Respiratory Funding Update

Competitive Bidding

• By Elisha Bury
• Sep 01, 2007

Big news on competitive bidding came in July when, after an industry-wide push, CMS granted HME providers a third extension in the first round. The 60-day extension pushed the due date for bids back to Sept. 25 and the registration deadline back to Aug. 27.

The Pros and Cons of Extension
The new deadlines gave providers additional time to work out the bugs with the online bid submission system as well as obtain answers to questions regarding bidding. Providers who were not able to get in under the bid window were given an opportunity to do so, and providers who had already submitted bids were allowed to resubmit them.

Tom Pontzius, president of Nationwide Respiratory, predicted that providers would make changes to their bids as discussions on the bidding process ramped up. He says information was circulating among providers who had problems and issues regarding how they managed to get their bids together.

CMS also changed the accreditation deadline for the first round to Oct. 31.

“I think the key was the extension to the accreditation deadline because that would allow more folks to be accredited and then in turn bid,” says Chris Rice, of Diamond Respiratory Care in Riverside, Calif.

But not everyone in the industry is happy about the extension. “I can tell you, this extension makes me mad,” says Dennis Trach, regulatory compliance manager and education administrator at Associated Healthcare System in Amherst, N.Y. “It gave everybody that dragged their feet another shot at the apple.”

Trach says a minor extension because of down systems was warranted, but not a full 60 days.

“I’ve been working on this stuff for three years and prepared up, and that’s why I’m upset,” he says. “We were prepared. We planned. We put in the time and effort, and
we were ready by the deadline. We were ready by the first deadline.”

Rice, who also completed bidding by the first deadline, wants CMS to be done with the first round. “I want to know where we stand,” he says. “I want to know whether we won, whether we lost, what we need to do next. This is going to delay the inevitable.”

Kelly Riley, CRT, RCP, director of The MED Group’s National Respiratory Network in Lubbock, Texas, says many providers in her network are frustrated. “The members who burned the midnight oil and got their bid in, some of them are, for obvious reasons, frustrated because they did what it took.”

Riley says providers blame CMS. “It’s the same old thing: They extended it at the 11th hour. What does that allow? That allows the folks that maybe weren’t going to
bid at all now to bid.”

On the other hand, she says, some providers see the extension as a positive, since it pushes back all of the other deadlines, which may allow for the passage of legislation to repeal competitive bidding. The new contract period for respiratory product categories is July 1, 2008-June 30, 2011.

“In some ways, (we’re) disappointed and frustrated, and yet in other ways, (these are) signs of encouragement because the voices were heard,” Riley says.

A Look at the Issues
So, how did the first round go? Trach says the biggest problem with the competitive bidding process was that CMS included HCPCS codes for products that are no longer manufactured. Those products were found in several product categories. He cited two respiratory codes in particular — E0580, Nebulizer, durable, glass or autoclavable; and E0560, Humidifier, durable, for supplemental humidification during IPPB treatment or oxygen delivery.

“Nobody has autoclaves in their house anymore,” Trach says.

CMS allowed providers to explain why they were not including a bid in this instance, but Trach questions why those particular products were included in the first place. He says that the usage tables posted on the CBIC Web site show that CMS has not been paying for these outdated codes in the majority of CBAs. Some of the codes do not even have products listed with the SADMERC.

“It seems to me that if you’re going to save money, you’d pick the highest utilized items with the highest dollar value,” Trach says. “Because if you save $10 and you do 500,000 of them, then you’re saving $5 million dollars, right? But if you’re only doing one in the whole country and you save $5, you didn’t save didley. What good was that?”

Riley says many of The MED Group members had difficulty estimating bid capacity on items they normally don’t bill for, especially oxygen. “You don’t charge for any of the content of service,” she says. “You don’t charge for any of the connective tubing. You don’t charge for any of the nasal pieces, the nasal cannulas.”

Rice says the system errors also created “a mess.” “Most of the problems revolved around the bid sheet. … It takes an inordinate amount of time,” he says. “Then, when you encounter these errors and it wipes out the data you had entered, it gets pretty frustrating.”

Advice from Providers in the First 10
Providers in the first 10 MSAs have some advice for those observing around the country, especially those slated for the next 70 MSAs: Start now.

