Competitive bidding: 'It's as bad as we thought'

Sunday, June 3, 2007

YARMOUTH, Maine - The yeas have it. Competitive bidding, as spelled out in pronouncements by CMS to date, is as intimidating as HME suppliers thought it would be. Some see a silver lining in an otherwise thunderous cloud, but by and large, suppliers expect meager (if any) profits, bankruptcies and a bureaucratic nightmare.

In a recent HME NewsPoll, half of 137 suppliers who responded to the poll say they've started to crunch the numbers that will enable a bid; the other half have not. About two-thirds of all providers plan to bid on their own while one-out-of-five expect to participate as a network and one-out-of-10 expect to provide product and services as subcontractors.

But there is near consensus on the notion that competitive bidding is bad news for beneficiaries and suppliers. The overarching fear is that the bids will be driven into the basement by unscrupulous suppliers who'll do anything to retain the business.

"Other providers are going to throw numbers in the air in hopes of getting a contract, causing this to be a complete mess," said Sylvia King, manager of Thrift Home Care in McComb, Miss. "I think it will be too late before they realize the mistake they have made in this industry."

Other suppliers say bidding low is a survival strategy.

"We will bid and will have to go low to avoid being ousted," Lenny Rodger, president of an HME company in Orlando, Fla.

Knowing that pricing is going south and that there's peril down under, some wonder why Congress didn't simply mandate deeper fee schedule reductions. At the same time, suppliers also expect to see rising administrative costs. That troubles them, especially as they believe the government could have required accreditation and reduced the fee schedule to levels deemed appropriate.

"Maybe the OIG should be charged with evaluating intentional waste as a form of abuse. There would be a real payback on that one," said Tricia Dibblee, president of Signature Medical Supply in Wilsonville, Ore.

Suppliers of complex rehab products and services are unnerved by what they've seen.

"I don't understand putting rehab wheelchairs in competitive bidding and leaving out manual wheelchairs," said Joanna Harrington, owner of Harrington Home Medical in Kennewick, Wash. "You can bid on the components but it's hard when you do the moldings and adjustments that are needed to make a wheelchair and seating fit a highly involved client."

One rehab supplier who embraced competitive bidding as a full-line HME and made it work for his company in Polk County, Fla., is opting out now.

"I have decided as a rehab dealer that I cant afford one penny less in reimbursement, so I have decided after multiple conference calls, research, and number crunching not to place a bid at all," said Butch Vanderpool, president of Mobility Specialists in Auburndale, Fla.

There are some who are less daunted, now that they're somewhat in the know.

"I'm pleased that there are reasonable provisions to allow small providers to continue to work with CMS," said Daniel Levy, president of SomniHealth in Alameda, Calif.

Though Lori Renfro thinks competitive bidding is still a terrible idea, she believes "accreditation for everyone brings integrity to the industry," said the senior vice president/COO of GBT Medical Supply in Lewisville, Texas.

Others believe that competitive bidding will rout bad suppliers from the program. One supplier to the U.S. Department of Veterans Affairs, who declined to identify himself, likes the new construct.

After success servicing the VA, this supplier believes the "slightly more complex program does not seem to be that difficult to bid on or to provide quality service to the patients within the stated parameters. Having been accredited for over two decades, we will jump in with both feet."