In our last article, we discussed the major categories of businesses that are eligible for healthcare and other contracts that the federal government "sets aside" in order to benefit small business. In this article, we look at examples of how set-asides affect both small and large businesses.
Generally speaking, contracting agencies work closely with the U.S. Small Business Administration ("SBA") to determine whether certain contracts should be "set aside" for small businesses. Federal procurement law actually requires agencies to set aside purchases for small businesses under certain circumstances: "The contracting officer shall (emphasis added) set aside any acquisition over $100,000 for small business participation when there is a reasonable expectation that (1) offers will be obtained from at least two responsible small business concerns...and (2) award will be made at fair market prices." (Federal Acquisition Regulation (FAR), Subpart 19.502-2(b).
For many healthcare providers, this is an enormously powerful--and legitimate--tool to narrow the competitive field and greatly increase the chances of an award, but you need to understand how set-aside decisions generally are made in order to most effectively take advantage of this aspect of federal healthcare contracting.
Despite the requirement to use small businesses when two or more healthcare groups can apparently meet an agency's requirement for healthcare services, an agency may not always follow this "rule of two."
If you are a physician practicing in a small group, believe you can fulfill an agency’s healthcare needs at a fair market price, and you know of at least one other small business that can do the same, you can approach the agency if they have not yet set aside the procurement and try to demonstrate that the "rule of two" applies to the planned acquisition. If the agency still declines to set aside the procurement, you still have options open to you.
For example, the VA recently issued a solicitation for a contractor to develop and operate a primary care clinic in Ohio. Although originally issued for businesses of any size, using information from a publicly accessible federal database, we demonstrated to the agency that there was a reasonable probability that it would receive at least two bids from qualified small business firms. As a result, the agency reconsidered its previous position and set aside the contract for small businesses, eventually leading to award of the contract to the client.
Companies pursuing federal healthcare contracts also need to be on the lookout for other problematic set-aside situations, such as a procurement in which an agency unreasonably excludes large businesses from competing for a healthcare contract, or one in which a contract set aside for small business is actually awarded to a large business. Several remedies are available in such cases. For example, a large business that can meet an agency's needs for a particular procurement can file a protest with the agency or GAO arguing that the decision to set aside a procurement for small business was not warranted.
Such a protest may be called for, for example, where you are a large healthcare business and have solid evidence that an agency could not have had a reasonable expectation of obtaining at least two offers of fair market prices from small businesses. If successful, such a challenge can "open up" the procurement to allow you to compete. Similarly, the law allows for a protest to SBA if you believe that a contract set aside for small business has been awarded to a company that is not, in fact, a small business under federal contracting rules.
Requirements for set-asides in federal contracting can create significant opportunities for all kinds of healthcare providers. Be alert, however, for set-asides that seem unduly restrictive or, conversely, ones that are unrestricted but should be set aside based on facts known to you. Agencies may be willing to voluntarily consider changes to initial contracting strategies based on a review of objective documentation establishing facts that support a decision to either:
Set aside a contract that was previously open to businesses of any size; or
Remove a previous set-aside to allow businesses of any size to bid.
If the agency is unwilling to voluntarily make a change based on the facts as you understand them, federal bid protest regulations preserve your rights to formally challenge the agency's decision. The regulations contain strict and tight deadlines, so prompt action greatly increases your chances of being able to successfully compete for a contract.
The White House team is retooling its message and strategy on healthcare reform, hoping a more modest approach will reinvigorate President Obama's effort. Polls show that support for Obama's handling of health reform has declined as anxiety deepens about its effect on middle-class, insured Americans. And guided by polls, the administration intends to emphasize insurance market reforms.
California Gov. Arnold Schwarzenegger has signed a revised annual budget to close California's $24 billion shortfall, including a $1.4 billion cut to Medi-Cal. In addition, California slashed $178.6 million from Healthy Families, its version of the Children's Health Insurance Program. In all, California's cuts could raise the number of uninsured children in the state to two million, up 915,000 from about 1.1 million in 2007, estimated the Children's Defense Fund.
As the nation faces a political showdown over health insurance reform, insurers worried that an overhaul could hurt their bottom line are funneling a wave of cash to members of Congress. Health and accident insurers and HMOs have spent more than $40 million on current members of Congress over the past 10 years, according to the Center for Responsive Politics, which analyzed Federal Election Commission data.
Atlanta-based St. Joseph's Hospital recently notified patients that it may end its relationship with medical insurance giant United Healthcare, effective Aug. 7, unless a new contract is reached. United Healthcare, which insures more than 1.5 million Georgians, sent a similar letter to its customers. The contract has reached its expiration before but the two parties agreed to extend it.
Although the majority of Americans support healthcare reform, more people are changing their minds as the healthcare debate heats up, according to a new study conducted by the Kaiser Family Foundation, a health issues research foundation.
More than half (56%) of Americans believe health reform is more important than ever, even in today's economy. The public (two to one) thinks that the country as a whole would be better off if Congress enacts reform now, according to the July Kaiser Health Tracking Poll of more than 1,200 English- and/or Spanish-speaking Americans. Nevertheless, the tide of public opinion is swaying.
"The public wants help with their health care bills and supports health reform, but the hotter the debate and the longer it lasts, the more anxious the public will become," said Kaiser President and CEO Drew Altman in a Kaiser press release last week.
Shifting tide of public opinion
The study indicates that Americans are changing which box they mentally check: "for" or "nay" on the big "R" word—reform. Public support for health reform is down 5 percentage points from last month, falling from 61% to 56%.
Why the change of minds?
One reason is expenses. Initial reports estimate the healthcare overhaul will costs $1 trillion over the next 10 years. The public splits on the whether the United States can actually afford to pay that price tag for health coverage. Fifty-one percent are willing to open their wallets to pay higher insurance premiums or taxes, while another 44% are not.
Another reason why the public is reconsidering reform may be that they are influenced by advertisements. People report seeing more healthcare reform-related ads now, up 10 percentage points this month, rising from 21% to 31%, and most of the ads are negative.
Americans may also be changing their minds about healthcare reform because they believe such a national change will affect their family. More than half (54%) of Americans have doubts and worries that congressional intervention will be bad for their family. The study indicates that the public's concern about the effects on families is driven by Republican voices, according to the study.
In fact, when asked, "Which worries you more: the government or insurance companies," more people (45%) answered "the government." Another 36% said insurance companies are scarier, and 12% are equally concerned about both types of institutional intervention.
Crossing party lines
But it seems most Americans, regardless of party affiliation, can change their minds on a dime. As demonstrated by congressional voices on Capitol Hill, the hot button issue of healthcare reform crosses party lines. Both sides split on support and opposition. Seven in 10 Democratic Americans back reform now. Six in 10 Republicans do not.
"Public support for health reform will depend on which arguments get through to the American people and, ultimately, how they answer the question of how will health reform affect their family," said Kaiser Vice President and Director of Public Opinion and Survey Research Mollyann Brodie in the Kaiser press release.