Calling the program “somewhere between flawed and lousy,” Stark said he was unsure if repeal legislation could pass this year--round one of the program is set to take effect July 1 in 10 initial MSAs--but added he would work with the industry to try to block competitive bidding despite the costs of ending the program.

The lead-off witness at the hearing was acting CMS Administrator Kerry Weems, who testified that “[competitive bidding] will reduce beneficiary out-of-pocket costs, improve the accuracy of Medicare’s DMEPOS payments, help combat fraud and ensure beneficiary access to high quality DMEPOS items and services.”

But members of the subcommittee grilled Weems about problems with the program, including the disqualification of 63 percent of the bidders in round one, choosing median pricing rather than lowest pricing and not allowing willing providers to supply products at the lowest price.

Reps. Lloyd Doggett, D-Texas; Phil English, R-Pa.; Sam Johnson, R-Texas; Mike Thompson, D-Calif.; and Pat Tiberi, R-Ohio, all questioned Weems on a range of issues including fraud, transparency in the bidding process, inexperienced contract winners and accreditation, according to a report from the American Association for Homecare.

At one point, Rep. Xavier Becerra, D-Calif., pressed Weems on unaccredited subcontractors in the bidding program. While the acting CMS chief said the accreditation requirement applies only to contract suppliers, he also said it would be a “bad business decision” for a contract winner to enter into a relationship with a non-accredited company.

Becerra said subcontractors should be held responsible as well and highlighted the fact that those with no experience could be utilized. He also noted it seems counterintuitive to have competitive bidding yet limit the number of contractors, stating that a more open competitive process would ensure better prices.

But Weems’ troubles really began when Stark asked how round one prices were set from the bids. As Weems explained how median prices were determined to be the best choice, Stark commented, “Sounds like you’re price-setting to me. Sometimes you’re bidding, sometimes you’re not. It’s at your convenience.”

Stark also asked what CMS had learned from round one and what would change for round two. Weems’ response: “I can’t think of anything I would change.” Stark’s questions ended with, “I think I’ve seen you’re a useless witness.”

“There was not a single member of the [subcommittee who] was in support of CMS,” reported VGM’s John Gallagher, vice president of government relations for the Waterloo, Iowa-based member services group.

Other witnesses testifying at the hearing included Kathleen M. King, director, Health Care, U.S. Government Accountability Office; Peter W. Thomas, health task force co-chair for the Consortium for Citizens with Disabilities; and Thomas J. Hoerger, Ph.D., a senior fellow at the Research Triangle Institute (RTI), a contractor that studied the demonstration projects for competitive bidding.

But it was Tom Ryan, former AAHomecare chairman and CEO of Homecare Concepts, Farmingdale, N.Y., whose testimony on the industry’s concerns over competitive bidding drew the most attention. “This Medicare bidding program is a train wreck. But as this program jumps off the tracks, the attitude of CMS is clearly ‘full steam ahead,’” Ryan told the subcommittee.

Ryan called for an immediate halt to the program and said “the wide range of problems and questions about the program must be independently evaluated, and an alternative process to determine payment rates for home medical equipment must be explored.”

Accounts from various industry groups agreed Ryan made a good case for HME, presenting concerns over beneficiary access, unsustainable pricing and questionable contract denials without proper recourse.

“The Medicare bidding program is a poorly conceived and fundamentally flawed program that is now exhibiting many of the serious breakdowns that were predictable based on its failure to recognize and account for the true nature of the way home medical equipment is provided to Medicare beneficiaries,” Ryan testified.

“These breakdowns have been evident since the start of the round one bidding process in early 2007, throughout the bid evaluation process and right through the recent awarding of contracts … Errors and flaws that have emerged in round one of bidding will be embedded in the program if CMS rushes to implement round two in 70 additional areas in the months ahead.”

Though his remarks were well received, Ryan also found himself on the spot when Stark asked if providers were prepared to have their reimbursements adjusted downward to offset the budgetary cost of ending competitive bidding.

Stark noted the Congressional Budget Office said stopping the program would cost $6 billion over five years. Because Congress is working under a “pay-go” policy where expenses must be matched with reductions, the industry would have to come up with a way to pay for eliminating the Medicare bid.

