[Congressional Record Volume 154, Number 100 (Tuesday, June 17, 2008)]
[Senate]
[Pages S5699-S5702]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. BAUCUS (for himself, Mr. Grassley, Ms. Stabenow, Mr.
Voinovich, Mr. Salazar, Mr. Roberts, Mr. Brown, Mr. Smith, Mr.
Casey, Ms. Collins, Mr. Levin, Mrs. Dole, Mr. Lieberman, Mr.
Isakson, Mr. Wyden, Mr. Burr, Mr. Dodd, Ms. Snowe, Mr. Sanders,
Mr, Hatch, Ms. Cantwell, Mr. Cardin, Mr. Schumer, Mrs. Clinton,
Ms. Mikulski, and Mrs. Lincoln):
S. 3144. A bill to amend part B of title XVIII of the Social Security
Act to delay and reform the Medicare competitive acquisition program
for purchase of durable medical equipment, prosthetics, orthotics, and
supplies; to the Committee on Finance.
Mr. BAUCUS. Mr. President, today I introduce, with my friend Senator
Grassley and twenty-four other Democratic and Republican Senators, the
Medicare DMEPOS Competitive Acquisition Reform Act of 2008. In doing
so, I would also like to recognize the efforts of Congressman Pete
Stark, Congressman Dave Camp, and so many others in the House of
Representatives who worked very hard on this bipartisan legislation.
This legislation will delay the durable medical equipment,
prosthetics, orthotics, and supplies competitive acquisition program.
Many Members of Congress and I have received reports about potential
inaccuracies in the implementation of the CAP program. These reports
range from suppliers who believe they were wrongly disqualified to
questions about the clarity and consistency of information that
suppliers received during the bidding process. Some providers were
awarded contracts to serve areas in which they did not previously have
a presence. Other suppliers were awarded contracts for service lines
with which they have little or no experience.
While I support the concept of competitive bidding as a way to
decrease costs, it is the obligation of Congress to make sure that
these savings are not at the expense of beneficiary access to the care
that they need in their own communities. I believe that Congress should
take a closer look to make sure this program lives up to its potential.
In order to ensure that we are getting the best possible price and
quality for beneficiaries, it is critical that the competitive bidding
process be accurate and inclusive. I am most concerned about the impact
that a poorly designed program will have on Medicare beneficiaries,
many of whom are confused about what this new program means for them
and are concerned that they won't be able to get care from someone in
their own community.
This means we must have as many bidders as possible who offer not
only the best price but clearly meet high quality standards. Based upon
the numbers we have seen as a result of bidding in phase one, I think
we need to look more closely to make sure that we are not missing an
opportunity to consider additional suppliers who have experience
furnishing these services in the communities at play. Furthermore, we
need to examine the bidding process outcomes to make sure that the
suppliers being offered contracts to serve patients in a selected area
have the team on the ground to help patients in those areas.
I have also heard concerns that some of the products included in the
first phase of the competitive acquisition program may not be the best
fit for this type of program because they require specialized handling
or expertise. At the end of the day, the most important goal of the
Medicare program is to make sure patients get the care that is
appropriate for them, so we must tread carefully when we move ahead
with a program covering these products.
The Centers for Medicare and Medicaid Services put forth an admirable
effort to implement a complex competitive bidding program in a short
time frame. I think that many of the concerns that people have raised
about the program can be resolved, but we cannot afford to ignore them.
The beneficiary services at stake are just too important to move
hastily; no matter how much money we believe we can save.
I think that it is worth it for us to delay for just a bit and take a
closer look to make sure this program lives up to its potential. With a
few minor tweaks here and there, I am convinced that the competitive
acquisition program will live up to its promise to provide cost
effective, high-quality services and products to patients.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the text was ordered to be printed in the
Record, as follows:
S. 3144
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Medicare DMEPOS Competitive
Acquisition Reform Act of 2008''.
[[Page S5700]]
SEC. 2. DELAY IN AND REFORM OF MEDICARE DMEPOS COMPETITIVE
ACQUISITION PROGRAM.
