CMS Adds Product Categories, Reposts MSAs for Competitive Bidding

The long wait for the details of the National Competitive Acquisition Program, or competitive bidding, was ended earlier this week when the Centers for Medicare & Medicaid Services (CMS) issued the outstanding details of the program.

CMS published the 10 MSAs briefly Friday, March 31, but on Monday, April 2, released the 10 MSAs again plus the product categories to be competitively bid.

In a statement, CMS acting Administrator Leslie V. Norwalk, Esq., said the final rule would improve "both service delivery and the quality of care, while getting savings for beneficiaries and taxpayers."

The competitive bidding program is expected to save $1 billion annually when fully implemented in 2010.

The news held few surprises for manufacturers and HME providers who have long speculated on which cities would be included and which categories would likely face bidding.

The product categories include:

  • Oxygen Supplies and Equipment
  • Standard Power Wheelchairs, Scooters and Related Accessories
  • Complex Rehabilitative Power Wheelchairs and Related Accessories
  • Mail-Order Diabetic Supplies
  • Enteral Nutrients, Equipment and Supplies
  • Continuous Positive Airway Pressure (CPAP) Devices, Respiratory Assist Devices (RADs), and Related Supplies and Accessories
  • Hospital Beds and Related Accessories
  • Negative Pressure Wound Therapy (NPWT) Pumps and Related Supplies and Accessories
  • Walkers and Related Accessories
  • Support Surfaces, group 2 and 3 mattresses and overlays (Miami and San Juan Only)

In case you missed the 10 MSAs last week, the cities set for competitive bidding in 2007, and the ones now needing immediate accreditation to participate in the program, include:

  • Charlotte-Gastonia-Concord, NC-SC
  • Cincinnati-Middletown, OH-KY-IN
  • Cleveland-Elyria-Mentor, OH
  • Dallas-Fort Worth-Arlington, TX
  • Kansas City, MO-KS
  • Miami-Fort Lauderdale-Miami Beach, FL
  • Orlando, FL
  • Pittsburgh, PA
  • Riverside-San Bernardino-Ontario, CA
  • San Juan-Caguas-Guaynabo, PR

The program will be expanded into 70 additional MSAs in 2009 and into additional areas after 2009. Areas that may be exempt from competitive bidding include rural areas and areas with low population density within urban areas that are not competitive, unless there is a significant national market through mail order for a particular item or service.

Industry Response

The industry did not take the news lying down.

The Council for Quality Respiratory Care (CQRC), a coalition of 11 home oxygen therapy providers and manufacturers, expressed concern about competitive bidding's impact on oxygen equipment and supplies, respiratory assist devices and CPAP devices and accessories, as well as sleep apnea services, supplies and equipment. The council said the process could jeopardize the level of quality of care for services patients would normally receive, thereby destabilizing the benefit and providers alike.

Members also criticized the process because it's based solely on price. "Under this final rule, lower quality standards than what the CQRC supports, coupled with a bid structure that is designed solely to minimize upfront costs, induces providers to sacrifice service levels and quality of care to maintain price competitiveness, directly affecting quality and threatening safeguards," said Peter Kelly, chairman of the CQRC and CEO of Pacific Pulmonary Services.

"Changes to this benefit have the potential to disrupt the quality and continuity of care for our patients," said Mark Shreve, CEO of the Coalition for Pulmonary Fibrosis. "The rule announced Monday by CMS may limit a patient's access to the services they need to survive, which is unacceptable."

Another provider forum,, opened a blog that allowed providers to sound off on the final rule and the detrimental impact competitive bidding will have on the industry.

KCI, a manufacturer of support surfaces, though positive about its ability to compete in the market, also issued a statement about the adverse effects of competitive bidding. Catherine M. Burzik, president and CEO of KCI, said, "We will closely evaluate the CMS competitive bidding framework and the appropriate level of KCI's participation in the bidding program. We believe that the rule as published may unfortunately reduce access to KCI's life- and limb-saving V.A.C.® Therapy for the nation's elderly and disabled."

On the legislative front, the American Association of Homecare (AAHomecare) released a call to arms letter urging home care providers to unite with the organization for a more unified approach to fighting competitive bidding and other legislative changes.

