VGM Government Team on Competitive Bidding and the Gap Period

Published in Member Communities on January 03, 2020

Craig Douglas and Mark Higley of the VGM Government team has provided their insight into the competitive bidding gap period the industry is currently experiencing. Read below to find out next steps, what to expect, and more information about this gap period.

Craig Douglas, Vice President, VGM Payer and Member Relations

Without question, Round 2021 of Competitive Bidding (CB) will be the single largest force that will shift and shape the reimbursement landscape for DMEPOS suppliers in the foreseeable future for almost any DMEPOS supplier in the United States. Whether you conduct your business in a Competitive Bidding Area (CBA), a non-CB area, or a rural area, this upcoming round of CB will impact you, for better or worse. You don’t even have to be a supplier that participates with Medicare for it to impact your business. I say that because Medicare reimbursement rates tend to set the benchmark for how other payers reimburse for those same DMEPOS products and services. State Medicaid programs, Medicaid Managed Care Organizations (MCOs), Medicare Advantage programs, commercial/private/third-party payers, and even Tricare typically set their fee schedules at rates that either mirror or in some way emulate Medicare’s fee schedule.

One major difference between Round 2021 and previous rounds of competitive bidding is the fact that for Round 2021, reimbursement rates could go up. That possibility didn’t exist in previous rounds. If that happens, and it almost certainly will for at least some products, it will be uncharted waters for many payers. In the past, as rates went down, it was easy for them to say that because Medicare pays providers those lower rates, and some providers accept those rates, that they should be able to pay providers that same rate or in some cases even less than those rates. If Medicare rates do increase in 2021, will other payers continue to follow Medicare and raise rates, or try to maintain the lower ones? You may even see some payers try to put things in place contractually with providers now, before 2021, to protect themselves from having to raise rates in 2021.

Providers need to review and familiarize themselves with the contract language of their existing payer agreements to see which contracts have reimbursement rates that are tied to the Medicare fee schedule, how they are tied to Medicare, etc., so they are better prepared for the changes that are coming in 2021.

Mark Higley, Vice President, VGM Regulatory Affairs

It is now January 2020, and we are into the “last half” of the Round 2021 “gap period”, which began Jan. 1, 2019, and will last through Dec. 31, 2020.

It has not been all been smooth sailing for many HME suppliers this last quarter. If you submitted a bid in the Round 2021 program, it’s likely you received one or more of the following three notices—each of which required a response within 10 days. These included 

  • Notice to Substantiate Your Bid(s) from 10-31-2019 to 11-14-2019
  • Notice of Covered Document Review Findings and Required Action from 11-15-2019 to 12-02-2019
  • Notice of Preliminary Bid Evaluation from 12-03-2019 to 12-17-2019

VGM Government Relations received over 300 inquiries applicable to an appropriate response. We are proud of the team in that we believe we offered input on a timely basis, and many bidding companies offered positive comments.  

That does not mean, however, that all will fare as well. Perhaps the most problematic issue was the preliminary bid evaluation (PBE), and it was the final development notification. This is where the CBIC evaluated suppliers to determine if bidders met the overall eligibility requirements. (It is also likely the last time bidding entities will receive contact from the CBIC again until the single payment amounts are announced and Palmetto begins the contracting phase.) Somewhat simply stated, the CBIC has attempted to verify the enrollment data in PECOS to determine the following for each location on every bid received, including Active PTAN, Accreditation, Licensure, Common Ownership/Control and the “Bid Bond” review.

Some comments: Many of the above verifications (bidders were notified in Connexion on a “Table 2” of issues) took relatively minor efforts to fix. Upload a license, contact an accreditor, verify NSC data, etc.  The exception was the bid bond. Some suppliers uploaded the enrollment surety bond (required for each NPI) in error. Some acquired a suitable bid bond but did not complete all of the requisite elements or uploaded only the receipt. Some, unfortunately, opined that they successfully uploaded all of the bond and met all of the requirements, but for some reason, the CBIC could not access the documents.  

It appears that most, if not all, of the bid bond disqualifications are firm. I dub it “a fatal error.” It is unfortunate, but, as always, VGM Government Relations is here to help.

In the next several weeks, we will be announcing a series of “Disqualified From Round 2021?” offerings. We anticipate webinars, blog posts, and several on-site sessions. Many will be in conjunction with current state and regional association events already on the calendar. We will assemble information applicable to subcontracting in your service area for product categories in which you have interest, as well as certain options to bill Medicare for competitively bid products under your own PTAN utilizing existing Round 2021 contracts in conjunction with another supplier. Additional details will be available shortly.  

In the meantime, look for updates at vgmgov.com. If you have not, please sign up today!


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