CMS: 364 Suppliers to Be Offered Round 1 Competitive Bidding Contracts

Among the details revealed by the Centers for Medicare & Medicaid Services (CMS) during a July 1 conference call with the media was the fact that 28 percent of suppliers to be offered Round 1 competitive bidding contracts do not have "market presence" in the geographical areas or for the products and services for which they've won bids.

CMS Deputy Administrator Jonathan Blum, who led the conference call, also disclosed the numbers of contracts being offered: 1,287 in all, to 364 suppliers who have a total of 622 locations.

Said Blum, "I think what's important to point out is that the vast majority of suppliers that will be offered contracts, 72 percent, already have market presence in those areas. There has been concern that the suppliers that have been offered a contract don't have market presence. But to our analysis, 72 percent of the suppliers who will be offered contracts currently have market presence."

In response to a follow-up question from HME Business Editor David Kopf, Blum said, "I think there is a very strong desire for the program to have competition and ensure that we get the best possible price... Our analysis shows that 72 percent of suppliers who will be offered a contract have market presence, which to me is a great success."

Blum and other CMS representatives on the conference call said they could not immediately state the number of suppliers who would not be awarded Round 1 contracts. Nor does CMS plan to let non-winning providers participate if they'll agree to be compensated at the winning-bid rates, an idea that was floated during CMS' last competitive bidding effort, halted by Congress in July 2008 after being in effect for two weeks.

"It's our belief that in order to have the most competitive bids, we also have to ensure that we have a process that awards a contract to the best possible bids," Blum said in answering a Mobility Management question. "If we were to change that and allow any willing provider, I believe that we would see less savings than what we're seeing with the results today."

Blum added, "The current rules don't provide for that scenario" of working with any provider willing to accept the single-payment amounts.

Blum said 48 percent of suppliers to be offered contracts have been identified as "small" suppliers with $3.5 million or less in gross revenues. He added that this far exceeded CMS' target goal of offering 30 percent of its contracts to small suppliers.

During the conference call, CMS repeatedly emphasized that suppliers who are not extended contracts could still work with Medicare, possibly through subcontracting, by selling products not in the bidding programs or by providing "services to other payors."

CMS posted the single-payment rates on July 1 at CMS said during a June 30 Program Advisory & Oversight Committee meeting that winning suppliers would receive contract offers on July 2 via FedEx mailings.

Said Blum of the competitive bidding program, "It's a new way for CMS to set prices. CMS currently sets these prices for the Medicare program based upon a fee schedule that I think it's fair to say is higher than prevailing market rates."

The program starts in nine geographic areas with this round, then is due to expand by another 70 or more areas in Round 2. As part of the proposed 2011 physician payment schedule, CMS revealed that it's seeking to add another 21 metropolitan statistical areas to Round 2 of the program.

A July 1 press release that accompanied the release of bid prices said, "Medicare beneficiaries in nine areas of the country who use certain medical equipment and supplies will see average savings of about 32 percent off the current cost of those items."

As an example announced during the press conference, Blum said Medicare is currently paying $3,641 for a power wheelchair. Under competitive bidding, the price would drop to $2,554, a savings of about 30 percent. Blum did not provide details of the type of power chair in the example.

He said CMS was "very confident and very pleased to announce these new rates." In answer to a question about the likelihood of Congress shutting the competitive bidding program down, Blum said, "CMS has made tremendous improvement to the program over the last year and a half or so. We've dedicated more resources to educate suppliers who planned to bid, but also to educate beneficiaries to these changes. We have made tremendous improvements to our systems to ensure that the bidding process is smooth, and every report that I have received has said that these investments have paid off nicely."

About the Author

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

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