(a) Temporary Delay and Reform.--
(1) In general.--Section 1847(a)(1) of the Social Security
Act (42 U.S.C. 1395w-3(a)(1)) is amended--
(A) in paragraph (1)--
(i) in subparagraph (B)(i), in the matter before subclause
(I), by inserting ``consistent with subparagraph (D)'' after
``in a manner'';
(ii) in subparagraph (B)(i)(II), by striking ``80'' and
``in 2009'' and inserting ``an additional 70'' and ``in
2011'', respectively;
(iii) in subparagraph (B)(i)(III), by striking ``after
2009'' and inserting ``after 2011 (or, in the case of
national mail order for items and services, after 2010)'';
and
(iv) by adding at the end the following new subparagraphs:
``(D) Changes in competitive acquisition programs.--
``(i) Round 1 of competitive acquisition program.--
Notwithstanding subparagraph (B)(i)(I) and in implementing
the first round of the competitive acquisition programs under
this section--
``(I) the contracts awarded under this section before the
date of the enactment of this subparagraph are terminated, no
payment shall be made under this title on or after the date
of the enactment of this subparagraph based on such a
contract, and, to the extent that any damages may be
applicable as a result of the termination of such contracts,
such damages shall be payable from the Federal Supplementary
Medical Insurance Trust Fund under section 1841;
``(II) the Secretary shall conduct the competition for such
round in a manner so that it occurs in 2009 with respect to
the same items and services and the same areas, except as
provided in subclauses (III) and (IV);
``(III) the Secretary shall exclude Puerto Rico so that
such round of competition covers 9, instead of 10, of the
largest metropolitan statistical areas; and
``(IV) there shall be excluded negative pressure wound
therapy items and services.
Nothing in subclause (I) shall be construed to provide an
independent cause of action or right to administrative or
judicial review with regard to the termination provided under
such subclause.
``(ii) Round 2 of competitive acquisition program.--In
implementing the second round of the competitive acquisition
programs under this section described in subparagraph
(B)(i)(II)--
``(I) the metropolitan statistical areas to be included
shall be those metropolitan statistical areas selected by the
Secretary for such round as of June 1, 2008; and
``(II) the Secretary may subdivide metropolitan statistical
areas with populations (based upon the most recent data from
the Census Bureau) of at least 8,000,000 into separate areas
for competitive acquisition purposes.
``(iii) Exclusion of certain areas in subsequent rounds of
competitive acquisition programs.--In implementing subsequent
rounds of the competitive acquisition programs under this
section, including under subparagraph (B)(i)(III), for
competitions occurring before 2015, the Secretary shall
exempt from the competitive acquisition program (other than
national mail order) the following:
``(I) Rural areas.
``(II) Metropolitan statistical areas not selected under
round 1 or round 2 with a population of less than 250,000.
``(III) Areas with a low population density within a
metropolitan statistical area that is otherwise selected, as
determined for purposes of paragraph (3)(A).
``(E) Verification by oig.--The Inspector General of the
Department of Health and Human Services shall, through post-
award audit, survey, or otherwise, assess the process used by
the Centers for Medicare & Medicaid Services to conduct
competitive bidding and subsequent pricing determinations
under this section that are the basis for pivotal bid amounts
and single payment amounts for items and services in
competitive bidding areas under rounds 1 and 2 of the
competitive acquisition programs under this section and may
continue to verify such calculations for subsequent rounds of
such programs.
``(F) Supplier feedback on missing financial
documentation.--
``(i) In general.--In the case of a bid where one or more
covered documents in connection with such bid have been
submitted not later than the covered document review date
specified in clause (ii), the Secretary--
``(I) shall provide, by not later than 45 days (in the case
of the first round of the competitive acquisition programs as
described in subparagraph (B)(i)(I)) or 90 days (in the case
of a subsequent round of such programs) after the covered
document review date, for notice to the bidder of all such
documents that are missing as of the covered document review
date; and
``(II) may not reject the bid on the basis that any covered
document is missing or has not been submitted on a timely
basis, if all such missing documents identified in the notice
provided to the bidder under subclause (I) are submitted to
the Secretary not later than 10 business days after the date
of such notice.
