CMS barrels forward with competitive bidding

Wednesday, November 3, 2010

BALTIMORE - After months of speculation that CMS was having trouble getting enough takers for its competitive bidding program for DME, officials said yesterday that an overwhelming majority of the contracts the agency offered were accepted.

"I had a chance to meet with a couple of the folks who raised concerns," said Jonathan Blum, deputy director of CMS and director for the Center for Medicare. "I think their primary concern was that bidders wouldn't sign contracts, but 92% of those that were awarded contracts have signed them and it gives me great confidence in the integrity of the program."

Overall, CMS received 6,215 bids from 1,011 different suppliers. The agency made 1,324 contract offers and signed 1,217 separate contracts with 356 suppliers.

CMS officials said that 76% of the contracts were awarded to suppliers already furnishing the items in the competitive bidding areas (CBAs); 97% of the contracts went to suppliers with experience with the items they will be providing; and 51% went to small suppliers.

"All of the contracted suppliers are currently in good standing with Medicare," said Blum. "They meet state licensure requirements; they meet re-enrollment requirements, quality and financial standards; and they are accredited."

Medicare beneficiaries will get letters next week to explain potential changes and how to get more information. Blum also said that CMS plans to aggressively monitor the program, including actively monitoring toll-free numbers for issues and complaints, and watching claims on a weekly basis.

"CMS fully recognizes that this is a new program for beneficiaries," he said. "While we are committed to this program succeeding, we are also going to be doing everything we can to ensure that our beneficiaries receive continued access to high quality suppliers."

Officials continued to tout the projected savings of the program: $28 billion over the next 10 years. That represents $17 billion less in Medicare spending, and $11 billion less in the form of co-pays and premiums for beneficiaries.

Questions asked during the call:

Can you tell us more about program integrity tool that you used on the winning bidders and the red flags you found? Did you take back the contracts you offered to those bidders?

"Given the importance of this program, given how much of a change that it represents, and given some of the new tools that CMS has at its disposal, we wanted to be extra careful that the contracted suppliers were the best possible suppliers for the program," said Blum. "CMS will continue to be applying new ways to use data, to use predictive modeling and claims analysis to ensure that the Trust Funds are protected not only for this program but for all of our fee for service programs."

As to Round 2 of the program, slated to kick off in 2011, officials said that at this time, CMS doesn't have any plans for changes to the design of the program. Officials also indicated that it will consider in the near future whether to expand the product categories.

"The vehicle for hearing about more product categories would be in the request for bid that would go out ultimately to launch bidding in the program," Blum said.