Competitive Bidding: Important Issues Applicable to the Round Two Recompete

Transcription

1 Competitive Bidding: Important Issues Applicable to the Round Two Recompete This webinar offers all HME providers contemplating placing bids in the "Round 2 Recompete" program an opportunity to prepare for the myriad of steps and procedures required by the competitive bid contractor. Attendees will have access to online "tools" and checklists to assist them in the process. A live question and answer period will be offered, in addition to participants being able to Mark specific concerns and scenarios and/or issues that they would not rather discuss during the webinar. Participants are urged to review these documents in detail (see link above).

2 My Contact Information: Mark Higley, Vice President - Regulatory Affairs mark.higley@vgm.com O: C: Please me your questions! I will respond today. You may call me tomorrow most of the day. It will help if you me the question first and request a call to follow-up. FAQs from the webinars will be posted to my vgm.com front page blog tomorrow.

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6 As you already know On July 15, 2014, CMS announced its plans to recompete the supplier contracts awarded in Round 2 of the DMEPOS Competitive Bidding Program and the National Mail-Order diabetic testing supplies competition. (It is required by statute to do at least every three years.) The current contract period expires June 30, 2016; the new contracts will begin on July 1, 2016 (which is a contract period of two and one half years). For the recompete, CMS is making changes to both the composition of the product categories (including adding new products) and the number of competitive bidding areas (CBAs).

7 The product categories to be included in the Round 2 Recompete are as follows: Enteral Nutrients, Equipment and Supplies General Home Equipment and Related Supplies and Accessories (includes hospital beds and related accessories, group 1 and 2 support surfaces, commode chairs, patient lifts, and seat lifts) Nebulizers and Related Supplies Negative Pressure Wound Therapy (NPWT) Pumps and Related Supplies and Accessories And

8 Respiratory Equipment and Related Supplies and Accessories (includes oxygen, oxygen equipment, and supplies; continuous positive airway pressure (CPAP) devices and respiratory assist devices (RADs) and related supplies and accessories) Standard Mobility Equipment and Related Accessories (includes walkers, standard power and manual wheelchairs, scooters, and related accessories) Transcutaneous Electrical Nerve Stimulation (TENS) Devices and Supplies

9 CMS is conducting the Round 2 Recompete in virtually the same geographic areas that were included in Round 2. BUT Because of changes to the metropolitan statistical areas and boundary changes to ensure that no CBA is included in more than one state, however, there will be 117 CBAs in the Round 2 Recompete (compared to 91 in the current Round 2 competition). A list of the ZIP codes included in each CBA is also available on the CBIC website (dmecompetitivebid.com click on upper left Round 2 Recompete tab). Here are some screenshots from ompete.nsf/docscat/home (*) (*) Or just Google CBIC or dmecompetitivebid

10 See the left menu tabs for current information and status. Registration and the Bid Window is open

11 And review this tab to review the videos, fact sheets, bid evaluation data, and bid worksheets

12 Here is updated timeline for the Round 2 Recompete:

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14 So let s start with common questions we receive There was already a Round 1 recompete that affected, for example, Charlotte and Miami and the rest of the original nine CBA areas. What s different this time around for providers considering placing a bid or bids in Birmingham?

15 The Categories!...the current Oxygen and CPAP Devices/Respiratory Assist Devices product categories were combined into a single product category; the current Walkers and Wheelchairs/Scooters categories were combined into a single product category A new General Home Equipment category was created, including the previous Hospital Beds and Support Surfaces categories in addition to new products; and a new TENS devices product category was added. The external infusion pumps and supplies product category, which was bid in the Round 1 Recompete, is not included in the Round 2 Recompete.

16 The general home equipment category removes transcutaneous electrical nerve stimulation (TENS) devices. The nebulizers and related supplies are now separate category (as compared to the Round 1 respiratory equipment category which included these products).

17 CBAs in multi-state MSAs have been defined so that there are no multi-state CBAs. There are 117 CBAs in the Round 2 Recompete. The coverage area, however, is virtually Identical!!

18 Multi-state MSAs are no longer: PHILADELPHIA-CAMDEN-WILMINGTON, PA-NJ-DE-MD Round 2 Current Multiple State CBA Round 2 Recompete CBA Philadelphia

19 I believe there is an opportunity with the Recompete to improve the reimbursements ( single payment amounts ) for Round 2 products and services.

20 For some bidding companies, these product categories combine products not typically furnished by the supplier in the today s marketplace. For example, HMEs furnishing oxygen and oxygen equipment do not necessarily furnish CPAP devices and RADs.

