of auctions. Cramton’s concerns about the program have caught the attention of Rep. Pete Stark (D-CA), chair of the House Ways and Means subcommittee on health, who is urging CMS to say whether it is considering program changes. A Stark spokesperson said CMS has not replied.
CMS officials have declined to discuss the status of the program beyond releasing a vague statement last week about a “program integrity tool” raising “a number of issues” that require further examination.
The Center for Regulatory Effectiveness, which represents oxygen suppliers, also jumped into the debate Monday with a letter to CMS urging a delay of the round one bid until the program’s rules are revised to conform with accepted principals for auctions. In accordance with Cramton’s critique, the CRE argues that the CMS program is uniquely flawed.
“CRE is not aware of any auction program in existence which violates accepted auction principals as seriously as does CMS’ DMEPOS competitive bidding program,” the letter (below) wilsonletter1states. (In a separate matter, the CRE is involved in a lawsuit against CMS for not releasing the financial standards used to determine the winning bidders.)
The group is preparing a report that it argues will demonstrate that the DME competitive bidding program violates established auction rules in ways that other federal auction programs do not.
“In the mean time, to prevent harm to Medicare beneficiaries and taxpayers, we request that while CMS is re-examining Round 1 bidders for possible fraud, that you use this period to assess the agency’s bidding rules for non-compliance with established auction principals and postpone the Round 1 program until the agency’s auction rules are revised to conform with accepted principals,” the CRE letter states.
It is unclear whether the fracas over the program’s design is affecting the timing of the first round of the program, sources say, though some speculate that the design itself might be making it difficult to get suppliers to sign contracts. Redesigns are more likely going to be applied to the second-round bid, according to a Deutsche Bank note on DME supplier Lincare (see story).
Industry lobbyists warn that CMS has little time to release the contracts because of a grandfathering measure in CMS regulations. Some equipment suppliers may be grandfathered into the program at the same payment level as the winning bidders. DME suppliers not chosen by CMS to participate in the demo must tell their customers in writing within 30 business days before the new program starts whether they will continue to supply equipment. The first round begins Jan. 1 and there are many government holidays in December so lobbyists calculate that DME suppliers have until mid November to notify customers. Also, it is not merely a matter of sending a letter to Medicare beneficiaries, the sources say. DME suppliers who decide not to be grandfathered in must coordinate with the new suppliers to avoid gaps in service at the start of the program. — John Wilkerson ( email@example.com )