Countdown to Bids: Providers Race Against the Clock

ATLANTA–CMS issued item weights and product utilization data
last week for round one of the national competitive bidding
project, but the agency missed its “by the end of April” deadline
for issuing the request for bids.

According to its Web site, “CMS has extended the target date for
opening the bidding window to early May.”

Still, the new information offered some tools for providers who
plan to go after Medicare DMEPOS business in the 10 MSAs where
competitive bidding will debut in April 2008.

“We are still evaluating the limited quantitative data that has
been made available to the industry by CMS,” said Lisa Getson,
executive vice president, governmental relations, investor services
and compliance, for nationwide provider Apria. The Lake Forest,
Calif.-based provider has branches in nearly every competitive
bidding area.

“No one has seen a bid document,” said Tom Mullaney, president
and owner of Mullaney’s Pharmacy and Health Care in Cincinnati and
president of the Ohio Association of Medical Equipment Services.
Consequently, he said, there are “a lot of questions and concerns”
that have stymied some providers’ decisions on whether or not to
bid.

For his part, Mullaney said, “we do all the categories
currently, so we are going to bid all those.”

Beth Bowen, executive director of the North Carolina Association
of Medical Equipment Services, said that while most of the
providers she has spoken with plan to bid, she’s been getting all
kinds of questions on bidding from less-informed providers
throughout her state and beyond.

“They’re asking everything from ‘How long has this been around?’
to ‘What is competitive bidding?’” she said. “Those [questions] are
very frightening because it’s those kind of folks who are going to
screw up the bidding process.”

Even without all the answers, providers are scrambling to get
ready. When CMS does issue the RFB, the agency has said its bid
window will remain open for 60 days.

“We’ve been preparing for it operationally for the last year,
just really looking at our procedures, our policies and
efficiencies and trying to streamline areas that can be
streamlined,” said Tammy Zelenko, president and CEO of AdvaCare
Home Services, Pittsburgh, and vice president of the Pennsylvania
Association of Medical Suppliers.

AdvaCare will bid, she said, but not on all product categories.
“My biggest concern is that even though I bid four categories, I
may only get one of the four. And what does that do to the referral
source and the beneficiary? It’s going to be challenging for the
hospitals discharging the patients and the beneficiaries. There is
not going to be that continuum of care that we have worked so hard
to achieve.”

Progressive Medical Equipment in Lenexa, Kan., also has been
preparing for some time, said owner Gerald Sloan. The company is
just waiting for the RFB. “We’re ready to go from the requirements
standpoint,” he said. “For the last several weeks, we have been
assembling our prices on all the products.”

It’s been a sobering exercise. “I don’t know where the savings
are going to be,” he said. “We’re working off allowables that have
been cut far, far from the allowables five years ago.”

Sloan is concerned, too, that even a low bid might not be enough
to keep Medicare’s business. “There’s so much subjectiveness to
this. Honestly, we could give the lowest bid and not be chosen,” he
said. “They are going to look at our financials and consider if we
are worthy of being in the Medicare program. If CMS decides they
don’t want you in the program, they can make that conclusion.”

Raul Lopez, director of operations for Bayshore Dura Medical in
Miami Lakes, Fla., and president of the Florida Association of
Medical Equipment Services, recognizes the reality is that everyone
who bids will not win. “We may not get everything, but we are going
out there and we are taking a look at it,” he said. “We have a lot
of people who rely on us. We owe it to them to try.”

Chris Rice, director of marketing for Riverside, Calif.-based
Diamond Respiratory Care, said he is worried about how providers
will compute their service capacity, one of the requirements of
submitting a bid.

Rice asserted that overstating capacity would result in lower
reimbursement. His worry is that providers will think that even if
they only cover 2 percent of an area, they should write down, say,
10 percent. “They’re going to think of it as an inert number. And
really, it’s the key to the whole system,” he said.

“Imagine a ladder that has the bids arranged from lowest to
highest (lowest on bottom). Each step is one provider’s bid,” he
explained. “On the left side of the step is the bid price; on the
right is estimated capacity. The more steps that Medicare climbs
before it gets to 100-percent capacity, the higher the bids will go
and the more reimbursement will be paid.

“If those capacity numbers are exaggerated,” Rice continued,
“they’re not going to climb many stairs … so when they select the
reimbursement number from only a few of the lowest steps in the
bidding staircase, reimbursement is smaller than it should be.”

Sandra London-Leib, CEO of Advanced Homecare in Lawrence, Kan.,
believes that it will be the patient who, in the end, is most
adversely affected. Her company will bid in multiple categories,
she said, but she fully expects a negative impact on Medicare
beneficiaries in the Kansas City CBA no matter who wins. “We
anticipate being able to weather this storm, but the cost of
survival will be great and the patients in rural Kansas will be the
ones hurt the most when all is said and done,” she said.

“The best thing that could happen,” she added, “is for
competitive bidding to be delayed a couple of years so that
Congress could actually examine the plan and understand the
possible repercussions of their actions on America’s seniors and
disabled citizens.”

That’s something Mullaney is fighting for. “I’m lobbying to get
it stopped or repealed,” he said bluntly.

To link to the Competitive Bidding Implementation Contractor Web
site, click here.