Bidding program: 'It's a slow downhill fall'

YARMOUTH, Maine - There's no rest for the weary, especially in the HME industry. No sooner did the bid window for Round 2 close March 30 than it was time to look ahead to what's next, including the worst case scenario: potential future rounds of competitive bidding.

With Round 1 contracts set to expire Dec. 31, 2013, stakeholders expect CMS to announce product categories, zip codes and other information related to a re-bid sometime later this year.

"They will re-bid in Round 1 areas," said John Gallagher, vice president of government relations for The VGM Group.

Those re-bid contracts would expire by 2016, at which time the secretary of health and human services can apply bid prices nationwide, stakeholders say. Don't forget, they say: That means every zip code in every state, rural or not.

How CMS would apply that pricing--take the lowest single payment amounts? apply an average of those amounts?--is unknown and would likely require a rule-making process, stakeholders say.

"Bidding may not happen in Montana, but the pricing will get there," said Walt Gorski, vice president of government affairs for AAHomecare.

One wild card is mail order diabetes supplies. The Round 1 contracts for that category expire at the end of this year, on Dec. 31, 2012. With Round 2 contracts not set to start until July 1, 2013, that leaves a six-month gap in which diabetes supplies in the first nine CBAs may not be subject to the single payment amounts.

"CMS has indicated that prices for diabetic supplies will go back to some type of previous fee schedule prices," said Wayne Stanfield, president and CEO of NAIMES.

The impact of competitive bidding, if it continues, will reverberate beyond Medicare. President Obama's proposed federal budget for 2013 includes a provision that would apply competitive bid rates to Medicaid pricing in states where the bid program is in effect. With 100 total CBAs nationwide, that's bound to be most of them. Private payers will likely follow suit, said Stanfield.

"It's a slow downhill fall at that point," he said. "Providers won't be able to maintain profitability and I think you are going to see a mass exodus."