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Headline News
Countdown to Bids: Providers Race Against the Clock
ATLANTA--CMS issued item weights and product utilization data last week for round one of the national competitive bidding project, but the agency missed its "by the end of April" deadline for issuing the request for bids.

According to its Web site, "CMS has extended the target date for opening the bidding window to early May."

Still, the new information offered some tools for providers who plan to go after Medicare DMEPOS business in the 10 MSAs where competitive bidding will debut in April 2008.

"We are still evaluating the limited quantitative data that has been made available to the industry by CMS," said Lisa Getson, executive vice president, governmental relations, investor services and compliance, for nationwide provider Apria. The Lake Forest, Calif.-based provider has branches in nearly every competitive bidding area.

"No one has seen a bid document," said Tom Mullaney, president and owner of Mullaney's Pharmacy and Health Care in Cincinnati and president of the Ohio Association of Medical Equipment Services. Consequently, he said, there are "a lot of questions and concerns" that have stymied some providers' decisions on whether or not to bid.

For his part, Mullaney said, "we do all the categories currently, so we are going to bid all those."

Beth Bowen, executive director of the North Carolina Association of Medical Equipment Services, said that while most of the providers she has spoken with plan to bid, she's been getting all kinds of questions on bidding from less-informed providers throughout her state and beyond.

"They're asking everything from 'How long has this been around?' to 'What is competitive bidding?'" she said. "Those [questions] are very frightening because it's those kind of folks who are going to screw up the bidding process."

Even without all the answers, providers are scrambling to get ready. When CMS does issue the RFB, the agency has said its bid window will remain open for 60 days.

"We've been preparing for it operationally for the last year, just really looking at our procedures, our policies and efficiencies and trying to streamline areas that can be streamlined," said Tammy Zelenko, president and CEO of AdvaCare Home Services, Pittsburgh, and vice president of the Pennsylvania Association of Medical Suppliers.

AdvaCare will bid, she said, but not on all product categories. "My biggest concern is that even though I bid four categories, I may only get one of the four. And what does that do to the referral source and the beneficiary? It's going to be challenging for the hospitals discharging the patients and the beneficiaries. There is not going to be that continuum of care that we have worked so hard to achieve."

Progressive Medical Equipment in Lenexa, Kan., also has been preparing for some time, said owner Gerald Sloan. The company is just waiting for the RFB. "We're ready to go from the requirements standpoint," he said. "For the last several weeks, we have been assembling our prices on all the products."

It's been a sobering exercise. "I don't know where the savings are going to be," he said. "We're working off allowables that have been cut far, far from the allowables five years ago."

Sloan is concerned, too, that even a low bid might not be enough to keep Medicare's business. "There's so much subjectiveness to this. Honestly, we could give the lowest bid and not be chosen," he said. "They are going to look at our financials and consider if we are worthy of being in the Medicare program. If CMS decides they don't want you in the program, they can make that conclusion."

Raul Lopez, director of operations for Bayshore Dura Medical in Miami Lakes, Fla., and president of the Florida Association of Medical Equipment Services, recognizes the reality is that everyone who bids will not win. "We may not get everything, but we are going out there and we are taking a look at it," he said. "We have a lot of people who rely on us. We owe it to them to try."

Chris Rice, director of marketing for Riverside, Calif.-based Diamond Respiratory Care, said he is worried about how providers will compute their service capacity, one of the requirements of submitting a bid.

Rice asserted that overstating capacity would result in lower reimbursement. His worry is that providers will think that even if they only cover 2 percent of an area, they should write down, say, 10 percent. "They're going to think of it as an inert number. And really, it's the key to the whole system," he said.

"Imagine a ladder that has the bids arranged from lowest to highest (lowest on bottom). Each step is one provider's bid," he explained. "On the left side of the step is the bid price; on the right is estimated capacity. The more steps that Medicare climbs before it gets to 100-percent capacity, the higher the bids will go and the more reimbursement will be paid.

"If those capacity numbers are exaggerated," Rice continued, "they're not going to climb many stairs ... so when they select the reimbursement number from only a few of the lowest steps in the bidding staircase, reimbursement is smaller than it should be."

