Medicare Not Playing By Its Own Rules In Tennessee

NASHVILLE, May 24, 2013 /PRNewswire-USNewswire/ -- Adding to Medicare's mounting woes is new evidence that its national bidding program is not being run according to the rules set by the Centers for Medicare & Medicaid Services (CMS), says the American Association for Homecare.

The bidding program, which was mandated by Congress, is supposed to establish a procurement system that would set market-based reimbursement rates while maintaining access to high-quality care and equipment for Medicare patients. But it has failed to reach that objective. The program was piloted in nine areas in 2011, and Round 2 is set to roll out in an additional 91 areas on July 1.

Durable medical equipment (DME) providers in Tennessee and other states say that the program is deeply flawed and has jeopardized the health of Medicare beneficiaries. The latest evidence pointing to the severity of the problems is a lack of required licenses for companies that won contracts.

Despite the fact that Medicare required companies that submit bids for Round 2 to have all licenses and accreditation in place by May 1, 2012, more than 20% of contract winners in Tennessee alone do not have licenses that will legally allow them to serve patients. In an attempt to recover from this violation of its own rules, CMS has sent letters to unlicensed and/or unaccredited contract winners stating that they must have everything in place by July 1. However, even with this extension, it does not appear that there is enough time for those companies to become legal providers.

The bidding program's rules include strict penalties for non-compliance with state and local laws. Contract winners who do not meet licensing requirements will be disqualified, meaning that they will lose every contract in every bid area.

This raises the specter of tens of thousands of Medicare patients, the elderly and people living with disabilities, losing access to critically important medical equipment such as oxygen, wheelchairs, and feeding tubes.

"Across Tennessee, providers are enraged by the manipulative efforts of CMS to break its own rules to allow non-licensed companies to shut out legitimate, local companies and jeopardize access to care for our state's most vulnerable citizens," said Ashley Plauche, director of communications and PR at Lambert's Health Care and vice president of the Association for Tennessee Home Oxygen and Medical Equipment Suppliers. "CMS is deliberately allowing these illegitimate companies to produce the low prices that the rest of us are held to in an effort to show false savings for the government. This is not a technicality. Unlike CMS, Tennessee remains committed to Medicare beneficiaries, and is more concerned with their safety and wellbeing than with a headline about false savings."

The Tennessee Congressional delegation is sufficiently concerned that they wrote a letter to CMS Administrator Marilynn Tavenner on May 20 asking for her "plan of action to ensure all Medicare beneficiaries in Tennessee affected by the DME Competitive Bidding Program will have timely access to physician ordered supplies and necessary services."

The licensure and subsequent access problems are not limited to Tennessee. Reports are coming in from other bid areas. California, Michigan, New York, Ohio, and Pennsylvania are among the states with the same problems.

Across state and political party lines, public officials and people in the healthcare community foresee significant difficulties for Medicare patients. Pressure is growing from a number of quarters to have CMS put an administrative delay into place through the end of the year.

In a letter to colleagues dated May 17, Representatives Glenn Thompson (R-Pa.) and Bruce Braley (D-Iowa) have asked both Republicans and Democrats in the House to join them in sending a letter to Administrator Tavenner. In the letter to CMS they state their concern about "lack of transparency" in the bidding process and "improper vetting" of bidders. They urge CMS to delay Round 2 "to allow for adequate investigation and correction of the significant problems that have been identified."

"CMS really should acknowledge the problems, stop the program, and allow time for it to be fixed," said Tyler Wilson, president of AAHomecare. "It's not unreasonable to expect a federal agency to abide by its own rules. Medicare beneficiaries, state regulators who expect their own state's rules not to be circumvented by CMS, and DME providers should insist on nothing less."

Thompson and Braley assert that there are "significant distortions of the bid prices in every bidding area nationwide." The low bids submitted by companies who should have been disqualified are just one part of the equation. Another is that bids from some licensed companies were never submitted because the companies feared they couldn't obtain licenses in time and believed they would be disqualified. 

"My company would have bid in more areas, but we didn't think we could get licenses in time," said Joel Marx, chairman of Medical Service Company in Cleveland, Ohio. "If we'd known that we actually had an extra 15 months, we definitely would have submitted more bids. This deadline change is grossly unfair to the honest companies who played by the published rules."

The solution to Medicare's bidding problems, supporters say, is H.R. 1717, the Medicare DMEPOS Market Pricing Program Act of 2013. The bill was introduced by Representatives Tom Price (R-Ga.) and John Larson (D-Conn.) on April 25. "It's a fair procurement system based on three core principles: market-based prices, binding bids, and transparency," said Wilson. H.R. 1717 currently has 96 cosponsors.

The American Association for Homecare represents durable medical equipment providers, manufacturers, and others in the homecare community that serve the medical needs of millions of Americans who require oxygen systems, wheelchairs, medical supplies, inhalation drug therapy, and other medical equipment and services in their homes. Members operate more than 3,000 homecare locations in all 50 states. Visit

SOURCE American Association for Homecare