Competitive bidding analysis

Sunday, May 6, 2007

The competitive bidding final rule includes several provisions to preserve beneficiary choice. One is that CMS will allow beneficiaries to continue using non-contract suppliers under grandfathering provisions. The final rule also aims to preserve beneficiary access to specific models or brands of medical equipment.

Under the rule, a physician may prescribe in writing a specific model or brand of equipment or a specific mode of delivery, if he or she determines that the item or mode of delivery would avoid an adverse health outcome for the beneficiary. The physician must document in the patient's record the reasons why the specific brand or mode of delivery is medically necessary to avoid an adverse outcome.

When this occurs, the contract supplier may respond in one of three ways. First, the supplier could furnish the specific item or mode of delivery that the physician ordered. The contract supplier could also work with the physician to determine whether there is an alternative that would meet the beneficiary's need. If there is one, the contract supplier must obtain a revised written prescription that specifies the alternative. Finally, if there is no alternative, and the contract supplier cannot furnish the specific item, the supplier must assist the beneficiary in locating another contract supplier that can furnish what the doctor prescribed.

Thus, while a contract supplier is not required to furnish a specific item or service outside of what it normally offers, he has an obligation to meet the patient's needs either by furnishing an alternative prescribed in writing by the physician, or by helping the beneficiary find a contract supplier that can furnish the specific item.

This rule tries to strike a balance between the operational constraints of suppliers and the specific needs of beneficiaries. However, for contract suppliers there are some caveats to keep in mind. One is that the contract supplier cannot charge more for furnishing the specific item prescribed by the doctor. If there are no alternatives that meet the beneficiary's needs, and the contract supplier chooses to furnish the specific item, the contract supplier will be reimbursed at the rate determined under competitive bidding.

The other is that the contract supplier can bill only for the item specified in the written prescription. The supplier cannot substitute another brand or model unless the doctor revises the prescription in writing to specify an alternative product.
Healthcare attorney Asela Cuervo is based in Washington, D.C.