Minnesota providers tolerate competitive bidding

Tuesday, April 30, 2002

ST. PAUL, Minn. — As HMEs in Florida seethe over a new Medicaid competitive bidding project for hospital beds and oxygen equipment and supplies, a similar bidding project in Minnesota is collecting accolades for saving the state "millions of dollars."

As in Florida, providers in Minnesota submit bids to outfit Medicaid beneficiaries in the state with oxygen equipment and supplies. Just last month, the state expected to release another RFP for a three-year, $1.3 million to $1.5 million contract, according to Martha Beckwith, who manages the contracts.

But unlike Florida, where providers denounce competitive bidding (for Medicaid, anyway) and doubt it will succeed, in Minnesota, providers appear ambivalent, and bidding has been the status quo for 10-plus years now. Earlier this year, the OIG even applauded Minnesota's project in a report auditing the state's Medicaid payments for oxygen equipment.

"The state has achieved significant savings (millions of dollars) by obtaining competitive bids and setting the Medicaid allowable rates for oxygen related DME at amounts much less than the Medicare allowable rates," the OIG stated.

So how much lower is the Medicaid allowable rate?
In 1998, Minnesota made headlines with its competitive bidding project when the state reportedly accepted a $38 bid on oxygen concentrators (See HME News, May 1998: Land of Thousand Lakes, $38 concentrator). Beckwith said the state currently pays just under $70 for concentrators. Regardless, the Medicare allowable is nearly $200.
That $70 rate means about $233,000 in savings for the state on oxygen concentrators alone. Beckwith said Minnesota's current contracts represent about 4,500 oxygen patients, with 1,796 of those patients using concentrators.

One Florida provider is bewildered by the ability of Minnesota providers to dole out oxygen concentrators at that rate. She said the Florida Medicaid allowable rate for concentrators is about $140, and that's hardly enough.
"They have to be making more money on supplies," she said. "And I can't imagine their service is very good."

Yet Beckwith ascertains that even at such a low rate, providers are still required to offer services like sending out a technician to visit an oxygen patient at least every 30 days to make sure his equipment is functioning properly.

Rose Schafhauser said in two years as executive director of the Midwest Association of Medical Equipment Services (MAMES), she's never received a formal complaint from a Minnesota provider about competitive bidding (That's certainly not the case in Florida, were the state association has gone so far as to sue Medicaid).

"Providers have opinions on it," she said. "It comes up in conversation, but I've never received a complaint, per se."
One thing Schafhauser has heard of is the possibility of winning bidders having more business than they can handle.

"I've heard of referral sources contacting providers, saying, 'Company XYZ has oxygen, but they can't be there for two days. Can you take care of it in the meantime?'"

One Minnesota provider said she's never participated in the project, and she doesn't see herself doing so in the future. Why? Because the reimbursement's so low (That's a gripe she shares with Florida providers).

"They [Northwest Respiratory Services, which has won the majority of the state's oxygen contracts] can have it," she said. "That's fine with us." HME