WASHINGTON -- Medicare violated its own rules for its durable medical equipment (DME) bidding program by granting bids to unlicensed suppliers, according to a lawsuit filed by a durable medical equipment company and a trade group.
The American Association for Homecare -- along with Home Mediservice, a home DME supplier based in Havre de Grace, Md. -- sued the Department of Health and Human Services Wednesday seeking to stop round 2 of Medicare's competitive bidding program from starting July 1. The suit, known as American Association for Homecare et. al. v. Sebelius, was filed in the U.S. District Court for the District of Columbia.
HHS sent letters to unlicensed-yet-successful bidders in Tennessee last week, saying the department would remove all awards issued to unlicensed bidders, the Washington-based DME trade group said in its lawsuit.
"This action, however, will not put all properly licensed bidders in Tennessee in the position they would have been if the secretary had, as she was required to have done, rejected the bids submitted by unlicensed bidders," the complaint read.
They go on to say they are unaware of this happening in other states but have reason to believe it occurred.
The complaint seeks "to require the secretary to redetermine successful bidders, and recalculate the payment amount, in every state where the secretary accepted bids from unlicensed bidders, after eliminating all contracts and bids from unlicensed bidders."
Bidding instructions from April 2007 say bids will be disqualified if a bidder doesn't meet all state licensure requirements, the complaint states, adding 30 of the 98 contract suppliers in Tennessee are unlicensed. Another third of successful bidders in Maryland were unlicensed.
Round two of Medicare's competitive bidding program for durable medical equipment is slated to launch July 1 unless the court acts.
The Medicare Modernization Act -- the same law that created the program's Part D prescription drug program -- allows the Centers for Medicare and Medicaid Services to . The move came in response to several government watchdog reports finding Medicare's fee schedule for medical equipment at times too high.
Initial bidding started on nine products in 2009 and is set to expand to an additional 91 products on July 1.