After Bid Rates, What Comes Next?

WATERLOO, Iowa — Anxiously awaiting CMS’ announcement of
new Round 1 competitive
bid rates, the industry is already thinking about what comes
next.

With the expected release of the bid rates right before the
Independence Day holiday, HME advocates are looking to step up
pressure on members of Congress to abandon competitive bidding
during upcoming July 4 events and at possible town hall meetings in
their home districts. Providers are also considering practical
steps to survive in the new lower reimbursement environment.

At its Lunch Bucket webcast and conference call Tuesday, VGM
Group officials predicted the new rates at about 25 percent below
the current fee schedule and suggested how providers could
“guesstimate” based on the rate announcement whether they are
likely to get a contract. They outlined a plan of action to support
the repeal of competitive bidding while also dealing realistically
with whatever happens.

VGM’s Alan Morris, regulatory analyst, said if the rates end up
at a 25 percent reduction, that will translate into 32 to 34
percent below 2008 rates (incorporating the 9.5 percent DME cut
that was the price of delaying competitive bidding in its first run
that year).

The reimbursement amounts to be announced are medians of
accepted bids, so companies that bid within 2 or 3 percentage
points — up to about 5 percent — above those medians
are likely to get a contract, said Morris. 

After the rates are published, emails will go out to providers
asking them to look for a package in the mail. Letters will follow
several days later either offering a contract, telling the bidder
they are qualified but did not get a contract, or notifying them
that they are not qualified. Bidders in the second category could
still have a chance of being offered a contract later as CMS and
its Competitive Bidding Implementation Contractor seek to fill in
gaps because of winning providers who decline.

Congress’ July district work period, during which lawmakers will
return home for July 4 celebrations and town hall meetings,
provides an opportunity for the HME industry to ramp up efforts in
support of H.R. 3790, noted John Gallagher, VGM vice
president-government relations.

The latest representative to sign on to the bill is Rep. Mike
Ross, D-Ark. The bill to repeal the program now has 252 cosponsors,
a number likely to get the attention of House leadership, but so
far no one has stepped forward to sponsor a companion bill in the
Senate. Senators have instead chosen to defer to Senate Finance
Committee Chairman Max Baucus, D-Mont., and Ranking Member Chuck
Grassley, R-Iowa, and to John D. Rockefeller IV, D-W.Va., chairman
of the Subcommittee on Health Care, who has reportedly said he
wants competitive bidding to go forward.

“We have now begun relationships in the Senate to get [the bill]
moving,” Gallagher said.

The summer break, with legislators at home from July 2 to July
12, is a good opportunity for HME providers, their employees and
Medicare patients to contact their state’s senators and
representatives about the bill. The message: Stop competitive
bidding. Or to use the more descriptive moniker: Stop “suicide”
bidding.

Among talking points to help engage politicians, a VGM analysis
shows competitive bidding could cost 80,000 to 100,000 jobs and
jeopardize access to health care. It might also be helpful to
remind politicians that fraud issues, which some legislators see as
a motivation for competitive bidding, have already largely been
addressed by accreditation and surety bond requirements.

There is little time for Congress to repeal competitive bidding
before the end of the year, only about seven weeks considering the
various breaks. The recent extension of the
“doc fix” until the end of the year ensures that it will come
up again, which could be another opportunity to address competitive
bidding, Gallagher said. He warned, however, that adoption of
competitive bid rates might be a matter of the genie being out of
the bottle — even if competitive bidding is scrapped —
if Medicaid and third-party payers have already adopted the
“suicide” rates.

Meanwhile, a congressional hearing on the DMEPOS bidding program
is planned for July 26, with participants to include Jim Tozzi of
the Center for Regulatory Effectiveness, a regulatory watchdog
organization whose legal arm is handling a
lawsuit against the program; and Kenneth Brown, PhD, a
University of Northern Iowa associate professor of economics who
has studied the effects of competitive bidding on rural areas.

The lawsuit, filed by the Texas Alliance for Home Care Services,
questions the financial criteria that CMS used in selecting
qualified bidders. The suit
is moving forward and could help to stall implementation of
competitive bidding for another year or more, Gallagher said,
noting that CMS might prefer to kill the program rather than face
another costly delay.

To explain it all, VGM is planning a series of one-day seminars
in the nine Round 1 competitive bidding areas to help providers
deal with the new reimbursement environment, including financial
tools to analyze the short- and long-term impact on their company’s
well-being via bids won or lost; information on continuing as a
grandfathered supplier for the length of a rental agreement, which
can help to mitigate financial challenges in the near term; and
subcontracting.

A schedule for the meetings, co-hosted by state associations, is
available on the VGM website. The first will be held July 13 in
Cincinnati.

View more competitive bidding
stories.