21 The combining of product categories (e.g., oxygen and CPAP) might result in a reduction in the amount of out-of-area bidders, who, in previous rounds, bid CPAP in virtually all areas of the country. Delivery of CPAP supplies have seen, arguably, an increase in dropshipments. Now that the bidding supplier must also offer oxygen and oxygen equipment in the same CBAs (requiring comparably more in-home service), I anticipate a decrease in the number of out-of-area contracts offered (with a resulting increase in reimbursement/single payment amounts). There are also about 15% less supplier locations in the marketplace.

22 Supplier Type Code Supplier Type Code Description Count of Suppliers with Active Med ID (11/01/2010) Count of Suppliers with Active Med ID (11/01/2011) Count of Suppliers with Active Med ID (11/01/2012) Count of Suppliers with Active Med ID (11/01/2013) Count of Suppliers with Active Med ID (11/01/2014) 54 MED SUPPLY COMPANY 9,438 9,503 8,880 8,222 7,881 A6 MEDICAL SUPPLY COMPANY WITH RESPIRATORY THERAPIST 2,109 1,972 1,941 1,876 1, MEDICAL SUPPLY COMPANY WITH ORTHOTIC-PROSTHETIC MEDICAL SUPPLY COMPANY WITH ORTHOTIC PERSONNEL MEDICAL SUPPLY COMPANY WITH PROSTHETIC PERSONNEL B3 MEDICAL SUPPLY COMPANY WITH PEDORTHIC PERSONNEL B1 OXYGEN & EQUIPMENT MEDICAL SUPPLY COMPANY WITH REGISTERED PHARMACIST TOTAL 13,163 13,088 12,454 11,679 11,326

23 vgmncbservices.com

24 And Servicing the Entire CBA A contract supplier must furnish competitively bid items to any beneficiary who maintains a permanent residence in or who visits a CBA and who requests those items from the contract supplier.

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27 A large number of House Representatives and the OIG recognize that a number of contract suppliers are not providing products as required by their CB contracts. AAHomecare will continue to work with House Representatives regarding this problem. The CBIC also recognizes the existence of the access problem. It is identifying noncompliant contract suppliers by conducting secret shopper telephone calls. Currently occurring in your service area? Turn the violating supplier in to your regional liaison!

28 EXAMPLE: Florida Liaison is Latisha Davis

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30 Very important!!! HME providers must be aware that the bid limits for all Round 2 recompete items will revert back to the current Medicare Fee Schedule. In simpler terms, the upper bidding amount will not start at the current reimbursement (single payment amount) in effect now for a Round 2 CBA. By way of example, one month s rental of E1390 oxygen concentrator in most CBAs range from SPA reimbursement from $90 = $100. The recompete bid limit for this item will be $ (plus any inflation adjustment $180.92) and NOT $90-something

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33 USE the VGM Worksheets!!!

34 Let s do an example from the actual worksheets

35 The four worksheets exactly mirror the official CBIC bid preparation worksheets available online at Bidding%20Suppliers~Bidding~Bid%20Preparation%20Worksheets?open&expand=1&navmenu2=Bidding^Su ppliers^biddingl3&navmenu=bidding^suppliers Select one or more of the four regional worksheets (about 30 metro CBAs are on each worksheet). The VGM versions are here: The metropolitan bidding areas in each of the four worksheets are in alphabetical order. Each of the metro areas is identical as to the HCPCS codes within each category. However each metro area is unique with regard to the historical utilization, code weight and bid limit. The bid limits are at the current 2015 fee schedule and NOT the previous Round 2 single payment amounts! Open a spreadsheet and select a CBA of interest. In the Your Bid Amount column (M) there is a fail-safe feature: If you include a typo (too common in previous rounds) that is either above the current Bid Limit/Fee Schedule for any HCPC item in any category, or more than 55% below the Bid Limit, it will turn RED. This is not suggesting a bid for any code will be disqualified for being non bona-fide but more so to prevent the accidental input of, for example, $1.00 versus $100.

36 Also note the Undiscounted Composite Bid for Category amount (in $) under Column L. This is the weight of each item times the current fee schedule/bid limit and then summed. If you wish to achieve a category discount of 30%, you would need to have this undiscounted composite bid amount reduced by 30%. The worksheet allows you to see this bottom line as you input your bid amounts. The far right column indicates how much each of the product codes will move the composite bid. If the individual code is significant (that is it moves the composite bid more than 5% it is notated in RED. With the exception of the TENS category, most of the codes in the categories are insignificant. Some are less than 1/10 th of one percent. A few are even less. Look for the codes in RED first and concentrate on these items. Insignificant codes can generally be discounted at minor amounts (even one cent) without lowering the overall composite bid. (Try it!!)

