[Congressional Record (Bound Edition), Volume 154 (2008), Part 9]
[Extensions of Remarks]
[Pages 12502-12504]
[From the U.S. Government Publishing Office, www.gpo.gov]




INTRODUCTION OF LEGISLATION TO DELAY MEDICARE'S DME COMPETITIVE BIDDING 
                         DEMONSTRATION PROGRAM

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Thursday, June 12, 2008

  Mr. STARK. Madam Speaker, I rise today to introduce the ``Medicare 
DMEPOS Competitive Acquisition Reform Act of 2008.'' I am pleased to be 
introducing this bill with my Ranking Member on the Ways and Means 
Health Subcommittee, Representative Dave Camp (R-MI); Ways and Means 
Committee Chairman Charles B. Rangel (D-NY); House Minority Leader John 
Boehner (R-OH); Energy and Commerce Chairman John D. Dingell (D-MI); 
and Energy and Commerce Committee Health Subcommittee Chairman Frank 
Pallone (D-NJ). In particular, I would like to thank Mr. Camp for 
helping to craft this bipartisan legislation.
  The Medicare Modernization Act mandated a competitive bidding program 
for durable medical equipment in Medicare and allowed the program to be 
nationally implemented after a several year phase-in. Unfortunately, 
the Administration developed the program with blinders on to the needs 
of patients and the small

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companies who make up the durable medical equipment industry.
  Our subcommittee held a hearing on implementation of the bidding 
program on May 6, 2008. We heard testimony from numerous stakeholders 
about the difficulties they encountered during the bidding process. For 
example, nearly two-thirds of applicants were disqualified because of 
improper documentation--when they had initially been promised that such 
documentation errors would be pointed out to them and they'd have an 
opportunity to correct any errors. We also heard from beneficiary 
organizations concerned about a number of issues, including maintaining 
access to benefits during what is likely to be a very tumultuous 
transition period.
  Without Congressional intervention, the flawed program begins on July 
1, 2008. The bill we're introducing today delays implementation of the 
competitive bidding program for 18 months to provide the Centers on 
Medicare and Medicaid Services (CMS) with the time to create an 
improved program based on standards laid out in this legislation. 
Importantly, this bill comes at no cost to the Federal Government. The 
cost of delaying the program is fully paid for by the DME industry.
  Let me be clear from the outset in saying that I do not think this 
legislation goes far enough. If it were entirely up to me, I would be 
introducing legislation to repeal the current competitive bidding 
program and take far simpler approach to adjusting Medicare's DME 
payment rates.
  The program has already proved useful. It has shown that companies 
are willing to take Medicare's business for far lower prices than the 
current fee schedule rates. Overall, the estimate is that Medicare 
would save 26 percent over the current fee schedule in these 
communities. That's a significant savings that we can't afford to 
ignore. However, instead of repeating the bidding process again and 
again in each and every community, I think Medicare might better be 
served--and significant administrative costs saved--by taking what we 
learned in this first round to change the fee schedule rates by which 
we pay for DME now. Those improvements could be done once and would 
immediately be in effect nationwide. That seems far simpler and far 
less disruptive to both suppliers and beneficiaries than the program 
that CMS is now phasing in.
  One aspect of the competitive bidding program that I fully embrace is 
the requirement that DME suppliers meet quality standards through an 
accreditation process. Unfortunately, as the Government Accountability 
Office and Office of Inspector General have told us in numerous 
reports, the DME industry has a ripe history of waste, fraud and abuse.
  The program's accreditation provisions are a good start in tackling 
these problems, and our bill strengthens those requirements. 
Specifically, the bill sets a hard deadline of October 2009 for all DME 
suppliers to be accredited. It also addresses a loophole that currently 
allows subcontractors to remain unaccredited. It closes that loophole 
by requiring that every company that supplies DME items to Medicare 
beneficiaries, whether they are the primary supplier or have a 
subcontract to supply DME, must be accredited as meeting quality 
standards. Just recently, additional concerns have been raised about 
the quality of some of the accreditation organizations. While we did 
not address that in this bill, I believe the administration has both 
the authority and the obligation to ensure that accreditation is 
meaningful.
  This bill was developed with strong bipartisan support and with input 
from patient advocates and industry representatives--many of whom have 
endorsed the legislation. It is the true definition of a compromise. It 
doesn't eliminate the program as some of us would have liked, but it 
lays out the standards for a much more fair and appropriate competitive 
bidding program for the future.
  Again, as the program has shown, Medicare is overpaying for durable 
medical equipment. Enactment of this legislation reduces such 
overpayments and simultaneously paves the way for a better competitive 
bidding program for patients and suppliers. I am proud that we were 
able to develop this compromise and require the industry themselves to 
come to the table to help pay for the delay. This bill is in the best 
interest of our senior citizens and people with disabilities who depend 
on this equipment to maintain independent lives. I urge my colleagues 
to join us in acting swiftly to enact this much needed legislation.
  Organizations endorsing the bill include: American Academy of 
Physical Medicine and Rehabilitation, American Association for 
Homecare, American Podiatric Medical Association, American Society of 
Transplantation, Consortium for Citizens with Disabilities Health Task 
Force, Health Industry Distributors of America, Invacare, ITEM 
Coalition, National Coalition for Assistive and Rehab Technology, 
National Community Pharmacists Association, Orthotic and Prosthetic 
Alliance, Pedorthic Footwear Association, Rite Aid, the Endocrine 
Society, Vision Council of America, Wound Ostomy Continence Nurses 
Society, 3M Corporation.
  A more detailed summary of the bill follows:

       Medicare DMEPOS Competitive Acquisition Reform Act of 2008

Introduced by Reps. Stark, Camp, Rangel, Boehner, Dingell, Pallone and 
                                others,


                                Summary

       The Medicare DMEPOS Competitive Acquisition Reform Act of 
     2008 delays implementation of the Medicare durable medical 
     equipment, prosthetics, orthotics and supplies (DMEPOS) 
     competitive bidding program. It would also make improvements 
     to the bidding process, establish quality measures for DME 
     suppliers in Medicare, and make additional changes to the 
     program. The cost of the delay would be offset by a reduction 
     in current DMEPOS payment rates.


