Competitive bidding: Lawsuit seeks financial standards

WASHINGTON - A lawsuit filed yesterday against CMS and the Department of Health and Human Services seeks a halt to the national competitive bidding program until the agencies comply with Federal Medicare law.

The suit, which was filed in U.S. District Court on behalf of the Texas Alliance for Home Care Services (TAHCS) and Dallas Oxygen, seeks to compel the defendants to specify financial standards that providers must meet under the bidding program; and to provide proper notice and opportunity for public comment on those standards.

"We had asked CMS to release the methodology and the documentation for deciding financial worthiness on several occasions and they refused to do that," said Barry Johnson, president of TAHCS. "It's the law to do it and we think they should comply with the law."

CMS's reasoning for not releasing the information: If that information is made public, it opens to door to providers submitting fraudulent bids.

If there's potential for abuse, it's on CMS's side, as well, said Bruce Levenson, with government watchdog group the Center for Regulatory Effectiveness.

"Does CMS even have standards or are they just doing this on an arbitrary basis?" he said. "Are they playing favorites? Will they cut out people they don't like?"

The suit, which is being handled by Multinational Legal Services, an affiliate of the CRE--which is not a plaintiff in the suit--also asks the court to:

* Vacate the current interim final rule;

* Enjoin CMS from awarding DME contracts until it releases proposed financial standards for public comment, considers those comments and issues a final or interim final rule and applies those standards.

CMS and HHS have 60 days to respond to the complaint.