Bid fight has new urgency

Payment amount for oxygen concentrators drops to an average of $77.97 in Round 1 areas
Friday, September 9, 2016

WASHINGTON – CMS has delivered a one-two punch to the HME industry, with precious few days left to line up legislation to slow down the spread of competitive bidding.

The agency on Thursday first published an update to its “impact monitoring” of competitive bidding, saying the program continues to have no impact on access to HME. Then it published a new set of payment amounts for HME as part of Round 1 2017, which goes into effect Jan. 1.

For one of the most common products put out to bid, oxygen concentrators (E1390), the new payment amount will be, on average, $77.97. Miami will have the highest amount at $90.01; and Chester, Lancaster and York counties in South Carolina the lowest at $70.04.

For CPAP devices (E0601), the new payment amount will be, on average, $42.68. Again, Miami will have the highest amount at $47.50; Riverside, Calif., will have the lowest at $37.58.

CMS’s update on monitoring and the new payment amounts (and their associated savings) complicate the industry’s efforts to pass legislation that would soften the blow of a second phase of cuts that went into effect in non-bid areas on July 1. Stakeholders have targeted September, before Congress recesses again for the November election, as the prime time to get legislation passed.

“We’re especially concerned about the disruption for beneficiaries following the application of bidding derived-pricing to rural and non-bid areas, reducing prices by 50% to 60%,” AAHomecare stated following the news. “We’re getting widespread reports that these cuts are beginning to severely impact our industry’s ability to support seniors and people with disabilities in small communities nationwide.”

CMS says its latest round of data collection on assignment rates for July and early August of 2016 show no change compared to the same period in 2015, before bid pricing was rolled out to non-bid areas.

“Overall, there was no change in the July/August rate of assignment for 2016 (99.89%) versus the July/August rate of assignment for 2015 (99.91%),” the agency stated.

AAH strongly disagrees. It has spent much of its time in the past few month collecting anecdotes about the impact of the bid program on access to HME.

“CMS’s statement asserting that the bidding program isn’t affecting beneficiary access flies in the face of both common sense, as well as what we’re hearing from home medical equipment providers, hospital discharge planners, and HME patients across the nation,” the association stated.

AAH also pointed out that CMS initially downplayed concerns about contract awards to unlicensed providers.

“Just a few months ago, the Office of Inspector General confirmed that significant numbers of unlicensed providers had, in fact, taken part in Round 2 of the bidding program in several states that license HME,” the association stated. “Time will also tell how well today’s claims by CMS hold up.”

Now that CMS has announced the new single payment amounts for Round 1 2017, it’s in the process of extending 1,523 contract offers to 198 bidders. It says small providers make up 46% of those being offered contracts. It plans to announce contract suppliers this fall.

At press time, AAHomecare said it would provide an analysis of the new payment amounts as soon as possible.

Round 1 2017 represents the third round of competitive bidding pricing in the country’s biggest cities. The original Round 1, with contracts spanning three years, went into effect Jan. 1, 2011.



After the bba of 1997 i organized a meeting with the Pacific Association of Medical Equipment Suppliers ( pames ). I invited the 9th district congressional representative attend as several dealers had the opportunity to voice their concerns, and speak with the member directly. My own stance was that further reductions comparable to the 33% we took on home oxygen would prevent me from providing the level of service required to effectively manage a business. I even suggested stopping the practice of billing Medicare as a demonstration and no one wanted to come on board. The reality is that time is now here and you must stop providing a service that you almost assuredly are losing money every time you accept a patient. The risks may have been many then but now the risk is the continuation of becoming a finanace agent for the government that does not even get interest on its long term loans. The last ones standing are only there because the money is coming from the investors pockets. They won't be blind to this for much longer.