NCB proposal: Issues that cause the most heartburn

Wednesday, May 31, 2006

CMS's proposed regulation on competitive bidding, slated to be implemented in late 2007, sent providers reeling. If you were brave enough to digest the initial 203-page document, you probably concluded that the rule raises more questions than it resolves. Let's take a look at some of the issues that cause the most heartburn.
This is a notion that took everyone by surprise and with good reason. It appears contrary to decades of healthcare law and rules that prohibit Medicare providers from offering beneficiaries rebates on healthcare items and services (remember the beneficiary inducement statute?). The rebate concept is structured to encourage providers to submit the lowest bid possible--so they can increase their chances of winning the bid and gain an advantage over other winning providers. The greater the difference between the provider's low bid and the winning bid amount, the greater the cash rebate the beneficiary will be able to pocket if he chooses you. For the consumer, that's a pretty attractive proposition. Think about it: When the rebate amount is greater than the beneficiary's co-payment amount, you could be paying patients to use your services!In an attempt to address the obvious legal issues, CMS proposes that providers not be able to advertise rebates. Presumably, the government will advertise the respective rebates of various winning providers. Interesting.
If a provider loses the bid and no longer wishes to serve his existing Medicare beneficiaries, winning HMEs must take over that business. That means winners will have to provide ongoing rentals for beneficiaries with medical needs for cap rental items or oxygen. For example, a winning provider may be required to take on 100 hospital bed rentals that have been occurring for 11 months or oxygen rentals that have been occurring for 30 months. As CMS states in the proposed rule, providers should be accounting for these additional costs when determining the bid to submit for particular items. While CMS will have estimated projected utilization for each HCPCS code it intends to bid, CMS will not be able to provide information regarding how many beneficiaries have been renting a hospital bed or have been on home oxygen therapy by the time the contract will begin. How then can any provider begin to intelligently calculate these additional costs into his bids?
Some of the more interesting (read "frightening") information is in CMS's Regulatory Impact Analysis. In this section, a number of statements appear to directly contradict other statements in this section and throughout the rule, particularly regarding the ability of smaller providers to successfully bid in the programs. While CMS continually alludes to the demonstration programs in Polk County and San Antonio, stating that small providers were able to successfully participate in those bids, CMS's impact statement says that this rule "will have a significant impact on a substantial number of small providers." Two pages later, CMS continues: "We anticipate that the bidding process will be designed to neither reward nor penalize small providers." In a similar vein, CMS states that "since providers can choose whether to submit a bid for the competitive bid program, the regulation imposes no direct cost." Sure, if you don't submit a bid you don't incur the costs of submitting a bid; but if you don't submit a bid you have eliminated all chances for becoming a winning provider.
One of the largest and yet to be resolved issues is the Quality Standards. While the proposed rule was officially published May 1, and CMS scheduled a meeting of the Program Advisory and Oversight Committee (PAOC) in late May, the final Quality Standards were not scheduled to be issued until sometime in June. Quality Standards are so integral to the implementation of competitive bidding that it is difficult to provide meaningful comments to the proposed rule while we are unaware of the content and requirements of the Quality Standards. Perhaps the one positive statement in the entire competitive bidding proposed rule is CMS's apparent attempt to make sure that Quality Standards are implemented at the same time as competitive bidding, and that providers in the initial bid geographic areas will be required to be accredited by an organization whose standards are determined by CMS to meet the CMS Quality Standards. But at another point in the proposed rule, CMS states that the accreditation organizations will be able to grant providers in a bid area a grace period to become accredited within some unstated period of time. Now that's clarity.


Cara Bachenheimer is vice president of government relations for Invacare.