Inspector General investigating medical supply contracts under Medicare program following request by Rep. Thompson

August 29, 2013

In 2011, more than 240 economists and market auction design experts wrote to President Obama concerning the flawed model being used by the Centers for Medicare and Medicaid Services (CMS), commonly known as "Competitive Bidding," to procure Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) for seniors and those facing life-changing disease and disability. The experts wrote, that “the current program is the antithesis of science and contradicts all that is known about proper market design.” These perceived flaws have become a reality over the past several years. In fact, the procurement model is anything but competitive, and has negatively affected seniors, people with disabilities, and a large portion of the small medical device companies that offer these goods and services.

On June 12, 2013, Representative Bruce Braley (D-IA) and I initiated a letter signed by 227 Members of Congress – a full majority in the U.S. House of Representative, including 82 Democrats and 145 Republicans – which outlined critical flaws and abuses in the program, and requesting that CMS delay further implementation until such issues are fully addressed and fixed.

Despite the growing number of reported abuses under the program, and strong congressional concern about the design of the bidding model and the need for further transparency, CMS moved forward with the program in 91 new bidding areas on July 1, 2013. The CMS Administrator, the agency’s top official, admitted to the program abuses, yet has failed to address how the failures occurred or offer any plan for corrective action.

For this reason, Rep. Braley and I requested an investigation on June 20, 2013, into CMS and its handling of the program. This week, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) informed Rep. Braley and I of its decision to move forward with the investigation. 

  • (August 28, 2013) Bloomberg: Get Ready for a Review of the DME Competitive Bidding Program: "While certainly not an everyday occurrence, sometimes Congress actually gets things done. As an example, a congressional request has led the OIG to conduct a limited, four-state review of CMS's competitive bidding program for DME. The review will cover Maryland, Michigan, Tennessee, and Ohio, and will investigate whether CMS awarded contracts to unlicensed DME providers, according to an Aug. 22 OIG letter addressed to Reps. Glenn Thompson (R-Pa.) and Bruce L. Braley (D-Iowa). Thompson and Braley had called for the review in a June 20 letter to OIG. Inspector General Daniel R. Levinson said the review would determine if state licensing requirements were met by DME providers who were awarded contracts, and he said the review would also examine any impacts to the competitive bidding program as a result of licensing issues. OIG will conduct a full post-award review of Round Two of the competitive bidding program later this year..."
  • (8/29/13) Pittsburgh Post-gazette: U.S. agency investigating medical supply contracts: "The Department of Health and Human Services has agreed to investigate whether government contracts for durable medical goods -- such as wheelchairs, beds and blood-sugar monitors -- are being awarded properly.  The probe stems from concerns that the Center for Medicare Services may have awarded hundreds of contracts to suppliers who aren't in compliance with program requirements.  U.S. Reps. Glenn "G.T." Thompson, R-Centre, and Bruce Braley, D-Iowa, requested the investigation in June after learning that contracts were awarded to 30 unlicensed suppliers in Tennessee and that more may have been improperly awarded in other states..."
  • (8/28/13) EHR Intelligence: Medicare competitive bidding program to undergo OIG review: "In response to a request from two members of Congress, the Office of Inspector General (OIG) has decided to conduct a review of Medicare’s competitive bidding program for durable medical equipment and supplies...This past June, Representatives Glenn Thompson (R-PA) and Bruce Braley (D-IA) petitioned the OIG to look into licensures issues and the awarding of contracts by the Centers for Medicare & Medicaid Services (CMS) to unlicensed Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) companies. Now the OIG has decided to move forward with an investigation…”
  • (8/29/13) McKnight's News: NASL leader praises government investigation into medical equipment bidding process: "A government investigation could shed much-needed light on the Medicare competitive bidding process for durable medical equipment, prosthetics and supplies, according to Cynthia Morton, executive vice president of the National Association for the Support of Long-Term Care. In June, NASL applauded more than 225 lawmakers in the House of Representatives who signed a joint letter criticizing the bidding process. The letter said that improperly licensed suppliers were winning contracts, and argued that the program should not be expanded as planned on July 1 of this year. The effort failed to put the brakes on the program, but now the Department of Health and Human Services Office of Inspector General has said it will conduct a “limited scope” investigation of the program, focusing on four states…”
  • (7/ 3/13) Birmingham News: Congress calls on CMS to delay implementation of competitive bidding: “In a rare act of bipartisan agreement in the House of Representatives, 218 members of Congress have signed on to a letter written by Congressman Bruce Braley (D-IA) and Congressman Glenn Thompson (R-PA) expressing serious concerns about the Centers for Medicare and Medicaid Services' (CMS) Competitive Bidding Program for Durable Medical Equipment, Prosthetics, Orthotics and Supplies. The group, a bipartisan Congressional majority, called on CMS Administrator Marilyn Tavenner to grant an administrative delay of further implementation of the program through the end of the year.  The competitive bidding program, which has been widely condemned by medical providers and healthcare advocates, was initially implemented in nine test markets, but is set to expand to an additional 91 markets in July 2013.  The letter's signers expressed grave concerns about the program…”
  • (6/27/13) Politico, Opinion: Bipartisan concern on DMEPOS: "We acknowledge the government should take every measure to reduce costs. Furthermore, we believe the Medicare DMEPOS program is unsustainable without the introduction of competitive market methods and other common sense reforms. Savings can and must be achieved through a manner that protects beneficiaries’ access to quality goods and services. But to say the current model achieves this end without knowing to what expense on the part of beneficiaries is a slap in the face to good government. In 2011, more than 240 economists and market auction design experts wrote President Obama on the issue, warning that Medicare’s new bidding model would ultimately harm competition and impair patient access, stating “the current program is the antithesis of science and contradicts all that is known about proper market design.” These perceived flaws have now become a reality. Medicare beneficiaries and taxpayers deserve a system that’s not just labeled competitive, but is competitive. We stand by our letter, as do 225 other members of Congress, and again urge the CMS administrator to do the right thing and delay the program to allow for adequate investigation and correction of these significant problems before moving forward in 100 cities nation-wide…”