Devil in the details: The reshaping of the next round of bidding

Up for discussion: product categories, supplier capacity, bona fide bids
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Friday, December 7, 2018

WASHINGTON – As HME industry stakeholders work with CMS officials to shape future rounds of competitive bidding, they’re focusing, first, on helping the agency re-arrange the program’s product categories.

Under lead-item pricing—where payment levels for the item with the highest expenditures in a product category determine the payment levels for all other items in the category—stakeholders say it doesn’t make sense, for example, to bundle oxygen concentrators and CPAP devices in a broad respiratory category. Why should the payment level for a stationary oxygen concentrator determine the payment level for a CPAP mask?

Other categories stakeholders say are too broad: general HME, which includes everything from hospital beds to support surfaces to commode chairs; and mobility, which includes everything from manual and power wheelchairs to accessories to walkers.

“We’re finalizing recommendations to CMS on how to organize the product categories into more discrete product categories,” said Cara Bachenheimer, chair of the government affairs practice at Brown & Fortunato.

In the first round of competitive bidding, back in 2011, CMS had more specific product categories but then bundled some products into broader categories in subsequent rounds of the program. Stakeholders suspect the agency made the change based on feedback, but it “may have taken it too far,” they say. In a recent final rule, CMS suggested it was open to re-arranging the product categories, they point out.

Having more product categories may create difficulties for providers and referral sources—conceivably, a contract for walkers may go to one provider, beds to another and support surfaces to another—but “with lead-item pricing, there’s no other way to do it,” said Kim Brummett, vice president of regulatory affairs for AAHomecare.

Bachenheimer agreed, saying, “It’s more important to have a financially stable program, even if it’s logistically more complicated.”

Stakeholders are under the gun to influence the product categories: When the agency announces the timeline for its next round of bidding—some time in early 2019, they expect— it could also announce the impacted product categories and bid areas.

“It needs to happen quickly,” Bachenheimer said.

More transparency needed: supplier capacity, bona fide bids

Stakeholders also plan to push for transparency on how CMS determines supplier capacity. In the past, the agency has manipulated capacity based on a provider’s historical capacity. That means, a provider may submit a bid with a supplier capacity for 100 walkers, but CMS, in looking at the provider’s historical capacity, determines it can do 200 walkers.

“You have contract suppliers who say, ‘I was a winner and because I was the only local supplier, I was forced to do thousands of walkers, and I don’t want to do that many,’” Brummett said.

Additionally, stakeholders plan to push for transparency on how CMS determines bona fide bids.

“What’s the threshold for verification,” Brummett said. “We don’t feel like CMS has anything in writing. If I bid $100 on an item and my product invoice from the manufacturer says $99—to me that’s not a sustainable price; it hasn’t allotted for overhead, etc. So if a bid is X% below the ceiling, should it automatically trigger a verification?” 

The introduction of lead-item pricing raises other questions about bona fide bids, including, will the agency apply the verification process just to the lead item, or all items?

“We think it should apply to all items,” Bachenheimer said.

On supplier capacity and bona fide bids, stakeholders plan to make recommendations, but they’re still “brainstorming” and “tossing around ideas” right now, they say.