Editor's Note

The Real Purpose of Competitive Bidding?

• By Elisha Bury
• Jun 01, 2008

One of the most startling comments I’ve heard about competitive bidding is that its real purpose is to get rid of suppliers.
As providers in the first round were notified about bid contracts in March, that sentiment seemed to ring true. For one thing, industry sources reported more than a hundred cases where providers were erroneously disqualified for missing documents that had actually been supplied. With no measures in place to verify providers’ submissions and the launch date of competitive bidding still set for July 1, it certainly seems that CMS is unconcerned with these complaints.

Though CMS has repeatedly focused on the cost-savings aspect of competitive bidding and reported that the new fee schedules are expected to provide significant savings to the Medicare program, CMS has yet to issue a blanket statement permitting all accredited providers to supply equipment at the bid price. Why not, when doing so would accomplish the same savings?

The industry has pushed for measures to prevent fraud and abuse for many years, yet it is only recently that CMS issued quality standards and accreditation requirements. The timing certainly supports the theory that CMS is trying to weed out providers.

Providers that were not awarded bid contracts, were disqualified in the first round, are in the next round of bidders or are simply tired of the rigmarole that is CMS continue to question: What can I do to save my business?

Fortunately, providers have embraced a side effect of competitive bidding: out-of the-box strategies. We’ve all heard the push for retail and it seems to be sinking in as more providers erect show rooms that rival department stores. Others have examined day-to-day operations and reorganized to implement efficiencies. Providers also are looking at newer technologies, especially for oxygen, that can help cut costs. Some providers have abandoned Medicare altogether and are instead seeking other payor sources to boost sales, especially in the sleep arena.

In the months ahead, Respiratory Management will examine these strategies. RM starts this month with an article that answers the question: How can providers build a successful oxygen business in the current reimbursement climate?

Next month, RM talks liquid oxygen, with cost-savings tips and expert advice. Later in the year, providers sound off with sleep market hotspots.

CMS may be out to destroy businesses, but home care has always been and will continue to be about the survival of the fittest.

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