Left to right: Ron Rukas, Georgie Blackburn, Chuck Blackburn

Let's assume national competitive bidding works out nicely for you. You become properly accredited, compile right-on-the-money product-supply proposals, dot every "i" and cross every "t" as demanded by CMS, and you win contracts. Your business flourishes—but then so does national competitive bidding. And that's the conundrum many foes of the new Medicare cost-savings scheme currently face. If they strive to ensure viability in a program they have labeled as flawed, they will unavoidably be working to ensure the viability of the program itself. In so doing, claims that national competitive bidding is detrimental will be undercut and calls for its reform will be met with scoffing.

Georgie Blackburn, ATS, is no stranger to this paradox. However, she believes she has hit on the proper rationale for dealing with it. "The first order of business is we have to survive," she says. "The second order of business is we have to keep pushing our representatives in government to see reason. We can't let up on them."

Her husband, Chuck Blackburn, RPh, is optimistic that remedies to national competitive bidding are possible, even as buoyed proponents of the system stiffen their resolve to press forward with implementation from coast to coast. "Legislators are actually very eager to learn, to have information that will help them develop good policies and laws," he says. "They don't want to make mistakes. If they need to slow down and look carefully before enacting new rules, you can tell them and many of them will listen."

NOT YET MADE PEACE

Georgie and Chuck Blackburn are part of the management team at family-owned Blackburn's, a regional DME/HME/pharmacy company headquartered in Tarentum, Pa. Their enterprise is located within the Pittsburgh metropolitan statistical area (MSA). That means Blackburn's will be among the first in the United States to participate in national competitive bidding. "We do not feel as if we are guinea pigs by being in the initial group of 10 MSAs," says Ron Rukas, RPh, president of Blackburn's. "We're not bothered that we're part of an experiment. We are, however, bothered that there are so many unknowns confronting us. Businesses don't like uncertainty and instability. This is not something we've yet made peace with. We are spending a lot of time, energy, and money to attempt to be able to participate successfully in national competitive bidding. We are not sure what this is going to buy us—or what the outcomes are going to be, let alone whether they will make sense and be logical."

Blackburn's derives slightly more than 25% of its total revenues from Medicare, and fully one half of that stream will be directly affected by national competitive bidding in this introductory round, according to Chuck Blackburn, who serves as chairman of the board of directors. Happily, not all of the company's product lines will be immediately subjected to the program (those spared for now include medical-surgical items, Group II DME products, and orthotics and prosthetics).

Chuck Blackburn

Something Chuck Blackburn finds disquieting in all this is the notion floated by program promoters that every provider who follows national competitive bidding guidelines can expect a realistic shot at winning the contracts. "I'm not sure that's going to be the case," he says. "CMS wants the bidding to be so down to the penny that only the largest companies with the best data management technologies at their disposal can develop bids so finely tuned. I don't know how the majority of our industry will be able to bid without being potentially off the mark by significant sums. In other words, the bid might be correct as far as Medicare is concerned, but the reality is that the numbers will turn out to be well below what the bidder can actually live with" because the bid was based on insufficient data, flawed analysis, or unsupportable conjecture.

SOME EASIER THAN OTHERS

Success at bidding is said to hinge on how well a provider identifies true costs and then whittles them down to size. Blackburn's started analyzing and paring its true costs some years before national competitive bidding came along. "The main way we've been taming our overhead is through consolidation of operations and elimination of what we call nonvalue services," says Rukas.

Ron Rukas

Blackburn's won't know for a time yet how it will fare in the bidding, but the company is clearly playing to win. Says Rukas, "We're putting a maximum goodfaith effort into being competitive with our bids." Expectations inside Blackburn's are that some product categories will prove easier to bid than others. Chuck Blackburn indicates that "the fewer the number of HCPCS [Healthcare Common Procedure Coding System] codes and services associated with them, the less challenging the development of the bid."

