Legal Speak

CMS Sets Sights on Next 70 MSAs

• By Asela Cuervo
• Apr 01, 2008

In January, the Centers for Medicare & Medicaid Services (CMS) announced the expansion of the competitive bidding program for DMEPOS with the addition of 70 new metropolitan statistical areas (MSAs). Although it is not a surprise that the program is moving into its second phase, it is surprising that CMS is pressing ahead when it has not yet awarded contracts from phase I that closed in September. At press time, CMS was behind schedule in announcing the winning bidders. The announcement had been widely expected to happen March 1, but in the most recent update, CMS staff stated only that it would make the announcement “soon.”

The January announcement identified the MSAs to be included in the next phase of the program, but CMS can define a smaller — or larger — area as the actual competitive bidding area (CBA). The CBAs, identified by ZIP codes, are expected to be released in the spring. The bidding process will begin later in the year. In contrast to how it initiated phase I, CMS appears to be announcing the MSAs well in advance of opening the bid window, apparently in an effort to encourage suppliers to get accredited.

Although the rules governing competitive bidding will not change, CMS has stated that it intends to modify some aspects of the bid process, especially the bid processing system, which collapsed under the weight of bid submissions last year. At the Oct.11 Program Advisory and Oversight Committee (PAOC) meeting, CMS stated that problems with the bid system had been corrected but did not provide specific information about how the system was tested. The capacity of the bid processing system is a key question for suppliers because there will be heavier volume with suppliers in 70 MSAs submitting bids at the same time.

With the addition of 70 new MSAs, as many as 50 percent of Medicare beneficiaries could be affected by competitive bidding. CMS is expanding the program though no one will understand how competitive bidding will work until phase I is fully implemented in July. If you consider that the only experience CMS has with competitive bidding in a day-to-day environment is the demonstrations in Polk County, Fla., and San Antonio, Texas — small and medium-sized MSAs with fewer beneficiaries — the need to proceed more deliberately becomes apparent.

For suppliers in affected MSAs, however, the immediate question is what to do to compete effectively. Accreditation is a requirement for bidding. Anyone who is not accredited must begin the process right away. If you are in one of the 70 MSAs or do business there, you need to understand the bidding rules; you should review your financial information to make sure your credit histories are accurate; and above all, you must understand what it costs to furnish the products you will bid on.

This article originally appeared in the Respiratory Management April 2008 issue of HME Business.