Q&A: Here We Go Again — Competitive Bidding, Part II

AMARILLO, Texas — According to health care attorney Jeff
Baird, the HME industry continues to be buffeted by “the Perfect
Storm, a convergence of regulatory restrictions, reimbursement cuts
and our old nemesis competitive bidding.” In the
following Q&A covering some of the most common questions about
the DMEPOS bid program reprise, Baird points out that the upcoming
Round 1 rebid does not affect only the initial competitive bidding
areas. “The first round will affect all HME suppliers, regardless
of where they are located,” said Baird. “It is critical that the
industry work as a team to defeat this ill-conceived program.
Hopefully, competitive bidding will be rescinded before it goes
into full effect. However, for now, the suppliers in the first nine
CBAs must deal with it.”

Q: Unfortunately, I am located in one of the first nine
competitive bid areas. I understand that in my application process,
I have to estimate my “capacity.” What does this mean?

A: The request for bid (RFB) instructions
direct suppliers to estimate their capacity by calculating the
number of units they currently furnish on a yearly basis and adding
any additional units they will be capable of furnishing during the
first year of the contract period. Bidders must report their
estimated capacity on the bid form.

Q: Does CMS have to accept the estimated capacity that I
submit?

A: No. CMS may adjust a bidder’s reported
capacity if it is above the supplier’s historic capacity and the
supplier’s expansion plan or financial scoring does not allow CMS
to be confident that the supplier can operate at a sufficient level
on Day 1 of the contract period.

Q: I am located in a small town in the Midwest. My town
should never be included in a CBA. Why should I be concerned about
competitive bidding? From a practical standpoint, doesn’t
competitive bidding only affect suppliers in the larger
cities?

A: Essentially, the whole country — not
just those cities that make up the first nine CBAs — will be
affected by Round 1. Let me explain. The recent Senate Finance
Committee health care reform proposal “Chairman’s Mark” would
require expansion of the number of areas to be included in Round 2
from 79 of the largest MSAs to 100 of the largest MSAs by including
the next 21 largest MSAs by population.

The Chairman’s Mark would also require that HHS extend the
competitive acquisition program, or the competitive bid rates, to
the rest of the country by 2016. It is likely that the starting
point for Round 2 bidders will be the rates established in Round 1.
If the language in the Chairman’s Mark finds its way into the final
health reform bill, then suppliers in small-town America will be
directly affected by what happens in the first two rounds.

Q: I keep hearing about a legislative bill that will
repeal competitive bidding. Does such a bill exist and, if so, what
does it say?

A: Recently, Rep. Kendrick Meek, D-Fla.,
introduced H.R. 3790, a budget-neutral competitive bidding repeal
bill. This pay-for competitive bidding repeal would eliminate the
CPI-U updates for all DME in 2010, 2011, and 2012; in addition, the
DME fee schedule would be reduced by 0.25 percent in each of these
three years. In 2013, all DME would receive a CPI-U update. In
2015, complex rehabilitative power wheelchairs, recognized by HHS
as classified within group 3 or higher, would receive a CPI-U
update. All other DME would receive no CPI-U update, as well as a
0.5 percent reduction in fee schedule payments.

According to industry insiders, the Office of Management and
Budget has scored the proposal as being budget-neutral. In reaching
this score, OMB assumes that future competitive bidding savings
will be approximately 10 percent (after the 9.5 percent cut).

Q: As I prepare my bid, how careful should I be in
meeting state licensure requirements?

A: Very careful. Suppliers submitting a bid for
a product category in a CBA must meet all DMEPOS state licensure
requirements, if any, for that product category for every state in
that CBA.

Prior to submitting a bid in a CBA, the supplier must have a
copy of the applicable state licenses on file with the NSC. CMS
will verify with the NSC that the supplier has all such licenses on
file. In order to be eligible to be awarded a contract, suppliers
must possess the applicable licenses at the time of bid submission
for each location listed on Form A of the online bid submission
system (“DBidS”).

Contract suppliers must maintain compliance with all licensure
requirements throughout the duration of the contract period. A
supplier with only one location in a multiple-state CBA must have
that location meet the licensure requirements of each state in the
CBA to provide competitive bidding items and services throughout
the CBA. Each location of a supplier with more than one location in
a multiple-state CBA must have the applicable state licenses for
the state in the CBA in which it provides the competitive bidding
items. Each location does not have to be licensed for both states
unless that location is providing items in both states.

Q: I keep hearing that my bid must be “bona fide.” What
does that mean?

A: The CBIC will use statistical measures to
screen for non-bona fide (or unrealistic) bids. If a bid is
suspected as being non-bona fide, then the CBIC will contact the
bidder. The bidder must prove that the bidder can furnish the item
at the bid price. Such proof may include, but is not limited to, a
manufacturer’s invoice for the item.

CMS has stated: “We may ask the bidder to give us additional
information to make sure that the bidder can actually furnish the
item at the bid price. When we contact a bidder about a potentially
non-bona fide bid, it is the bidder’s responsibility to provide
sufficient information to prove that it can furnish the item at the
bid price. This should include, at a minimum, a brief description
of the rationale for the bid, along with financial documentation to
support the rationale.” If the amount for one item in a product
category is found to be not “bona fide,” then that bid for that
category will be disqualified.

View more competitive
bidding stories.

Jeffrey S. Baird, Esq., is chairman of the Health Care Group
at Brown &
Fortunato, P.C., a law firm based in Amarillo, Texas. He
represents pharmacies, infusion companies, home medical equipment
companies and other health care providers throughout the United
States. Baird is Board Certified in Health Law by the Texas Board
of Legal Specialization. He can be reached at 806/345-6320 or
[email protected].

Do you have a legal question about an HME issue? Send your
questions to HomeCare
Monday for an answer from health law firm Brown &
Fortunato. (No names will be used if your question is
published.)