Report: Many Round Two Contract Suppliers Weren’t Licensed

New HHS OIG study affirms that multiple Round Two contract holders didn't have required state-level licenses.

A new study confirms what the industry and lawmakers knew three years ago: At least 63 providers given Round Two contracts by CMS did not have the correct state level licenses required for them to serve those contracts, according to a new report from the Office of the Inspector General (OIG) for the Department of Health & Human Services. And those findings could help the industry's fight to delay the July 1 implementation of bid expansion's full cuts.

AAHomecare President and CEO Tom Ryan (pictured at the Washington Legislative Conference) said the new report further documents that CMS can't "evaluate the impacts of its bidding program"before plowing ahead with a new round of cuts on July 1."

The report, Incomplete and Inaccurate Licensure Data Allowed Some Suppliers in Round Two of the Durable Medical Equipment Competitive Bidding Program That Did Not Have Required Licenses, audited 146 and found that in addition to the 63 without the necessary licenses, 14 additional suppliers needed further research. The full report can be read at

News that more than 30 percent of Round Two’s contract recipients were improperly licensed originally surfaced three years ago, but the new HHS OIG report “raises more concerns” about CMS’s competitive bidding program, according to a statement released by the American Association for Homecare.

AAHomecare just held its Washington Legislative Conference last week, as part of a larger push to advance Senate and House legislation (S.2736 and H.R. 5210, respectively), that would delay bid expansion’s fast-approaching July 1 cuts for 15 months, as well as require CMS to report on patient access on a regular, transparent basis. The report buttresses the industry’s argument that the bid program is flawed and needs reform, according to AAHomecare.

“The fact that it took two years to get this report just solidifies our view that CMS can't evaluate the patient impacts caused by recent deep cuts for rural providers in just six months before plowing ahead with a new round of cuts on July 1,” AAHomecare President and CEO Tom Ryan said. “That’s why we need Congress to step in and make CMS take the time they need to properly evaluate this program.”

As part of the report, HHS OIG made three key recommendations in its report:

  • CMS should complete the research required to determine whether 14 suppliers had a proper license and make a licensure determination regarding those suppliers.
  • CMS should identify all applicable state licensure requirements to prevent suppliers that do not have all currently required licenses from receiving contracts in future rounds of the competitive bidding program.
  • CMS should work with state licensing boards to better coordinate, identify, and maintain an accurate and complete licensure database of currently required State licenses.

HHS OIG noted that CMS concurred with and will take steps regarding the first two recommendations, but did not concur with the third recommendation. AAHomecare’s Ryan said CMS has exhibited a pattern of not handling the state licensure issue with the timely care it requires.

“CMS has dragged its feet on implementing provisions passed in Congress last year that would require CMS to better enforce their own rules requiring that bidders are properly licensed in states requiring licensure,” he said. “This isn’t the way to run a program that impacts home medical equipment providers nationwide, and the millions of patients that depend on the essential products and care they provide.

“The message is clear,” Ryan concluded. “The bidding program needs serious examination before it causes further disruption for both providers and patients.”

About the Author

David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on Twitter at @postacutenews.

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