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Home Health & Hospice Week

Competitive Bidding:

Bidding Details Up For Grabs

Published on Fri Dec 17, 2004

Which MSAs will see bidding first?

The durable medical equipment industry has fought to give input on the Medicare competitive bidding process, and it was input they were asked for - and lots of it - at the most recent Program Advisory and Oversight Committee meeting.
 
The Centers for Medicare & Medicaid Services is in the very beginning stages of formulating the upcoming bidding system for DME. CMS aims to issue a proposed rule on the system next summer, with a final rule following in early summer 2006, staffers said in the Dec. 6 and 7 PAOC meeting in Baltimore, MD. Bidding implementation is set for January 2007.
 
Staffers from CMS and bidding contractor Research Triangle Institute came armed with a bevy of complicated questions for committee members. Here are the main issues touched on:

 

  • MSAs. The Medicare Modernization Act requires only that 10 "of the largest" metropolitan statistical areas undergo bidding in 2007, RTI researchers noted in the meeting. In 2009, that switches to 80 of the largest MSAs.
     
    RTI floated a number of ideas for measuring the largest MSAs, including total population, Medicare fee-for-service population, and total charges for DME, prosthetics, orthotics and supplies. MSAs such as New York, Miami-Fort Lauderdale and Los Angeles seem like shoe-ins, while places such as Chicago, Philadelphia, Dallas-Fort Worth and Houston seem likely candidates.
     
    Other considerations for choosing MSAs could include geographic size, the number of suppliers in the area, and whether the area crosses state lines and/or DME regional carrier lines, RTI suggested.
     
    PAOC members were leery of choosing MSAs based on Medicare's previous two bidding demonstrations, reports committee member Cara Bachenheimer with Invacare Corp. CMS conducted the demos in much smaller MSAs, Bachenheimer notes on Inva-care's Web site.

     

  • Bid items. Under different scenarios offered by RTI, suppliers would bid on all items and win an overall bidding contract; bid on product categories and win the bid for each category; or bid on each DMEPOS item individually.
     
    Highest-cost and highest-volume items, as well as those with the largest savings potential, may be put up for bid first, MMA instructs. CMS can exempt items not expected to see significant savings under bidding, RTI noted. Also up for discussion was whether each MSA should have the same items subject to bidding.
     
    Committee members urged CMS to convene "a PAOC meeting where clinicians, manufacturers, and consumer representatives could discuss how the equipment is used and the clinical factors that would determine whether a given item is suitable for competitive bidding," Bachenheimer says.

     

  • Length. Bidding cycle questions included how long cycles should be (one year or more), whether all MSAs should hold bidding at the same time or stagger cycles, whether "off-cycle" bidding should be allowed if a supplier drops out, and whether CMS should adjust payments for multi-year bidding cycles.

     

  • Grandfathering. Under the bidding demos, non-bid winners were able to continue serving patients when existing capped rental agreements were in place, existing service relationships were in place for oxygen or nebulizer drugs, or suppliers had agreements to furnish all of a nursing home's DMEPOS. RTI wanted to know whether CMS should keep the same transition policies, partially adopt them or scrap them altogether.

     

  • Quality. Committee members urged CMS to formulate the quality standards suppliers must adhere to under bidding. CMS might not use formal rulemaking to come up with the standards, Invacare reports.

    In addition to laying out the numerous questions, CMS and RTI conducted an overview of other bidding programs conducted by the Department of Veterans Affairs, Utah and Minnesota. 
     
    Editor's Note: The presentations from the meeting and other materials are at     www.cms.hhs.gov/suppliers/dmepos/compbid/.

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