CMS upends competitive bidding

Agency pauses program with plans to implement significant changes, including some that stem from industry recommendations
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Friday, July 13, 2018

WASHINGTON – All Medicare-enrolled HME providers are back in business starting Jan. 1, 2019.

CMS stated in a July 18 proposed rule that when the current competitive bidding contracts expire Dec. 31, 2018, any Medicare-enrolled provider will be able to provide DMEPOS items to beneficiaries, until the agency initiates that next round of the program with significant changes.

“This is another indication that the program is broken and needs to be fixed,” said Tom Ryan, president and CEO of AAHomecare. “CMS is, once again, talking about the need to make sure the DME benefit is viable and the need for stakeholder input.”

The proposed rule follows a May 11 interim final rule that reinstated 50/50 blended reimbursement rates in rural areas from June 1, 2018, through Dec. 31, 2018.

Any Medicare-enrolled provider may be able to provide DMEPOS items on Jan. 1, but they’ll have to do it at the current rates in bid areas, non-bid areas and rural areas.

“There are a lot of non-contract suppliers out there that still exist,” Ryan said. “They’ve been on the sidelines, but they still exist, and now they’ll be able to go to referral sources and compete again for that Medicare business. Whether or not they want to at the price, that’s their determination.”

In addition to the temporary “any willing provider” provision, the proposed rule extends the 50/50 blended rates in rural areas through Dec. 31, 2020, something that will cost CMS $1.05 billion.

“That is a significant give-back,” Ryan said. “That is a cost to them. They’re putting dollars back into a benefit that has been decimated due to poor policy.”

Still, stakeholders will continue to make the case that the blended rates should apply to all non-bid areas, not just rural areas—and CMS may be open to that idea, they say.

“They specifically ask that question in the proposed rule: Should we extend the blended rates to all non-bid areas?” said Cara Bachenheimer, chair of the government affairs practice at Brown & Fortunato. “If we can convince the agency, before the final rule is published, that would be another potential upside.”

The proposed rule also provides a window into how CMS plans to run the next round of the bid program. For one, the agency plans to implement lead-item pricing using maximum bids, a methodology that stakeholders say reflects their input. Lead-item pricing means CMS will ask providers to submit bids on one major item within a product category and it will use those bids, among other factors, to set the price for that product and all others in the category.

“It’s very similar to a clearing price, which is our language,” said Jay Witter, senior vice president of public policy at AAHomecare. “It’s a significant win that acknowledges the significant flaws to median pricing. They’re moving toward something with more auction-like principles.”

Will this change, along with other changes that will be implemented in the next round of program—like tying surety bonds to bids, and implementing a higher bid ceiling—result in higher reimbursement rates? That’s the $64 million question.

“I would hope that bid prices would come in at a more reasonable level,” Bachenheimer said. “It’s difficult to predict people’s behavior, but that’s the expectation.”

As for what the proposed rule means for H.R. 4229, a bill that would provide broader relief—it would apply blended rates in all non-bid areas and retroactively from Jan. 1, 2017, to Jan. 1, 2019—AAHomecare says it’s keeping the pressure on.

“That to me is a pressure point that has helped us get to where we are today with CMS,” Ryan said. “I wouldn’t stop.”