Observation Deck

Working Hard, or Working Smart

Providers can control the fate of their businesses by supporting the MPP.

• By Rob Brant
• Jan 01, 2012

When the Round One re-bid registration began on Aug. 17, 2009, affected providers did not give up the fight to stop the flawed biddingprogram. Instead, we redoubled our efforts.

A month later, my Congressman, Rep Kendrick Meek (D-Fla), circulated a dear colleague letter to gain support for a bill to repeal competitive bidding. Three weeks before bid registration closed, Meek introduced HR 3790 with 13 initial cosponsors.

Bid registration is now open, and just to add to the pressure of the holidays and year end tasks, CMS has placed a big countdown clock for bid registration at the top of their www.dmecompetitivebid.com home page.

The Overriding Question

The only question for Round Two providers is: “Are you going to work hard, or are you going to work smart?” You can (and should) do your best to prepare for bidding. But understand that many bid winners in Round One have already closed successful businesses because this program is fl awed. Other bid winners have noted in letters to their legislators that their company is in the worst debt it has every faced, and will likely close some time in the next six months.

The program remains flawed because it will still allow out-of-area, inexperienced, financially bankrupt suppliers to win contracts with non-binding bids. These companies can still set unreasonably low single payment rates, and walk away leaving local suppliers in ruin. State Medicaid programs and other insurance carriers are poised to mimic those rates, and by law the Secretary of Health and Human Services can set the prices nationally.

If you would like to “work smart” to control the fate of your business, there is an alternative, and it is not too late to make your voices heard. Most providers will “work hard,” and spend hundreds of man hours and thousands of dollars on the bid process, but will not spend five minutes communicating with their patients or legislators about the problems with the bidding program.

Some More Questions

With lawmakers trying to save $1.2 trillion, and Medicare boasting that their own version of “competitive” bidding will save $20 billion, repeal is not a likely option. That leaves us with two choices: A market-based pricing program (MPP) designed by competitive bidding experts, or the current unsound program, designed by CMS policy makers.

Ask yourself the following questions:

• Would you rather have a program that will accept only binding bids or the current program?
• Would you rather have a program that will limit out-of-area, inexperienced providers or the current program?
• Would you rather have a program with single county bid areas, or the current program?
• Would you rather have a program that sets reimbursement rates by the clearing price (typically the last bid in), or the current program?
• Would you rather have a program that requires Medicare to open their books and offer transparency, or the current program?

Before you answer, remember these two important facts:

First, if you are a provider in one of the 24 states without DME state licensure, (such as Connecticut, New Jersey, New York, Oklahoma and Washington), you are not only bidding against your neighbors, you are likely bidding against providers from across the country;

Second, if you are a provider in one of the remaining states with DME state licensure, (such as California, Florida and Texas), you are not only bidding against your neighbors you are likely bidding against providers from every corner in your state.

This is why the industry has developed the MPP. Using the input from the more than 200 economists and auction model experts led by University of Maryland Professor of Economics Peter Cramton, the industry has developed a program that incorporates all the favorable alternatives listed in the questions above. The MPP says “yes” to all those options for better bidding, while also appealing to the political climate in which we find ourselves. Now is the time for providers to “work smart,” and back the program.

I know many suppliers who “worked hard” placing their bid in Round One. Most were “bid losers,” or like me some were “bid winners.” Both groups agree they don’t regret that they did not bid any lower, but they regret they did not put in the effort needed to stop the program.

This article originally appeared in the January 2012 issue of HME Business.