MSA Selection Could Miss $1 Billion; Look Out, Anchorage

MELBOURNE, Fla.–When CMS chooses the next 70 MSAs for
competitive bidding, the agency could be excluding $1 billion in
annual Medicare DME expenditures from the program, according to
industry consultant Wallace Weeks of Weeks Group.

To forecast which cities might be included in Round Two of the
national bidding program, Weeks made a list based on the selection
methodology described in CMS’ final rule. He found the agency’s
scoring, which does not weight total DME spending in an MSA, would
leave some of the nation’s biggest cities off the list.

“I think that they are asking themselves if they made a mistake
when they created the final rule,” Weeks said. The current
selection method would exclude some of the “really big MSAs and
replace them with really small MSAs, some to the tune of 350,000 in
population,” he said.

Under the CMS method, Weeks’ calculations showed, for example,
that Chicago would miss the cutoff at No. 78; Jacksonville, Fla.,
would not be included at No. 81; and San Diego would be left off at
No. 96.

Other MSAs with populations over one million that would be
excluded, Weeks said, include Florida’s Tampa-St.
Petersburg-Clearwater, Rhode Island’s Providence-New Bedford-Fall
River and Connecticut’s Hartford-West Hartford-East Hartford. But
the CMS list would include a number of smaller MSAs, like
Anchorage, Alaska; Provo-Orem, Utah; Ann Arbor, Mich.; and
Brownsville-Harlingen, Texas.

In fact, Weeks said, Anchorage comes out in the No. 1 spot using
the CMS method. That city was on the list of possibilities for the
first round of bidding, Weeks said, “and it’s staying on the list.
It’s a big-time target.”

However, the CMS list would also include “a number of big cities
you would expect to see,” Week said, like Houston at No. 8, Atlanta
at No. 10, Los Angeles at No. 13 and Detroit at No. 37.

Weeks said CMS’ selection method would cover 12.4 million
seniors in addition to the 4.2 million residing in the 2007 bidding
areas. Not counting grocery chains, large pharmacy chains,
discounters, optometrists and opticians, there are about 9,800
providers in the MSAs that would be covered.

But Weeks believes CMS will modify its selection method to give
more weight to total spending for DME in each MSA. “It might not
occur to them until they really look at all the big cities that
will be left out,” Weeks said.

To see what the next 70 MSAs might be with the scoring change in
place, Weeks prepared a second list. “There were 17 cities in the
CMS methodology that were not on my list, and those 17 MSAs I have
dubbed ‘on the bubble.’ They are small MSAs, but I believe that CMS
will opt to go to bigger MSAs,” he said.

Scored by the CMS method, Weeks predicts the Top 10 cities
selected for Round Two bidding will be:

1. Anchorage, Alaska
2. Provo-Orem, Utah
3. Raleigh-Cary, N.C.
4. Ann Arbor, Mich.
5. McAllen-Edinburg-Pharr, Texas
6. Baton Rouge, La.
7. Fayetteville, N.C.
8. Houston-Baytown-Sugar Land, Texas
9. Lexington-Fayette, Ky.
10. Atlanta-Sandy Springs-Marietta, Ga.

Scored using Weeks’ modified method, the Top 10 list would
include:

1. Houston-Baytown-Sugar Land, Texas
2. Los Angeles-Long Beach-Santa Ana, Calif.
3. Atlanta-Sandy Springs-Marietta, Ga.
4. Raleigh-Cary, N.C.
5. Baton Rouge, La.
6. Nashville-Davidson-Murfreesboro, Tenn.
7. Salt Lake City, Utah
8. McAllen-Edinburg-Pharr, Texas
9. Memphis, Tenn.-Miss.-Ark.
10. Austin-Round Rock, Texas

If the agency doesn’t change its selection method, Weeks
continued, “CMS will pass up a significant opportunity to reduce
allowed charges.” Saving money, he added, was what the agency said
it intended to do.

To view Weeks’ prediction of cities that will be included in
2009 competitive bidding, visit
www.weeksgroup.com.