Products categories that lean on HCPCS include negative pressure wound therapy, diabetic, enteral, and certain types of mechanical ventilators, he says. "The categories we expect to be the most challenging because they have so many HCPCS codes and so many services and, by extension, so much weighting will be complex rehab and standard power wheelchairs with their related accessories."

The heightened difficulty of assembling bids involving larger numbers of HCPCS is in part the result of problems with the weightings supplied by the DMEPOS Competitive Bidding Implementation Contractor (CBIC) system. "The weighting in some of these categories—especially power wheelchairs and complex rehab—makes very little sense," says Chuck Blackburn.

Georgie Blackburn, the company's vice president of government relations and legislative affairs, expresses concern that the weighting formula is not based on the actual utilization experience of each individual provider in the Pittsburgh MSA. "It's a composite, and because of that, we don't feel the weightings we've received from CBIC are credible," she says. "We don't feel we can use CBIC's weightings to put together a realistic bid. We have to instead go back and analyze our own utilization histories to see what the weightings should really be. That's something every provider ought to be doing."

WINNING WAYS

Company leaders see opportunities for Blackburn's even if bids are beaten by others. "We're a strong company with a lot of attributes that potentially could be subcontracted to the winning bidders," says Chuck Blackburn. "For example, we have a robust DME repair department as well as highly skilled technicians in power mobility. If a provider other than us wins the bid for rehab but lacks a strong rehab component, that winner might be interested in bringing us along as a partner with them on that."

Bid winners might also choose to team with Blackburn's because of their live inventory—said by Chuck Blackburn to be the largest in Pennsylvania. "We don't drop-ship from out of state," he says. "Everything we sell is product we buy and stock, and ship from our own warehouse."

Georgie Blackburn asserts that the company's geographical reach represents a plus as well. "We're a regional company that goes into all seven counties making up the Pittsburgh MSA," she says. "A company smaller than ours that wins a bid might be able to service only some of the counties, but not all. That company would need the help of someone like us to be able to fulfill the obligations of the Medicare contract they've won."

Rukas offers that, at bottom, "it's still all about service. If an item needs repair—an oxygen concentrator goes down—it needs to be repaired promptly, and the only way that can happen is if you have the parts already in stock."

STAYING THE COURSE

Blackburn's plans to stay its present course but intends to further improve the efficiency of its operations. "Our primary goal is to serve patients with the total package of care they need," says Chuck Blackburn. "But it is becoming more and more of a challenge to operate a business that is heavily service-oriented when payor sources continually want to turn the service into an off-the-shelf commodity. At the same time, we're not a mail-order company. Our business is about one-on-one encounters with customers, which mostly take place in their homes and which involve costs in terms of personnel and transportation."

The company is looking to address those payor blues by increasing its cash businesses. "We remodeled our pharmacy and showroom, and that gives us 3,000 square feet of new product area," says Georgie Blackburn. "We might stock this with a wider selection of ADL products."

Chuck Blackburn says the company will not make the mistake of presupposing national competitive bidding to be an anomaly. "This is a concept I think we will see spread to all payors," he says. "Medicare is just the model. If private payors see that national competitive bidding is workable, they'll all adopt it. So we providers have to go along with the changes, but we also must strive to make sure the changes will be workable for the patients, for us, and for the organizations that are paying the bills."

A LOOK BACK ON THE PRESIDENCY

Georgie Blackburn

Georgie Blackburn, ATS, is the immediate past-president of the Pennsylvania Association of Medical Suppliers (PAMS). She began her term as the top elected official of that organization wanting to educate all Keystone State providers regarding current and coming Medicare and Medicaid issues. She feels that, for the most part, she made good inroads toward that goal.

"Having been my company's compliance director, I have a heightened concern about postpay audits in particular," she says. "I believe those can greatly hurt your business if you don't understand the front-end processes. So, during my PAMS presidency, I made it an objective to have as many seminars and informational sessions as possible to make sure providers were really up to speed with postpay audits and other matters, such as changes in power mobility policy, and also trends in selective contracting."

Rich Smith is a contributing writer for  HME Today.