Competitive bidding delay stands

Sunday, July 13, 2008

WASHINGTON - The House of Representatives and the Senate voted late yesterday to override the president's veto of a Medicare bill that would delay national competitive bidding for 18 to 24 months.

The president vetoed the bill earlier in the day.

The House voted 383-41 and the Senate voted 70-26 to override the veto. The bill delays competitive bidding in exchange for a 9.5% nationwide cut for all products included in Round 1 of the program. It also exempts certain high-end rehab items from competitive bidding.

Additionally, the bill would allow providers to retain ownership of their oxygen equipment. As part of the 36-month oxygen cap, providers were supposed to transfer ownership of equipment to beneficiaries beginning Jan. 1, 2009.

At this point, the industry has no information on how CMS will manage the policy and payment changes

The bill's provisions, in more specific detail, include:

* Repeal of Deficit Reduction Act provision mandating that beneficiaries assume ownership of oxygen equipment. The law repeals the provision originally in the DRA that required beneficiaries to assume ownership after 36 months of medical need. This provision is effective Jan. 1, 2009.

* Competitive bid program delay. 18-24 month delay of Rounds 1 and 2 of the bid program. Terminates contracts awarded under Round 1 and restart the contracting process in those areas in 2009. Round 2 contracting process will begin in 2011. CMS cannot apply bid rates in non-bid areas until Round 2 is completed.

* Offset to pay for delay. In January 2009, the product categories included in Round 1 will be reduced by 9.5% nationwide. This policy does not affect diabetic supplies furnished by retail suppliers because they were not covered by the bidding program. Items that had been subject to the reduction will receive a 2% payment increase in 2014, except in any area where a competitive bidding contract is in effect or CMS has otherwise adjusted payment rates. Items that are not in a bid area will receive the full CPI update in 2010, 2011, 2012 and 2013. In 2014, these items will receive the CPI update plus 2%.

* Bidding process improvements. Requires CMS to notify bidders about paperwork discrepancies and give suppliers the opportunity to correct within a reasonable time frame. Provides CMS the authority to subdivide MSAs with more than 8 million people. Exempts rural areas and MSAs with a population of less than 250,000 from competitive bidding for at least five years. Requires suppliers who bid on diabetic testing supplies to offer brands that cover at least 50% of the market by volume (does not apply to Round 1). Before using its authority to adjust prices in non-bid areas, CMS must issue a regulation and consider how prices set through competitive bidding compare to costs for such items in non-bid areas. Requires HHS's Office of Inspector General to verify calculations used to determine the pivotal bid amount and winning bid amounts.

* Quality measures. Requires all suppliers to be accredited by Oct. 1, 2009. Therefore, all suppliers, whether they are billing Medicare directly or are a subcontractor to another supplier, will be subject to accreditation. Requires contracting suppliers to disclose all subcontracting relationships to CMS. Excludes physicians and other practitioners from DMEPOS accreditation requirements until CMS develops provider-specific standards. Allow CMS to waive physician accreditation if the agency determines they are subject other mandatory quality requirements. Establishes a separate ombudsman within CMS to handle supplier and beneficiary issues related to the competitive bidding program.

* Other changes. Excludes negative pressure wound therapy from Round 1 and requires CMS to evaluate how these items are coded and paid. Excludes Puerto Rico from Round 1 re-bidding (did not receive enough valid bids in original Round 1 for CMS to award any contracts). Allows physicians and other treating practitioners to supply "off-the-shelf orthotics" to their patients without being awarded competitive bidding contract. Allows hospitals in bidding areas to supply the same DMEPOS items that physicians and other practitioners will be able to supply (those that are considered an integral part of professional services) without being awarded contracts for those items. Ensures that podiatrists and other similar practitioners can prescribe DMEPOS items by using broader definition of physician in Social Security Act. (This relates to a drafting error in the MMA that pointed to the wrong definition of physician in the Social Security Act when requiring face-to-face examinations in order to prescribe DMEPOS items.) Delays mandated GAO report to coincide with delay to Round 1 and expands the scope of the report. Provides CMS implementation funding of $120 million.