Federal Judge rejects request for injunction against Medicare competitive bidding program for durable medical equipment, editorial says

Jul 2 2008

U.S. District Judge for the District of Columbia Ricardo Urbina on Monday rejected a request for a preliminary injunction against a Medicare competitive bidding program for durable medical equipment, CongressDaily reports (Edney, CongressDaily, 6/30).

Under the program, which will begin on Tuesday, CMS will select DME suppliers to participate in Medicare based on bids they submit. The 2003 Medicare law mandated the program as part of a larger effort to implement competitive bidding. In 2008, the program will operate in 10 of the largest Metropolitan Statistical Areas and will apply to 10 of the top DME, prosthetics, orthotics and supplies product categories. In 2009, the program will expand to an additional 70 MSAs and will continue to expand in future years. The program also will apply to additional product categories in future years. The program likely will result in an average 26% decrease in the prices of medical equipment in the 10 MSAs, according to CMS (Kaiser Daily Health Policy Report, 6/12).

In June, the American Association for Homecare and Ace Drug, a DME supplier, filed a lawsuit that seeks to block the program (Wayne, CQ Today, 6/30). The lawsuit, which names HHS Secretary Mike Leavitt and acting CMS Administrator Kerry Weems as defendants, seeks a preliminary injunction against the first phase of the program and a permanent injunction against the whole program. According to the lawsuit, CMS did not include adequate information about financial standards suppliers needed to qualify for the program, and, as a result, many were disqualified (Kaiser Daily Health Policy Report, 6/12).

Decision Details, Reaction

In his decision, Urbina wrote that the plaintiffs failed to "demonstrate an irreparable injury" to DME suppliers as a result of the program and provided only "speculation that is vague and general" as evidence of such injury. He added that the annual loss of $75,000 for Ace as a result of the program "is something less than catastrophic or even crippling considering that Ace earned $3.7 million in revenue last year."

AAHC President Tyler Wilson said, "While we are disappointed that the court did not grant a preliminary injunction, we are encouraged that the court did not bar our claim on jurisdictional grounds." He added, "The court did not rule on the merits of the case. We believe the law supports our position, and we hope the court will uphold our statutory challenge. In the days and weeks ahead, we will press for a summary judgment for the court" (CQ Today, 6/30).