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CMS Issues Interim Final Rule on Competitive Bidding

Tomorrow’s edition of the Federal Register will include an interim final rule for competitive bidding, according to a notice from the American Association for Homecare.

The rule includes a rebid of Round One in 2009 and details regulatory requirements related to changes made to the DMEPOS bidding program by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). Passed in July, MIPPA delayed the bidding program.

According to the rule document:

“Specifically, this rule: implements certain MIPPA provisions that delay implementation of Round 1 of the program; requires CMS to conduct a second Round 1 competition (the "Round 1 rebid") in 2009; and mandates certain changes for both the Round 1 rebid and subsequent rounds of the program, including a process for providing feedback to suppliers regarding missing financial documentation and requiring contractors to disclose to CMS information regarding subcontracting relationships.”

The rule will take effect 30 days after its Jan. 16 publication--on Feb. 15. CMS will take comments during a 60-day comment period ending March 17.

The Round One rebid does not include negative pressure wound therapy, and MIPPA permanently excludes group three power rehab wheelchairs from competitive bidding.

The rebid also drops San Juan, Puerto Rico, one of the original 10 MSAs chosen by CMS in which to begin the bidding program. The other nine remain on the list:

--Cincinnati-Middletown (parts of Ohio, Kentucky, Indiana)
--Cleveland-Eyria, Ohio
--Charlotte-Gastonia-Concord (North Carolina and parts of South Carolina)
--Dallas-Ft. Worth, Texas
--Kansas City, Missouri (and parts of Kansas)
--Miami-Ft. Lauderdale-Miami Beach, Florida
--Orlando, Florida
--Pittsburgh, Pennsylvania
--Riverside-San Bernardino, California

CMS will notify HME providers if their bid submission is missing any of the required financial documents and will allow them to submit missing documents within 10 business days of the notice.

“It’s unfortunate that this rule will be released literally in the final hours of the Bush administration,” said Tyler Wilson, AAHomecare president. “The fundamental problems associated with the bidding remain--this program will [actually reduce] competition, reduce access to care for seniors, reduce patient choice, reduce quality and put good providers out of business.”

Because it is an interim final rule, Wilson said, CMS can re-launch the bidding program quickly without any “meaningful” opportunity for public comment or input.

“CMS should have allowed for a discussion of the problems encountered during Round One of the bidding process,” Wilson said. “A proposed rule rather than an interim final rule would have allowed for greater public discussion that is sorely needed on a program of this magnitude.

“Since the bidding program was delayed last summer by MIPPA, there has been no public dialog with CMS about the problems that led to the delay in the program. Nor has there been any public dialog about the development of the changes required by MIPPA.”

“We’re not surprised at all that the Bush administration is [doing] everything they can to get this rule out on their watch to begin advancing again Round One of competitive bidding,” said Seth Johnson, vice president of government affairs for Pride Mobility Products, Exeter, Pa.

“[CMS] rushed it through with absolutely no communication with the industry,” said Cara Bachenheimer, senior vice president of government relations for Invacare Corp., Elyria, Ohio. “In a better world, they would have convened a public [Program Advisory and Oversight Committee] meeting to get input on what improvements should go into the rule and had public comments before the final rule … There is no process to get comments from any of the affected parties.”

Regarding the comment period attached to the rule, Johnson said, “CMS isn’t required to do anything with those comments.”

AAHomecare said it has begun to alert members of Congress to the HME sector’s concerns about both the policy governing the bidding program and the rule-making process. Proposing an alternative to competitive bidding will be one of the priorities for a planned “Homecare on Capitol Hill” fly-in Feb. 11, the association said.

Bachenheimer said the industry’s job in the coming days will be to alert legislators to the re-launch of competitive bidding and the industry’s concerns about it.

“Our shot is going to be convincing the new administration to suspend the final rule,” she said. “Members of Congress need to know … to delay it. They need to know how the Bush administration rushed this out without absolutely any opportunity for comment. We are going to have to again educate members of Congress.”

Johnson said legislators he has so far talked to about the issue have expressed concern.

“Committee leaders on both sides of the aisle are expressing significant concerns about [CMS’] releasing this,” he said. “They are very alarmed that this administration would go forward with this rule in the last hours of the administration and would not simply allow this to be something the new administration would study closely and determine if they wanted to move forward with.”

Bachenheimer noted, however, there could be another way to remove competitive bidding from the table. Under a precedent called the Card Memo, as the new president, Barack Obama could choose to stall implementation of any Bush administration laws that had not yet taken effect until they have undergone further study.

“We don’t know if the Obama administration is going to follow the … process, but there is certainly a precedent for them to do so,” said Bachenheimer. “Our job is to try and convince them they should do it.”

HME providers are already grappling with the effects of the failed Round One bid. To pay for the savings CMS estimated it would reap from the bidding program, all Medicare DMEPOS providers took a 9.5 percent reimbursement cut on the product categories included in Round One. That cut took effect Jan. 1.

To view a copy of the rule obtained by AAHomecare, and for information on the association’s Washington fly-in, see

For continuing coverage of the bidding program, check future issues of HomeCare Monday. For your free subscription, visit and click “Subscribe.”