Ryan answered “yes” when Stark asked if providers would be “willing to come up with $6 billion to get rid of bidding.”

“Stark said that he didn’t plan to wipe the slate clean and asked if the industry would be willing to pay for it,” Gallagher said. He added that Ryan’s response was “the only responsible answer,” but it has implications for the future of the industry. “The good news is that members of Congress are saying ‘Yes, this is a train wreck.’ The bad news is we have to find a way to pay for this train wreck …

“If providers are able to adjust to a realistic fee change and still provide service to beneficiaries, then we cannot just delay competitive bidding but repeal it,” Gallagher said.

Although the hearing has seemingly opened a crack in competitive bidding’s door, not all subcommittee members--or HME groups--had the same reaction to its outcome. Ranking member Rep. Jim McCrery, R-La., advocated going forward with competitive bidding, saying, “We have to hold out hope for helping to control cost.”

And an email from the Accredited Medical Equipment Providers of America summarizing the hearing pointed out there may be no quick fix. “It seems very clear that we can expect no help from Congress on the first round,” the message said. “It also seems almost as clear that we can expect little or no help on the second round either.”

There’s no doubt the short timeframe to delay round one is a real stumbling block for providers, with less than two months to go until it is implemented. After the hearing, a report from Congress Daily included this quote from Stark on a possible legislative fix: “We’ll look at it, try to find a solution, and as I said, if we don’t do it this year, we will definitely do it next year, but that may be too late.”

In the meantime, members of Stark’s staff and representatives from AAHomecare held an initial meeting Thursday to explore the possibilities of ending the program. And the House Small Business Committee has scheduled its own hearing on competitive bidding May 21.

For a full transcript of the House Ways and Means Health Subcommittee hearing, or to submit comments for consideration and inclusion in the hearing record, click here.

Even as the 4,000 participants--2,600 of them providers, according to show officials--converged on the Long Beach Convention Center Tuesday, HME representatives were attending a hearing on Capitol Hill centered on competitive bidding (see full report in this issue). And that hearing, in which House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., said he would try to block the program, led to a follow-up meeting on Thursday with Stark’s staff to discuss alternatives.

“AAHomecare chairman Alan Landauer is leaving here today for a meeting up on the Hill tomorrow … to discuss options for going in a different direction than competitive bidding,” association President Tyler Wilson told his audience during a Wednesday morning Washington update at the spring trade show.

Speaking before a packed room, Wilson offered a brief summary of the Ways and Means hearing, which included testimony from Kerry Weems, acting CMS administrator--who told the committee “there are no problems” with competitive bidding--and provider Tom Ryan, former AAHomecare chairman and CEO of Farmingdale, N.Y.-based Homecare Concepts, who spoke on the association’s behalf.

After pointed questioning from committee members, Wilson said, the upshot is that “a whole bunch of important people are going to rethink this …We are building up political headwind.”

But getting rid of competitive bidding will take some doing, Wilson said, and it won’t come without a cost.

CMS has already said it expects to save $1 billion annually through the DMEPOS bidding program, so the industry must come up with a way to save that money if the program is eliminated. Based on a Congressional Budget Office estimate of the cost of ending the program, Wilson said that means $6 billion might need to be cut from HME reimbursement over five years unless other alternatives surface.

Wilson quizzed providers on whether they would be willing to take an across-the-board reimbursement cut in return for competitive bidding “going away.”

A five-percent cut got an almost unanimous show of hands. A 10-percent cut drew about an 80 percent showing. At 15 percent, providers started grumbling, but there were still a plentiful number of hands in the air.

Reworking the program, however, did not appear to be acceptable. Audience member Cindy Justice, vice president and general manager for Melbourne, Fla.-based RespiCare of Central Florida, said she could not fathom redoing round one. “It just makes me sick to think about it,” she said.

“We don’t want to have the program retooled if there is a chance of getting the whole thing thrown out,” Wilson said.

