ATLANTA--Hoping for a helpful tool to evaluate competitive bidding contract offers, providers instead reaped a load of troubling questions when CMS revealed the number of contracts it had offered for round one, HME stakeholders said last week.
At the prodding of the American Association for Homecare and others, on March 28 CMS issued a chart showing the number of contracts it had offered in each product category and CBA. It also issued a disclaimer.
“The information in this chart represents the number of contract offers, NOT the actual number of contracts that will be awarded,” CMS said. “In addition, this information does not represent the number of supplier locations for each supplier entity/organization. Some supplier entities have a number of locations throughout a CBA that would be servicing the area if a contract is awarded.”
Providers had until April 3 to accept the contracts; CMS had said the list of those who accepted will be released in May.
While it didn't say a lot of things, what the chart did reveal was troubling, HME advocates said. Over all product categories in the 10 CBAs, only 1,335 contracts were offered.
“We can take guesstimates as to how many providers that is,” said Walt Gorski, vice president of government relations for AAHomecare. “The number of suppliers is probably 700, 800, 900. That's a significant reduction from the number of current suppliers.”
And it will likely be fewer than that, some asserted, because numerous suppliers have already said they cannot accept contracts at the rates CMS is offering.
Robert Arado of Caremed Respiratory Services in Tampa, Fla., and administrator of a network that was not offered any contracts for the Miami area, questioned whether the number of providers that did get contract offers would be enough to service the area.
“We have 600 companies there doing oxygen and now we have 44,” he said, referring to the number of contracts CMS offered in the oxygen category in the Miami CBA. “I don't think we are going to have enough providers to service such a large area.”
John Shirvinsky, executive director of the Pennsylvania Association of Medical Equipment Suppliers, said he thought the 21 providers offered oxygen contracts in the Pittsburgh CBA would likely be able to service the area. “I would feel more comfortable knowing that 21 are serving the area than five or six,” he said.
But Shirvinsky said the chart numbers, and all the other numbers CMS has released, are questionable.
“No one knows what form of voodoo they used to arrive at these numbers,” he said, noting: “As you look at what they have released … I continue to be concerned about the integrity of the entire bidding process and the viability of the numbers that are out there.”
If providers based their bids, acceptance of contracts and anything else on the numbers CMS has provided, they could be placing their businesses in jeopardy, according to Shirvinsky. As a case in point, he referenced Pittsburgh's 21 oxygen contracts.
“Most companies were looking at this from the standpoint that there were probably going to be five or six providers that were selected in the CBA,” he said, “so companies were doing their pricing based on having 20 percent of the market. But you get 21 companies, and all of a sudden it's 5 percent of the market … I don't understand how any of the numbers provided for competitive bidding can be valid.”
In addition to the numbers themselves and what they represent, stakeholders also expressed serious concerns about which providers were offered contracts. Through communication with other local providers, sales representatives and others, some providers said they had been able to ascertain who had been offered contracts.
“Most of us know our competition,” said Georgie Blackburn, vice president of government relations for Blackburn's Pharmacy in Tarentum, Pa., whose company bid on all nine product categories for Pittsburgh and was offered five contracts. “We went into this knowing that [CMS] hoped to have five providers in each product category. We know our CBA, and we envisioned those that might take part.”
But she said several of the providers offered contracts in Pittsburgh are not from the area, and some of those who are have no experience in providing certain equipment and services.
“It's those outside the bidding area and those who have never done this sector before [that are worrisome],” she said. “How can you bid on an area you don't know well? That's troublesome … I take real issue with the fact that we are having players coming into the market without having any track records.”
Danny Waller, co-owner of Carolina Med Plus in Charlotte, N.C., agreed. “Eleven [providers got contracts] in my area for respiratory,” he said. “We know who the players are. Some of these people were not even from our area. They [are] from out of state, and some of them have never even done it before. I can't believe that [CMS] is offering a contract to someone to do respiratory and they have never done it before.
“I have been doing this for 25 years,” he continued, “and I've had as many as 500 oxygen patients at one time. I know what it takes to handle 500. Can you imagine those that won this bid--and lowballed it--trying to handle this area? They don't have a clue.”
Rose Schafhauser, executive director of the Midwestern Association of Medical Equipment Services, pointed out another concern: Providers who had hoped to gain some insight into exactly how much they needed to build up their businesses to service contracts didn't get much help.
“The issue is,” Schafhauser said, “it could be five providers, but it could be several locations.” Since the chart doesn't specify the number of locations, she said, “there's no way to know how you are going to need to ramp up.”
And in the short period of time before implementation on July 1, that could be a real problem in servicing patients.
Gorski has little doubt that could happen. “I think if you look at the information that CMS has put out, this is a drastic reduction in the number of suppliers providing service to beneficiaries,” he said. “These providers are going to have to handle a significant amount of new business, and Medicare is still not providing enough guidance. There doesn't seem to be a recognition that there will be a disruption in care and that patient relationships are going to be severed.”
In the end, stakeholders predicted, there will be a severe erosion of quality and service.
“By allowing providers to bid on things they never did before and never were credentialed in … that leads to less quality,” said Blackburn.
Waller, whose company bid in five categories in the Charlotte CBA and didn't win any, also said he is concerned about the quality of service. Already, he said, he is getting frantic phone calls from suppliers that were offered contracts and are seeking subcontractors to help cover the area. They are discovering, he said, that no one wants to subcontract at the prices they are offering.
“They can't do it for what they submitted the bid for,” Waller said. “People that underbid had no clue what they were bidding. They didn't have a [real grasp] on what the costs were. They hurt us; they hurt the industry. And here they are, scrambling now. The patient will suffer in the end.”
Arado expects a vastly different and lesser industry to emerge.
“I don't think that the numbers are going to be able to provide you with a choice of vendor in order to make a competitive market … Service is what makes a difference. We're going to see things happen that I never thought I would in this business,” he said sadly.