Looking for opportunity in new NCB proposal

Friday, June 30, 2006

Q. What does the new Medicare competitive bidding proposal mean for small providers of durable medical equipment?
A. Set to launch sometime in 2007, CMS's competitive bidding program allows suppliers that furnish DME under Medicare Part B to participate in a competitive acquisition program (the Medicare DMEPOS Competitive Bidding Program, "the program"). The program, as designed, may create significant challenges to small suppliers. CMS intends to award contracts to several suppliers in each bidding area and proposes to select only as many suppliers as necessary to ensure it has enough capacity to meet its projected demand. Any provider not awarded a contract would be prohibited from participating in Medicare for up to three years. Pilot projects in Florida and Texas yielded savings for beneficiaries, yet also resulted in one national company receiving about 70% of Medicare referrals in one bidding category.
CMS acknowledges that most DMEPOS suppliers are small suppliers and attempts to address these suppliers' concerns through a series of program proposals. Although CMS does not guarantee bidding outcomes, the proposal permits suppliers to develop a network to bid collectively. The proposals also would allow qualified HMEs, small and large, who don't submit winning bids to be hired as subcontractors by winning bidders. CMS also is proposing, under certain conditions, permitting the creation of legal entities, such as joint ventures and limited partnerships, to submit bids as single applicants. CMS hopes to safeguard the viability of small providers by prohibiting network members' market share from exceeding 20% of the Medicare market. In addition, a supplier could join only one network and could not submit individual bids if part of a network. By selecting multiple suppliers for each program area and conducting separate competitions for product categories, CMS hopes to ensure that small suppliers have an opportunity to participate in the program. HME
Lester Perling is a partner with Broad and Cassel in Fort Lauderdale, Fla. Reach him at (954) 745-5261 or lperling@broadandcassel.