The letter stated, "The continuing assaults on home care by Congress, the administration and the Centers for Medicare and Medicaid Services (CMS) have reached a point where the home care community absolutely must fight back with a unified voice. With a new Congress, it is a perfect opportunity for our entire industry to become fully engaged and to sharpen our advocacy."

Tyler Wilson, president of AAHomecare, also commented that, "The association will closely monitor implementation of the final rule to ensure access to quality care for Medicare beneficiaries and to ensure fairness for home care providers. We will aggressively enlist co-sponsors for H.R. 1845, the Tanner-Hobson bill, which was introduced last week. This bill would fix some of the larger flaws in the competitive bidding program."

Congress U.S. Representatives John Tanner (D-Tenn.), David Hobson (R-Ohio), and Mike Ross (D-Ark.) introduced The Tanner-Hobson bill that would help ensure fairness and patient access to care in the new competitive bidding program for home medical equipment in Medicare. The House bill, H.R. 1845, would allow any home medical equipment (HME) provider to participate in Medicare at the selected award price resulting from competitive bidding as long as the provider submitted a bid at an amount less than the Medicare fee schedule amount and is otherwise compliant with program requirements.

Another provision of the bill requires Medicare to conduct a complete analysis of the impact of competitive bidding on beneficiary access to quality products and the impact on home medical equipment providers and services after competitive bidding has been fully implemented in the initial 10 MSAs. The bill would prohibit Medicare from expanding competitive bidding to additional MSAs or applying bid rates to non-bid areas unless specifically authorized by Congress.

What Does It Mean?

AAHomecare issued the following timeline: Bidding should roll out in late April 2007, lasting for 60 days. Through Fall 2007, CMS and its contractors will review the bids, putting the announcement of winning bids in December 2007. Implementation begins April 2008.

Competitive bidding program will replace the current payment amounts for the items being bid. Providers that wish to furnish competitively bid items in a CBA will be required to submit bids to provide those items. CMS says contracts will be awarded to a sufficient number of winning bidders in each CBA to ensure access and service to high quality DMEPOS items. The winning bids will be used to establish a single Medicare payment amount for each item.

The final rule includes a grandfathering provision that may enable beneficiaries who are already renting certain DMEPOS items to continue renting these items from their existing suppliers if the supplier chooses to continue renting the item under grandfathering rule (called "non-contract suppliers"), rather than having to switch to a contract supplier.

For providers of oxygen equipment, the final rule provides for a minimum of 10 months of payment to a contract provider who assumes the responsibility for providing oxygen to a beneficiary who had been receiving services from a non-contract provider. Similarly, if a beneficiary who is renting capped rental equipment switches from a non-contract provider to one that has been awarded a contract under the competitive bidding program, the new contract provider will receive 13 months of rental payments. These payment provisions apply without regard to the number of months of payments Medicare previously made to the non-contract supplier; however, payment can only be made if medical necessity for the equipment continues.

The final rule allows beneficiaries who own an item of DMEPOS that is part of the competitive bidding program to obtain maintenance and servicing from any Medicare provider that has a valid billing number, and is not limited to seeking repairs from contract suppliers. However, if the standards for obtaining a total replacement of an owned item that is part of the competitive bidding program are met, the beneficiary will have to obtain the replacement item from a contract supplier, and payment will be made for the item at the single payment amount.

The final rule also allows small providers to form networks in order to participate in the bidding process, provided that these networks comply with all federal and state laws including the federal antitrust laws. In addition, small providers will not be required to submit bids for all product categories.

CMS has scheduled a Special Open Door Forum to discuss the competitive bidding final rule from 2:30 to 3:30 p.m. EDT Wednesday, April 11. Publication of the final rule is expected April 10. To participate, dial (800) 837-1935 and then reference Conference ID 2739332.

Next Step: Accreditation

The next step for providers, especially those in the initial 10 MSAs, will be mandatory accreditation.

According to CMS almost 5,000 suppliers are already accredited, but only 329 of those are in the 20 MSAs proposed in the NPRM for the Competitive Bidding Program.

Check out the following CMS sites for more information:
For MSAs, product categories and HCPCS codes for each product category:
For information on the final rule: (click on the download for CMS-1270-F)
For quality standards:
For the approved accreditation organizations:
For questions or assistance regarding competitive bidding, contact the Competitive Bidding Program Helpline at (877) 577-5331 or use the "Contact Us" feature at

This article originally appeared in the April 2007 issue of HME Business.


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