Competitive bidding: What are your options?

Thursday, August 26, 2010

If I had been asked to come up with the most unworkable program imaginable, I could not have dreamed up competitive bidding. However, until the program collapses, we have to deal with it. Here are three key components of competitive bidding:


There will be a "grandfathering" process for oxygen equipment and supplies; inexpensive or routinely-purchased items furnished on a rental basis; items requiring frequent and substantial servicing; and capped rental items furnished on a rental basis. Only HME suppliers that began furnishing these grandfathered items prior to implementation of competitive bidding may be eligible to participate as a grandfathered supplier. Beneficiaries may choose to continue renting the item from the grandfathered supplier, provided the grandfathered supplier is willing to continue furnishing the item under the same terms as the contract supplier. The beneficiary may choose to switch from a grandfathered supplier to a contract supplier at any time. If a supplier chooses to be a grandfathered supplier, then it must do so for all beneficiaries who request services.


Not later than 10 days after the date a supplier enters into a competitive bidding contract, the supplier must disclose information on each subcontracting arrangement  and whether the subcontractor is accredited or exempt. Once a supplier is in a competitive bid contract and the supplier enters into a subcontract arrangement, then not later than 10 days after entering into such arrangement, the supplier must disclose the same information. Under current guidance, a subcontractor may perform the following services: purchase of inventory; delivery and instruction; and maintenance and repair of rented equipment. The CBIC has stated that a supplier may not subcontract for the following services: intake and assessment; coordination of care with physicians; submission of claims on behalf of beneficiaries; ownership and responsibility for equipment furnished to beneficiaries; and ensuring product safety. The following do not require accreditation: a subcontractor that only performs the "purchase of inventory" service, delivers the item, or repairs equipment that a supplier is renting to a beneficiary. A subcontractor that performs equipment set-up or patient instruction must be accredited unless exempt.

Transfer of ownership

Sixty days before the anticipated effective date of the change of ownership ("CHOW"), the contract supplier (i.e., seller) must notify CMS that it is negotiating a CHOW. Thirty days before the effective date of the CHOW, the non-contract supplier (i.e., buyer) must submit certain documentation to CMS, unless such documentation was previously submitted and is still current. If a new entity will emerge from the CHOW, then the new entity must submit the documentation. If the buyer buys the assets of the seller, then the buyer must submit a signed novation agreement to CMS. The novation agreement must state that the buyer will assume all obligations under seller's competitive bidding contract. The novation agreement must be submitted at least 30 days before the anticipated effective date of the CHOW. If a new entity is formed, then at least 30 days before the anticipated effective date of the CHOW, the seller (which is the existing contract supplier) must submit to CMS a final draft of a novation agreement; and within 30 days after the effective date of the CHOW, the new entity must submit to CMS the executed novation agreement.