Round 1 Rebid Cuts Average 32%

BALTIMORE — In an announcement the HME industry has been both waiting to hear and dreading, the Centers for Medicare and Medicaid Services has released new payment rates for the Round 1 competitive bidding rebid. The reimbursement reductions average 32 percent across all product categories.

The agency’s Competitive Bidding Implementation Contractor posted the rates on its website this afternoon, including the single-payment amounts by code and by competitive bidding area (CBA). Charts also show the distribution of contract offers for each product category in each CBA.

The new rates are scheduled to take effect Jan. 1, 2011, in the nine Round 1 cities: Charlotte, Cincinnati, Cleveland, Dallas, Kansas City, Miami, Orlando, Pittsburgh and Riverside, Calif.

While the exact rates vary by CBA, examples of average pricing include:

• Oxygen concentrator: The current allowable averages $173.17 per month, with the new payment at $116.16.
• Hospital bed: The current allowable averages $127.12 per month, with the new payment averaging $80.35.
• Diabetic supplies: The current allowable averages $75.32 per month, with the new payment averaging $33.44.

According to Jonathan Blum, CMS deputy administrator and director of the Center for Medicare, once it is fully implemented, the competitive bidding program “is expected to save more than $17 billion over 10 years.”

For a power wheelchair, Blum noted on a media call, Medicare currently pays $3,641, but the new rate will be $2,554 “or a savings of about 30 percent, so again, we see very significant savings that will accrue starting Jan. 1, 2011.”

Blum said CMS will offer 1,287 contracts to 364 suppliers with 622 locations.

“It’s important to point out that we expect that of the vast majority of suppliers that will be offered contracts, 72 percent already have market presence in those areas,” Blum said, adding that CMS also expects that contracts will be offered to 48 percent of suppliers who are deemed to be “small” suppliers, or those with gross revenues of less than $3.5 million.

“It’s also important to keep in mind this is not just about the nine regions,” he said. “Congress requires CMS over time to expand the program to 91 parts of the country starting in 2011, and by 2016, CMS must assure that all parts of the country are either part of the competitive bidding program or that the fee schedule is set at the competitive bid rate.” (Round 2 bidding will begin in 2011, with implementation slated for 2013.)

CMS is sending emails today to bidders who are being offered contracts advising those companies that a FedEx package will be delivered Friday (July 2) informing them their bid has been accepted. Those providers will have 10 business days to accept or decline the contracts.

If the contract offers are not accepted, the CBIC will offer contracts to other providers until demand for the CBA is met.

Those companies whose bids were not accepted will not receive notice until the contracting process is completed in September, when CMS said it expects to release the names of contract winners.

View the entire competitive bid rate announcement on the CBIC website. Read CMS’ press release on the rebid rates.

Check HomeCareMag.com and upcoming issues of HomeCare Monday for further details and industry reaction.

View more competitive bidding stories.