CMS Names Round One Bid Winners

CMS Names Round One Bid Winners

BALTIMORE–Earlier this afternoon, the Centers for Medicare and Medicaid Services released the names of the winning contract suppliers for round one of competitive bidding, set to take effect July 1.

In a 2 p.m. press briefing with reporters, acting CMS Administrator Kerry Weems said 325 medical equipment suppliers have signed contracts in the 10 competitive bidding areas selected for rollout of the program.

View a list of the round one winners. Under “Search Tools” select “Find Suppliers of Medical Equipment in Your Area.”

“Each and every one of these suppliers met quality customer service and financial standards. In fact, we conducted announced and unannounced audits and site visits so they could prove that they met those standards,” Weems said.

Of 1,005 suppliers who submitted 6,200 bids in round one, Weems said, “We offered contracts to 23 percent of the suppliers that submitted bids. These were in the winning range and met the quality and financial standards and discosure requirements.

“Sixty-one percent of the bids submitted were priced higher than the winnning range, and just over half of these high-priced submissions were disqualified because they failed to meet other requirements,” Weems continued, adding that the remaining 16 percent of bids would have been in the winning range had they not been disqualified.

Weems also said based on the final contracts, about half of the winning suppliers in each bid area are small suppliers.

“We’re confident that they have enough capacity to meet these needs, especially when you put the volume of sales and rentals of competitive bid items into proper perspective,” Weems said.

As an example, Weems said in the Dallas CBA, Medicare pays for an average 770 walkers each month. That means of 20 suppliers who won contracts in the CBA, each would be selling about 38 walkers a month.

“In Pittsburgh, there will be 15 suppliers who will be furnishing hospital beds,” Weems said. “Medicare currently pays monthly rentals on about 1,300 beds, which is about 89 beds to be furnished by each supplier, on average.”

When questioned about companies being awarded contracts without having provided services in the bidding areas, Weems said: “Look at the suppliers on the Web site. Suppliers in those areas in many, many cases have multiple locations in those areas. Ninety percent of suppliers are in the area in which they bid.”

Weems also announced an extension of the accreditation application deadline for round two. “This is because a significant number of suppliers in those communities have not yet applied for accreditation,” he said.

Under the new deadline, suppliers now must be accredited or have applied for accredreditation by July 21, 2008, to participate in the second round bid. The previous deadline was May 14, 2008.

“We also want to let you know today that we’re announcing a new policy for complex rehab power wheelchairs that will allow us to pay non-contract suppliers in certain conditions,” Weems said. “Those circumstances are when a power wheelchair was prescribed by a physician before the competitive bid began but the delivery of the item was not made until July 1 or after.”

According to Weems, the agency is now beginning “the steps necessary to educate and inform beneficiaries and their providers about their options so they will be able to get the most out of this new program …

“We have a whole ground game we are going to be rolling out in the next couple of weeks,” Weems said, in which “every provider, every prescribing physician and every beneficiary” in the bidding areas would be contacted about the program.

“We understand that the implementation of this program will be difficult for some providers because the law requires that there be both winning and losing bidders,” he said. “While winning suppliers must accept lower prices, these amounts are based on their bids, and they have the opportunity to increase the number of beneficiaries they serve.

“We also know there’s been a frustration because the new system represents a significant change in how suppliers operate under Medicare compared to the past. CMS will continue to work closely with suppliers and make improvements in the program as we move forward,” Weems continued.

“Keeping this program on track and on time to bring high quality products to people with Medicare with lower prices is a priority for CMS,” he concluded.

Indeed, in answer to a question on whether he anticipated any delays in the program, Weems responded, “No. We’re proceeding.”

However, since a May 6 congressional hearing into the program that aired a number of problems with the bidding process, the industry’s efforts to delay round one–and to stop the program entirely–have picked up steam. And last week, three California representatives called on Health and Human Services Secretary Michael Leavitt to conduct a full investigation into questionable bidding practices in the Riverside CBA.

Immediately following the press conference, the American Association for Homecare issued a response, noting that “CMS continued to tout the benefits of the competitive bidding program although the home care community and Congress have revealed numerous flaws in the program including threats to services, quality, and unfair treatment of bidding providers.”

AAHomecare said a Wasington lobbying fly-in scheduled Wednesday “is an important opportunity to combat competitive bidding at a critical juncture.”

The association said more than 150 home care providers have registered so far to participate but “there is room for many more.”

For information on the AAHomecare event, visit www.aahomecare.org.

A CMS press release on the round one winners follows in its entirety.

MEDICARE ANNOUNCES OVER 320 WINNING SUPPLIERS SELECTED FOR COMPETITIVE BIDDING PROGRAM FOR DURABLE MEDICAL EQUIPMENT, PROSTHETICS, ORTHOTICS, AND SUPPLIES

The Centers for Medicare & Medicaid Services (CMS) today released the names of the 325 suppliers that have signed contracts with Medicare to provide certain medical equipment and supplies to beneficiaries in 10 communities across the U.S. at significantly lower prices than they are paying now.