``(ii) Covered document review date.--The covered document
review date specified in this clause with respect to a
competitive acquisition program is the later of--
``(I) the date that is 30 days before the final date
specified by the Secretary for submission of bids under such
program; or
``(II) the date that is 30 days after the first date
specified by the Secretary for submission of bids under such
program.
``(iii) Limitations of process.--The process provided under
this subparagraph--
``(I) applies only to the timely submission of covered
documents;
``(II) does not apply to any determination as to the
accuracy or completeness of covered documents submitted or
whether such documents meet applicable requirements;
``(III) shall not prevent the Secretary from rejecting a
bid based on any basis not described in clause (i)(II); and
``(IV) shall not be construed as permitting a bidder to
change bidding amounts or to make other changes in a bid
submission.
``(iv) Covered document defined.--In this subparagraph, the
term `covered document' means a financial, tax, or other
document required to be submitted by a bidder as part of an
original bid submission under a competitive acquisition
program in order to meet required financial standards. Such
term does not include other documents, such as the bid itself
or accreditation documentation.''; and
(B) in paragraph (2)(A), by inserting before the period at
the end the following: ``and excluding certain complex
rehabilitative power wheelchairs recognized by the Secretary
as classified within group 3 or higher (and related
accessories when furnished in connection with such
wheelchairs)''.
(2) Budget neutral offset.--
(A) In general.--Section 1834(a)(14) of such Act (42 U.S.C.
1395m(a)(14)) is amended--
(i) by striking ``and'' at the end of subparagraphs (H) and
(I);
(ii) by redesignating subparagraph (J) as subparagraph (M);
and
(iii) by inserting after subparagraph (I) the following new
subparagraphs:
``(J) for 2009--
``(i) in the case of items and services furnished in any
geographic area, if such items or services were selected for
competitive acquisition in any area under the competitive
acquisition program under section 1847(a)(1)(B)(i)(I) before
July 1, 2008, including diabetic supplies but only if
furnished through mail order, -9.5 percent; or
``(ii) in the case of other items and services, the
percentage increase in the consumer price index for all urban
consumers (U.S. urban average) for the 12-month period ending
with June 2008;
``(K) for 2010, 2011, 2012, and 2013, the percentage
increase in the consumer price index for all urban consumers
(U.S. urban average) for the 12-month period ending with June
of the previous year;
``(L) for 2014--
``(i) in the case of items and services described in
subparagraph (J)(i) for which a payment adjustment has not
been made under subsection (a)(1)(F)(ii) in any previous
year, the percentage increase in the consumer price index for
all urban consumers (U.S. urban average) for the 12-month
period ending with June 2013, plus 2.0 percentage points; or
``(ii) in the case of other items and services, the
percentage increase in the consumer price index for all urban
consumers (U.S. urban average) for the 12-month period ending
with June 2013; and''.
(B) Conforming treatment for certain items and services.--
The second sentence of section 1842(s)(1) of such Act (42
U.S.C. 1395u(s)(1)) is amended by striking ``except that''
and all that follows and inserting the following: ``except
that for items and services described in paragraph (2)(D)--
``(A) for 2009 section 1834(a)(14)(J)(i) shall apply under
this paragraph instead of the percentage increase otherwise
applicable; and
``(B) for 2014, if subparagraph (A) applied to the items
and services and there has not been a payment adjustment
under subsection (h)(1)(H) for the items and services for any
previous year, the percentage increase computed under section
1834(a)(14)(L)(i) shall apply instead of the percentage
increase otherwise applicable.''.
(3) Conforming delay.--Subsections (a)(1)(F) and (h)(1)(H)
of section 1834 of the Social Security Act (42 U.S.C. 1395m)
are each amended by striking ``January 1, 2009'' and
inserting ``January 1, 2011''.
(4) Considerations in application.--Section 1834 of such
Act (42 U.S.C. 1395m) is amended--
(A) in subsection (a)(1)--
(i) in subparagraph (F), by inserting ``subject to
subparagraph (G),'' before ``that are included''; and
(ii) by adding at the end the following new subparagraph:
``(G) Use of information on competitive bid rates.--The
Secretary shall specify by regulation the methodology to be
used in applying the provisions of subparagraph (F)(ii) and
subsection (h)(1)(H)(ii). In promulgating such regulation,
the Secretary shall consider the costs of items and services
in areas in which such provisions would be applied compared
to the payment rates for such items and services in
competitive acquisition areas.''; and
(B) in subsection (h)(1)(H), by inserting ``subject to
subsection (a)(1)(G),'' before ``that are included''.
