GAO: Use ‘cookie cutter’ to roll out NCB

Sunday, September 12, 2004

September 13, 2004

WASHINGTON ­ The GAO issued a list of recommendations to CMS last week on ways to streamline the implementation process for national competitive bidding, slated to begin in 10 metropolitan areas in 2007.
The GAO's report, "Past Experience Can Guide Future Competitive Bidding for Medical Equipment and Supplies," centered on how to address the issues and concerns coming out of the demonstration projects in San Antonio and Polk County, Fla., namely what items to include in the bidding, how to streamline the implementation, ways to collect information on items provided to beneficiaries and steps to ensure quality items and service.
Among the recommendations included in the report were:
- Consider conducting competitive bidding for demonstration items and items that represent high Medicare spending that were not included in the competitive bidding demonstration;
- Develop a standardized approach for competitive bidding for use at multiple locations;
- Consider using mail delivery for items that can be provided directly to beneficiaries in the home, as a way to implement a national competitive bidding strategy;
- Evaluate individual HCPCS codes to determine if codes needs to be subdivided because the range in characteristics and price of items included under the individual codes is too broad.
"Developing a cookie-cutter approach to competitive bidding - for example, using the same policies and processes in multiple locations - could help CMS roll out its implementation in more than 80 locations more easily, while employing mail-order to deliver items with prices set through nationwide competitive bidding could allow CMS to more quickly implement competitive bidding on a large scale," said the report.
CMS agreed with many of the GAO's recommendations and said it would study the feasibility of the mail order suggestion. The agency disagreed, however, with reevaluation of the HCPCS codes.
"We believe subdividing codes according to price ranges would lead to Medicare setting codes for particular brand names in circumstances where a manufacturer has established high prices for its products but when these prices do now reflect meaningful clinical difference or high quality," CMS wrote to the GAO.
Sen. Charles Grassley, R-Iowa, fired back following the report's release, outlining his concerns about the impact of the program on the durable medical equipment market.
A statement from Sen. Grassley's office expressed “concerns about imposing competitive bidding for durable medical equipment because of the potential impact on small businesses and the fear that access to quality suppliers could be undermined in rural states like Iowa.” The statement continued, “As a new report points out, competitive bidding could lead to new abuses of the system."
The Medicare Modernization Act made competitive bidding a reality last December following a series of demonstration projects that were mandated by Balanced Budget Act of 1997. Starting in 2007, CMS will be conducting large-scale competitive bidding for durable medical equipment, supplies, off-the-shelf orthotics and enteral nutrition and related equipment and supplies in 10 of the largest metropolitan areas.