HCFA blocked in competitive bidding project
HCFA blocked in competitive bidding project
By MATTHEW HAY
HHBR Washington Correspondent
TAMPA A Federal magistrate in Tampa, FL, last week handed the Health Care Financing Administration (HCFA; Baltimore) a major setback in its efforts to implement its competitive bidding demonstration project for durable medical equipment (DME) in Polk County, FL. In a lengthy 42-page report on her findings, Magistrate Judge Mary Scriven found merit in virtually every argument brought by the Florida Association of Medical Equipment Dealers (FAMED; Orlando, FL) and recommended approval of the association’s request for a temporary injunction that would delay implementation of the project indefinitely.
FAMED and several Florida DME companies filed suit in Florida federal court Feb. 4 contending that HCFA established and utilized an advisory committee National Technical Expert Panel (NTEP) in violation of the Federal Advisory Committee Act (FACA). Specifically, the plaintiffs claimed that HCFA failed to follow FACA’s requirements by giving all interested parties proper notification about the meetings.
The decision is a major win for FAMED and much of the DME industry that has fiercely opposed the demonstration project. "We are delighted," FAMED President Brian Seeley told HHBR. "The court came down on our side on every key point."
Perhaps even more important than delaying the implementation of the project is the fact that the decision was handed down before HCFA was able to open sealed bids from DME suppliers which were due March 29. The primary concern of the DME industry has long been that HCFA would take the pricing data submitted by DME suppliers and use it as a basis for inherent reasonableness cuts across the country for items included in the demonstration, such as oxygen, hospital beds and enteral nutrition.
HCFA initiated the Medicare Part B demonstration project in 1995 and contracted with Palmetto GBA, the Region C durable medical equipment regional carrier (DMERC) to assist in its development. NTEP meetings began shortly thereafter.
The court found that HCFA’s contention that the DME companies failed to demonstrate that their participation in the NTEP would have made a difference in the design of the demonstration project is flawed for several reasons. "Specifically," said the federal magistrate, "it requires th[e] Court to assume that the NTEP and the HCFA would have not considered the comments of plaintiffs had they participated in the meetings despite the time and expense in establishing a panel of experts and holding three meetings."
"It further requires the court to assume that the HCFA would have ignored their statutory obligation to obtain advice and recommendations from specialists prior to engaging in a demonstration project or complied with the obligation in a perfunctory manner," the federal magistrate asserted. "Finally, defendants are correct that plaintiffs were not able to take part in the NTEP due to defendant’s alleged failure to comply with FACA." As a result, said the federal magistrate, it cannot be determined with certainty whether plaintiffs would have made a difference.
The court also said that HCFA’s claim that the NTEP was insignificant to the overall process is belied by the record. HCFA’s affidavit asserts that the NTEP did not have a great impact on the demonstration’s design but the federal magistrate noted material passed out at the first meeting said the participation of the organizations present was "crucial to the success" of the project. In addition, materials passed out at the second meeting explained that the objective was to "develop a detailed set of product and service specifications for all items to be bid in the project."
The federal magistrate also rejected HCFA’s argument that Palmetto GBA proposed the NTEP rather than the agency itself. "HCFA, by its own acknowledgment, stated that it formed the NTEP," said the federal magistrate. "On balance, the evidence, as it currently exists, tips decidedly in favor of the plaintiffs." Moreover, even if HCFA did not establish the NTEP it utilized it, said the federal magistrate. "For instance, there is evidence that HCFA altered the lists of products to be covered by the demonstration project as a result of the NTEP’s advice rendered at the first meeting."
FAMED had argued that HCFA has until Dec. 31, 2002, to complete the demonstration project but HCFA argued that even a short-lived injunction could effect its ability to implement the project. Specifically, HCFA argued that certain information must be entered by October 1999 so it can be reconfigured to the Y2K standard. "As for the defendant’s alleged Y2K problem," said the federal magistrate, "it hardly passes the straight face test as an imminent harm. Second, the alleged harm is speculative at best."
The court said that HCFA’s argument about savings that will be lost to the Medicare program are also "speculative at best." Noting that the purpose of the demonstration project is to determine whether competitive bidding will result in any decrease in federal expenditures, the court said this: "If the Veteran’s Administration’s experience on which defendant’s rely for this estimate were dispositive of the issue, no demonstration project would be needed."
The court concluded that given the March 29 deadline to submit bids for the demonstration project, any objections to the federal magistrate’s finding must be filed by March 17. Absent that action on the part of HCFA, a federal judge is virtually certain to approve the findings.
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