What Exactly Does That 64 Percent Mean?

ATLANTA–According to Dave McCausland, CMS’ recent announcement
that 64 percent of the contract winners in round one of competitive
bidding are small providers “may fall under the category of
‘statistics can prove anything.’”

“Does it really matter that small providers were offered
64 percent of the contracts in the first 10 metropolitan areas when
the total number of contracts offered–1,335–was only 14 percent
of what CMS had originally forecast they would offer in the Final
Rule–9,854?” McCausland questioned.

Senior vice president of planning and government affairs for The
Roho Group, Belleville, Ill., McCausland compared the round one
contract figures–posted March 28 on the CBIC Web site–to the
Regulatory Impact Analysis section of the Final Rule on competitive
bidding, published April 2, 2007. He offered the following excerpts
from the rule:

–“We estimate that 28,960 suppliers will provide
competitive bid items in the CBAs that we initially designate. If
suppliers furnish products in more than one MSA, we counted them
more than once because they are affected in more than one MSA …
we estimate that 68 percent of suppliers will furnish products
subject to competitive bidding and will be affected by competitive
bidding during the initial round of competitive
bidding.”
–“We also estimate that approximately 85 percent of
registered DMEPOS suppliers are considered small according to the
[Small Business Administration] definition.”
–“We also assume, based on the results of the demonstration,
that at least 60 percent of bidding suppliers will be selected as
winners in at least one product category.”

Calculations based on this and other data in the rule,
McCausland said, show that of 19,720 estimated total providers
furnishing bid items in the first 10 bid areas, some 16,762 (85
percent) are small providers. Of those, only 854 were offered
contracts (64 percent of 1,335). That means about 5 percent of the
number CMS originally estimated as small providers affected in
round one were offered a contract.

“Why were CMS’ estimates in the Final Rule so
overstated?” McCausland asked. “What
happened?”

For McCausland’s in-depth look at the “alleged benefits” and
“likely outcomes” of competitive bidding and the statistics that go
with it, check the upcoming April issue of HomeCare.