“If you’re not accredited, get on the wagon, spend the bucks and get it done,” Trach says.

He suggests joining a group, such as The MED Group, VGM, AAHomecare or a state association.

“Find out what other people are doing,” Trach says. “That’s the only way people are going to make it through. Discuss. You can’t talk pricing. That’s easy to not do.”

Trach says discussing the process is especially important because the educational offerings from CMS did not offer enough information to help providers understand the process. “If you’re not paying attention to what’s going on and you’re not following these things and participating in groups, you’re not going to get all of your information from Medicare,” he says.

In fact, staying on top of the issues and understanding the costs of doing business are probably the two most important things providers can do to prepare — and also the most time consuming.

“What they really need to do is get a handle on their costs,” Rice says. “That’s the key to the whole thing. If you don’t understand what all of your costs of bidding are, you’re going to be in a real bind down the road when you’re married to these new single payment rates.”

Trach says these things need to be accomplished before logging onto the system. “Do your homework before you start entering in anything for products,” he says. “Make sure you’ve got the right products and you’ve got an entire list.”

Rice encourages providers to submit spreadsheets and enter “n/a” in the system. Although bidding that way doesn’t save time, it can prevent providers from losing
data if the system crashes.

While respiratory categories were no more difficult to bid than other categories, Rice says providers really should think about how they’re going to provide consumable oxygen, whether it be liquid or gas. “You’ve got to evaluate the idea of subcontracting it out and see if it’s going to make any sense for you,” he says.

Work on the Forefront
“The extension in the bidding window is not a panacea,” says Michael Reinemer, vice president of communications and policy at the American Association for Homecare (AAHomecare) in Arlington, Va. “It doesn’t fix all of the problems with competitive bidding that we’ve been talking about for years now. Those issues still must be addressed, and the mechanism for that is the (House) Tanner-Hobson bill and Hatch-Conrad-Roberts bill in the Senate … that would modify the statute.”

Those efforts are still ongoing, and industry organizations like AAHomecare as well as providers nationwide will be lobbying hard until the 110th Congress ends next fall. At press time, the Medicare Durable Medical Equipment Access Act of 2007 (HR 1845 and S.1428) had 107 cosponsors in the House and 12 in the Senate.

Still, providers should operate as if competitive bidding is here to stay.

“I think a lot of people said, ‘Well, if it happens, we’ll deal with it.’ ” Trach says. “I heard that so many times, it wasn’t even funny. ‘Well, I think they’re going to cancel competitive bidding.’ When was the last time they repealed an act? I think it was Prohibition. Maybe.”

Accreditation Tips
With mandatory accreditation looming, HME providers should begin selecting an accreditation organization and getting started on the lengthy process.
Gwen Franzgrote, director of HME Services at CHAP, New York, urged providers to:
• Draft organizational policy and procedure protocols that validate what you do and how you do it.
• Implement a performance improvement program or quality program to benchmark and compare internally and with competitors.
• Test employees on competency and ensure training and ongoing validation of skills and competency.
• Relate all work not only to the standards of the accrediting organization but also to the CMS quality standards.

“If they’re not sure where to start, look at the CMS quality standards first,” Franzgrote says.

Sandra Canally, president/CEO and owner of The Compliance Team, Spring House, Pa., says, “The most important thing is to stop waiting and to get started no matter where they are in the country.” On average, accreditation for providers not located in an MSA takes about four months, with four hours dedicated to the process each week; but Canally says it could take longer depending on the accreditation organization and the provider. She offers these tips on selecting an accreditation organization:
• Not all accreditors are approved for all product lines. Be sure to select the appropriate accreditation organization for the products you currently offer and those you plan to offer.
• Do your homework. Contact all approved accreditation bodies to get a copy of their quality standards. Ask questions about what’s involved in the process, and choose an organization that best fits with your business culture.
• Find out what is included in the process to determine if you’ll need to incur additional expenses, such as hiring an outside consultant or purchasing a policy manual.
• Ask about the overall costs. Accreditors charge in different ways: some by volume, some by revenue. Canally says it’s not comparing “apples to apples across the board.”

This article originally appeared in the Respiratory Management Sept/Oct 2007 issue of HME Business.