(b) Quality Standards.--
(1) Application of accreditation requirement.--
(A) In general.--Section 1834(a)(20) of the Social Security
Act (42 U.S.C. 1395m(a)(20)) is amended--
[[Page S5701]]
(i) in subparagraph (E), by inserting ``including
subparagraph (F),'' after ``under this paragraph,''; and
(ii) by adding at the end the following new subparagraph:
``(F) Application of accreditation requirement.--In
implementing quality standards under this paragraph--
``(i) subject to clause (ii), the Secretary shall require
suppliers furnishing items and services described in
subparagraph (D) on or after October 1, 2009, directly or as
a subcontractor for another entity, to have submitted to the
Secretary evidence of accreditation by an accreditation
organization designated under subparagraph (B) as meeting
applicable quality standards; and
``(ii) in applying such standards and the accreditation
requirement of clause (i) with respect to eligible
professionals (as defined in section 1848(k)(3)(B)), and
including such other persons, such as orthotists and
prosthetists, as specified by the Secretary, furnishing such
items and services--
``(I) such standards and accreditation requirement shall
not apply to such professionals and persons unless the
Secretary determines that the standards being applied are
designed specifically to be applied to such professionals and
persons; and
``(II) the Secretary may exempt such professionals and
persons from such standards and requirement if the Secretary
determines that licensing, accreditation, or other mandatory
quality requirements apply to such professionals and persons
with respect to the furnishing of such items and services.''.
(B) Construction.--Section 1834(a)(20)(F) (ii) of the
Social Security Act, as added by subparagraph (A), shall not
be construed as preventing the Secretary of Health and Human
Services from implementing the first round of competition
under section 1847 of such Act on a timely basis.
(2) Disclosure of subcontractors under competitive
acquisition program.--Section 1847(b)(3) of such Act (42
U.S.C. 1395w-3(b)(3)) is amended by adding at the end the
following new subparagraph:
``(C) Disclosure of subcontractors.--
``(i) Initial disclosure.--Not later than 10 days after the
date a supplier enters into a contract with the Secretary
under this section, such supplier shall disclose to the
Secretary, in a form and manner specified by the Secretary,
the information on--
``(I) each subcontracting relationship that such supplier
has in furnishing items and services under the contract; and
``(II) whether each such subcontractor meets the
requirement of section 1834(a)(20)(F)(i), if applicable to
such subcontractor.
``(ii) Subsequent disclosure.--Not later than 10 days after
such a supplier subsequently enters into a subcontracting
relationship described in clause (i)(II), such supplier shall
disclose to the Secretary, in such form and manner, the
information described in subclauses (I) and (II) of clause
(i).''.
(3) Competitive acquisition ombudsman.--Such section is
further amended by adding at the end the following new
subsection:
``(f) Competitive Acquisition Ombudsman.--The Secretary
shall provide for a competitive acquisition ombudsman within
the Centers for Medicare & Medicaid Services in order to
respond to complaints and inquiries made by suppliers and
individuals relating to the application of the competitive
acquisition program under this section. The ombudsman may be
within the office of the Medicare Beneficiary Ombudsman
appointed under section 1808(c). The ombudsman shall submit
to Congress an annual report on the activities under this
subsection, which report shall be coordinated with the report
provided under section 1808(c)(2)(C).''.
