Medical equipment suppliers sue over bidding program

A trade group representing medical equipment manufacturers and suppliers is suing the Bush administration, seeking to block the implementation of a competitive bidding program for their products.

The American Association for Homecare (AAHomecare) announced Wednesday that it filed suit on Monday in a Washington, D.C., federal court against Health and Human Services Secretary Mike Leavitt and Centers for Medicare and Medicaid Services (CMS) acting Administrator Kerry Weems.

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The group, composed of companies that make and sell products such as oxygen equipment, wheelchairs and hospital-style beds for the home, wants the court first to issue a preliminary injunction against the durable medical equipment competitive bidding program, the first phase of which is to take effect on July 1. The suit also demands a permanent injunction.

The lawsuit is the newest weapon in the medical supply industry’s fight against the program. AAHomecare, member companies such as Invacare and allied trade associations resisted the program when CMS was formulating its implementation plans and have pressed Congress to postpone or eliminate the program.

Lawmakers in the House and Senate are eyeing legislation to do just that — but would replace the competitive bidding program with an across-the-board cut in durable medical equipment payment rates.

Rep. Pete Stark (D-Calif.) is leading the efforts in the House. Although the Medicare legislation being debated in the Senate this week does not contain language to halt the bidding program, the industry is working to get Finance Committee Chairman Max Baucus (D-Mont.) to modify the bill as it moves forward.

“While we continue a full-court press on the legislative front to delay the bidding program, we also want to get the courts involved,” AAHomecare President and CEO Tyler Wilson said in a statement. “The bidding program will put thousands of homecare providers out of business, and patients’ access to quality home medical equipment and services will suffer as a result.”

Beginning on July 1, only companies that won the bidding process in 10 metropolitan areas are permitted to provide 10 categories of medical equipment and supplies, such as oxygen tanks or power wheelchairs, to beneficiaries who live in those locations. CMS also plans next month to start advancing its expansion of the competitive bidding program to 70 additional cities, with an eventual goal of nationwide implementation as required by law.

In their lobbying and the lawsuit, the industry argues that CMS did not provide bidding companies with adequate information about the financial standards they needed to meet to be selected for the program, leading to many companies being denied entry. AAHomecare also charges that CMS improperly defined small businesses for the program, which excluded many companies from the guaranteed slots for smaller firms.

AAHomecare members “have been excluded from providing items and services in the first round of bidding areas for which they submitted bids as a result of the legally defective competitive bidding program administered by CMS,” the lawsuit says.

Congress enacted the competitive bidding program in 2003 as a method of controlling skyrocketing spending on medical equipment and supplies, particularly on oxygen and power wheelchairs.

“As a matter of policy, we are unable to discuss pending litigation,” said Jeff Nelligan, CMS director of media affairs. “However, stopping or slowing the competitive bidding program for durable medical equipment will only mean that Medicare beneficiaries will lose or delay their chance of saving money when they buy or rent their medical equipment and supplies from fully accredited suppliers.”