What’s new about the DME competitive bidding program? Everything!

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05/06/2019
By Cara Bachenheimer, Mark J. Higley, Robert Rankin and Dan Starck

Bob Dylan probably didn’t have durable medical equipment (DME) in mind when he sang “The times they are a-Changin.” But that memorable refrain could easily apply to Medicare’s DME competitive bidding program (CBP), which will implement a brand new process for bidding this June.
 
With big changes to the competitive bidding program fast approaching, it is vital for medical equipment providers and suppliers to understand how the new process works so they can prepare to place bids that promote both maximum patient access and industry sustainability.
 
What’s changed

It is well known that the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) requires Medicare to replace the current fee schedule payment methodology for selected DMEPOS items with a competitive bid process. In early March, the CMS announced plans to consolidate the competitive bidding areas (CBAs) included in the Round 2 Re-compete and Round 1 2017 DMEPOS CBP into a single round of competition named “Round 2021.”
 
Key changes include:

  • Use of the “clearing price” to set rates: The single payment amount (SPA) for a lead item will be equal to the maximum bid submitted for that item by bidders whose lead item bids for the product category are equal to or below the pivotal bid for that product category in a CBA.
  • Lead-item pricing: To allow for the use of what is essentially a “clearing price” methodology, suppliers will submit a single bid for a lead item in the product category. The SPA will be calculated for that lead item in the CBA based on the highest amount bid within the winning bids. The SPAs for non-lead items will be based on the relative difference in the fee schedule amounts for the lead and non-lead items.
  • Bid surety bonds: Bidders must obtain a $50,000 bid surety bond for each CBA for which they submit a bid.
  • Use of SPAs to set rates in non-CBAs: CMS also uses the SPAs to set the rates in non-CBAs that are not rural but will set the rural non-CBA rates at what is essentially the SPA plus 10% in rural areas. This means the bids for CBAs will have a direct impact on the rates in non-CBAs.

 
Resources

To help providers get up to speed, a group of industry leaders collaborated to launch an online educational resource: www.dmecbpeducation.com. The website—the product of a collaboration between the American Association for Homecare, the Council for Quality Respiratory Care, the Healthcare Nutrition Council and the VGM Group—serves as a complementary resource to the Competitive Bidding Implementation Contractor (CBIC) website.
 
Suppliers and prospective bidders nationwide can use the website’s powerful calculators to estimate how lead item pricing may impact costs and compare them to an approximation of how the SPAs compare to the current 2019 Medicare rates. The calculator will also show how a bid would affect the rates in non-CBAs if it became the SPA. Moreover, the website will also serve as a platform for webinars and events intended to educate prospective bidders about the CBP in the lead-up to the bidding round.
 
Since bidding is no longer business as usual, all providers who plan to compete should visit www.dmecbpeducation.com and the CBIC website to learn more about how these changes will impact them. And with the bidding period set to launch in June, time is of the essence.
 
So, DME providers, get ready. As Bob Dylan famously sang, “If your time to you / Is worth savin' / Then you better start swimmin' […] for the times, they are a-changin’.”
 
Cara Bachenheimer is Head of the Government Affairs Practice at Brown & Fortunato and General Counsel for the American Association for Homecare. Mark J. Higley is Vice President of Regulatory Affairs for VGM Group, Inc. Robert Rankin is Executive Director of the Healthcare Nutrition Council. Dan Starck is Chair of the Council for Quality Respiratory Care.