Round 1: Anticipation & Lessons to Learn

As this issue went to press, the industry was anticipating the implementation of national competitive bidding’s first round, due to start July 1. Mobility Management asked Seth Johnson his opinions about what we know so far about round one results and what we can expect going forward.

Mobility Management: Based on what we now know about the numbers and the identities of the winning bidders, their locations, and the competitive bidding fee schedules to go into effect July 1 — what are your concerns over the first-round results? Do you see any “red flags” in any of the results and information released by the Centers for Medicare & Medicare Services (CMS)? If so, why?

Seth Johnson: One of the primary concerns is that only 31 of the 155 winners for the standard power wheelchair category are also complex rehab power wheelchair category winners in the nine CBAs (competitive bid areas) that have both. In Miami, only one of 19 standard power wheelchair winners is also a complex rehab winner, and in Riverside (Calif)., there is only one out of 17. If you happen to live in Cincinnati, you have better odds, where seven of 16 standard power wheelchair winners are also complex rehab winners.

MM: Among the questions brought up by legislators is why so many bidding suppliers were disqualified from consideration. Can you give us background as to why they were disqualified, as far as you’ve heard? Are you concerned about the number of suppliers disqualified or how/why they were disqualified?
SJ: Providers were disqualified for one of three reasons: Bids were missing or contained incomplete financial information, bidders did not meet the mandatory accreditation deadline, or their bid rates submitted were too high or too low — yes, some were disqualified for submitting too low of a bid for one individual code in a product category.

I am very concerned that only 23 percent of the providers that submitted bids in the 10 CBAs were awarded a contract. That means that 77 percent of the providers who chose to participate in the competitive bidding program were not awarded contracts and will be unable to provide those products and services to Medicare beneficiaries.

MM: A number of suppliers also have won bids to supply DME for areas in which they did not have offices at the time they submitted bids. The expectation is that these suppliers will need to subcontract or open new offices and hire staff quickly to meet a July 1 implementation date. Are you concerned about these logistical challenges?

SJ: Yes, we are fundamentally concerned with subcontracting primarily because of a lack of clear direction on this topic from CMS. We are also very concerned that with a little over a month until July 1 (at the time of this interview), many questions remain that must be answered prior to providers entering into subcontract arrangements. Time is clearly running out for CMS to provide the necessary information to ensure that beneficiary access is preserved for the items and services under competitive bidding and a smooth transition for providers and other stakeholders.

MM: How do you feel in general about the number of suppliers chosen and the number of contracts awarded? Do you think beneficiary demand will be adequately met given the number of suppliers chosen? Do you have any concerns about beneficiary access?

SJ: We are very concerned about the impact of CMS awarding contracts to only 23 percent of providers who chose to participate in round one of the competitive bidding program. I think it is unclear whether beneficiary demand for standard power wheelchairs and also complex rehab power wheelchairs will be met. CMS did not release their estimated capacities for each of the product categories in the 10 CBAs, and we know that regarding the standard and complex rehab power wheelchair categories, the capacities were based on old K0011 data, and not the current HCPCS codes that were implemented November 15, 2006.

I do fear that access will be denied to beneficiaries under competitive bidding, and this is one of the many areas that the industry must closely monitor in round one in order to build a strong case for eliminating any further expansion of the program.

MM: What can/should CMS learn about this first round? What do you hope CMS will do differently for second-round participants?SJ: CMS should learn that implementing a competitive bidding program for DME and the health-care services provided along with the equipment is a very complex process that must be closely analyzed and reviewed each step of the way in order to help ensure positive beneficiary outcomes and appropriate cost savings. I hope that if CMS does move forward with implementation of round one, that a significant delay will take place prior to expanding the program to 70 more areas in round two in order to allow time for a thorough review and analysis and modifications to the program.

MM: What can suppliers who are not in the first 10 MSAs learn from the first-round results? What recommendations or advice do you have for suppliers in the second-round areas who would like to submit bids?

SJ: One of the main concerns I would have if planning to submit a bid in round two is making sure all the necessary bidding information is received by CMS and that it is complete. The number of disqualifications for incomplete information is a significant concern, especially in light of the fact that many of those providers had their CPAs and attorneys review the information prior to submission and also again upon receipt of the disqualification notice, and everything appeared to be in order.

CMS is still reviewing many of those inquiries, and hope-fully they will be adequately resolved prior to implementation of round one. The recommendations I would provide for those interested in participating in round two is to apply for accre-ditation ASAP if you have not already done so. CMS recently extended the deadline for accreditation for round-two providers until July 21. In addition, once round one is implemented, I would look closely at the impact of round one and attempt to forecast what you think the impact will be in the CBAs you are looking to submit a bid in, in order to help determine the best bidding strategy for your company.

This article originally appeared in the July 2008 issue of Mobility Management.

About the Author

Laurie Watanabe is the editor of Mobility Management. She can be reached at

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