After H.R. 6331: Where Does Mobility Go from Here?

What if competitive bidding was stopped, complex rehab was carved out of the program altogether, and the first-month purchase option for power chairs was preserved?

After years of living with the specter that was competitive bidding, DME suppliers, manufacturers and other stakeholders found themselves fully able to ponder those questions starting the evening of Tuesday, July 15. That's when H.R. 6331 became law and competitive bidding as we've come to know it was stopped.

July 15 started with a promised presidential veto that swiftly led to a 383-41 vote to override in the House. While political insiders expected the Senate vote to be closer - especially since Sens. Edward Kennedy (D-Mass.) and Barack Obama (D-Ill.), who'd voted yea on the bill last week, were not in town to vote this time. But a little after 6 p.m. Eastern time, the Senate voted 70-26 to override President Bush's veto, thus making H.R. 6331 law.

For those who had lobbied so long against competitive bidding as anti-competitive and harmful to beneficiary access, it was now time to reflect, even as the Centers for Medicare & Medicaid Services (CMS) scrambled to put the brakes on a first-round bidding program that had launched in 10 areas on July 1.

The next morning, as many suppliers came to work and heard for the first time that competitive bidding contracts were no longer valid, the initial challenge was simply to figure out what the new landscape looked like...and to help CMS to do the same.

In a day-after interview with Mobility Management, Cara Bachenheimer, Invacare Corp.'s senior VP of government relations, said, "We joined AAHomecare in a meeting yesterday with CMS and pressed the need for comprehensive and clear information, because there's already a huge amount of confusion going on out there with the bid program. To minimize further disruptions (for) discharge planners, consumers, (etc.), all of the above need to know exactly what is going on right now.

"We identified the top priorities that they should be addressing, but we don't know the scope of the information or the level of detail that they're going to put out."

For much of Wednesday, the day after the veto override, CMS' competitive bidding-related Web sites remained devoid of information about the new law - though many of the downloadable documents and links pertaining to the program had been removed from the Web sites. Then Wednesday afternoon, suppliers who'd won first-round bids and who had been working for two weeks with beneficiaries in those bid areas received an e-mail notification from CMS that said, in part, "(Contracted suppliers) will soon be receiving official notification... We're notifying you that your contract with CMS for this program is terminated. You'll be receiving an official notification letter via Federal Express within the next several days. Effective immediately, you may continue to furnish DMEPOS items and services that have been included in the competitive bidding program, and you'll now be paid under the fee schedule for those items and services in accordance with existing Medicare (rules)."

Later on Wednesday, CMS' DME MACs began issuing identical, brief statements that said competitive bidding had been halted.

Given that H.R. 6331 is now law, "Claims will be paid based on the current fee schedule, and any enrolled Medicare supplier can provide equipment," said Rita Hostak, VP of government relations, Sunrise Medical, and immediate past president of the National Coalition for Assistive & Rehab Technology (NCART). "The contracts for round one are cancelled by this legislation."

But beyond the basics, little information had been made publicly available as this issue was completed Thursday evening. For instance, what happens to beneficiaries who had started working with newly contracted suppliers in first-round bid areas from July 1 through the afternoon of July 15?

"Suppliers may have commitments to any Medicare beneficiaries they provided equipment to during the brief period that the program was in place," Hostak said. "How these specific beneficiaries will be addressed going forward is the type of information that CMS will have to provide."

Said Bachenheimer, "If the beneficiary chooses to continue with that supplier, that's their decision. The pricing will change; the law is retroactive to June 30. So what that means is bid pricing will not be in effect. Providers will be paid at the prices that were in effect June 30 and are again in effect. Since the law is retroactive, it's as if those bid prices were never in effect." But as far as the supplier's commitment to beneficiaries, Bachenheimer said, "The contracts are null and void, so there is no obligation. That's why it's more of an ethical than a legal issue. You certainly don't want to leave a beneficiary stranded, particularly if you're mid-stream in the process."

What We Know Now: Education Is Needed, Rehab Is Carved Out

Yes, the industry is waiting for guidance from CMS on many issues, but what do we know now, besides the fact that DME payment amounts have reverted to pre-competitive bidding prices, and that once again, any current Medicare supplier may furnish equipment?

Certainly, suppliers can expect confusion from the physicians, clinicians, consumers and others they work with, as they adjust once again to a new DME workflow and structure.

Seth Johnson, VP of government affairs for Pride Mobility Products, said CMS will be providing educational material on the impact of H.R. 6331: "It's my understanding that CMS is working on sending those communications out, and I believe they indicated those should be sent out within the next week or so. I know those efforts are underway to communicate that to all the stakeholders, including Medicare beneficiaries."

Still, suppliers can expect to remain on the front lines of re-educating all stakeholders, Johnson admitted. "I know," he said, "that providers who were not winning providers in these areas are already undergoing those educational efforts to let their referral sources know what CMS posted (on July 16), indicating the program is now operating as it did pre-July 1. That's what we're advocating that our providers do to the extent that they weren't winners in those 10 areas."

