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Licensing Challenges, Lawsuits and Prospects for Delay as Bidding Implementation Approaches

Thursday, June 20th, 2013

Andrea Stark

 

MiraVista continues to monitor the situation with contracted providers under Round 2 of competitive bidding.  We have been able to confirm, based on a letter from Marilyn Tavenner to Congressman David Roe from Tennessee, that approximately 30 Tennessee contracts were voided out of 98 awards.  CMS indicates they do not intend on immediately awarding replacement contracts (relying on in-state suppliers and grandfathered suppliers), but will “closely monitor the situation in the state”.

 

With voided contracts in Tennessee, these providers will not jeopardize the entirety of their CBIC contracts by not having everything in place on the start date of July 1, 2013. While disruptive, MiraVista maintains this is a welcome reprieve.  Most of these providers relied on the licensure database housed on the National Supplier Clearinghouse website when submitting their bids back in January 2012.  The database did not accurately reflect all of the states licensure requirements (specifically for Tennessee).   Most of the providers who received voided contracts were unaware of the additional licensing requirements that also mandate a brick-and-mortar location approved by the state to dispense any medical equipment in that state. These providers were notified by the CBIC on or about April 15, 2013 that contracts had been awarded based on the same, incomplete licensure information contained in the database (and not according to actual state licensure requirements in place at the time of bid submission, as was required by law).  The April letter directed the suppliers to submit a complete 855-S form to enroll a new TN location for their organization.  Submission of the application requires prior licensure approval, accreditation, and surety bonds for the new location. The Medicare application process to enroll a new location takes at a minimum 45-60 days.  All combined, it was an insurmountable feat to get all of this finalized with approximately 75 days’ notice start-to-finish.  Having these “problematic” contracts voided, takes the pressure off the risk of non-compliance and subsequent breach and loss of all other contracts in unaffected states.

 

We know other states have cited that the CBIC has awarded contracts to providers that do not meet licensure requirements in their state.  What remains to be seen is how CMS will address these other concerns.  MiraVista maintains that this is an increasingly complex issue CMS must contend with.

 

We believe other contracts will eventually be voided if the licensure requirements were in effect at the time of bid submission where licensure had not been procured by the supplier by the original, May 1, 2012 extension date. This precedent is now established with the Tennessee nullifications.  Yet we do not know how CMS will handle changing licensure requirements where rules change mid-stream.  Will they offer grace periods to allow contracted providers to come into compliance? We have learned that Mississippi now has a regulation similar to Tennessee in that a physical location is required to procure licensure, but the requirement was changed AFTER bid submission closed.

 

AAHomecare announced yesterday, June 19th that it has filed a lawsuit against the Health and Human Services in conjunction with a Maryland provider.  The lawsuit seeks to stop the program citing the licensing irregularities in other states to include: Colorado, Ohio, Maryland, North Carolina, Tennessee, Virginia and Washington.  We will continue to monitor the progress of this initiative.

 

We are most hopeful for the prospects of new legislation introduced just last week on June 14th, HR 2375 The Transparency & Accountability In Medicare Bidding Act of 2013.  The bill will mandate a minimum delay of six months for all bidding programs to include Round 2, National Mail Order and Round 1 Recompete.  Round 1 could not proceed until six months after Round 2 resumes.  It would obligate CMS to meet with three auction experts, an economist and an econometrician (collectively an “auction expert team”) for the purpose of an independent review and assessment of the program. The goal will be to address the design, development, adequacy of support for beneficiaries, market fairness, sustainability and functioning of the program.  It disqualifies any current or former CMS employee, contractor or individuals that were involved in the original creation or design of the program from being selected for the auction expert team. CMS will have to cooperate fully and disclose all confidential information related to the program to the auction expert team.  A report to include recommendations for changes must then be submitted to Congress within four months of engaging the auction expert team.

 

The bill gives us a real opportunity to elicit fundamental change which is desperately needed.  A Dear Colleague letter contained the foundation for the bill’s text.  The letter was signed by 226 Representatives and delivered to CMS on June 13th.  The letter relies on CMS to make the call to delay, but to date, CMS shows no sign that they will consider a delay.  However, if we convert the co-signers on the letter to co-sponsors of the bill, we have a strong chance of getting passage in the house and can begin work in the Senate.  Passage of the bill will mandate CMS to suspend the program.  This could move quickly, but will not be complete in the two weeks before the program start date of July 1, 2013.

 

We cannot accept minor band-aid fixes that do nothing to address the unintended consequences of conducting a flawed auction program.  The current program has forced unnatural market trends.    This has produced so many shifts in geographical presence, product offerings, state licensing complexities, and unsustainable rates all in the interest of “survival” and not “true competition”.  Auctions like the Market Pricing Program can work for DME as set forth in HR1717, but competitive bidding in its current form will fall far short.

 

 

CBIC Retroactively Disqualifies Bids in the 11th Hour

Friday, June 14th, 2013

Andrea Stark

 

Contracted providers for MSAs in Tennessee report FedEx letters arrived this morning (June 14) from the CBIC declaring that select bids have been disqualified and previously awarded contracts would be amended to strike affected bid areas.  Specifically, bidders that did not meet state licensure requirements before May 1, 2012 are affected.  Curiously enough, CBIC contacted affected bidders by letter several weeks ago and granted a grace period, giving providers until July 1, 2013 to comply.

 

So where does this leave us?  There are a few possible outcomes…

 

With disqualified bids, CMS must revisit the single payment amounts and contracted rates.

 

The announcement of disqualified bids potentially invalidates the whole contracting process.  When a provider is disqualified, their bid amounts cannot be used in the calculation of the single payment amount.  This begs the question whether any of the previously awarded contracts are valid as they do not have accurate pricing.  Secondarily, if any contracted provider is disqualified, the CBIC will also have to add replacement suppliers.  It stands to reason that, in order to meet capacity requirements, the CBIC may have to advance up the bidder chain significantly to find qualified providers where licensure is currently in place.

 

CMS could announce a full or partial delay of the program. 

 

CMS may delay.  It takes time to execute new contracts and to recalculate single payment amounts.  Alternatively, CMS could decide to stick with the original schedule but not pursue contracting in the MSAs where licensure is an issue.  Precedent along these lines was established in Round 1 after capacity could not be acquired in the bid process for San Juan, PR.  This is an unlikely option, however, as we are not aware of any public notification or communications with unaffected contract providers.

 

MiraVista will continue to monitor the situation and will communicate developments as they become available.

 

Need Help Submitting Your Bid?

Wednesday, February 1st, 2012

The Competitive Bidding Implementation Contractor (CBIC) recently published a series of webcasts to assist suppliers in submitting their bids for Round 2 of Competitive Bidding and the national mail-order diabetic supplies program. The bid window opened on January 30, 2012 (click here for info on other critical dates).

 

Webcast topics include:

  • An overview of the Round 2 and national mail order competitions (published 12/20/11)
  • A webcast specific to the national mail order program for diabetic supplies (published 01/09/12)
  • Important program rules outlined in the Request for Bids (RFB) Instructions (published 01/13/12)
  • How a bid is evaluated (published 01/20/12)
  • Details on financial documentation requirements (published 01/25/12)
  • How to submit a bid (published 01/27/12)

The webcasts are free and available for viewing 24 hours a day, 7 days a week. In addition, a DBidS reference guide is also available to assist suppliers in using the online system to place their bids.


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