Competitive bidding: How do you survive the impossible?

Tuesday, July 27, 2010

WATERLOO, Iowa - The VGM Group is on the road this summer to help competitive bidding winners and losers make the best of an impossible situation.

"People are nervous and want to know what to do," said Alan Morris, VGM's regulatory analyst. "Whether it's this year or next, our belief is that this program is ultimately going away. We try to keep people upbeat and give them tools for survival."

Providers in the first nine competitive bidding areas bid down prices, on average, 32%. No one can survive that size cut long term or do so and take good care of patients--not winning providers, not losing providers. The key, say VGM officials, is for providers to develop strategies that allow them to hold on until the program is eliminated.

During its seminar tour, VGM covers, among other things, two areas that hold that key to survival: subcontracting and grandfathering, Higley said,

In short, a grandfathered provider failed to win a bid but opts to continue servicing his existing Medicare patients--some, depending on the product category, at the new bid price and others under the current fee schedule. In a subcontracting arrangement, a winning bidder hires a losing bidder to perform certain duties, such as delivering product.

Morris and Mark Higley, VGM's vice president-development, are quick to point out that these strategies at short-term fixes, not long-term solutions.

"We believe some providers, perhaps many of them, are considering exiting this market or looking for alterative revenue sources," Higley said. "Our program allows them some time to develop their long term business plans and business strategies as compared to having to panic."

For more on VGM's competitive bidding seminars, go to