The industry also knows that complex power rehab equipment and services have been carved out - exempted - from competitive bidding going forward. While the halting of competitive bidding itself is temporary while CMS reformulates it according to Congressional mandates, complex power - defined as Group 3 and higher power chairs and their related accessories -- will not be part of the future program.

That was sweet news to the rehab industry, which had argued from the beginning that the unique, customized, service-dependent nature of complex assistive technology could not be well served by a competitive bidding model.

"That was a major victory," said U.S. Rehab President Jerry Keiderling. "Remember, the language in that bill preserves the first-month purchase option (for power chairs) as well. There are two items to be excited about there."

"The complex rehab exemption is obviously a huge positive," Bachenheimer said. "The way we think of it is that CMS had every intention of using authority to apply bid rates in non-bid areas in 2009, so there was a real threat of much deeper cuts. I think overall, getting complex rehab out of the bidding program in perpetuity is a huge positive. It was the most inappropriate package of services for a bidding program. It (now) will never be in a bid program, unless Congress changes the law. It's a permanent exclusion that helps the whole category of products and services."

Still at issue is one of H.R. 6331's "pay-fors": In exchange for halting competitive bidding and reforming the program, in January CMS will implement a 9.5-percent cut to all DME that was bid in the first round. For now, at least, that cut would include complex power rehab, even though that technology has since been excluded from the program.

"Obviously, complex rehab absolutely needed to be carved out of competitive bidding," said Johnson. "We are concerned about the application of that 9.5-percent cut to power wheelchair providers, especially in light of the significant reductions that took place in November of 2006. Clearly, providers of complex rehab products and services do not have another 9.5 or really 10 percent to give.

"The 9.5-percent cut is to pay for the overall competitive bidding delay provision. Embedded in that competitive bidding delay provision is that exemption for complex rehab. Clearly the 9.5-percent cut pays for a lot more than complex rehab, even just looking at the complex rehab benefit itself."

"The legislation states 'on all bidded items in round one,'" Keiderling said, when asked if complex power rehab would still be subjected to the 9.5-percent cut. "Complex rehab and related accessories were bid in round one. So at this point, they are included. That is a major concern on everybody's mind right now, and how can we get that legislation changed? Efforts are being made to look at what can be done within the next six months, before that 9.5-percent goes into effect."

Nonetheless, the rehab carveout was seen as reason for celebration among the industry's legislative experts.

"I think it was a major effort by many people," said Keiderling in explaining the success of the exemption. "I think NCART was probably at the forefront of that. But there were many people involved from many associations, and dealers themselves."

Hostak indicated that future advocacy efforts might include expanding the carveout to all complex rehab technologies.

"NCART's initiative was to obtain an exemption for all complex rehab and assistive technology from competitive bidding," she said. "This technology is inappropriate for any competitive bidding program due to the high individualization in each specific case and the extreme variation in cost this can cause. It is also important to note that H.R. 2231 and S. 2931 provided exemption for all complex rehab technologies.

"However, given the cost associated with H.R 6331, the exemption was applied only to rehab products and related accessories included in competitive bidding to date. Whether it will be necessary to obtain legislation to exempt other items is not clear at this point. Ultimately, it is important to ensure that all complex and individually configurable technologies are exempt from any future competitive bidding program."

The 9.5-Percent Cut in January & Other Financial Impacts

Among the information we also know at this point: H.R. 6331's price tags include that 9.5-percent funding cut for DME categories bid in the first round, which is sure to concern suppliers who have already seen funding recent funding cuts in wheelchair cushions, power mobility devices and other product categories.

Asked the likely impact of those cuts, Hostak said, "This question raises a different but very important question regarding the HME industry. Is profitability for suppliers equitable across all HCPCS codes? The answer is absolutely not. Therefore, the consequence of a 9.5-percent cut for each HCPCS code included in round one will be more severe for some items than others. Suppliers will be forced to look for ways to cut costs."

"No one is happy about the cut," said Mark Higley, VP of development for The VGM Group. "However, the alternative is unthinkable. The final bid fee schedule amounts would surely have filtered into other areas of the HME provider's business. Whether it was private insurance, Medicaid or the Medicare system through inherent reasonableness, those prices would have set the stage for disaster."

As for suppliers who were financially hurt by the program's halt and want to seek compensation, Bachenheimer said, "I think people should go to their own attorneys. The government clearly expected some potential litigation." (See related story containing Health & Human Services Secretary Michael Leavitt's comments on compensation in this issue.)

Said Higley, "VGM will continue to advocate on behalf of all of its membership. We understand that there was time and money invested into bidding on the competitive bidding program. However, our position was clear: Prepare for the bid...but fight with all your might to prevent this flawed program from occurring. With regard to providers who believe they are entitled to compensation, Section 154 of H.R. 6331 suggests Medicare Trust Funds may be available to certain companies who, ostensibly, can prove damages."

What to Expect Going Forward

Even before H.R. 6331 became law on Tuesday, there was Capitol Hill buzz that a "delay" to competitive bidding at this point, ostensibly to reform the program, could actually result in the program's overall death. Talk of that possibility grew stronger after Congress overrode Bush's veto.

But for the time being, the assumption is that the next step - once CMS takes care of a myriad of housekeeping tasks related to transitioning from competitive bidding to pre-program procedures and pricing - will be to create a better competitive bidding program, one that incorporates the requirements put forth by Congress.

"The 18- to 24-month (postponement that's being mentioned) is not in the statutory language," Bachenheimer pointed out. "That's the amount of time CMS said it would take them to redo the program based on the mandates that Congress put in the legislative language. It's going to require (CMS) to go back to the drawing board and rewrite the competitive bidding regulation in its entirety. That's about a two-year process - they're probably going to try to speed it up - and they have to redo the bid process based on that. They literally are going back to square one to recraft the program."

Asked what improvements he is hoping for this second time around, Johnson said, "The industry has largely been supportive of mandatory accreditation; all providers are required to be accredited by September 30 of next year. Clearly, there needs to be a requirement that all providers be accredited, and if they are accredited based on the quality standards. What we're hearing right now is that a revised draft of the quality standards should be released by CMS sometime in July, so sometime in the next two weeks."

Johnson also would like to see improvements made in the bidding process itself - for instance, to the disqualification process during bidding submissions.

"Clearly, there were issues regarding inappropriate disqualifications from participating in the program due to a lack of complete financial information," he said. "We talked to quite a few of our providers, and they had their accountants and their attorneys and other independent professionals review the information that was submitted hard copy, and they all attest the information was complete.

"So it does appear based on communication (given on July 16) that (as) the Medicare program moves forward, providers will have the ability to respond to the extent that there is missing information when Medicare is reviewing their bid for competitive bidding, to respond with that information that Medicare has indicated is missing. So Medicare would have to specifically identify what that missing information is. Many providers that were disqualified still don't know what specifically was missing, whether it was an issue with the credit score that wasn't submitted in the right format, or if there was something that (CMS) wanted to see, part of the financials that wasn't incorporated in the statement that was submitted.

"Medicare will have to provide that specific information if they're disqualifying a provider moving forward for incomplete financial information and give them an opportunity to -- I believe they indicated it was (in) 10 days -- submit the missing information."

Subcontracting turned out to be a controversial issue in round one, as some suppliers argued that peers were bidding outside their areas of expertise.

Said Hostak: "H.R. 6331 addresses many of the key reform issues. However, additional steps are needed to ensure that only knowledgeable and qualified suppliers bid in each category. Sunrise Medical believes that the role of the supplier is critical, and the experience and knowledge of the supplier can impact the clinical outcome of beneficiaries. We want to ensure that the process is fair and equitable. Moreover, that the process contains an analysis of the supplier's ability to provide products beyond just price, capacity or financial stability."

Bachenheimer indicated that she hopes CMS' Program Advisory & Oversight Committee (PAOC) will be able to play a more significant role this time.

"We're hopeful that CMS would be a little more receptive to some of the industry recommendations," she said. "For example, the PAOC, which I sit on, provided a lot of good advice over the last several years, and I'm not sure that CMS incorporated any of that advice. Good advice based upon how things work in the private sector and the way that CMS could do things a little bit differently or very differently. And none of that was incorporated, either in the regulation or in the bid program. For whatever reason, they chose not to."

And Johnson said the industry will have the chance to make its voice heard regarding this second competitive bidding program.

"It's my understanding that the Medicare program will be providing an opportunity for comments on the restructuring of the competitive bidding program moving forward through the rule-making that they are required to follow," he said.

The Big Take-Away: When Grassroots Advocacy Works

While H.R. 6331 isn't a perfect solution to every DME supplier's needs, its successful passing from bill to law - while overcoming a veto along the way - may have implications far beyond competitive bidding, say legislative experts.

"I can't tell you how many members of Congress actually know what DME is now because they've heard from so many constituents," Bachenheimer said. "That needs to happen on an ongoing basis, not just in times of crisis. I would encourage people to continue and cultivate those relationships. Obviously, there are going to be new faces after the November elections and some of those will have to start anew, but this industry has such potential from a grassroots (level), and I think we're just starting to see that."

Keiderling said more legislators on the Hill now understand complex rehab, but still, "You have to constantly remind them. It is an election year; there are a lot of people who understand it now who may not be here in another election. So it's going to be a constant education, I think. But I think it will be a little bit easier because we've been recognized. We never were before."

He also said it was encouraging to see larger numbers of industry members participate in the process. "For years, there was a handful of people that got involved in the legislative game - and I call it a game because it sometimes can be. But we've seen, over the last couple of years, many more people get involved that never would before. Are we at full capacity of involvement? No, we still need many more people to get involved."

As Bachenheimer noted, "A hundred members of Congress signed on to the House bill within seven days of its introduction, and I think 40 senators. That's huge. You want to say, 'See, grassroots does work. If they don't hear from you, they don't know about it, let alone care about it.'"

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