“We are pleased that Medicare beneficiaries living in the 10 first round communities will continue to receive high quality service and supplies from the suppliers participating in Medicare’s competitive bidding program,” said CMS Acting Administrator Kerry Weems. “All of these contract suppliers have met our stringent standards, so beneficiaries can be assured they receive their equipment and supplies from legitimate suppliers.”

The new competitive bidding program goes into effect on July 1, 2008, in 10 communities. This program uses the local, competitive marketplace to lower the costs for certain durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) for Medicare beneficiaries who use Medicare-contracted suppliers to obtain medical items and supplies. Because beneficiaries pay 20 percent coinsurance on the cost of DMEPOS, they will directly benefit from the savings.

Based on bids submitted by these suppliers, beneficiaries and Medicare will see prices, on average, 26 percent lower than Medicare currently pays for the same items. CMS received bids from 1,005 suppliers. There were just under 6,200 bids for one or more product categories in competitive bidding areas (CBAs) where the new program is being implemented. CMS offered contracts to 23 percent of suppliers that submitted bids. These suppliers were in the winning price range and met quality and financial standards and disclosure requirements. Sixty-one percent of the bids submitted were priced higher than the winning range, and just over half of these high-priced submissions were disqualified because they failed to meet other bid requirements. The remaining 16 percent of bids would have been in the winning range had they not been disqualified.

To participate in the competitive bidding program, suppliers are now required to meet Medicare’s quality and financial standards that ensure participating suppliers are viable companies able to meet the needs of Medicare beneficiaries and the terms of their contracts with Medicare. In addition to those requirements, which were developed with input from suppliers, a Medicare-contracted supplier must:

• Be enrolled in and be approved – or accredited – by Medicare based on the specific products and services they offer;
• Be financially sound – as demonstrated by common standards in use by the financial community;
• Fill orders from their own inventory, or contract with other companies that can fill orders for beneficiaries;
• Provide access for beneficiaries to get the items they need; and
• Provide high quality customer service by ensuring that delivery of products is timely and complaints are resolved quickly and appropriately.

“Medicare-contracted suppliers submitted bids affirming they will ensure that beneficiaries receive necessary equipment and supplies with a high level of customer service,” said Weems. “Medicare has the tools to ensure that the suppliers, as well as companies with which the suppliers subcontract, meet the needs of beneficiaries to guarantee continued beneficiary access to medical equipment and supplies. CMS may seek to terminate contracts with suppliers that don’t meet these requirements.”

As part of the competitive bidding program, suppliers submitted bids to CMS to supply certain items to beneficiaries that reflect the prices charged in the marketplace, which are lower than the prices under the current Medicare fee schedule. Bids were evaluated to ensure there would be a sufficient number of suppliers, including small suppliers, to meet the needs of beneficiaries living in the CBAs. Small suppliers were considered those with gross revenues of $3.5 million or less and make up approximately 50 percent of the suppliers that accepted contracts in this first round of the program. Suppliers that are not contract suppliers for the first round of DMEPOS competitive bidding program may be able to subcontract with winning bidders for certain items and may bid in Round two and in future rounds.

To take advantage of the lower prices for the items that were part of the competitive bidding program, Medicare beneficiaries living in one of the CBAs who have ongoing need for a DMEPOS supplier may need to choose a new supplier if their current supplier is not a contract supplier and they wish to have Medicare continue to cover their equipment and supplies. A beneficiary may, in some situations, also be able to continue to receive certain items from a grandfathered supplier. Grandfathered suppliers are non-contract suppliers that provide certain rented equipment under the terms of the program.

Consumers, physicians and other providers can find a list of Medicare contract suppliers in the 10 initial areas of the program by visiting www.medicare.gov (under “Search Tools” select “Find Suppliers of Medical Equipment in Your Area) or by calling 1-800-MEDICARE (TTY users should call 1-877-486-2048). People can also visit the local offices of the various partner groups, such as their State Health Insurance and Assistance Program, Area Office on Aging and a number of community organizations that can provide information on the program.

CMS today also announced that it is extending the deadline for suppliers in the 70 second round metropolitan statistical areas (MSAs) to become accredited. CMS is extending the deadline because a significant number of suppliers in those communities have not yet applied for accreditation. Similar to round one requirements, suppliers will need to be accredited to be awarded a contract. Suppliers must be accredited or have applied for accreditation by July 21, 2008, (formerly May 14, 2008), and the final accreditation deadline for the second round of competitive bidding is now January 14, 2009, a change from the October 31, 2008 deadline.

CMS is urging suppliers in the 70 MSAs to apply for accreditation immediately because if they do not meet these accreditation deadlines, they will not be able to compete for contracts to furnish competitively bid items to Medicare beneficiaries in these areas.

Additional information on the DMEPOS competitive bidding program is available at www.cms.hhs.gov/DMEPOSCompetitiveBid.