37 Meet Financial Standards All bidders must meet certain financial standards Bidding suppliers are required to submit specified financial documents for the most recent year in which a tax return has been submitted. For the Round 2 recompete financial documents will represent calendar or fiscal year 2013 or See official documents at:

38 CMS determines a supplier s financial viability based on financial ratios calculated from the bidder s submitted financial information. The financial ratios can be found on the CBIC website. All bidders must meet CMS established financial thresholds to be considered for a contract Commentary and examples of common HME ratios and other financial metrics are included on this link: Series/FSS.asp

39 You need a recent credit report (90 days)

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42 Some tips and common issues Bidders do not have to submit a bid for all recompete product categories and CBAs but may choose to bid for certain product categories in certain CBAs. However, the program (and DBidS software) requires bidders to submit bids for ALL codes within the category.

43 Contracts are awarded only to locations listed on Form A in the online DMEPOS Bidding System (DBidS). It is important that suppliers identify the PTANs of all locations that will provide competitively bid items in a CBA; only those locations identified on the bid will be included in the contract and eligible for Medicare payment for competitively bid items at the time the program begins. Multiple commonly owned locations bidding? Submit financials documents from ALL location!!

44 Commonly Owned and/or Controlled Locations Suppliers may not bid against themselves for the same product category in the same CBA. Therefore, commonly owned or commonly controlled suppliers must submit one bid that includes all commonly owned and/or controlled locations that would furnish competitively bid items in the same product category in the designated CBA. Separate bids submitted for the same product category in the same CBA by supplier organizations that are commonly owned or controlled will be disqualified.

45 Bona Fide Bids CMS requires that all bid amounts must be bona fide (rational and feasible for the bidder to furnish at the bid price) and that suppliers should not submit a bid for an item at a loss in order to improve their chances of winning a contract. Suppliers should include all costs related to furnishing an item to the beneficiary in the bid price. CMS will evaluate bids to ensure that they are bona fide and may request that a supplier submit additional information, such as manufacturers invoices, to validate the bid amount. See VGM worksheets for bona-fide bid check!!!

46 The bidding process includes three steps: 1. Register for user ID and password 2. Submit bid in the bidding system 3. Mail required hardcopy documents

47 Registered? If not time to do it! ppliers~registration?open&expand=1&navmenu=bidding^suppliers ) In part, the text reads: In order to submit a bid for the DMEPOS Competitive Bidding Program Round 2 Recompete and the national mailorder recompete, you are required to obtain a user ID and password to access the online DMEPOS bidding system (DBidS). To do so, you must first register in the Individuals Authorized Access to the CMS Computer Services (IACS) online application. Even if you registered during a previous round (Round 1 Recompete, Round 2, or the national mail-order competition), you must register in IACS again. Please keep your user ID and password as you will be asked to use them again in the future. Several companies report that they have tried to follow those instructions and received a message something to the effect of that my SS# and address were already in use so you cannot register.

48 There is a toll-free help line: Competitive Bidding Implementation Contractor (CBIC) customer service center tollfree at between 9 a.m. and 9 p.m. prevailing Eastern Time, Monday through Friday. During a call to the customer service center the CSR acknowledged that the information is misleading. Here is the bottom line: The fix is to go into IACS under your previous registration, go to my profile and then go to Add App. Select DMEPOS and the rest is just straightforward data entry. Most of the CSRs are now aware of the issue. Have a problem? Call the number above or call me.

49 Bidding: Form A Form A requests information about the bidder s organization and the organization s locations that are included in the bid. Suppliers must identify their organizations as one of a specific business organization type (supplier with single location, supplier with multiple locations, or network).

50 Form A Form A requires the bidder to provide identifying information, such as the legal business name, doingbusiness-as name, mailing address, and physical address for both the business organization and for each location identified by the PTAN. Bidders will also select the CBA(s)/product category(s) for which they are bidding. Only the PTANs entered on the bid will be included in a contract award and will be the only PTANs qualified to receive payment from Medicare for competitively bid items

51 Suppliers are only required to complete ONE Form A Suppliers submit ONE Form A, regardless of the number of CBAs and product categories being bid. Exception: If a supplier has more than one location within the same CBA and one or more of the locations furnishes a different product line that does not compete against the other location(s), the supplier will have distinct bidder numbers and must complete separate Form As representing each bidder number.

