CMS’ Wilson: Competitive Bidding Moves Ahead

WASHINGTON

As HME advocates gathered in the nation’s capital earlier this month to push for a delay of competitive bidding, a CMS official said the agency plans to move forward with the first two rounds of the program as scheduled.

“We have a legislative mandate, and we’re not going to approach it and plan to fail. We’re going to approach it and plan to succeed,” CMS’ Laurence Wilson, director of the agency’s Chronic Care Policy Group, told some 350 attendees — a record turnout — at the American Association for Homecare’s Legislative Conference March 4. “We will move forward with the program and watch very closely to see if adjustments need to be made.”

While the law does provide some “wiggle room” to adjust implementation dates, Wilson said round-one contracts will be enforced beginning July 1 and noted CMS does not anticipate the major delays the industry is hoping for.

Although Wilson promoted competitive bidding as a way to set more accurate prices, a number of conference attendees expressed concern during a Q&A session after his presentation that the bidding program will put providers out of business and that CMS will not have time to evaluate the effects of round one before moving on to round two.

“This is bad public policy,” said Tom Ryan, president and CEO of Farmingdale, N.Y-based Homecare Concepts. “We’re moving too fast with this program … I’ve been in business for 20 years. I want to make it to 25.”

The agency is evaluating round one in stages, Wilson explained, and has already identified some areas that need improvement, including boosting supplier education, streamlining financial documentation requirements and upgrading the bidding software, which caused major headaches for bidders in the first round.

After round one begins, DME contractors will survey beneficiaries on whether or not they received the right products and if their needs were met, he said. CMS also will monitor call centers to become familiar with the problems beneficiaries and providers are experiencing.

“There are a lot of things we haven’t gotten to yet. We hope to learn from round one and apply those lessons to round two,” Wilson said. “I know it’s not a popular program, but it’s the program we have to work with, and we want it to work as smoothly as possible and be a success.”

Contract suppliers for round one should be announced soon, he said, adding that an official timeline, exact Zip codes and products for round-two implementation should be released in the next “weeks or months.”

Wilson also said CMS is looking “very closely” at implementing prices set under competitive bidding in non-bid areas. A round three of competitive bidding also is a possibility, he said.

In response to questions asked during the session, Wilson also:

• Said if a supplier won’t accept the median bid, the contract will be offered to the next supplier. When a provider in the audience asked what would happen if suppliers keep rejecting the contracts, he said, “If we cannot meet demand, we can’t have competitive bidding for that product.”
• Expressed interest in a recently published study that analyzes the competitive bidding demonstration projects in Polk County, Fla., and San Antonio, Texas. Authored by Brett Katzman, PhD, associate professor of economics at Kennesaw State University near Atlanta, and Kerry Anne McGeary, PhD, associate professor of economics at Drexel University in Philadelphia, the study concludes that CMS’ format for competitive bidding is fatally flawed and, in many instances, results in higher prices and poorer service. Wilson said he is interested in reading the study on the demonstration projects because it is peer-reviewed and has been published in a journal.
• Said CMS is not required to protect small businesses under the Medicare Modernization Act; the agency is only required to make sure small suppliers are included in the program. “At the end of the day, this is a program that picks winners and losers. Some are small and some are big.” Wilson also could not offer a percentage of providers who will win or lose out of those who placed bids.
• Announced that CMS plans to hold a PAOC meeting early this summer to get further feedback on the program.