Sandra London-Leib, CEO of Advanced Homecare in Lawrence, Kan., believes that it will be the patient who, in the end, is most adversely affected. Her company will bid in multiple categories, she said, but she fully expects a negative impact on Medicare beneficiaries in the Kansas City CBA no matter who wins. "We anticipate being able to weather this storm, but the cost of survival will be great and the patients in rural Kansas will be the ones hurt the most when all is said and done," she said.

"The best thing that could happen," she added, "is for competitive bidding to be delayed a couple of years so that Congress could actually examine the plan and understand the possible repercussions of their actions on America's seniors and disabled citizens."

That's something Mullaney is fighting for. "I'm lobbying to get it stopped or repealed," he said bluntly.

To link to the Competitive Bidding Implementation Contractor Web site, click here.

Since McClellan's resignation, Leslie Norwalk, previously deputy administrator at the agency, has served as CMS acting administrator. According to news reports, Norwalk withdrew from consideration for the permanent appointment, telling CMS staffers she did not want to commit to serving for the remainder of Bush's term but would stay in office while the Senate considers Weems' nomination.

No NPI Could Mean Claims Rejection in July, CMS Cautions
BALTIMORE--At a recent conference call on the National Provider Identifer, CMS gave some insight into why the agency has softened its mandate for use of the new number.

"By some estimates, almost half of the industry's health plans are not yet ready to use the NPI on the adjudication of claims," an agency official said. "More than a third of clearinghouses will not use their NPIs to process transactions by the deadline. And while we don't have authority over the software vendors, we understand that about half of the vendors' software still cannot generate claims using NPIs. Those are not very positive statistics this close to a deadline."

The agency set May 23 this year as the compliance deadline for using the NPI on claims and emphasized that date is still firm for all except small health providers, who have until May 23, 2008, to comply. (See HomeCare Monday, April 9.)

However, under a contingency plan released April 20, CMS said that for "some period after May 23, 2007," Medicare will:

--Allow continued use of legacy numbers on transactions;
--Accept transactions with only NPIs; and
--Accept transactions with both legacy numbers and NPIs.

But the agency cautioned that as soon as it considers the number of claims submitted with an NPI for primary providers (billing, pay-to and rendering providers) is sufficient, Medicare could begin rejecting claims without an NPI, perhaps as early as July 1, 2007.

This month, according to CMS, Medicare will evaluate the number of claims it gets containing an NPI. If the analysis shows "a sufficient number" of claims that have them, Medicare will begin to reject claims without NPIs on July 1. If the agency judges there are not enough claims containing NPIs, it will assess compliance again in June and could begin rejecting non-compliant claims in August.

Between now and May 23, 2008, CMS has previously said it will not impose penalties for non-compliance "as long as covered entities, including health plans and covered health providers, continue to act in good faith to come into compliance, meaning they are working towards being able to accept and send NPIs."

While CMS believes some 2 million health care providers have received their NPIs, "we think that's only about 85 percent of the universe," the official said.

CMS has scheduled another conference call on the NPI contingency plan on Thursday, May 10, at 2:00 p.m. EDT. Visit http://www.cms.hhs.gov/NationalProvIdentStand/Downloads/NPIRoundTable.pdf for details and registration information.

Here's the 411 on Competitive Bidding Help
ATLANTA--The questions are endless and the answers seem few, but there is help for home medical equipment providers on the intricacies of competitive bidding.

National and state associations, buying groups and manufacturers are stepping forward with an array of conferences, seminars and Web-based training to assist in everything from understanding CMS' competitive bidding final rule to placing a bid.

Among the offerings:

May 8-10: While information technology will be a focus at The MED Group's Reimbursement & IT Conference at the Hyatt Riverfront in Jacksonville, Fla., topics will also include preparing for competitive bidding, changes in Medicare and roundtable discussions with peers. Details: www.medgroup.com

May 9: "Understanding the Realities of Competitive Bidding, Network Opportunities and Accreditation," presented by the Midwest Association of Medical Equipment Suppliers and The VGM Group at the Four Point Sheraton, Kansas City Airport, Kansas City, Mo., will include an overview of the competitive bidding final rule, preparations and options for submitting a bid and an analysis of the short- and long-term impact on HME providers. Details: http://www.vgmeducation.com/traveling_education.asp, or contact MAMES at (651) 351-5395

