Competitive Bidding Cuts Medicare Rates 32 Percent
On Thursday, CMS released the winning bid amounts in the nine areas of its Round One National Competitive Bidding program. Confirming the industry’s widespread concern that the cuts would be deep, the bids represent an average 32 percent reduction in Medicare payment rates across different product categories, including oxygen and sleep therapy. Over 10 years, the bidding program is expected to save $17 billion, officials said.
A total of 364 suppliers were offered 1,287 contracts in the affected areas, including Charlotte, N.C.; Cincinnati; Cleveland, Ohio; Dallas; Kansas City, Mo.; Miami; Orlando, Fla.; Pittsburgh; and Riverside, Calif. CMS plans to announce the contract suppliers in September once all contracts have been finalized. The 1,287 contracts cover the range of affected Medicare codes.
During a press conference for industry media, CMS officials said the bid evaluation process was substantially improved during this re-bid phase of Round One. They said their analysts have ensured that there will be a sufficient number of suppliers, of various company sizes, to meet the needs of beneficiaries. In particular, officials stated that a high percentage of small suppliers, those with gross revenues of $3.5 million or less, were offered contracts, at 48 percent. CMS officials also stated that 72 percent of those suppliers offered contracts currently have market presence in the areas involved. That issue raised questions from reporters about how the other 28 percent of providers will answer demand in areas in which they are not currently operating. Officials said that subcontracting arrangements or business expansion could address coverage issues.
All bid amounts are now public on the website at www.dmecompetitivebid.com. For E1390 (a stationary oxygen concentrator), the payments range from $102.84 to $125. For E0601 (a CPAP device), the payments range from $53.85 to $59.95.
As the industry absorbs the news, announcements about the damage the bidding program will cause to access and patient care started to fly.
From the American Association for Homecare: “This program will only make it harder to receive medically required home care. Over time, the country will see spending soar in other parts of Medicare because the bidding program will push spending into longer hospital stays and ER visits.”
From the Texas Alliance of Home Care Services: “The alleged savings are the result of ‘suicide bids’ from providers in this ill-advised race to the bottom that will put thousands of homecare providers out of business.”
Respiratory & Sleep Management will continue to update the industry as news and reaction on the bid rates spreads.