http://go.cms.gov/vGBxWu

If that doesn’t work, I saved a copy here:

http://www.competingbid.com/docs/pmd1.pdf

The Centers for Medicare & Medicaid Services (CMS) today announced operational details for the next stage in a program that sets new, lower payment rates for certain medical equipment and supplies – such as oxygen equipment, walkers, and some types of power wheelchairs – while maintaining patient access to them. CMS today also launched a comprehensive education program to help guide suppliers through the competitive bidding process.

The Medicare Competitive Bidding Program for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) was expanded by the Affordable Care Act and is estimated to save Medicare, seniors, and taxpayers more than $28 billion over 10 years.  Already in 2011, the first phase of the program has saved Medicare 35 percent compared to the fee schedule and resulted in lower cost for Medicare patients.

“Today marks another step forward in our progress towards obtaining fair prices for equipment like wheelchairs and walkers,” said CMS Administrator Donald M. Berwick, M.D. “We are looking forward to a robust competition that will achieve better value and preserve access for our beneficiaries.”

Under the program, DMEPOS suppliers compete to become Medicare contract suppliers by submitting bids to provide certain items in competitive bidding areas (CBAs).  The new, lower payment amounts resulting from the competition replace the fee schedule amounts for the bid items in these areas.  

The first phase of the program was successfully implemented for nine product categories in nine areas of the country on Jan. 1, 2011.   To date, CMS monitoring data have shown a successful implementation with no changes in beneficiary health status.  Today, CMS released the detailed schedule for Round 2 bidding.  Registration will begin on December 5, and the 60-day supplier bidding period will begin in late January of 2012. 

Round 2 expands the program to 91 additional metropolitan areas, and the new prices are expected to take effect on July 1, 2013. A National Mail Order Competition to help bring down prices for mail order diabetic supplies will coincide with the Round 2 timeline.  

The bidder education program launched today is designed to guide suppliers through the competitive bidding process and will feature numerous enhancements such as improved Request for Bids instructions, updated fact sheets, and a series of webcasts that suppliers will be able to view at their convenience.  Information and materials may be found at www.dmecompetitivebid.comand a toll-free help line (1-877-577-5331) is available to assist bidders with questions and concerns. 

“We have considered feedback from many stakeholders to implement process improvements to make the competitive bidding program even stronger,” said Jonathan Blum, deputy CMS administrator and director of the Center for Medicare. “In addition to the enhancements we’ve made to our bidder education program, we will be strengthening our rigorous bid evaluation process by increasing our scrutiny of bids.”

The Round 2 categories of products are similar to those in Round 1, with some additions.  The Round 2 product categories are:

·        Oxygen, oxygen equipment, and supplies;

·        Standard (Power and Manual) wheelchairs, scooters, and related accessories (a new category that combines all mobility devices);

·        Enteral nutrients, equipment, and supplies;

·        Continuous Positive Airway Pressure (CPAP) devices and Respiratory Assist Devices (RADs) and related supplies and accessories;

·        Hospital beds and related accessories;

·        Walkers and related accessories;

·        Negative Pressure Wound Therapy pumps and related supplies and accessories (new category);

·        Support surfaces (Group 2 mattresses and overlays).

Beneficiaries may continue to use their current suppliers at this time. Similar to the successful implementation of Round 1 of the program, CMS will conduct extensive outreach to beneficiaries in the Round 2 areas prior to the new program taking effect.

Dec. 5, 2011: Registration for user IDs and passwords begins

Dec. 22, 2011: Authorized officials are strongly encouraged to register no later than this date

Jan. 12, 2012: Backup authorized officials are strongly encouraged to register no later than this date

Jan. 30, 2012: CMS opens 60-day bid window for Round 2 and national mail-order competition

Feb. 9, 2012: Registration closes

Feb. 29, 2012: Covered document review date for bidders to submit financial documents

March 30, 2012: 60-day bid window closes

CMS also posted this extended timeline:

Fall 2012: CMS announces single payment amounts, begins contracting process

Spring 2013: CMS announces contract suppliers, begins contract supplier education campaign

Spring 2013: CMS begins supplier, referral agent and beneficiary education campaign

July 1, 2013: Implementation of competitive bidding program for Round 2 and mail order competitive contract and prices.

Actual date will be announced through listserv notice.

This is a post I wrote on the topic of capacity back in 2007-2008 for the first round of bidding. I dug it up from the old forum. It’s such an important topic that I brought it over to this new blog. So, it may seem dated, but it’s actually still the case. The graphic is new – and a newer one is coming…

Best regards,

Chris

As the first round of competitive bidding is about to get underway providers are scrambling to understand the process. There are a myriad of new terms to understand and concepts to grasp. Of them, “capacity” (your market share) seems to be the most benign and largely overlooked. As it turns out, capacity is the key to the whole system. Exaggerating it actually drives reimbursement down.

To see why this happens, you have to understand how CMS will evaluate the bids. First, they will arrange the qualifying bids from lowest to highest, according to price. Along side with the bid price will be the providers estimated capacity for supplying this product in their MSA. Starting at the bottom, and ignoring price, CMS will go up the list adding capacity numbers and stop when they reach 120%.  At that point they have arrived at the “pivotal” bid.

All of the bids that are higher than the pivotal bid will be excluded. Those below it (the winners) will be averaged and that becomes the new reimbursement. As you can see capacity is what causes bids to be included in the program, more so than price.

The fear is that providers will miscalculate, or more likely, exaggerate their capacity. If so CMS will not have to move very far up the list in order to arrive at 120%. Further, since bids are arranged from lowest to highest an artificially lower number of bids and prices will be averaged to arrive at the new payment amount.  In short, exaggerated capacity numbers drive reimbursement down.

To illustrate this point you can think of the bid selection process like a step ladder. Each step represents one bid with the lowest price at the bottom. On that same step is that provider’s estimated capacity. CMS will start at the bottom and look only at the capacity numbers. They will climb each step adding the capacity as they go. Once they reach 120% they stop. The bid price at that step becomes the pivotal bid. The providers above it lost, and those at and below it won. By averaging the bids from the pivotal level down CMS will arrive at the new reimbursement price.

If the capacity numbers are exaggerated, CMS did not need to climb many stairs before reaching 120%. Therefore, the new reimbursement will be an average of artificially low prices. So, by exaggerating your capacity you drive reimbursement down.

The main reason for exaggerating capacity is the mistaken notion that it will matter when competing for business. CMS simply wants to make certain patients have access to equipment and that 100% of the market is covered. Your capacity estimate does absolutely nothing to affect your ability to bring in more business. The thought of “I have 3% of the market now, but I could do 10%!” will do nothing but harm your business. Winning bidders under the new system are entitled to compete for as much business as the market will allow them, regardless of their capacity estimate.

Your capacity numbers are a key component to the bidding program. Unfortunately those who do not understand this concept will have a detrimental affect on the outcome. Reimbursement is low enough; we don’t need to make it worse.