On Suicidal Bids for Oxygen and the Industry's Response
Well, the waiting is over. The so-called “winning bid amounts” have been revealed. But, in another sense, the waiting game may have just begun. Color me skeptical, but I do believe this whole competitive bidding debacle is headed straight for a stark reality that only HME providers can appreciate.
I have spoken to and have heard reports about many other bidders who are aghast at the $102 to $125 per month range for stationary oxygen. There was a strong sense that the winning bids would be in the $150 to $160 per month range, a significant 12 percent below the 2010 allowable of $173. When combined with the 11.8 percent 2008 MIPPA reduction, prudent minds figured that a combined cut of greater than 23 percent over two years would be enough to satisfy CMS. Well, apparently not.
If we are to believe what we hear, there were HME providers who indeed did submit those $102 to $125 per month “suicide bids” for stationary oxygen. They also submitted equally suicidal $21 per month bids for portable oxygen.
Suicide bids indeed! Consider this — if these new rates become reality and if we use an allowable of $116 (the average of the nine rates), the monthly Medicare payment for E1390 or E0439 would be $92.80 (80 percent of $116), plus an additional $16 per month for the portable E0431 or E0434 (80 percent of $21 per month). That’s a combined monthly Medicare payment of $108.80, which is a staggering 32 percent below the current combined monthly payment of $161.54. I can state unequivocally that no HME provider that I’m aware of has lowered his operating costs by 32 percent. In fact, it could be reasonably argued that it actually costs more to operate in today’s environment, yet cash flow will be significantly impaired.
So, here is a scenario. Contracts offered to those HME providers who submitted the winning bids must be accepted by July 16. But if we are to believe what we hear, this is a limited number of providers. A limited number of providers means limited geographic coverage. I suspect that to ensure continued access for Medicare beneficiaries, CMS will approach other providers who came in at higher rates and “offer” them the opportunity to sign up, so long as they agree to accept the low-ball rates. Then the question becomes “Do I sign a contract for a rate that is much lower than what I considered to be feasible for my company when I submitted my original bid?" Maybe the next waiting game has just begun after all!
Let me know what you think of the competitive bidding situation with a comment below.
Posted on Jul 15, 2010 at 11:45 AM