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How Competitive Bidding Will Impact Reimbursement Rates for Non-Bid Areas

Posted on in Billing/Reimbursement

By Craig Douglas, VP of Payer and Member Relations, VGM & Associates

So, you think that because you do not serve or operate within a competitive bid area (CBA), that Round 2021 of the Competitive Bidding (CB) program for DMEPOS products and services doesn’t matter to you or doesn’t impact you and your business? Think again! The bids submitted by DMEPOS providers during Round 2021 will most certainly impact you in one way or another, whether you serve one of the 130 CBAs or not.

For Round 2021, after all bids have been submitted and the dust settles, each of the 130 individual CBAs will have their own unique set of rates for all the items included in CB, and a new single payment amount (SPA) will be assigned to each DMEPOS item in each CBA. The country will then be divided up into eight regions, which are the same regions used by the Bureau of Economic Analysis. The SPAs from each of the CBAs that are either fully or partially located in each region will be averaged (unweighted average), and that average will serve as the regional single payment amount (RSPA) for the states within that region. Since there are eight regions, there will be eight RSPAs. The eight RSPAs are then averaged to find a national average price for each item.

There are some additional rules for the RSPAs:

  1. The RSPA cannot exceed 110% of the national average price.
  2. The RSPA cannot be below 90% of the national average price.

To add some context, let’s look at an example. Let’s assume I am a supplier in Waterloo, Iowa, where VGM is headquartered, and I specialize in providing Widget X. Waterloo is not part of a CBA, and therefore, suppliers are not submitting bids to Medicare for Widget X in Round 2021 for Waterloo. However, I will inherit the RSPA for the region, even if I didn’t submit a bid for any of the CBAs located within my region.

Waterloo is in the Plains region, which includes North Dakota, South Dakota, Nebraska, Kansas, Missouri, Iowa, and Minnesota. Let’s say there are six CBAs within the Plains region. If the providers in those six CBAs submit bids that result in SPAs that are $100, $105, $110, $115, $120, and $125 respectively, the RSPA for my region is the average of those six SPAs, which would be $112.50 (if $112.50 is not above 110% of the national average, or below 90% of the national average). I now have a reimbursement rate that is lower than three of the CBAs in my region, and I didn’t even submit a bid.

This example illustrates the fact that competitive bidding can affect your business regardless of your area. To learn more about the Round 2021 Competitive Bidding Program, including a timeline and tools, visit our blog post: Round 2021 Details Just Announced – Timeline Included.