(c) Change in Reports and Deadlines.--
(1) GAO report.--Section 302(b)(3) of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003
(Public Law 108-173) is amended--
(A) in subparagraph (A)--
(i) by inserting ``and as amended by section 2 of the
Medicare DMEPOS Competitive Acquisition Reform Act of 2008''
after ``as amended by paragraph (1)''; and
(ii) by inserting before the period at the end the
following: ``and the topics specified in subparagraph (C)'';
(B) in subparagraph (B), by striking ``Not later than
January 1, 2009,'' and inserting ``Not later than 1 year
after the first date that payments are made under section
1847 of the Social Security Act,''; and
(C) by adding at the end the following new subparagraph:
``(C) Topics.--The topics specified in this subparagraph,
for the study under subparagraph (A) concerning the
competitive acquisition program, are the following:
``(i) Beneficiary access to items and services under the
program, including the impact on such access of awarding
contracts to bidders that--
``(I) did not have a physical presence in an area where
they received a contract; or
``(II) had no previous experience providing the product
category they were contracted to provide.
``(ii) Beneficiary satisfaction with the program and cost
savings to beneficiaries under the program.
``(iii) Costs to suppliers of participating in the program
and recommendations about ways to reduce those costs without
compromising quality standards or savings to the Medicare
program.
``(iv) Impact of the program on small business suppliers.
``(v) Analysis of the impact on utilization of different
items and services paid within the same Healthcare Common
Procedure Coding System (HCPCS) code.
``(vi) Costs to the Centers for Medicare & Medicaid
Services, including payments made to contractors, for
administering the program compared with administration of a
fee schedule, in comparison with the relative savings of the
program.
``(vii) Impact on access, Medicare spending, and
beneficiary spending of any difference in treatment for
diabetic testing supplies depending on how such supplies are
furnished.
``(viii) Such other topics as the Comptroller General
determines to be appropriate.''.
(2) Delay in other deadlines.--
(A) Program advisory and oversight committee.--Section
1847(c)(5) of the Social Security Act (42 U.S.C. 1395w-
3(c)(5)) is amended by striking ``December 31, 2009'' and
inserting ``December 31, 2011''.
(B) Secretarial report.--Section 1847(d) of such Act (42
U.S.C. 1395w-3(d)) is amended by striking ``July 1, 2009''
and inserting ``July 1, 2011''.
(C) IG report.--Section 302(e) of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (Public Law
108-173) is amended by striking ``July 1, 2009'' and
inserting ``July 1, 2011''.
(3) Evaluation of certain code.--The Secretary of Health
and Human Services shall evaluate the existing Healthcare
Common Procedure Coding System (HCPCS) code for negative
pressure wound therapy to ensure accurate reporting and
billing for items and services under such code. In carrying
out such evaluation, the Secretary shall use the existing
process for the consideration of coding changes and consider
all relevant studies and information furnished pursuant to
such process.
(d) Other Provisions.--
(1) Exemption from competitive acquisition for certain off-
the-shelf orthotics.--Section 1847(a) of the Social Security
Act (42 U.S.C. 1395w-3(a)) is amended by adding at the end
the following new paragraph:
``(7) Exemption from competitive acquisition.--The programs
under this section shall not apply to the following:
``(A) Certain off-the-shelf orthotics.--Items and services
described in paragraph (2)(C) if furnished--
``(i) by a physician or other practitioner (as defined by
the Secretary) to the physician's or practitioner's own
patients as part of the physician's or practitioner's
professional service; or
``(ii) by a hospital to the hospital's own patients during
an admission or on the date of discharge.
``(B) Certain durable medical equipment.--Those items and
services described in paragraph (2)(A)--
``(i) that are furnished by a hospital to the hospital's
own patients during an admission or on the date of discharge;
and
``(ii) to which such programs would not apply, as specified
by the Secretary, if furnished by a physician to the
physician's own patients as part of the physician's
professional service.''.
(2) Correction in face-to-face examination requirement.--
Section 1834(a)(1)(E)(ii) of such Act (42 U.S.C.
1395m(a)(1)(E)(ii)) is amended by striking ``1861(r)(1)'' and
inserting ``1861(r)''.
