Fall-Back Options for Unsuccessful HME Bidders

Editor's note: A condensed version of this article appears in the January 2012 edition of HomeCare magazine.

Let us look at the worst case scenario. Despite diligent efforts to bid in one or more product categories, an HME provider is not awarded a competitive bid contract. That means the provider can’t bill Medicare for products covered by competitive bidding. There is no good way to paint this scenario in a positive light. As suggested in the old Charles Schwab commercial, despite putting lipstick on a pig, it is still a pig. Nevertheless, the losing bidder must “play the hand that has been dealt.” This article is about responsive steps that an HME provider can take if he or she is not awarded a competitive bid contract.

Continue as a ‘Grandfathered’ Provider

There is a “grandfathering” process for:
• oxygen equipment and supplies
• inexpensive or routinely-purchased items furnished on a rental basis
• items requiring frequent and substantial servicing
• capped rental items furnished on a rental basis

Only HME providers that began furnishing these grandfathered items before implementation of competitive bidding may be eligible to participate as a grandfathered supplier.

Beneficiaries may choose to continue renting an item from the grandfathered provider, on condition that the grandfathered provider is willing to continue furnishing the item under the same terms and prices as the provider who was awarded the contract. The beneficiary may choose to switch from a grandfathered provider to a contract provider at any time. If an HME provider chooses to be a grandfathered provider, then the provider must do so for all beneficiaries who request the services.

For items requiring frequent and substantial servicing and oxygen equipment, the grandfathered provider will be paid the bid payment amount. For capped rental items and inexpensive or routinely-purchased items, the grandfathered provider will be paid the lower of the actual charge or rental fee schedule amount. Grandfathering is also applicable to HME providers who lose contracts in a subsequent competitive bidding period.