HME Summit live: With competitive bidding, is it win, lose or draw?

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09/12/2011

It's no accident that the Summit is being held in Charlotte, N.C. this year. It's ground zero for competitive bidding. We are hearing from two contract winners, Kim Brummett, of Advanced Home Care and Rick Perrotta, of Network Medical Supply. Also at the table: Dan Gooch, of Pal-Med Diabetic Supplies, which was not awarded a bid.

What did Round 1 bid winners in the Charlotte CBA do right? Or wrong?

Bid winner Kim Brummett: We started early and created spreadsheets like I have never seen and started playing the numbers.

Or wrong?

Bid winner Rick Perotta: As part of calculations, Medicare asks how many products can you deliver. We said twice as many as now, we should have said half. By saying you will deliver a lower quantity, you end up with a higher bid.

How should Round 2 providers use the bid amounts from Round 1?

Kim: I would love to see Round 2 not go as low as Round 1 did.

Rick: Unless some of the rules change significantly, if it's crucial to the survival of your biz that you get the bid, then pay very close attention to Round 1. That's where the numbers are going to be.

Non-winner Dan Gooch: Sticking with primary weighted products is crucial.

How many of your indirect costs did you include in your calculation?

Kim: We factored them in, but not the whole amount. Frankly, you have to get more efficient. We went in knowing if our indirect costs were X amount, then we had to get that down.

How can providers determine whether they should bid on all product categories?

Rick: If it's a category that's absoutely vital to your buisness, you have to bid it. But, on some of the ancillary products, do the full-up cost analysis.

How can we bid smarter in Round 2?

Dan: One thing interesting to follow in national mail order bid, most of us know that the companies that could handle that contract, is the big guys. For a smaller business, can't ramp up like that. Not sure I would want to do that anyway.

Did any of you change your purchasing and have you regretted that?

Kim: We have, but we are always looking at that. We look at what dischargers want and what we can afford. Once you make a decision to switch, watch those exchange orders.

What were major changes you made to your business models?

Kim: Do I need to send RTs out to patient's homes? Reduction in clinical staffing. Switching to non delivery models,

Rick: You gotta have GPS tracking on your trucks.

Did you recognize growth in volume as a result of bid?

Perrotta: It did for us. That was the big unintended consequence. We all thought even if you didn't win the bid, you could still do repairs. Can't. So we are getting 15 or 20 referrals a month for repairs.

Kim: Would I say our growth is up because we won the bid? I don't think so.

What has been the financial impact of competitive bidding?

Kim: A lot of managed care contracts are a percentage of Medicare? We are starting to these more commercial plans adopting these rates. That's scary.

Dan: It's a short while before we start seeing the state adopt the fee schedule.

What do you think of a program redesign?

Kim: I think all of us would agree to "stop the low-ball bid." If they could figure out a way to make the bid binding.

Rick: The elephant in the room is the suicide bid. I don't know how you'd implement a (change) to stop the low ball bid.

Theresa Flaherty

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