Competitive Bidding: What We Know So Far
What's on the minds of power mobility suppliers? The same thing that's on the minds of most of the HME industry right now: competitive bidding. With the anticipated rollout of competitive bidding later this year, providers anxiously await answers to their questions. Here, Cara Bachenheimer, vice president of government relations for Invacare Corp., tells us what she knows so far.
There are still many unanswered questions regarding competitive bidding and how, when and where the Centers for Medicare & Medicaid Services (CMS) will specifically implement the program. Once CMS issues the final rule implementing competitive bidding, and the Request for Bids (RFB), we will have significantly more information. Here is a summary of what we know, based on available information to date.
1. When?
CMS has stated that the competitive bidding program will begin implementation in October 2007. That assumes that CMS issues the final rule on competitive bidding early this year and CMS releases the Request for Bids (RFB) very shortly after that. CMS also has verbally stated it may phase-in the initial 10 metropolitan areas.
2. Where?
CMS will begin implementing competitive bidding in 10 large geographic metropolitan statistical areas (MSAs), starting in late 2007. The 10 areas will be chosen from the following list: Miami, Charlotte, N.C., Dallas, Riverside, Calif., Pittsburgh, Kansas City, Mo./Kan., Cincinnati, San Juan, Puerto Rico, Cleveland, San Francisco, Atlanta, Houston, Detroit, Seattle, Baltimore, Philadelphia, Phoenix, Boston and Tampa. The final list will be identified shortly after CMS issues the final rule implementing competitive bidding, expected later this month.
3. What?
CMS will include seven to 10 product categories for each of the 10 initial geographic areas. Product categories will be defined to include a series of HCPCS codes. About seven product categories will be included in all initial 10 areas, the remaining product categories will vary from area to area. Likely to be included in all 10 areas will be oxygen, power wheelchairs, manual wheelchairs, hospital beds, CPAPs, enteral nutrition and diabetic items.
4. How?
Implementation information will be accomplished through the following official CMS documents: (a) the CMS final rule, (b) the Request for Bids (RFB) — this will contain the most substantive and detailed information, and (c) other CMS documents that are less formal. In each of the initial 10 areas there will be bidders conferences where prospective bidders can attend, learn information on how to bid, etc., and ask questions. Bidders will likely have 45 days from the date that the RFP is issued to submit their bids.
5. Bid Submissions:
Suppliers will be encouraged to submit bids electronically. Suppliers will be ale to bid on one product category, some or all that are included in a bid area. For example, oxygen is likely to be a product category. CMS may or may not include all HCPCS in the oxygen medical policy in the bid. To bid on a product category, the supplier must submit a price for each HCPCS code included in that product category, indicate the manufacturer make and model it intends to provide (though CMS states that it recognizes those may change), and other detailed information regarding the supplier's history of providing those products in that area. The draft bid forms are available on Invacare's Web site www.invacare.com, under the Policy and Funding section, as a "Hot Button."
5. Mandatory Accreditation:
In order to submit a bid, a supplier must be accredited by a CMS-approved accreditation organization. (HME-related accreditation organizations that are approved include JCAHO, CHAP, ACHC, HealthCare Quality Association on Accreditation, The Compliance Team, and the National Association of Boards of Pharmacy.) CMS has said that suppliers in the initial 10 sites must be accredited by this spring; suppliers in the additional 80 MSAs scheduled for 2009 implementation must be accredited by spring 2008. Providers who are currently accredited will be grandfathered in until their next expiration dates as long as CMS has approved a crosswalk between the accrediting organization's standards and the agency's mandatory supplier quality standards. For CMS' full list of approved organizations and the contact information, go to:www.cms.hhs.gov/CompetitiveAcqforDMEPOS.
6.Only Contract Suppliers will be able to Provide Bid Items to Beneficiaries in Bid areas.
Medicare suppliers will have to submit a bid for a product category to have the chance to win and participate as a contract supplier. This means that to be able to provide bid products to beneficiaries residing in the bid area, the Medicare supplier will have to submit a bid and be chosen as a winning supplier, or contract supplier. If a supplier submits a bid and does not win, he/she will not be able to provide items that are in the bid to beneficiaries residing in the covered geographic area.
7. Calculating the Bid Payment.
Under the proposed rule, the payment amount, by HCPCS code, will be calculated based only upon the information submitted by suppliers who are winners. That is, CMS will not consider the prices of suppliers who end up losing the bid because their bids are too high.
8. How Many Suppliers?
There is no pre-determined correct number of suppliers that will be chosen as winners for each product category in each geographic area. Rather, CMS will determine the appropriate number of suppliers to include as winners based upon a supply-demand calculation. CMS will determine, based on historical data, what anticipated utilization will be for each product category; suppliers will identify in their bid submissions how many items they are capable of providing which is defined by the supplier's capacity, which, if significantly more than their historical capacity, must be substantiated. CMS will essentially count up from the lowest bidding supplier until the suppliers' capacities equals anticipated utilization.
9. Networks: an Option for Smaller Suppliers.
CMS has included an option for suppliers to form networks, presumably as a nod to smaller entities. (Although the network proposal does not limit participation to small suppliers; the limitation is that each network cannot in total represent more than 20 percent of the market; there is no definition of the term market.) Therefore, smaller suppliers who cannot serve an entire geographic region may form a separate legal entity and submit a consolidated bid. Individual suppliers who are part of a network that submits a bid cannot submit a separate bid for any of the products included in the network's bid. There are a fair number of legal, businesses, logistical and other complexities involved in setting up a network.
This article originally appeared in the January 2007 issue of HME Business.