May 9-10: "Competitive Bidding, Accreditation, Reimbursement Changes: Your Medicare Survival Toolkit," sponsored by the American Association for Homecare, will be held at the Marriott Houston Intercontinental Hotel. Topics include navigating competitive bidding, tools to achieve accreditation and best business practices for reimbursement changes. Details: www.aahomecare.org

May 14-15: "Essential Pieces to the Healthcare Puzzle," sponsored by the New York Medical Equipment Providers association, will be held at the Crowne Plaza, White Plains, N.Y. Topics range from competitive bidding to new market opportunities. Details: www.nymep.org

May 16: "Understanding the Realities of Competitive Bidding, Network Opportunities and Accreditation," presented by the California Association of Medical Product Suppliers and VGM, is scheduled at the Ontario Airport Marriott, Ontario, Calif. Details: http://www.vgmeducation.com/traveling_education.asp, or www.campsone.org

May 24: A "National Competitive Bidding Seminar" will be presented by the North Carolina Association of Medical Equipment Services and VGM at the Hilton Charlotte University Place. Details: http://www.vgmeducation.com/traveling_education.asp, or contact NCAMES at (919) 387-1221

June 4: Medtrade Conferences on the Road will present "Turning a Challenge into an Opportunity: How to Succeed with Competitive Bidding" at the Hilton Miami Airport. Topics include bid preparation, the pros and cons of network bidding, a walk through the bid application process and survival steps if you are not a successful bidder. Details: Visit www.medtrade.com, and click "Medtrade Conferences on the Road"

June 5-7: "Homecare at Risk," AAHomeCare's annual Legislative Conference, is set at the J.W. Marriott, Washington, D.C., with a state issues roundtable, an inside look at CMS and Capitol Hill appointments for attendees. Details: www.aahomecare.org.

June 11-14: VGM's Heartland Conference (for members only) will be held at the Five Sullivan Brothers Convention Center in Waterloo, Iowa. Along with eight seminar tracks, discussion of competitive bidding and a variety of networking events are planned. Details: http://www.heartland2007.com

Providers who can't attend any of these events can still get help online.

HME retail consultant Jack Evans of Malibu, Calif.-based Global Media Marketing, in concert with several other industry consultants and the University of Southern California School of Pharmacy, has put together three Webinars on accreditation and competitive bidding, including: "How to Succeed with Competitive Bidding" with speaker Jeffrey Baird of Brown & Fortunato, PC, on May 10; "Step-by-Step Accreditation: What You Need to Know" with speaker Mary Ellen Conway of Capital Healthcare Group, May 17; and "Mandatory Accreditation is Here" with speaker Tom Cesar of the Accreditation Commission for Health Care, May 23. Details: http://www.hmeducation.com/

Providers can also find a wealth of competitive bidding information from Invacare, The MED Group, Sunrise Medical and VGM on their respective sites at: www.invacare.com; www.medgroup.com; www.sunrisemedical.com; and www.vgm.com.

For official bidding information from the Competitive Bidding Implementation Contractor, link to the CBIC Web site here.

For questions, call the CBIC competitive bidding helpline at (877) 577-5331.

The meeting is scheduled on Thursday, May 10, at 7:00 p.m. at the Holiday Inn at 2905 Sheridan Street, Hollywood, Fla. For more information, contact Brant at rob@citymedical.com.

Indiana Halts Medicaid Sole-Supplier Contract--for Now
INDIANAPOLIS--State officials have decided to halt a contract to Michigan-based J&B Medical Supply that would have made the company the sole supplier of incontinence supplies and other disposables for Indiana's Medicaid program.

The state had been considering the agreement as a pilot to "see how it worked and then make an ultimate decision," according to Indiana Family and Social Services Administration spokesman Dennis Rosebrough.

But after drawing fire from opponents--including the Association of Indiana Home Medical Equipment Services--the state changed its position. "As we floated that balloon, a number of people raised issues, and so we made a decision that rather than go down a troublesome road, we would not do that," Rosebrough told HomeCare Monday. Instead, he added, the state will issue a traditional request for proposal from both in- and out-of-state companies in the next few months.

Judy Bunn, executive director of AIHMES, which represents more than 80 companies in the state, had expressed concerns in a newspaper article published Tuesday that the state's original decision would be bad for both home care businesses and patients. "There are companies who will go out of business or have to lay off people," Bunn told the Fort Wayne News-Sentinal. "The patient will lose the choice of providers and choice of products."

