Business Solutions

Head-on Competitive Bidding Collision

The industry fights to reform bidding while simultaneously preparing for the Round Two re-compete.

• By David Kopf
• Jan 01, 2015

Hear that sound? It’s the rumble and roar of the Round Two re-compete, which is hurtling straight toward the industry’s efforts to reform competitive bidding. We’ll call CMS’s train the Round Two Express and the industry’s the Legislative Locomotive, and neither looks like it will jump on an alternate track before the big collision.

Just like in an old black-and-white serial film, the industry is racing against the clock to respond legislatively, but unlike the cinema cliffhangers of yesteryear, we’re not sure the industry can pull it off. In fact, it doesn’t look likely. Bidding starts on Jan. 20 (see “Round Two Re-Compete Timeline” for the full slate of pertinent dates), which doesn’t give the industry much time to make any kind of spectacular save. That said, providers simply can’t give up; they must keep up the fight.

The Legislative Locomotive

Let’s take a look at how the industry was wrapping up 2014 to get a sense of where that fight stands: The industry worked hard during the 113th Congress to develop and advance competitive bidding reform. After realizing that repealing the entire program, or replacing it with the Market Pricing Program wasn’t getting the needed traction, industry associations such as the American Association for Homecare, along with providers and industry advocates, took a different course of action: they worked with Reps. Pat Tiberi (R-Ohio) and John Larson (D-Conn.) to launch H.R. 4920 the Binding Bids Bill in June 2014.

The thrust of the Binding Bids Bill was straightforward and solved the key problem of “suicide bidding.” The issue of competitive bidding operating on non-binding bids was long cited as a major flaw in the program, because it lets companies engage in the sort of low-ball bidding at prices that some bidders have no intention of honoring. H.R. 4920 required that providers put up surety bonds — “bidding bonds” — before submitting their bids to ensure those providers would truly bid an amount they could support.

The Binding Bids Bill gained decent support, picking up 68 co-sponsors, and in turn fostered something the industry hadn’t yet secured: a Senate companion bill. Sens. Rob Portman (R-Ohio) and Ben Cardin (D-Md.) launched S.2975, the Medicare Competitive Bidding Improvement Act (MCBIA) of 2014, to make all bids binding via surety bonds and require proof of licensure for the next rounds of bidding.

Unfortunately, that bill wasn’t launched until the beginning of December 2014, which didn’t give the industry much time to get the legislation passed in the upper chamber — or the lower chamber — before lawmakers went home for the winter break. So, work was done to attach the industry’s legislative language to Congress’s last-minute $1.1 trillion “Cromnibus” spending bill that would finance the government through the next fiscal year, but unfortunately the bill passed on Dec. 15 without those provisions.

This left the industry with a tough challenge: can it get its legislation passed before bidding starts on the Round Two re-compete?

“Our goal is to get binding bids passed prior to the opening of the bid window,” says Cara Bachenheimer, senior vice president of government relations at Invacare Corp. “… We’re working every angle we have to get these bills through. There are standalone opportunities; there are attachment opportunities. Nothing is set at this point.”

“We have talked to our [returning] champions, and we believe there is a small window at the beginning of 2015 to get [H.R. 4920 or S.2975] through and incorporate it into the Round Two re-compete process, prior to the bid window opening on Jan. 22,” says Seth Johnson, vice president of government affairs for Pride Mobility Products Corp. “But clearly, timing is going to be of the essence. It would be extremely aggressive to get binding bids through the legislative process, considering that it would have to be reintroduced and passed.

“What we are being told is that would be a process that would be voice voted,” he continues. “We’re pretty confident that the House seems ready to do that. … The real question becomes can you get the Senate to act that quickly?”

“From the House standpoint, Tiberi would be on board to do that,” says John Gallagher, vice president-government relations for the VGM Group Inc. “You lose all the co-sponsors, so they would have to be reassigned to it. On the Senate side, it is so brand new, but I believe Mr. Cardin would be willing to go forward with Mr. Portman.”

So, from a grassroots perspective, this means that it is imperative that providers reach out to their lawmakers, inform them of the tight Round Two re-compete timetable, and particularly the fact that the bid window opens on Jan. 22, and exhort them to support the industry’s efforts to advance binding bids legislation.

While that timing seems scary, it could also be a good advocacy “hook.” Providers can explain to their lawmakers that time is of the essence and they need to act fast, or they might have an increasingly worsening mess on their hands if suicide bidding is allowed to occur once again. Jobs and patient access to care hang in the balance.

One thing helping the industry in terms of the Senate is the changing of the guards the 114th Congress is bringing.

“With the Republicans taking over the Senate, we will be working with a Republican leadership versus a Democrat leadership, and that is helpful to us,” Bachenheimer explains.