                               Background

       Durable Medical Equipment (DME) has historically been paid 
     using a fee schedule. The Balanced Budget Act of 1997 
     established a demonstration program to test competitive 
     bidding as a new way to set payment for DMEPOS. The Medicare 
     Prescription Drug, Improvement, and Modernization Act of 2003 
     went further, requiring CMS to implement competitive bidding 
     nationally for the following selected categories of items and 
     services: oxygen supplies and equipment; standard power 
     wheelchairs and scooters; complex rehabilitative wheelchairs; 
     mail-order diabetic supplies; enteral nutrients and 
     equipment; continuous positive airway pressure (CPAP) devices 
     and Respiratory Assist Devices (RADs); hospital beds; 
     negative pressure wound therapy devices; walkers; and support 
     surfaces, including mattresses. Under the program, suppliers 
     bid to provide items for one or more of the categories in a 
     geographic area. Those whose bids are awarded are then 
     permitted to supply the selected items to beneficiaries; 
     organizations that are not awarded bids are precluded from 
     providing Medicare beneficiaries with DMEPOS items targeted 
     for bidding in the bidding area. Unless this or other 
     legislation is enacted to delay the program, Round 1, which 
     affects 10 metropolitan statistical areas is slated to start 
     on July 1. The agency is required to begin implementation of 
     Round 2, which will affect 70 communities, in 2009, although 
     CMS has not released the exact schedule. After Round 2 is 
     completed, competitive bidding may be expanded across the 
     country and prices may be adjusted in non-bid areas using 
     information from the bidding program.


                              Legislation

     Temporary Delay Rounds 1 & 2
       Terminate contracts awarded under Round 1 and restart the 
     contracting process in those areas in 2009.
       Round 2 contracting process would begin in 2011.
       Payment adjustments for DMEPOS in non-competitive bid areas 
     may not take effect until Round 2 is completed.


                                 Offset

       In January 2009, eliminate the annual inflationary 
     adjustment for all items covered by Round 1 of the 
     competitive bidding program and reduce payment rates for 
     those items by 9.5 percent nationwide. This policy does not 
     affect diabetic supplies furnished by retail suppliers 
     because they were not covered by the bidding program.
       Items that had been subject to the reduction would receive 
     a 2 percent payment increase in 2014, except in any area 
     where a competitive bidding contract is in effect or CMS has 
     otherwise adjusted payment rates.


                      Bidding Process Improvements

       Require CMS to notify bidders about paperwork discrepancies 
     and give suppliers the opportunity to correct within a 
     reasonable time frame.
       Provide CMS the authority to subdivide MSAs with more than 
     8 million people.
       Exempt rural areas and MSAs with a population of less than 
     250,000 from competitive bidding for at least 5 years.
       Require that suppliers who bid on diabetic testing supplies 
     offer brands that cover at least 50% of the market by volume 
     (does not apply to Round 1).
       Before using its authority to adjust prices in non-bid 
     areas, CMS must issue a regulation and consider how prices 
     set through competitive bidding compare to costs for such 
     items in non-bid areas.
       Require HHS's Office of Inspector General to verify 
     calculations used to determine the pivotal bid amount and 
     winning bid amounts.


                            Quality Measures

       Require all suppliers to be accredited by October 1, 2009. 
     Ensure that all suppliers, whether they are billing Medicare 
     directly or are a subcontractor to another supplier, be 
     subject to accreditation.
       Require contracting suppliers to disclose all 
     subcontracting relationships to CMS.
       Exclude physicians and other practitioners from DMEPOS 
     accreditation requirements until CMS develops provider-
     specific standards. Allow CMS to waive physician 
     accreditation if the agency determines they are subject to 
     other mandatory quality requirements.

[[Page 12504]]

       Establish a separate ombudsman within CMS to handle 
     supplier and beneficiary issues related to the competitive 
     bidding program.


                             Other Changes

       Exclude complex rehabilitation wheelchairs, and related 
     accessories when furnished with such wheelchairs, from 
     competitive bidding.
       Exclude negative pressure wound therapy from Round 1 and 
     require CMS to evaluate how these items are coded and paid.
       Exclude Puerto Rico from Round 1 re-bidding (did not 
     receive enough valid bids in original Round 1 for CMS to 
     award any contracts).
       Allow physicians and other treating practitioners to supply 
     ``off-the-shelf orthotics'' to their patients without being 
     awarded competitive bidding contracts.
       Allow hospitals in bidding areas to supply the same DMEPOS 
     items that physicians and other practitioners will be able to 
     supply (those that are considered an integral part of 
     professional services) without being awarded contracts for 
     those items.
       Ensure that podiatrists and other similar practitioners can 
     prescribe DMEPOS items by using broader definition of 
     physician in Social Security Act. (This relates to a drafting 
     error in MMA that pointed to the wrong definition of 
     physician in the Social Security Act when requiring face-to-
     face examination in order to prescribe DMEPOS items.)
       Delay mandated GAO report to coincide with delay to Round 1 
     and expand scope of report.
       Provides CMS implementation funding of $120 million.

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