The help of a solid buying group can provide a bit of solace as you dip your toes into the uncharted waters of competitive bidding.

One month after CMS’ Notice of Proposed Rule Making (NPRM) governing national competitive bidding (NCB), many questions remain about the program’s final direction and shape. Through all of the uncertainty, smaller providers continue to rely on the collective power of buying groups as an educational and economic equalizer. We asked representatives from four buying groups about the NPRM and the continuing role of buying groups in the competitive bidding era.

Dealer/Provider: What is the most interesting and/or surprising thing about the recent Notice of Proposed Rule Making for competitive bidding released by CMS?

Laura Boxley, Payer Program Manager, Pharmaceutical Buyers Inc (PBI), Broomfield, Colo: It is interesting that CMS’s proposed competitive bidding rule for DMEPOS recognizes the role of small providers in servicing beneficiaries. One way CMS proposes to protect small suppliers is by allowing them to select which product categories they bid on. This prevents the small suppliers who provide limited or specialized services from being excluded from the program.

Another important element of the proposed rule is the requirement for accreditation by a CMS-approved accrediting organization. A supplier must be accredited to receive Medicare payment for DMEPOS, whether or not the business participates in the competitive bidding program.

Cindy Ciardo, CO, manager of vendor services, Essentially Women, Oxford, Mich: It seems to be a lot of information with little practical value for suppliers.

• It still does not identify exactly which products will be included in the bid.
• If done by product category, it does not address how it will prevent beneficiaries from having to deal with two or three companies.
• It does not name the 10 cities where it will be phased in next year.
• To participate, suppliers must be accredited by a CMS-approved accreditation organization, but CMS has yet to name approved accreditors.

How can suppliers plan with so much essential information still missing? How exactly is CMS calculating savings? How is CMS ensuring that there will be a sufficient number of suppliers to meet the needs of the Metropolitan Statistical Area (MSA)?

Bill Elliott, president and CEO of the MED Group, Lubbock, Tex: There are a variety of items that are of interest or should I say concern. Many of the issues the industry has raised are only further highlighted by the proposed rule; issues such as the allowance for a “grace period” to be permitted in determining whether a bidder meets the required quality standards, the recommendation that products be bid in a way that will result in beneficiaries receiving their HME from multiple providers, and the very minimal protection for small business inclusion in the winning bidders pool are significant concerns.

The possibility of a “rebate” program only serves to complicate a very challenging bidding process and implementation plan. In addition, the portrayal that the impact on the provider community will be minimal is very misleading. The draft regulation provides possible scenarios and many issues for discussion. One thing that remains certain is that we all need to rally additional support for the Hobson-Tanner Bill and the Rehab Carve-Out Bill. Now more than ever we need to be supportive of the American Association for Homecare and other organizations as they push our messages. These pieces of legislation directly address real problems with CMS’ implementation plans and the necessity of this legislation is only highlighted by this draft regulation.

John Gallagher, vice president, government relations, VGM Group, Waterloo, Iowa: The provision that sticks out to a lot of people where they would say, “Oh, great,” is the grandfathering for the small provider, which at first light is not a bad thing. In the long term, I don’t think it helps the industry, and it gives CMS and Congress an out to say, “We are taking care of small businesses or we are taking care of those providers.” People think they will be able to continue to play. Yes, with existing patients, but they will get no additional patients and those patients will continue to dwindle off. What it sets up is large providers or nationals to buy up those who don’t get the bid and pick up their patient population.

Dealer/Provider: How can buying groups help HME providers in the competitive bidding era?

Boxley: Group purchasing organizations (GPOs) can support HME providers so they better understand the potential impact of the CMS competitive bidding program on their business. By understanding the geographic regions and product groups impacted as this program is implemented over the next 4 years, the provider can then prepare for future change. GPOs can also decipher the mechanisms and procedures of the bidding process and guide the provider along the way. Perhaps the most immediate role that a GPO can play is in assisting suppliers with becoming accredited. PBI has been assisting members in a variety of health care settings with the accreditation process for more than 20 years.

Ciardo: The obvious answer is education—presenting seminars, publishing materials in newsletters, and distributing information via the Internet designed to:

• help businesses run more efficiently and productively;
• find ways to diversify payor mix, and increasing managed care contracting as an option to relying heavily on Medicare;
• find ways to diversify product mix, expand into new product categories, and emphasize more cash sales;
• teach better marketing skills and retail merchandising ideas;
• connect members with appropriate resources;
• educate members about the impact of current legislative and regulatory issues imposed by our government

Buying groups should also continue to negotiate better pricing and incentive programs for products and offer programs and price savings for operational expenses such as credit card processing, insurance, telephone service, Web site development, consulting services, and accreditation.

Elliott: It is a tough marketplace out there, and will only get more challenging. As an independent provider, the need to be part of a larger group has never been greater. As an example, MED is well positioned to help our members in this environment. First, as a network we offer a coordinated group of high-quality providers. Who better to be associated with than fellow MED Members?  Second, we offer alignment with our Supplier Partners. Competitive acquisition costs will be key. MED will be exploring the development of formulary products for the bids. Our combined commitment and scale will ensure that we have the most competitively priced product available.

Third, buying groups offer the support of business services, and efficient business operations will be required. MED will enhance its current services like Winning Business Models, MED U, and R3 to provide focused support to winning through NCB. We also will leverage the benefits of our specialty Networks. And finally, buying groups offer collective wisdom and experience. MED is a learning organization. This is a new environment, and we will learn by participating. As part of each bid, we will be bringing forward what we learn in each of the initial 10 MSAs to continue to improve the process both pre- and post-bid. DP