Round One Rate Anomalies Puzzle Stakeholders
ATLANTA–A week after CMS revealed the new fee schedule for
DMEPOS items in the 10 MSAs in round one of competitive bidding,
industry stakeholders were still reeling from the potential effects
of the figures–which slashed payment amounts by an average 26
percent–and voicing concerns about how those rates were
calculated.
“When you drill down and look at the spreadsheets, there
are a lot of anomalies with the overall rates,” said Seth
Johnson, vice president of government affairs for Pride Mobility
Products in Exeter, Pa.
“It almost appears that CMS picked their own price and
threw it in there,” said John Gallagher, vice president of
government relations for Waterloo, Iowa-based VGM Group.
Stakeholders questioned not only the prices themselves but also
the differences–and similarities–in the rates.
“One spread really jumped out at me,” Johnson said.
“If you look at the percentages [for the base codes], you see
a significant spread. In Riverside, [Calif.], for example, for
Group 3 the spread for complex rehab is 7.5 percent to 10 percent
off Medicare’s current fee schedule. But if you compare that to the
spread for Group 2 in Riverside, it’s anywhere from 5 percent to
70.73 percent off. Clearly, that tells me that either there is a
different pool of providers that bid standard versus complex rehab,
or some of the same providers used significantly different bid
strategies to determine their bids.”
In some product categories, identical bid prices were calculated
for multiple bid areas, said Cara Bachenheimer, senior vice
president of government relations for Elyria, Ohio-based
Invacare.
Such a thing is “highly improbable” and suggests a
flawed bid calculation process, she said.
As an example, Bachenheimer noted that in the high-end rehab
product category, 105 HCPCS codes had identical prices in two
markets, 24 codes had identical prices in three markets and 14
codes had prices that were identical in four markets.
In the standard wheelchair product category, she said, 76 codes
had identical prices in two markets and 18 codes had prices that
were identical in three markets. As well, Bachenheimer said,
“the new single payment rate for stationary oxygen systems is
exactly the same amount, to the penny–$136.90–in both Charlotte,
N.C., and Pittsburgh.”
“This is highly improbable mathematically,” she
said.
Dave McCausland, senior vice president of planning and
government affairs for The Roho Group in Belleville, Ill.,
agreed.
“Mathematically, it’s probably easier to find a DNA match
than this,” he commented. “You see so many matches down
to the penny.”
In other areas, he said, the spreads were vast.
“Take E2601–that’s a general-use wheelchair
cushion,” he said. “The current allowable is $61.16.
The bid prices in category two range from a high of $56.52 in
Kansas City to a low of $44.34 in Miami. That’s 20 percentage
points’ difference.”
And, while the HCPCS code is the same for a general-use
wheelchair cushion in complex rehab, the new rate is different.
“With the exception of Cleveland, the winning bid price is
different than in category two for the same product,”
McCausland pointed out. “The range in category three is $59
in Miami and $48.93 in Cincinnati. The current allowable is the
same because it’s the same code, just a different category. So how
is this possible? Either the math is wrong or people bid out of
fear.”
Len Hoffstetter, owner of Entech Medical in La Verne, Calif.,
said he thought the pricing reflected a “knee-jerk”
reaction on the part of providers. Hoffstetter, who won a bid for
the enteral nutrition product category in the Riverside CBA, said
he was surprised first by being offered a contract, and second, by
how low the fee schedule fell.
“I didn’t go crazy with my bid,” he said, noting
that he did his due diligence and calculated his costs and what
profit he could live with. “They went considerably lower than
that. So what does that tell you?”
Stakeholders aren’t yet sure what it tells them.
“It’s kind of baffling,” said Chris Rice of Diamond
Respiratory in Riverside, and founder of www.competingbid.com.
Referring to rates that are, in general, lower in the Miami and
Orlando bidding areas, Rice said, “I wonder if there were
more bidders in the Florida MSAs and maybe the sheer number brought
the numbers down. Maybe there were more bidders–and more lowball
bidders–in that area.”
Rice said he had been offered five contracts and power
wheelchairs and complex rehab were not among them. He was, however,
offered a contract for the oxygen product category and, while the
new fee is low, it could be worse.
“It would be tougher to do oxygen at the Miami
rate,” he said.
Consultant Wallace Weeks of Weeks Group, Melbourne, Fla., said
the new rates were beyond his worst expectations. “There is
no justification for the industry offering such steep
discounts,” he said. “CMS has played the lack of
transparency and cohesiveness in our industry to the detriment of
many great businesses and the caring people who work in them. But
the fault doesn’t reside only in the predatory offices of our
largest customer; it also resides in the hands of those who signed
off on these low bids.”
Pride’s Johnson said he would like to know who bid in the
various areas. “We would like to see information on who bid
in these areas because we are really concerned with some of the
rates,” he said. “With the [power wheelchair] spread in
Riverside, you see significant reductions. We’re just concerned
that some providers that bid have never provided these products and
services and don’t have a true sense as to what [the] cost of
serving beneficiaries really is.”
McCausland would also like more information from CMS not only
about who bid but also how the agency calculated the rates. He
doesn’t think that will happen, however.
“[CMS] has shown no indication that they have the desire
for transparency,” he said. “I wish they would, but I
don’t see it.”
Whether CMS reveals more information or not, Weeks cautioned
that many, if not all, providers trying to work with the new rates
could find themselves in dire straits.
“Any dealer that has the industry average net profit of 7
percent, has 27 percent or more of their revenue subject to the
bids and accepts one or more contracts with an average discount of
26 percent, will be unprofitable,” Weeks warned.
“Further, they will almost certainly be making a
self-execution of their company’s death warrant. Even the strongest
companies in our industry will be severely weakened for the near
term.”
He and others did say, however, that it is not too late to push
back. “If a sufficient number of dealers reject the contracts
and thereby leave CMS with a lack of supply, CMS could not go
forward,” Weeks said.
VGM’s Gallagher said he is unsure how many providers who were
offered contracts would reject them. But he encouraged providers to
alert their legislators to the myriad problems associated with the
implementation of competitive bidding.
“Actually,” Gallagher said of round one, “this
is almost too good to be true. It highlights the total incompetence
of CMS. CMS is totally incapable of moving [competitive bidding]
forward … It’s almost like the Keystone Cops have taken over
and rolled this thing out. They have no idea what they are
doing.”
That has to be made known to legislators, Gallagher said.
“People just have to speak out. If we get a chance for
lawsuits, we need plaintiffs. We need to have providers contacting
their legislators, beneficiaries screaming at members of Congress
and saying, ‘What is going on here?’ We can’t wait for round two;
round one has been a nightmare.”
Access single payment amount charts for the 10 products categories
by CBA.
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