“The message that voters sent, and that I think both parties understand is that they are fed up with nothing being done,” Gallagher said. “From that standpoint I think you are going to see a change in the Senate, and you’re already hearing it from the standpoint of [incoming majority leader] Sen. Mitch McConnell … who’s going to want to show people that they can legislate.”

That means that if there is going to be resolve on Republican-majority House and Senate to drive legislation, and shake the moniker of the do-nothing Congress, then there will be multiple opportunities to advance the industry’s binding bids legislation, Gallagher says. If the industry can’t secure a win as standalone legislation for binding bids before the re-compete bid window opens, at least there will be opportunities to advance the industry’s legislative language as an attachment.

And for providers that are feeling frustrated that the industry can’t seem to put its legislation over the top, Johnson reminds that they must keep fighting. Legislation is a process that take time, and isn’t as nearly a linear process as the “how a bill becomes a law” segment on Saturday morning television’s “Schoolhouse Rock” might have led us to believe. If anything, the industry has built up considerable political capital, he points out.

“We’ve never been in a better position, based on what we’re hearing from our champions on the Hill; for the first time we were able to get a Senate binding bids bill introduced; and there is a limited opportunity to get that very necessary reform incorporated into the program [before Jan. 22],” Johnson explains. “But the only way we’ll be successful in doing that is if we continue to engage our legislators and let them know this is a high priority.”

The Round Two Express

But the fight to try and reform competitive bidding before the Round Two re-compete starts tells only half the story. While the industry tries to save the Legislative Locomotive, it must also try and purchase a ticket on the Round Two Express. To put it more clearly, providers need to bid in this second round, because despite all its headaches and frustrations, Medicare reimbursement is still business that providers can’t afford to ignore.

Even if a business didn’t secure a contract the first time that Round Two was bid in 2012, they likely have not diversified their businesses and found enough new revenue sources to make them so successful that they can forget about Medicare. They must bid.

“You fight against competitive bidding; you build different revenue streams to combat it,” says Georgie Blackburn, vice president of government relations and legislative affairs for BLACKBURN’S. “At the same time — and I can only speak for my business — every time bidding opens up, there are certain lines that we feel we would love to have. Because one piece of business leads to another, and then to another and another.”

This is particularly important, because discharge planners and other key referral sources seek simplicity. When they work with an HME provider for one item for a patient, they ultimately want to use that provider for all sorts of items, related and otherwise. In short, a contract means a provider becomes more of a “one-stop shop” for partners that can bring a lot of business.

“We saw that happen in Round One and Round Two,” Blackburn said. “Your marketing changes to illustrate what you can still can do well. Then you’re reaching the discharge planning mindset that says, ‘I don’t have time to call everybody anymore.’”

Besides marketing, Blackburn says that providers bidding in the re-compete need to go back and ensure their financials are in order like they were the first time Round Two got bid.

“That’s the first thing,” she says. “Start getting your financial documents in order and make sure they are failsafe to ensure there is no misunderstanding. … Then of course start getting your data together for what you feel your bids can be as far as what price you can offer and live with it and still succeed — and that’s been the dilemma all along.”

And when we get to the actual bidding, what will be interesting is how some of the Round Two contract holders bid in the re-compete. They might turn the system around, according to Clint Geffert, president of VGM& Associates at VGM Group, Inc.. It could be that market dynamics might start overturning the crazy-low standards set by previous iterations of CMS’s bid program.

“Those that have won, are looking at the re-compete and quite frankly the previous winners are contemplating what they want to bid on,” Geffert says. “What we’re hearing is that some of them won in multiple categories, and there are certain categories where the bid rates don’t make sense for them to continue. So they’re claiming that they are going to bid reasonably and at rates that will allow them to make money.”

Another dynamic is that the providers that only won one contract are suffering from the fickle nature of referral sources’ need for one-stop providers that Blackburn previously pointed out. Those providers have struggled and might be eager to pick up more contracts. That also could change things up.

“The one thing we’re telling the winners is, you need to prepare for not winning,” Geffert says. “What’s your plan in case you don’t win in the next round? It’s somewhat of an ‘aha moment’ because they have not necessarily had to go through some of the same extremes that non bid winners did to make their businesses more lean and more efficient and pursue new revenue streams.”

The reality of the head-on collision between the Round Two re-compete and the industry’s efforts to stop it is that providers must ride on both trains: They must work to reform the bidding program, while also preparing their businesses to perhaps live under the frustration of flawed program for another three years. But throughout, they must leverage the legislative progress the industry has made to stop CMS’s runaway train before it ultimately derails their businesses.

This article originally appeared in the January 2015 issue of HME Business.