The newspaper said that under such a contract, state residents covered by traditional Medicaid would not have been able to purchase incontinence, catheter or ostomy supplies from an Indiana home care business.

The state currently spends about $4 million on such supplies for people on Medicaid, and in an effort to save money, is committed to giving the contract to one provider, the News Sentinel reported. According to Rosebrough, the state did not have to request bids for the contract because it was for a one-year pilot program.

Bunn said AIHMES, which would like to bid on the contract itself, is willing to work with the state. "If they have a specific dollar amount they are going to save, let us know. We are certainly looking at that to help them realize the savings," she told the newspaper.

The American Association for Homecare said it alerted other state HME association leaders about the issue after receiving a heads-up from AIHMES Board Director George Kucka of Fairmeadows Home Health Care in Schererville, Ind.

"This very same issue may emerge in other states," AAHomecare said.

NCB Turns Technology into Front-Burner Issue
LAS VEGAS--Industry experts say the launch of national competitive bidding means the latest technology for running their businesses must also be a front-burner issue for providers.

"With competitive bidding, you have to operate at your top efficiency," said Sarah Hanna, vice president of ECS Billing & Consulting, Tiffin, Ohio. Both to determine their bid and stay profitable if they win, Hanna said, providers must be able to analyze the cost of every aspect of their businesses--from getting products to patients to billing and working denials.

"Technology is of utmost importance because, ultimately, it makes you become more efficient," she said.

Miriam Lieber, president of Lieber Consulting, Sherman Oaks, Calif., added that, with competitive bidding, CMS is asking for providers' revenue by Medicare, by product, and for revenue outside of Medicare--all reported on a quarterly basis. With software that tracks such data automatically, a provider can simply generate a report, but "how am I going to do that if I'm not automated?" she questioned.

Both industry consultants and technology providers alike noted that many of the technological solutions HME providers are only beginning to consider are standard practice in other industries. So what's kept providers from embracing them?

Bently Goodwin, CEO of Memphis, Tenn.-based RemitData, thinks one reason is "there's just a lot more money" in other health care segments. But he said it's also because--at least until now--most HME providers haven't had to.

"There are certainly those providers out there that do embrace technology in this industry, but as a whole I think they've failed to do it ... simply because, up until now, the margins have been acceptable and they could get by without doing it," Goodwin said. "They have not seen up until now the competitive forces that are much stronger in other industries."

Goodwin said providers need to look at payroll costs and how to reduce them through productivity gains, which can be achieved by automating certain procedures. For example, he said, tweaking existing software or getting updated software can cut down the time to get claims out by 30 percent; going paperless can reduce the time spent finding and viewing documents by 50 percent; and routing delivery drivers more efficiently can result in 15 to 20 percent more deliveries per month per rep.

"That's where the savings are going to come," Goodwin said. "For most DMEs after cost of goods sold, payroll cost is their single-biggest line item, and that's where there are opportunities to save and get their margins smaller."

John Festa, president and CEO of Atlanta-based CareCentric, gave a similar assessment.

"There isn't a lot of margin between the manufacturer down to the DME," Festa said. "It's on better process improvement where he's getting more cash faster and higher collection rates based on what he's allowed to get by more efficient operations. There's a lot more to be garnered there than worrying about another 5 percent on the equipment side."

Providers who haven't looked at technology solutions "have no choice now," said Nancy Burma, president of Minneapolis-based Alternative Billing Solutions, acquired by CareCentric last year. "While the focus has been on patient care, in order to survive [providers] have to look at better ways of doing their compliance programs, their accreditation, their billing, their collection. It's demanded now."

If this year's Medtrade Spring was any indication, providers are coming to that realization.

"If there was a buzz word for this year, I'd say it was technology," Mike Mallaro, CFO for Waterloo, Iowa-based VGM, said at the Las Vegas show. "There's lots of interest in technology, whether it be online training, GPS, more efficient billing, automatic follow-up systems--anything that could help [providers] take costs out of running their businesses."

According to Lieber, it may ultimately be a matter of sink or swim.

"It's imperative and essential that every provider be automated in order just to maintain any level of efficiency whatsoever," she said, "but also simply to stay afloat in our environment."

To revisit this news any time during the week, go to www.homecaremonday.com.

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