(3) Special rule in case of national mail-order competition
for diabetic testing strips.--Section 1847(b) of such Act (42
U.S.C. 1395w-3(b)) is amended--
(A) by redesignating paragraph (10) as paragraph (11); and
(B) by inserting after paragraph (9) the following new
paragraph:
``(10) Special rule in case of competition for diabetic
testing strips.--
``(A) In general.--With respect to the competitive
acquisition program for diabetic testing strips conducted
after the first round of the competitive acquisition
programs, if an entity does not demonstrate to the Secretary
that its bid covers types of diabetic testing strip products
that, in the aggregate and taking into account volume for the
different products, cover 50 percent (or such higher
percentage as the Secretary may specify) of all such types of
products, the Secretary shall reject such bid. The volume for
such types of products may be determined in accordance with
such data (which may be market based data) as the Secretary
recognizes.
``(B) Study of types of testing strip products.--Before
2011, the Inspector General of the Department of Health and
Human Services shall conduct a study to determine the types
of diabetic testing strip products by volume that could be
used to make determinations pursuant to subparagraph (A) for
the first competition under the competitive acquisition
program described in such subparagraph and submit to the
Secretary a report on the results of the study. The Inspector
General shall also conduct such a study and submit such a
report before the Secretary conducts a subsequent competitive
acquisition program described in subparagraph (A).''.
(4) Other conforming amendments.--Section 1847(b)(11) of
such Act, as redesignated by paragraph (3), is amended--
(A) in subparagraph (C), by inserting ``and the
identification of areas under subsection (a)(1)(D)(iii)''
after ``(a)(1)(A)'';
(B) in subparagraph (D), by inserting ``and implementation
of subsection (a)(1)(D)'' after ``(a)(1)(B)'';
[[Page S5702]]
(C) in subparagraph (E), by striking ``or'' at the end;
(D) in subparagraph (F), by striking the period at the end
and inserting ``; or''; and
(E) by adding at the end the following new subparagraph:
``(G) the implementation of the special rule described in
paragraph (10).''.
(5) Funding for implementation.--In addition to funds
otherwise available, for purposes of implementing the
provisions of, and amendments made by, this section, other
than the amendment made by subsection (c)(1) and other than
section 1847(a)(1)(E) of the Social Security Act, the
Secretary of Health and Human Services shall provide for the
transfer from the Federal Supplementary Medical Insurance
Trust Fund established under section 1841 of the Social
Security Act (42 U.S.C. 1395t) to the Centers for Medicare &
Medicaid Services Program Management Account of $20,000,000
for fiscal year 2008, and $25,000,000 for each of fiscal
years 2009 through 2012. Amounts transferred under this
paragraph for a fiscal year shall be available until
expended.
(e) Effective Date.--The amendments made by this section
shall take effect as of June 30, 2008.
Mr. GRASSLEY. Mr. President, I am pleased to introduce the Medicare
DMEPOS Competitive Acquisition Reform Act of 2008 with my colleague,
Senator Baucus, to delay and reform the competitive bidding program for
Medicare durable medical equipment, prosthetics, orthotics, and
supplies. We are introducing this legislation to address serious
concerns that have arisen over implementation of the competitive
bidding program which is set to take effect in certain areas of the
country on July 1, 2008. The bill will delay the start of the
competitive bidding program for 18 months and require the Centers for
Medicare and Medicaid Services to review the program and address
significant issues that have been raised regarding implementation of
the program.
We must act now before the competitive bidding program takes effect.
We must ensure that the frail elderly who depend on diabetic supplies,
oxygen, and other medical equipment for life-threatening conditions
will continue to have access to essential medical products and supplies
which are vital to their daily lives. The continued viability of much
of the home medical supply industry is in serious jeopardy as a result
of flaws that surfaced in the program during the first round of
competitive bidding. Many small home medical equipment suppliers are in
danger of going out of business through no fault of their own if the
competitive bidding program is implemented as planned. Losing a
significant number of small suppliers from the home medical equipment
industry would have severe, unintended adverse consequences on
thousands of beneficiaries who need home medical equipment and
supplies. If that were to occur, it would severely hamper access to
essential medical equipment for an untold number of beneficiaries. It
was due to these very concerns that I opposed competitive bidding for
DME when it was under consideration in 2003. Now, my original concerns,
unfortunately, have become a reality, and urgent action by Congress is
required.
