June 17,2008

Baucus, Grassley, Colleagues Introduce Bill To Delay Medical Equipment Bidding Program

Senators express concern that the bidding program would limit Medicare beneficiary access to care

Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking
Member Chuck Grassley (R-Iowa) today introduced legislation that would delay implementation
of the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive
acquisition program (CAP). The bill would also make the bidding process more fair and
transparent, require suppliers to meet quality standards, and make other improvements to the
program. Introduction of this legislation, which mirrors H.R. 6252, comes following reports of
problems with implementation the program and concerns that the program would result in
decreased access to care for Medicare beneficiaries.

“This is important legislation for Medicare beneficiaries,” Baucus said. “Durable medical equipment can give seniors the freedom to live at home, and so it’s important to maintain a
reliable system in Medicare to provide these vital items. I am supportive of competitive
bidding as a means of reducing cost, but that cannot be accomplished at the expense of low
quality and inconsistent care. The competitive bidding program for durable medical
equipment should stay on hold until it’s certain that seniors will get the products they need
in a way that works for them.”

“This legislation will lead to lower prices and higher quality medical products while ensuring that beneficiaries will still have access to the medical equipment and supplies they need,” Grassley said. “These improvements also will help prevent many small home medical equipment suppliers from going out of business. That’s especially important in states such as Iowa that are reeling from floods and tornadoes. The loss of many more small businesses would be disastrous to beneficiaries whose access to needed medical supplies has already been limited by the floods.”

Baucus, Grassley, and other lawmakers have received numerous reports about potential problems with the implementation of the CAP program. These reports range from suppliers who believe they were wrongly disqualified to questions about the clarity and consistency of information that suppliers received during the bidding process. Some providers were awarded contracts to serve areas in which they did not previously have a presence. Other suppliers were awarded contracts for service lines with which they have little or no experience.

Under current law, round one of the competitive bidding program is scheduled to begin on July
1. At that time, CMS will begin paying suppliers who have been awarded contracts to provide
durable medical equipment, prosthetics, orthotics, and medical supplies to Medicare beneficiaries. CMS would subsequently implement round two in 2009, and following its
completion, competitive bidding could be expanded across the country and prices may be
adjusted in non-bid areas using information from the bidding program.

Under the Baucus-Grassley bill, contracts awarded under round one would be terminated and rebid those areas. New round one contracts would then take effect in 18 to 24 months. Round two contracts could not take effect before January 2011 and payment adjustments for DMEPOS in
non-competitive bid areas could not take effect until round two is completed.

The bill also makes improvements to the bidding process used by suppliers, to ensure they are
providing the best possible price and service. These changes will help ensure that suppliers who
are awarded bids are adequately meeting the needs of Medicare beneficiaries, and protects
beneficiaries who might be disadvantaged by the bidding process, such as those who live in rural
areas. The legislation also institutes measures to improve the quality of care including requiring
accreditation and disclosure of subcontracting relationships. A summary can be found
in the printer-friendly version of this release.

The legislation is being co-sponsored by more than 20 Senators, including Sen. Debbie Stabenow
(D-Mich.), Sen. George Voinovich (R-Ohio), Sen. Ken Salazar (D-Colo.), Sen. Pat Roberts (RKans.), Sen. Sherrod Brown (D-Ohio), Sen. Gordon Smith (R-Ore.), Sen. Bob Casey (D-Pa.),
Sen. Susan Collins (R-Maine), Sen. Carl Levin (D-Mich.), Sen. Elizabeth Dole (R-N.C.), Sen.
Joe Lieberman (I-Conn.), Sen. Johnny Isakson (R-Ga.), Sen. Ron Wyden (D-Ore.), Sen. Richard
Burr (R-N.C.), Sen. Chris Dodd (D-Conn.), Sen. Olympia Snowe (R-Maine), Sen. Bernie Sanders
(I-Vt.), Sen. Orrin Hatch (R-Utah), Sen. Maria Cantwell (D-Wash.), Sen. Ben Cardin (D-Md.),
Sen. Charles Schumer (D-N.Y.), Sen. Hillary Clinton (D-N.Y.), Sen. Barbara Mikulski (D-Md.),
and Sen. Blanche Lincoln (D-Ark.).

Comments from co-sponsors follow here:

“We cannot allow a system break-down within Medicare to compromise access to life-saving
health care equipment and supplies for our nation’s seniors.” Sen. George Voinovich (R-Ohio)
said. “That is why I fought for this legislation. I agree that we must get Medicare and other
entitlement spending under control, but a delay in the competitive bidding program is vitally
important to ensure access to quality medical supplies and services under the Medicare program and to implement a comprehensive beneficiary education campaign prior to program changes going into effect.”

Sen. Pat Roberts (R-Kans.) said, “Since last summer, I have been sharing stacks of complaints
from home health providers just trying to use the contractor’s website and getting inconsistent
information from CMS throughout the bidding process. Now providers complain they are being
wrongly disqualified from the program, with many of these businesses now fearing if they can
keep their doors open. I am pleased to join with my colleagues today to introduce this critical bill to delay the program and give us more time to make sure this program is done right and seniors continue to get access to high quality home health services and equipment.”

“It’s critical that seniors have uninterrupted access to prosthetics and other crucial medical
equipment,” Sen. Sherrod Brown (D-Ohio) said. “We must not place the patients who need this
equipment at risk. Period.”

“The competitive bidding process has already resulted in confusion and misinformation -- and all
before the program begins. Given the importance of these services to our seniors, it is critical that we improve CAP before their health and independence are compromised,” Sen. Gordon Smith (R-Ore.) said.

“I am proud to co-sponsor this important bill that will address serious problems in the implementation of a new proposed bidding process for durable medical equipment under
Medicare. The proposed implementation has been flawed from the start. This bill will ensure that
the most important parties to this proposal - our older citizens - maintain affordable access to the equipment and supplies they need to live independently at home,” Sen. Bob Casey (D-Pa.) said.

“The health and independence of many Medicare beneficiaries are dependent on the use of DME. This legislation is necessary to ensure an efficient and thorough CAP while protecting a patient’s access to high-quality and affordable care,” Sen. Joe Lieberman (I-Conn.) said.

“This legislation will help remedy a competitive bidding process which has unfairly shut out
thousands of small businesses. The fact is, that in rural areas in particular, the exclusion of local
firms will not only lower the level of service to patients, but in many cases appears unlikely to
produce real savings,” Sen. Olympia Snowe (R-Maine) said.

“The launching of CMS’ competitive bidding process has thus far been plagued with problems
and inconsistencies that have threatened to harm patient care and push many smaller suppliers out of business,” Sen. Ben Cardin (D-Md.)said. “This bill is necessary to ensure that suppliers of all s are treated fairly and patients receive needed supplies and equipment.”

“Like my colleagues, I support competitive bidding, but not at the expense of seniors and small
businesses. The DME bidding demonstration cannot be implemented until we can ensure that
seniors will continue to get high quality, reliable services from the Medicare program. New York
City is in Round 2, and I have heard major concerns from suppliers about the process and the
enormous of the bidding area. CMS needs to slow down and address these real problems,”
Sen. Charles Schumer (D-N.Y.) said.

“We in the federal government need to show seniors that the government is on their side. I am
proud to co-sponsor this legislation, which is necessary to improve transparency and avoid any
intended consequences this program may cause,” Sen. Barbara Mikulski (D-Md.), Chairwoman of the Health, Education, Labor and Pensions (HELP) Subcommittee on Retirement and Aging said.

A summary of the legislation can be found in the printer-friendly version of this release.

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