Stakeholders dig into recently released bid data 

WASHINGTON – Industry stakeholders are still digging through the Round 2021 data that CMS furnished late on Jan. 15 and trying to figure out what’s behind the sometimes drastic variance in payment amounts. 

For example, the amount for an oxygen concentrator was $72.36 in Akron, Ohio, but $189 in Chicago. The amount for CPAP devices was $38 in Oxnard, Calif., but $110.80 in Las Vegas. (Click here for more examples.)

“It’s difficult to say at this point whether the bid program is viable moving forward,” said Cara Bachenheimer, head of the government affairs practice and a shareholder at Brown & Fortunato. “With more data and more analysis, we hope to understand more completely what happened.” 

The agency announced in October that it wouldn’t be moving forward with Round 2021 for 13 product categories because the program didn’t achieve savings for those products. The implication: that the payment amounts had gone up, prompting AAHomecare to file a Freedom of Information Act and CMS to release the data. 

But it’s more complicated than that, as the variance in payment amounts shows, stakeholders say. Despite a tremendous effort by AAHomecare, VGM, the CQRC and others to educate providers prior to submitting bids – an effort that included a dedicated website, calculators and in-person and online sessions – uneducated bidders could be one reason or the variance. 

“If you didn’t bid high enough on the lead item, it pulled the accessories way back down,” said Mark Higley, vice president of regulatory affairs for VGM Government Relations. “The providers that bid $40 on CPAP again – either they didn’t know about the calculator or didn’t use the calculator or just wanted to get in. Or they were hoping another provider would bid much higher.” 

Another reason for the variance might be the capacity offered by providers. 

“If five suppliers offer a maximum amount of units, then the fifth supplier sets the price,” Higley wrote in his analysis and commentary. “If that price was near or below the former SPA, there would be no increase in reimbursement. This occurred frequently in several CBAs. Conversely, suppliers who recognized this mathematical factor and/or had history of offering relatively few items in the category could generally bid at a much higher amount. If that bid approached the bid limit and there was ‘room’ for the relatively low capacity offering, they then set the clearing price/maximum winning bid. And this happened frequently.” 

Stakeholders believe additional information is needed to completely analyze and comment on the payment amounts. AAHomecare announced last week that it had filed a second FOIA request for, among other things, the number of bids submitted. The association stated that while the data appear to support the industry’s concerns that payment amounts are too low, “it is important to analyze the data and understand the variations to avoid potential unintended consequences that could result in CMS eliminating the critical gains achieved during the last several years.” 

“We need to know how many bidders there were,” Higley said. “Areas with few bidders would have the tendency to reach capacity quicker and, accordingly, keep the single payment amounts low, like in Akron. Conversely, in some areas of the country like Chicago, a number of companies offered less capacity and hence that clearing price kept going higher and higher.” 

Regardless of whether or not these payment amounts should have gone into effect and what’s behind the variance, stakeholders still argue that they’re based on a pre-pandemic climate – demand and costs have shifted significantly since bids were submitted. 

“Don’t forget CMS’s decision was two-fold,” Bachenheimer said. “There was the lack of savings, and there’s also the pandemic.”