Medical Device Daily Washington Editor

Leave it to the healthcare industry to be dissatisfied at federal agency actions.

The Centers for Medicare & Medicaid Services reported earlier this week that it will expand to 70 the number of standard metropolitan statistical areas in which competitive bidding will take place for Medicare durable medical equipment (DME). Given that suppliers have to be accredited in order to submit bids, the agency also let it be known that some unscrupulous suppliers responsible for fraud likely will be weeded out as a result.

However, two industry associations assailed the Jan. 8 announcement on two points, and neither association is fond of the idea of competitive bidding for Medicare DME.

The American Association of Homecare (AAH; Arlington, Virginia) reacted to the announcement by making the case that CMS is not doing enough with its current statutory authority to corral fraud and abuse of the Medicare DME dollar. AAH’s ire is partly due to its contention that CMS has not been aggressive enough in enforcing the accreditation requirement for DME suppliers provided by the Medicare Modernization Act of 2003 (MMA).

In a statement posted on the association’s website, AAH asked: “why it has taken Medicare so long to impose effective measures to prevent fraud.”

The statement says that despite the fact that MMA required accreditation, “it wasn’t until several weeks ago that Medicare actually indicated the date by which DME suppliers must be accredited – and that date is not until Sept. 30, 2009.” The association also said that CMS was required to conduct unannounced site visits to DME suppliers prior to doing business with suppliers and that the agency was required to conduct site visits every three years to existing suppliers.

The Advanced Medical Technology Association (AdvaMed; Washington) chimed in on the issue with a statement that argued that competition would be bad for beneficiaries.

Stephen Ubl, president/CEO of AdvaMed, said the association is “deeply concerned that CMS is expanding a program before the first phase has started and the impact on beneficiaries’ access to supplies has been evaluated.”

Despite normally being supportive of competition, Ubl made the case that limiting the number of DME suppliers “is not in patients’ best interests” because such a move would threaten “patient access to important products, which can often mean the difference between a patient being able to remain in their own home and being forced into a nursing home or hospital.”

Ubl urged CMS to suspend the program’s expansion pending a more complete evaluation of the effect of competitive bidding.

CMS rolled out the initial bidding rule for the 10 metro statistical areas (MSAs) last April, but did not include two of the more conspicuous megacities, Los Angeles and New York, because of logistical concerns. The program, also mandated by MMA, is projected to save Uncle Sam roughly $1 billion a year once it is in force for the entire nation in 2010.

The new bidding areas include the metro areas of Los Angeles and New York, but also senior havens in the Sunbelt such as Florida’s Tampa Bay area.

The complaints about less than exhaustive enforcement may have some merit, but the record shows that Uncle Sam has done something to combat DME fraud.

CMS and the Department of Health and Human Services reported in July that they would focus on fraud in two states with high senior populations, California and Florida (Medical Device Daily, July 5), by means of a contract with the National Supplier Clearinghouse (NSC; Columbia, South Carolina). NSC was said to have visited nearly 1,500 suppliers in those states in 2006, leading to the loss of license of 600.

State attorneys in Florida also cracked down on illicit operators in the Sunshine State, obtaining convictions for five companies in Miami resulting in jail time and fines of $13 million (MDD, Dec. 17).

Acting CMS administrator Kerry Weems said in the CMS statement that competitive bidding “means that Medicare beneficiaries will have access to these products at substantially lower costs.” Weems said that the accreditation process provides Medicare with “another layer of protection from fraud.”

CMS also said that despite updates to the fee schedule for DME, it believes that those prices are “not representative of the true market prices of these items and services,” and beneficiaries can expect to see savings due to lower costs.

Whatever CMS does in the way of enforcement, it appears that the return on investment should be sizeable. In testimony before the House Budget Committee last July, Timothy Hill, the CFO at CMS testified that the agency had identified and documented “a significant amount of fraud being committed by DME suppliers in Miami and the Los Angeles metropolitan areas.”

Hill said that the number of DME providers had nearly doubled and “billing from the providers remains disproportionately high.”

Hill added that NSC’s activities resulted in projected savings of roughly $317 million at a cost to the agency of $3 million, an ROI of more than 100:1.

Conference to focus on food/drug laws

The Food and Drug Law Institute’s (Washington) 51st Annual Conference, co-sponsored with the FDA, will focus on the interrelationship between scientific and technological advances and food and drug law and regulation.

FDLI/FDA’s March 26-27 meeting at the L’Enfant Plaza Hotel in Washington, will include a luncheon speech by U.S. Supreme Court Justice Antonin Scalia and a “State of the FDA” address by Commissioner Andrew von Eschenbach, MD. Rep. John Dingell (D-Mich.) is also an invited featured speaker.

To register for the conference, visit http://www.fdli.org or call (800)956-6923 or (202) 371-1420.