He noted the industry is working on multiple fronts to get at least a delay of competitive bidding. Already, two lawsuits have been filed, one in the Dallas CBA and one in Cleveland, and another is in the works. In recent weeks, legislators on both sides of the aisle have sent letters detailing serious problems with the program to Department of Health and Human Services Secretary Michael Leavitt and chairs of key legislative committees.

In addition, AAHomecare is ramping up the industry’s visibility. Before the hearing, the association placed an ad challenging competitive bidding in Roll Call, a popular Capitol Hill newspaper.

Consumer media is also starting to take notice. On Tuesday, an article on competitive bidding--in which Stark was quoted as saying he would like to see the program “scrapped”-- appeared in the Wall Street Journal. The Washington Post also reported on home oxygen reimbursement cuts and service issues.

“The stars are beginning to align,” Wilson said.

Walt Gorski, AAHomecare's vice president of government affairs, attended Thursday's meeting with Stark's staff. While he could offer no new details, Gorski said, "AAHomecare is working with congressional staff to explore various options that are available to us in the short time remaining before the bidding program goes live in July.

"I think we have to be very mindful and cautious at this stage of the game. Obviously, no plan has been crafted, and it is premature to discuss actual ways to offset any policy changes. But clearly, any changes will require offsetting revenue … We’re at the starting line of seeking redress from competitive bidding, and what the final outcome [will be] is still unclear.”

Gorski added that the industry is only now beginning to see some results from years of efforts to stop competitive bidding.

“Our work has gained some traction,” he said.

While last week’s action offered providers a glimmer of hope, Wilson stressed there is much work yet to be done. “You have to craft a solution, get the legislation and the Senate and House together, then decide what vehicle it will move forward on,” he pointed out during the Medtrade Spring session.

To achieve any of that, providers must get involved in the process, he said. “We need our voices to be supported by yours,” he said, urging providers to call or email their legislators to ask for a delay in the bidding program.

News of the action on Capitol Hill buzzed around the halls of the convention center and on the show floor, with many providers saying an across-the-board cut would be better than the 26 percent average savings CMS said it would gain from competitive bidding.

Even a 15 percent cut would be better, according to Cindy Riemer Wolf, COO for Diabetic Care Services in Eastlake, Ohio. Her company, a national diabetic mail-order business, bid in that category in all 10 CBAs in round one and lost in every market.

“I’m very angry about this,” Wolf said. “We take care of 125,000 people. We’ve been doing this for 11 years.”

“We’re their support system,” added her husband, Marc, a pharmacist and the company’s CEO.

Cindy Wolf said she resents the providers who won bids because at the 43 percent pricing reduction that resulted in the category, “they have removed the service component from what we do. And all the folks who have won are not our competitors. Our competitors all lost. These people [who won bids] haven’t even done this before.”

She worries that patients will suffer because there will be no one to look out for them. So, while 15 percent would be a tough cut, “we’d swallow it and go,” Wolf said.

So would Jae K. Kim, C. Ped., CDF.

“They drop the fees based upon their research and we will follow,” said Kim, president of Life Med Medical Supplies & Equipment in Los Angeles. “Why do we have to take bidding? This is stupid.”

Mark L. Sangree, vice president and general manager of RespiCare of South Florida in Deerfield Beach, said elimination of round one would be better than its delay or redoing. He could live with the cuts, he said, but the best thing would be “to require accreditation but have a free marketplace.”

In case that doesn’t happen, though, Sangree and his peers at the Long Beach show were actively searching for ideas on how to live without Medicare. Sessions promising suggestions along those lines bulged with attendees, and many vendors reported keen interest in products that were not necessarily covered by the government program.

“A lot of people are looking for new revenue,” said Dave Cannon of Adroit Medical Systems in Loudon, Tenn., which offered a continuous low-level heat therapy pump. “They’re looking for new revenue streams.”

Traffic appeared brisk along most aisles of the show, despite the fact that some major manufacturers opted out and the show had been moved from its popular Las Vegas venue to Long Beach.

However, said Cannon, “This is the best show I’ve ever been to.”

“This has been the best spring Medtrade we’ve ever had,” agreed Jan Headrick, director of medical sales for Drew Shoe Corp., Lancaster, Ohio. “And I think it’s because it is not in Las Vegas.”