These concerns are especially problematic right now in states such as
Iowa in the Midwest which are already reeling from the disastrous
floods and tornadoes we have experienced this past month. The loss of
many more small businesses would be disastrous to beneficiaries whose
access to needed medical supplies has already been severely limited,
let alone the ripple effect this would inflict on local economies which
have already been severely impacted by record floods which have harmed
scores of businesses and cost hundreds of millions of dollars in
damages.
We heard from many medical equipment suppliers that the rules of the
competitive bidding program were unclear or were changed at the last
minute, and that their bids were not considered. CMS has told us that
roughly two-thirds of the bids submitted by suppliers were ultimately
rejected for lack of proper documentation or other issues apart from
price. This was done even though CMS had assured suppliers when the
program began that they would be notified if their bids lacked the
required documentation. Two weeks before the bidding closed, CMS
abruptly decided they would not provide such notification.
Appropriately, this bill terminates the contracts that were awarded
under Round One and pays any applicable damages incurred as a result of
the terminations, if any. In the future, the bill requires a more
transparent process on the part of CMS. When Round One is re-bid, the
bill requires CMS to provide feedback to suppliers with documentation
issues or other problems and give them an opportunity to remedy the
situation before their bids are thrown out and excluded from
consideration.
As Ranking Member of the Senate Finance Committee, I am committed to
ensuring that Medicare dollars are spent wisely and provide high
quality products to seniors at the lowest possible cost. The program
improvements required by this legislation will ensure more protections
for beneficiaries and lead to lower prices and higher quality medical
products while ensuring that beneficiaries will still have access to
the medical equipment and supplies that they need. These improvements
will also help prevent many small home medical equipment suppliers from
going out of business due to a flawed bidding process which unfairly
eliminated them from the Medicare program for three years.
In our bill, the cost of delaying the competitive bidding program and
adding additional safeguards to the program would be fully paid for by
the durable medical equipment industry. According to the Congressional
Budget Office, the delay in implementing competitive bidding and the
reforms to the program included in this bill will increase Medicare
spending by $3.1 billion over 5 years. To offset the cost of the
legislation, in 2009 those DME items subject to Round One of the
program will not receive a CPI update, and payments for those items
will be reduced by 9.5 percent. Items not subject to Round One will
receive a CPI update in 2009, and all DME items will receive CPI
updates in years 2010 through 2013. In 2014, those DME items which were
subject to the 9.5 percent payment reduction in 2009 will receive an
additional payment increase of two percent over the CPI unless they are
covered by competitive bidding contracts then.
As is true in many sectors, the DME industry is given a bad name by a
few bad apples that spoil the barrel. Unfortunately, we hear on a
regular basis from the Office of Inspector General and the Justice
Department that the DME industry continues to have far too many
incidents of waste, fraud and abuse. The multi-agency Medicare Fraud
Task Force formed last year has uncovered numerous examples of criminal
behavior and successfully prosecuted dozens of fraudulent or non-
existent DME suppliers in South Florida and elsewhere. In just over a
year, the task force has brought more than 120 cases against nearly 200
defendants in South Florida alone who have been charged with a total of
$638 million in fraud. We must have stronger safeguards to ensure that
companies who participate in competitive bidding are actual, legitimate
companies that can provide the equipment and services they bid to
provide. In addition, the Inspector General of the Department of Health
and Human Services is required to assess the process used by CMS to
conduct competitive bidding and verify the calculations of the pricing
determinations used to determine the payment amounts for competitively
bid items in Rounds One and Two.
This bill also includes standards which will lead to an improved
competitive bidding program. Under the bill, all DME suppliers must be
accredited and meet quality standards by October 2009. We also close a
loophole that currently allows subcontractors to remain unaccredited.
We heard many complaints about companies awarded contracts who had no
presence in the competitively bid area and who then began to solicit
subcontractors to assist in carrying out the terms of the contract they
had been awarded. Under the current program, subcontractors do not need
to meet accreditation standards. Our bill requires that every company
that supplies DME in the Medicare program must meet accreditation
standards, whether they are primary suppliers or subcontractors.
I urge my colleagues to support this legislation to delay the
competitive bidding program in order to ensure seniors continued access
to needed home medical equipment and supplies and to remedy flaws in
the bidding process and make other necessary improvements in the
competitive bidding program.
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