Procedural Flaws / Irregularities

• Many suppliers submitting bids were improperly and unfairly disqualified from the process because of missing data. Most of these disqualified bidders, however, can demonstrate that they did, in fact, provide the proper data to CMS and should not have been disqualified.
• Some suppliers were erroneously rejected because they supposedly did not meet the requirement that they were accredited by the deadline when, in fact, they were.
• DMEPOS Suppliers that were offered contracts were provided less than ten days from the postmark date to accept the contract. This is a very short period of time for a firm to evaluate the pricing impact and the contract terms and conditions.
• In some product categories, identical bid prices were calculated for multiple bid areas, suggesting flaws in the bid calculation process. Unless the median bid submitted for these HCPCS codes in these multiple markets was identical, this is highly improbably mathematically. For example, in the high-end rehab wheelchair category, 105 codes had identical prices in two markets.
• Suppliers were rejected based upon criteria that were never communicated to bidders. For example, to maximize the competitiveness of the “composite bid,” upon which they would be compared with other bidders, bidders submitted low prices for codes that had zero (or close to zero) utilization. As a result, their bids for the entire bid category were tossed, supposedly because items bids were too low. In reality, if utilization is zero or close to zero, suppliers can afford this. This type of application of financial criteria was never publicized. It illustrates the subjective nature of the reviewers who evaluated the bids and their lack of familiarity with DMEPOS Business operations and is contrary to the process that CMS set up for suppliers to submit bids.
• On September 13, 2007, twelve days before the bid window closed, CBIC changed the Request for Bids rules. The original RFB stated that “beginning 10 business days before the bidding window ends, suppliers will be notified if there are any missing hard copy attachments.” At the last minute, however, the CBIC changed the rules without informing suppliers who had already submitted bids. Two days before the bid window closed, the CBIC Web site document stated that : “the system will remain open for at least 15 days after the bidding window ends to allow bidders to check the completion status of the electronic bids and verify the receipt of hard copy documents by the CBIC.”

Beneficiary Impacts of the Competitive Bidding program:

• Almost four million Medicare beneficiaries who may need DMEMPOS are covered by the first ten competitive bid areas (CBAs). An additional 18 million Medicare beneficiaries will be impacted by Round Two. (more talking points on the back)
• CMS’s selection of a relatively small number of suppliers will result in an increase in ratio of beneficiaries to supplier by 339%.
• The First Round of the bidding program will eliminate an estimated 71% of all suppliers in the first ten markets, including small, medium, and large businesses. Many of these suppliers will not survive and will declare bankruptcy.
• Almost 224,000 Medicare beneficiaries who currently rely on home oxygen therapy may experience a disruption of their service if their provider does not grandfather.
• Almost 25,000 elderly beneficiaries currently relying on hospital beds to remain at home may have to switch if their providers do not grandfather due to irrationally low pricing in one or more markets.
• Beneficiaries, particularly those with high-end rehab and oxygen needs, may be forced to sever long-term relationships with their DME provider. Additionally, beneficiaries will be forced to deal with increased paperwork if they have multiple needs that will be provided by multiple suppliers.

Concerns about additional cuts to oxygen:

• Oxygen therapy is critical to approximately one million Americans who suffer from respiratory illnesses such as chronic obstructive pulmonary disease (COPD) and who require oxygen therapy under Medicare. Nationwide, as many as 15 million Americans have been diagnosed with COPD, a number that is growing. It is a slowly progressive, incurable disease that causes irreversible loss of lung function. Although existing medications have not proven beneficial in reversing its effects, home oxygen therapy-when properly prescribed and maintained-can slow or stop lung degeneration.
• Medical oxygen is a federal legend drug and the oxygen devices are prescription only. Transferring the burden of ownership to the beneficiary presents serious risks to patient safety. Moreover, medical oxygen therapy at home costs less than $8 per day in Medicare. A typical inpatient hospital day in Medicare costs $4,603.
• Oxygen therapy requires more than a piece of equipment. Service costs for medical oxygen therapy in the home exceed the cost of equipment by three to one: 72 percent of the costs required for providing home oxygen therapy are related to services and operation (intake, delivery, maintenance, patient assessment and education, regulatory compliance, and other costs). The equipment represents just 28 percent of the costs of home oxygen therapy (see 2006 study by Morrison Informatics).
• Over the past ten years, Congress has already reduced Medicare reimbursement for oxygen therapy by nearly 50 percent.
• More cuts put more seniors at risk and could lead to unnecessary hospital admissions and ER visits due to improper oxygen saturation
• Most Medicare home oxygen patients need oxygen to treat a debilitating pulmonary disease such as the incurable Chronic Pulmonary Obstructive Disease
• Patient choice will also be seriously curtailed. For example, if a patient's needs change after 13 months, they are stuck with the equipment they were forced to own at 13 months

Concerns about Additional Cuts to Power Mobile Devices

• Because many power wheelchairs are individualized for the patient, eliminating the first-month purchase option will dramatically reduce access for beneficiaries who suffer from long-term conditions such as multiple sclerosis, Lou Gehrig's disease, spinal cord injuries or paralysis.
• Power wheelchairs are uniquely configured for the individual beneficiary and are not interchangeable with other beneficiaries. It makes no sense to rent an item that is uniquely configured for an individual.
• Information from a CMS contractor, the SADMERC, indicates that virtually 100% of Medicare beneficiaries needing power wheelchairs purchase them on day one. Beneficiaries with severe disabilities use their PWCs daily and for the rest of their lives. There is little reason to rent these devices.
• Analysis from the American Association for Homecare shows that eliminating the first-month purchase option would result in the Medicare program paying 5 percent more for power wheelchairs than they currently pay.
• There are significant up front costs associated with providing power wheelchairs. These costs include, but are not limited to, assessing the beneficiary, fittings and adjustments, providing demonstration product, education and delivery as well as equipment acquisition costs, which are significant and are borne by the supplier prior to submitting a claim to Medicare.