52 Commonly Owned or Commonly Controlled Commonly owned suppliers are those where one or more of them has an ownership interest totaling at least 5 percent in the other(s). The term ownership interest is defined as the possession of equity in the capital, stock, or profits of another supplier, as defined in 42 CFR (e). Commonly controlled suppliers are those where one or more of the supplier s owners is also an officer, director, or partner in another supplier.

53 Commonly owned or commonly controlled suppliers must submit one bid that includes all commonly owned or controlled locations that would furnish the same product category within the designated CBA. Separate bids submitted for the same product category in the same CBA by commonly owned or controlled supplier organizations will be disqualified. Not certain or confused?? Call me

54 Form B the Bidding Form Includes the bidding forms for each product category/cba. A separate Form B is required for each competition. (*) Requests historic information about the supplier s experience in the product category and/or CBA. The supplier must provide the number of units it has furnished to all customers, Medicare and non-medicare, for the top 80% of the HCPCS codes in the product category during the past calendar year in the CBA.

55 Form B requires suppliers to identify the manufacturer and model of the products they plan to make available to beneficiaries in the CBA. This information will be used to populate the Medicare Supplier Directory on the Medicare website, The supplier directory will list the manufacturer information for the top items provided by contract suppliers to allow beneficiaries to make informed choices about the available products. Need a model number for an obscure product? Call VGM Wholesale at

56 Bidding on Multiple CBAs? Multiple Form B Glitch reported There is a slight delay in the DBidS application when a supplier modifies its bid to add competitions. As the application gathers the data to present on the screen, there is a five second or less delay before the page is refreshed. The timeframe could be longer depending on the user's Internet connection. Additionally, if a supplier wants to make changes to its location information, this cannot be done in DBidS. The application was enhanced to populate the PTAN information with the data in PECOS. The only way to update the information is by submitting an update to the NSC on the CMS-855S or via the online PECOS portal. Questions? Call the CBIC at

57 The Bidding Form: Total Estimated Capacity Requires suppliers to provide their expected capacity. The total estimated capacity indicates the number of units per HCPCS code you estimate you can furnish throughout the entire CBA for one (1) year. The bid preparation worksheet on the CBIC website contains the unit by product category definitions and historical utilization.

58 CMS Capacity Instructions To determine your expected capacity, calculate the number of units you currently furnish in the area on a yearly basis and add units you would be capable of providing annually as of the start of the contract period. It is anticipated that suppliers can maintain this level or greater throughout the contract period. However, and as most of you know, I have comments on some of the pitfalls relative to its effect on your bid, and the industry as a whole

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60 Bidding Form, continued Bid Price The amount for which a supplier can furnish the item, including all costs associated with furnishing the item. The bid price must be rational and feasible and must indicate the cost of furnishing a new item or the rental of a new item at the bid price submitted. Item description, bid type, item weight and fee schedule amount will be provided on the bid form.

61 After a supplier has completed Form B, the authorized official or backup authorized official must (electronically) certify Form B for consideration of a contract. Bids will be evaluated based on the information provided in DBidS and submitted in the package of hardcopy documents. Once the bid window closes, all bids are considered final and cannot be amended by the bidder. Bidders can check the DBidS status page for 45 days after the bid window closes to confirm that their online bid is complete, approved, and certified by the authorized official or backup authorized official, and whether their hardcopy documents have been received by the CBIC.

62 Certification Statement After completing Form A and Form B, the AO must certify the bid in DBidS. In order for a bid submission to be complete, an AO or backup AO must approve Form A and certify that the information provided is true, correct, and complete. The certification statement serves as the bidder s electronic signature. Bidders can verify the status of their bid by visiting the DBidS home page.

63 Steps you can take now: Have a copy of the required state license(s) on file with the National Supplier Clearinghouse (NSC) and in the Provider Enrollment, Chain and Ownership System (PECOS) for the physical location(s) that will be on your bid to provide the items in the product category(s). Make sure your CMS-855S enrollment application is up-to-date with the NSC and in PECOS and indicates the products you furnish in the states where you provide the items.

