What will Round 2 re-compete look like?

Friday, October 30, 2015

ATLANTA – Mark Higley laid to bare his predictions for the upcoming Round 2 re-compete during a session at Medtrade last week.

Higley, vice president of regulatory affairs at the VGM Group, says that the next round of competitive bidding, scheduled to go into effect July 1, 2016, will see more contract offers, with fewer to out-of-state providers and low-ball bidders.

Higley based his findings on surveys of hundreds of HME providers that submitted bids as part of the program, and data requests to CMS.

The Round 2 re-compete will see more contract offers because providers are getting “smarter and smarter” about their bids, Higley said. About 15,000 out of the more than 48,000 bids that providers submitted in Round 2 were tossed out, most for incomplete or inaccurate documentation or not meeting state licensure requirements, he said.

“Many of you didn’t have a chance to play the game, not because you bid too high, but because you made a mistake,” he said.

There will be fewer out-of-state contract providers because in the Round 2 re-compete CMS has combined product categories like oxygen and sleep, decreasing the number of sleep providers who “bid everywhere” in previous rounds of the program, Higley said.

“This time around, the category also included liquid oxygen,” he said. “Many CPAP drop-ship suppliers didn’t bid all of the 100 metro areas. That’s good.”

In the previous round of the program, Higley estimates that half of the providers offered contracts were out of area.

There will be fewer low-ball bidders because there are fewer bidders, plain and simple, Higley said. From 2010 to 2014, the number of pure-play providers dropped from 13,163 to 11,326. But when you throw out the national chains, that number drops to 5,200, he said.

The impact of all of these variables on the bid amounts submitted by providers in the Round 2 re-compete will be a 10% overall reduction from the amounts in the previous round, Higley said. For oxygen concentrators, for example, the cut will be 3%, he predicts.

“It won’t be the 15% that some have suggested,” he said.