Committee Reviews Proposed Second Round of CMS Competitive Bidding Project ~ Post No. 052308-3

Committee on Small Business
Subcommittee on Urban & Rural Entrepreneurship
Heath Shuler, Chairman

WASHINGTON, D.C. – Small durable medical equipment (DME) suppliers are an integral part of the nation’s health care system, providing services and equipment to millions of Americans.  But the future of many of these small businesses is being threatened by the Centers for Medicare & Medicaid Services’ (CMS) competitive bidding program for durable medical equipment. CMS began soliciting bids for this new program last year in 10 metropolitan areas. Despite complaints on a variety of areas within the bidding process, CMS has scheduled an expansion of the competitive bidding process to another 70 sites in January 2009. Today, the Subcommittee on Rural and Urban Entrepreneurship continued its oversight of the process by examining whether CMS has properly assessed the first round of bidding and its impact on small DME providers. The panel also heard from representatives of the medical community, who say CMS needs to fix the problems made clear during round one.  

“There are nearly 5,000 small DME suppliers across the country.  They are an essential source of health care services-particularly in rural areas,” said Subcommittee Chairman Health Shuler (NC-11).  “By pushing to expand this project without addressing the harm it is likely to cause entrepreneurs, CMS is undermining their ability to serve patients and their key role in strengthening the economic base of local communities.” 

The CMS bidding process requires durable medical equipment suppliers in selected markets to submit bids based on what price they can afford to distribute their products.  The agency chooses which firms will participate in the Medicare program based solely on these bids. If a firm is not awarded a bid, then they will no longer be able to receive Medicare reimbursement for the distribution of these supplies. As a result, many businesses with large percentages of patients using Medicare will be forced to close. While CMS officials claim the process is inclusive and impartial, contracts have been awarded to bidders who have no local presence or lack a history of providing the very products they bid on to provide. Meanwhile, experienced entrepreneurs are being shut out or rejected without adequate explanation.

“Clarity and fairness are essential to the integrity of a program like this, but the bidding process CMS has put in place lacks both. Now they want to expand it without first examining the process and results?  It’s incredible,” said Chairman Shuler.

Witnesses expressed considerable frustration with the current bidding process and warned that the second round would only magnify a range of problems.  Many said they may have to leave the Medicare program, or risk going out of business altogether if CMS moves ahead with its planned expansion.  

 “When serious challenges arise in the early stages of any process, you focus on fixing them.  You don’t make them worse by expanding the program and extending negative impacts to new markets.  CMS needs to take a careful look at this initiative before it moves any further.  Anything less hurts small businesses, patients and the economy, and is unacceptable.”


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