This is the year that theory turns into reality. For years our industry been arguing the deficiencies of the competitive acquisition program that Congress
by Cara C. Bachenheimer, Esq.
Friday, February 1, 2008

This is the year that theory turns into reality. For years our industry been arguing the deficiencies of the “competitive acquisition” program that Congress mandated in the Medicare Modernization Act of 2003.

With the first 10 geographic areas scheduled to go live July 1, and CMS' recent announcement that the next 70 areas will start the bidding process later this year, we and the consumers we serve will now see the real live impact that the bidding program will have on small business and consumers. We must make sure Congress has complete information about this program and its impact on seniors and people with disabilities.

Undoubtedly, the real-time rollout will help us better articulate and illustrate the arguments to Congress, and to state-level Medicaid programs with similar ideas. On the other hand, our efforts could be hampered by CMS' refusal to release much basic information about the bid program. For example, CMS has not agreed to reveal publicly the following about Round One:

  • How many individual companies submitted bids for each of the product categories in each of the 10 bid areas? This is particularly important given that CMS did identify the number of current suppliers for each product category in each of the initial 10 bid areas. For example, according to CMS, there were 325 suppliers serving the Cleveland area. How many of those suppliers actually submitted bids?

  • How many bidders were small businesses in each of the product categories in each of the 10 competitive bid areas? In its final rule implementing competitive bidding, CMS concluded that this program would have a significant impact on small business but declined to provide details. Those details are critical.

  • Did CMS receive any applications from networks of small suppliers? If so, how many, for what product categories and in what competitive bid areas? The network option seemed impossible to most small suppliers. And with some very large metropolitan areas included in the second round, the ability for a small business to serve the entire area is daunting at best.

In the fall, a House Small Business Sub-committee held a hearing examining the negative impacts of competitive bidding on small business. The same subcommittee followed up with a letter asking the Small Business Administration to intervene with CMS to delay implementation of the program until its economic impact on small business can be assessed.

CMS' announcement in January that the implementation process for Round Two will begin before Round One is implemented is surprising. With the pre-bid process for the next 70 MSAs beginning this spring, and the 60-day bid window occurring this summer, this means CMS will not be able to incorporate any changes in Round Two based upon its experience with Round One. Further, CMS has yet to explain the following fundamental questions regarding its implementation of Round Two:

  • What selection criteria did CMS use to select the next 70 MSAs for Round Two? While CMS identified selection criteria in its final rule, selection of the 70 new bid areas is not fully explained. Why were major areas such as Washington, D.C., Boston, Philadelphia and Seattle not included when some very rural areas with very small populations were? (At least eight areas with populations less than 500,000 were included.)

    I am not arguing for the inclusion of specific areas, rather for some stated rationale from CMS regarding its selection of the next 70 bid areas, particularly when the selected areas do not appear to match with CMS' stated criteria in its final rule.

  • For Round Two, did CMS select virtually the same product categories based on an assessment of the bids received in Round One? If not, what criteria did CMS use to select these products?

No longer is this program theoretical. Roughly half the beneficiaries reside in areas covered by Rounds One and Two. Half the members of the House of Representatives and two-thirds of the Senate represent constituents impacted by the bidding program. But the only way for these members to understand the real impacts in their home states and districts is if you inform them.

A specialist in health care legislation, regulations and government relations, Cara C. Bachenheimer is vice president, government relations, for Invacare Corp., Elyria, Ohio. Bachenheimer previously worked at the law firm of Epstein, Becker & Green in Washington, D.C., and at the American Association for Homecare and the Health Industry Distributors Association. You can reach her by phone at 440/329-6226 or by e-mail at cbachenheimer@invacare.com.