AAHomecare, HME provider take CMS to court

WASHINGTON - AAHomecare and Havre de Grace, Md.-based Home Mediservice have filed a lawsuit against Kathleen Sebelius, secretary of the Department of Health and Human Services (HHS), asking her to stop the July 1 expansion of competitive bidding because of “licensing irregularities.”

“Today's lawsuit zeroes in on a critical flaw in the bidding program—the failure to ensure that all bidders had satisfied state and local licensing requirements before accepting the bids and awarding contracts,” stated Tyler Wilson, president of AAHomecare, in a press release.

The lawsuit, filed in the U.S. District Court in Washington, D.C., comes on the heels of CMS voiding about one-third of the contract suppliers in Tennessee because they did not meet state licensure requirements, like having a physical location in the state.

The lawsuit contends that CMS violated the rules governing the competitive bidding program by allowing providers to submit bids and, in some cases, receive contracts in states in which they were not licensed to service Medicare beneficiaries. In Maryland, 112 unlicensed bidders were awarded contracts, the lawsuit notes.

“These contracts must be invalidated because the bids of these awardees should have been rejected,” the lawsuit states.

In addition to asking the court to rescind all contracts not licensed by the deadline of May 1, 2012, the plaintiffs ask for certain “remedial steps,” including the recalculation of payment amounts without the bids of unlicensed providers. This measure, the lawsuit says, would determine which licensed bidders should have been accepted, giving those companies another opportunity to be awarded contracts at the recalculated payment amounts.

The lawsuit notes that, besides Maryland and Tennessee, there are licensing issues in Colorado, Ohio, North Carolina, Virginia and Washington, and that AAHomecare is gathering licensing information from other states.

Mark Richardson, president of Home Mediservice, says there is one objective guiding the legal action.

“The only thing we'd like to accomplish with this suit with AAHomecare is to force CMS to play by their own rules,” he stated.