Competitive bidding: How to prepare now

Friday, August 31, 2007

Industry consultant Ken Emerick agrees that CMS will likely make quite a few changes to national competitive bidding before it kicks off the second round of the program in 2009. Just the same, providers who are waiting for competitive bidding to hit the next 80 competitive bidding areas should:
Know their costs
Rather than worry about what CMS will reimburse under competitive bidding, providers should examine their costs for each product they provide. "For example, what does it cost to maintain a patient on an oxygen concentrator?" Emerick said. "Most providers haven't even looked at that and broken it down."
Grow their businesses
Between now and the time CMS awards bids for the second round of competitive bidding, providers must grow their businesses. "If they're not, they're running a major risk," Emerick said. "Say you're a respiratory company with 200 patients and you don't get a contract. CMS will grandfather you, if your patients choose to stay with you, but only at the lower reimbursement rate. So it makes sense to grow your oxygen business as much as you can beforehand."
Consolidate, if necessary
If a provider has three or four locations in one competitive bidding area, he should ask himself this question, according to Emerick: "Do you have them set up as a cost point or a profit center?" He continued: "Most of the time, providers have a single administrative point and lump all their costs and revenues together. They can't even tell you how much business they're doing out of one location."
Have a marketing plan
Because winning a contract doesn't guarantee you business, Emerick stressed that providers have a marketing plan. "You have to be prepared to accept the contract, and you have to be prepared to spend capital on marketing to go after referral sources, because I'll tell you who has a program ready to go: Lincare and Apria," he said.