ATLANTA--Poised for months to hear the details about Round Two of national competitive bidding, home medical equipment providers were knocked off their pins last week when CMS' long-awaited announcement appeared to spin the project as an anti-fraud initiative.

While the regulation includes an accreditation component, competitive bidding was mandated by the Medicare Modernization Act of 2003 mainly as a cost-cutting initiative, stakeholders pointed out. But Tuesday's announcement--made at a press conference held in Los Angeles, the site of an ongoing anti-fraud demonstration project--focused instead on the bidding program as a fraud-and-abuse deterrent.

"Through the certification process, beneficiaries will be given another layer of protection from fraud," said CMS Acting Administrator Kerry Weems. "We welcomed this program when it was created by the Congress because we believed it could help lower costs for our beneficiaries and help us in our efforts to keep the small number of dishonest providers from taking advantage of American seniors."

Weems went on to tell members of the press that "many DME suppliers are just empty storefronts. Well, if you're going to be part of the program, we're not going to accredit an empty storefront."

The stage was set by a CMS media advisory sent Monday headlined: "Federal Government Announces Expanded Program to Provide Medicare with More Tools to Fight Fraud, Abuse." The advisory explicitly said the Round Two competitive bidding announcement would be held at a "news briefing to announce expansion of Medicare's anti-fraud and abuse efforts in Los Angeles County and in 69 other communities."

The anti-fraud agenda captured the interest of consumer press across the country, including the Los Angeles Times, the Chattanooga Times Free-Press and the Austin American Statesman, which explained competitive bidding to their readers as a deterrent to fraud, as well as a money-saver.

The Los Angeles Times article, which appeared in the newspaper's Jan. 8 edition, presaging the press event, particularly outraged some in HME since it focused on an 84-year-old blind woman who cannot walk and was reportedly victimized by a provider who talked her into acquiring $28,300 worth "of products she didn't need or want."

Acknowledging that government efforts to deal with fraud in the industry are long overdue, stakeholders said they felt the Times article and others misled the public about the intent--and the effects--of competitive bidding.

"I found my blood pressure rising by the minute" after reading the Times article, said Miriam Lieber of Lieber Consulting, Sherman Oaks, Calif. "When will the press learn that not every HME provider is a fraud? As the 70 new competitive bidding MSAs were released, it seemed ironic that the article painted competitive bidding as an opportunity to prevent fraud rather than a chance to eliminate two-thirds of the industry."

Lieber said she believes the non-trade media did not understand the issues and quite possibly even mixed up the announcement of Round Two bidding with the current anti-fraud demonstration project in L.A. "They either mixed up the stories or didn't know the stories," she said. (See HomeCare Monday, July 9, 2007.)

CMS intentionally announced the expansion of competitive bidding "at the Los Angeles anti-fraud event because of the very important consumer protection messages that need to get out to all beneficiaries, but especially those in the new competitive bidding areas," said Ellen B. Griffith, a CMS spokeswoman.

"As the home health industry said after the event, it is vitally important that Medicare protect honest suppliers from competition from the unscrupulous, and the educated beneficiary is one of the best sources of information about fraud," Griffith added.

She said there were two main messages CMS wanted to get across to beneficiaries in making its announcement.

"Beneficiaries need to know how to protect themselves from unscrupulous suppliers of durable medical equipment, prosthetics, orthotics and supplies," she said. "Under the competitive bidding program, only accredited suppliers of DME will be permitted to bill Medicare for items of DMEPOS, and only contracting suppliers will be able to bill Medicare for items within the eight categories of DMEPOS furnished to beneficiaries in the designated competitive bidding areas."

The second point CMS wanted to make, Griffith said, was that "beneficiaries, who pay 20 percent of the Medicare payment rate for items of DMEPOS, need to know that CMS is taking steps to make sure that for these commonly prescribed items, they are not paying more than they would have paid if Medicare payment rates were closer to the rates in the competitive marketplace."

But stakeholders said the fraud-and-abuse angle obscured what competitive bidding is really about.

Mark Higley, vice president of development for Waterloo, Iowa-based VGM Group, said he was disappointed that CMS' public announcement of the next 70 MSAs "clearly suggested that the competitive acquisition process was intended as a cure-all for fraud and abuse in the HME industry.

"Competitive bidding may very well reduce HME provider services, lower the quality of innovative products offered to Medicare beneficiaries and increase overall Medicare expenditures (via increased acute care service needs) ... but it is not a panacea for the elimination of fraud," Higley said.