CMS Announces Round 1 Competitive Bidding Winners

The Centers for Medicare and Medicaid Services has announced the identities of winners in its round one rebid of its national competitive bidding program.

The winners are listed at medicare.gov.

During the call, Jonathan Blum - deputy administrator & director of the Center for Medicare -- said 356 DME suppliers were awarded 1,217 contracts. The winning suppliers have a total of 662 locations.

Blum added that 1,011 suppliers submitted 6,215 contracts for consideration. About 35 percent of the suppliers ultimately won contracts.

He added that 92 percent of suppliers who were offered contracts did end up signing with Medicare.

Round one of the national competitive bidding program is scheduled to start on Jan. 1, 2011.

Blum said about 51 percent of bid winners are defined by CMS as small suppliers with gross annual revenue of $3.5 million or less.

He also said 76 percent of contracts were awarded to suppliers who already provide the contract items in the local areas, and 97 percent of contracts were awarded to suppliers already established in the bid area, in the product category, or both.

Blum additionally said, "All the contracted suppliers are currently in good standing with Medicare. They meet state licensure requirements, they meet enrollment requirements and quality and financial standards, and they are all accredited by independent organizations."

No Administrative Delay Planned

Blum repeatedly defended the structure and design of the program, saying he didn't see the need for an administrative delay in implementation.

"We are very confident in our methodology and our process," he said in response to a media question about possible structural changes to the program. While saying CMS would monitor the program's performance going forward, "At this time, we do not have any plans for changes."

During the Q&A session, David Kopf, editor of HME Business asked, "Why is CMS pushing forward with the Jan. 1 implementation date, given the letter from 166 bidding and auction experts? Wouldn't an administrative delay be in order?"

A large group of independent experts in finance and economics have said the program is deeply flawed.

Said Blum: "I think from our perspective that we feel very confident with the program." He said he met with representatives from the University of Maryland: "I think their primary concern is that bidders won't sign (contracts). I think from our perspective, given that 92 percent of those that were awarded a contractor has signed gives me great confidence in the integrity of our program."

Among the criticisms of the competitive bidding process is the lengthy delay in releasing the names of bid winners, which had initially been estimated to happen in September. In an Oct. 14 DMEPOS Open Door Forum and on a subsequent post to its competitive bidding Web site, CMS alluded to, but did not otherwise explain or describe, a new "program integrity tool" being used to assess potential bid winners and therefore creating a delay in the release of winner identities. The need for the tool, according to CMS' Michael Keane in the Open Door Forum, stemmed from old incidents of fraud and abuse in the DME segment.

Asked to elaborate on the program integrity tool in the conference call, Blum said, "We are continually - not just for the competitive bidding program, but for all fee-for-service programs - putting in place new tools to monitor, to assess and to track issues" for accuracy.

He added, "Due to the importance of the program... and given some of the new tools that CMS now has at its disposal, we wanted to be extra careful that the contracted suppliers were the best possible providers for the program. And we're here to say that all of the suppliers are currently in good standing with CMS and the Medicare program."

Neither Blum nor CMS' Laurence Wilson, who also participated in the brief media Q&A session, offered further details about what the tool was, how it operated or whether any potential winning bidders were excluded from the program because of results from the program integrity tool.

"All the contracted suppliers are in good standing with CMS," Blum repeated when asked about possible exclusions.

Getting the Word Out

"CMS is currently taking very active steps to educate beneficiaries and providers about their options," Blum said, adding that CMS would be mailing letters and brochures to beneficiaries to explain the program. The mailings are due to go out on Nov. 8.

Contacted immediately after the press conference, Michael Reinemer, VP of communications & policy for the American Association for Homecare (AAHomecare), expressed continued concern over the impact on beneficiary access to DME. The program is scheduled to start in just 57 days.

AAHomecare, on the same day of the press conference, sent out a bulletin referencing a study of the competitive bidding program by Professor Charles R. Plott at the California Institute of Technology. The study concluded, AAHomecare said, "that the fundamental flaws in the Medicare bidding system will prevent any 'quick fix.'"

"The main issue," Reinemer said, "would be the delay (in announcing bid winners) leaves very, very little time for people to prepare, and when you add the completely independent views of these economists from CalTech and everywhere else, it raises so many red flags."

He predicted that beneficiary access to technology could be hurt.

"When you radically limit the number of providers out there, there has to be some consequences that won't be good for the patient," he said. "We're hoping there won't be any negative consequences for the patients, but these are the most vulnerable people in our society, and we don't believe this is the way to treat these folks."

About the Author

Laurie Watanabe is the editor of Mobility Management. She can be reached at lwatanabe@1105media.com.

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