64 For reference purposes, review the NSC DMEPOS State License Directory on its website at The directory provides general state licensing requirements and contact information for each state s licensing board or agency. The directory is only a guide. Licensing requirements change periodically, and it remains the responsibility of the bidding supplier to identify and obtain all required licenses. For more information about licensure requirements, consult the appropriate license issuing agency listed on the guides or call the NSC at

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67 Hard Copy Documents Recompete~Bidding%20Suppliers~Bidding~Required%20Financial%20Documents?open&expan d=1&navmenu2=bidding^suppliers^biddingl3&navmenu=bidding^suppliers

68 ocument_package_checklist.pdf/$file/23_hardcopy_document_package_checklist.pdf

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73 Competitive Bidding: Part and Beyond The Affordable Care Act amended the Medicare Modernization Act statute to mandate use of information from the DMEPOS competitive bidding program to adjust the fee schedule amounts for DME in areas where competitive bidding programs are not implemented by no later than January 1, 2016.

74 CMS-1614-P is now FINAL! The Affordable Care Act amended the Medicare Modernization Act statute to mandate use of information from the DMEPOS competitive bidding program to adjust the fee schedule amounts for DME in areas where competitive bidding programs are not implemented by no later than January 1, CMS estimates that by applying bid rates throughout the entire United States it would save over $7 billion over FY 2016 through This affects about half of the Medicare FFS beneficiary lives!!

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76 Proposed (changes to) the methodology for making national price adjustments based upon information gathered from (all previous) competitive bidding program (CBPs).

77 National Pricing How? Adjust fee schedule amounts for states in different regions of the country based on previous competitive bidding round pricing in these regions. The regional prices would be limited by a national ceiling (110% of the average of regional prices) and floor (90% of the average of regional prices) There were three possible Regions (see next) The BEA regional array was selected.

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79 CMS determines a regional price for each state equal to the average of the single payment amount for an item or service from the CBAs that are fully or partially located in the same region where the state is located. CMS determines a national average price equal to the average of the regional prices. The regional price cannot be greater than 110 percent of the national average nor less than 90 percent of the national average price.

80 Adjust fee schedules annually using CPI-U Revise the SPA each time there is a new round of bidding. Use national ceiling for rural states and outside contiguous US.

81 Although we believe that the costs of furnishing items and services in rural areas are different than the costs of furnishing items and services in urban areas, there is no evidence to support a statement that the difference in costs is significant. However, in order to proceed cautiously on this matter in the interest of ensuring access to covered DMEPOS items and services, we are proposing to phase in the price adjustments, as explained below, so that we can monitor the impact of the adjustments as they are gradually phased in.

82 While not released We have the current SPAs in all markets from the current programs. As CMS has provided us the methodology to determine the regional payment amounts (RSPAs), and has confirmed that the BEA regional array will be utilized, we can hence determine the RSPAs now.

83 Summary of Provisions The new adjusted pricing for DMEPOS CBP items will begin on January 1, This will be a phase-in process over 6 months, allowables will be reduced by 50% on 1/1/16 and 100% on 7/1/16. CMS finalized a pricing methodology for non-competitive bidding areas. A rural area will be defined as a postal zip code that has more than 50 percent of its geographic area outside of a metropolitan area (MSA) or a zip code that has a low population density area that was excluded from a competitive bidding area. The payment amount will be 110 percent of the average of the SPAs of all the areas where CBPs are implemented.

84 Let s use an example. A fictional HME provider has asked me what the reimbursement would be in north Winston county for a month of oxygen on January and after July 1, 2016

85 Some of Winston county is in a metropolitan area but not included in the CBA (bid area). Alabama is in the Southeast region. Using the averages of the oxygen single payment amounts in the of all CBAs in this region, the reimbursement would be $ on January 1, 2016, and then $94.89 on July 1, 2016.

86 But how about service areas not adjacent to a metropolitan area in Alabama?

87 These rural areas that have not been subject to competitive bidding, and hence the adjusted fee schedule amounts will be based on 110 percent of the national average RSPA. As noted earlier, CMS has adopted an expanded definition of rural areas eligible for this provision. The array of ZIP codes defined as rural will be released sometime in Thus, the RSPA in rural Alabama for E1390 is $

88 Lastly, how about a state that has NO CBAs?? CMS dubs these states as rural or frontier In this case the SPA would again be 110% of the national average.

89 Can we see (now) the actual RSPAs? Yes! AAH Regulatory Council has created a document which includes the high utilization codes. Go to: PricingAnalysis.xlsx

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91 Summary

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94 Contact Information Mark Higley, Vice President - Regulatory Affairs mark.higley@vgm.com O: C: