The American law-making process can seem grinding, slow and somewhat mysterious, with much of the discussion and negotiating taking place quietly out of public view, behind closed doors.

So it was for a long while with the Centers for Medicare & Medicaid Services’ (CMS) competitive bidding program and the give-and-take going on among legislators and members of the DME industry. On July 1, the first round of competitive bidding was rolled out in 10 competitive bidding areas (CBAs) across the country.

But within days — and thanks to bill H.R. 6331 — the normally staid and orderly process of lawmaking morphed into must-see reality television. Dramatic passages of the bill in the House and Senate were followed by a presidential veto, which was followed by veto overrides in the House and Senate that happened almost faster than followers could tune in to C-SPAN. By the evening of July 15, just two weeks after being implemented, CMS’ troubled competitive bidding program had been forcibly halted by Congress, and the DME industry — along with referral sources, clinicians, consumers and caregivers — was faced with making another transition.

So ultimately, what does the passage of H.R. 6331 mean, and where will mobility and rehab go from here? At press time, two weeks after the July 15 rolling back of the program, the industry was still awaiting additional information from CMS. But for starters, here’s what we know now, according to the industry’s legislative experts.
#1: Complex Power Rehab Is Carved Out
One truth to emerge from the fracas is that complex rehab — with its extreme customization needs and exhaustive service component — is an ill fit for competitive bidding of any kind. H.R. 6331 excludes complex power rehab — defined as Group 3 and higher power chairs and related accessories — from competitive bidding programs.

“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,” said Cara Bachenheimer, Invacare Corp.’s senior VP of government relations. “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 Seth Johnson, Pride Mobility Products’ VP of government affairs. “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.”

Rita Hostak, VP of government relations for Sunrise Medical, 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.”

Don Clayback, VP of government relations for The MED Group, agreed that in the end, the complex rehab carveout was a critical victory even beyond Medicare policies. “It certainly sends a message that those things do need to be treated differently, and I think that’ll potentially help us in Medicaid and other situations. I think that’s a plus.”

#2: The Cost of the Delay: A 9.5-Percent Cut
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 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.”

Even before H.R. 6331 passed, it was clear that not all suppliers were happy with the idea of stopping the competitive bidding program…and those feelings were confirmed once the bill became law.

Clayback called supplier sentiment “kind of a mixed bag.”
“You have several camps of folks out there,” he said. “Those that won in general I think are disappointed that their contracts were terminated. Those that lost are happy because they’re back in the game. I think they’re grudgingly accepting of a 9.5-percent reduction to get back in the game.

“I think the ones that were not in the CBAs, that’s a different story. Because those guys are dealing with ‘Well, I wasn’t in the initial round.’ So the next question is ‘Were you in round two?’ And if you were, you wouldn’t (have been) impacted by (competitive bidding) fee reductions until probably July of next year. So yes, you have to take a reduction of 9.5 percent on January 1, but you probably would have been subject to more than that as you moved forward into 2009…. If competitive bidding went ahead, you may not have won. And if you did win, you probably would have had to at least meet what the round-one discounts were, and those were significant.”

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.”

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.”

#3: More Work Lies Ahead
Even before H.R. 6331 became law on July 15, there was Capitol Hill buzz that a “delay” to competitive bidding at this point, presumably 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.”

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 their 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.

#4: Washington Has Now Been Educated
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.’”

Said Clayback, “There’s different feelings about the bill, but I don’t think anybody could disagree that we have leaped light years ahead in terms of awareness of the industry. The thanks goes to a multitude of people and associations, but it really comes down to everybody that sent an e-mail, that made a phone call, certainly that visited with their member (of Congress).”

Clayback believes the relationships formed this time and the education that took place will be valuable to the DME industry in the future. “Legislative battles will be part of our ongoing existence,” he said, “and I think we have solidified our message. My personal feeling is that overall, this was a good thing. I think it took an awful lot of work on a lot of people’s parts. We certainly did not get everything we wanted, and that’s unfortunate. Some of that, I think, we’re going to continue to work on. That’s another thing I think people need to realize: This was not meant to be the end of our initiative. This was meant to get a delay so we can have further discussions and work on other alternatives.

“From an educational perspective, this was a victory. Now we just need to use that education to fix some of these problems that are still out there.”