On Tuesday, October 27, 2021, CMS announced single payment amounts for just two products included in the Round 2021 bid program set to begin next year. CMS reviewed over 49,000 bid applications across 16 different product categories in 130 competitive bid areas (CBAs). In the end, however, only 235 product-area competitions survived out of the thousands included at the outset of the program.

That leaves a huge supplier community with obsolete operational budgets and fossilized expectations for next year. Suppliers that planned for the exclusivity of a contract used assumptions about revenue, purchasing, and personnel that are no longer reliable. Those, on the other hand, that planned to exit certain CBAs find themselves in a race to determine the wisdom of engaging under the substituted reimbursement structure.

Round 2021 set out to competitively bid – and establish sustainable, market-based rates for – 16 product categories under a revised program designed to fix systemic flaws in previous competitions.

In April, shortly after the COVID-19 pandemic hit the US, CMS removed non-invasive ventilators over concerns the program might limit beneficiary access to life-saving equipment already in short supply.

Then, after months of silence, CMS removed 13 additional products “... because payment amounts did not achieve expected savings.” Products eliminated included:

1. Commodes.
2. PAP/RAD. 
3. Enteral. 
4. Hospital beds. 
5. Nebulizers. 
6. Negative pressure wound therapy. 
7. Oxygen. 
8. Patient lifts and seat lifts. 
9. Manual wheelchairs. 
10. Power wheelchairs. 
11. Support surfaces. 
12. TENS. 
13. Walkers. 

And that is how 16 products became two: 
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1. Off-the-shelf knee braces. 
2. Off-the-shelf back braces. 

​The competitive bidding announcement, along with the subsequently released 2021 DME Final Rule, leave virtually no supplier’s reimbursement rates unchanged and no expectation intact. And that kinda changes everything.

SOURCE LINKS
https://www.cms.gov/files/document/round-2021-dmepos-cbp-single-payment-amts-fact-sheet.pdf 
https://www.dmecompetitivebid.com//cbic/cbic2021.nsf/DID/84U18RR1ER

The industry sighed in collective relief last week when CMS announced plans to abandon the 2021 round of competitive bidding for most products and certain geographical areas. While understandable given the high stakes, it is not necessarily cause for celebration.

The move isn’t motivated by a desire to ensure access to care during the ongoing COVID-19 pandemic. CMS didn’t change course because current rates represent sustainable, market-based rates. No, the resulting single payment amounts simply didn’t add up to lower rates.

The program moves forward with off-the-shelf knee and back braces, mopping up approximately $600 million in savings, but only in those areas where bids produced savings over current expenditures. For abandoned products, CMS stated “payment amounts did not achieve expected savings.” Many suppliers expected the improved bid rules to yield a one-time correction to program flaws baked into the existing single-payment amounts. Instead, the decision suggests program fixes are limited to those that drive prices even lower.

Any reliance on prior single-payment amounts in determining future pricing for the 13 abandoned products taints the revised program. The existing rates are based on, among other things, arbitrary averages of non-binding bids, in some cases by bidders having no working experience with the products and areas for which they bid. Moreover, we worry the abandonment sets a precedent that periodically subjects suppliers to the cost and effort of the bid process just to make sure no more blood can be extracted from the stone.

We see it as a good sign that the revised program rules and industry collaboration didn’t add up to bids substantially lower than existing rates. Nonetheless, we interpret the conclusion of Round 2021 as neither a pause to ensure a quality patient care network, nor a signal that sustainable, market-based reimbursement rates are the shared primary purpose of the revised bid rules. Clear understanding of purpose is key to what happens next.
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As federal agencies roll out specific procedures for PPP forgiveness and Provider Relief Fund (PRF) reporting to account for COVID-19 stimulus money, it is no surprise authorities are also preparing to audit compliance with the massive programs.

The CARES Act created a special oversight committee of federal inspectors general called the Pandemic Response Accountability Committee (PRAC). The committee will track and follow the money to ensure all recipients are good stewards of funds received. Its objectives include investigation and mitigation of risks that cut across program and agency boundaries.

The committee’s oversight includes:

• The CARES Act ($1.9 trillion plus $298 billion in tax relief/credits over 10 years).
• The Paycheck Protection Program & Health Care Enhancement Act ($483 billion).
• Families First Coronavirus Response Act ($3.4 billion).
• Coronavirus Preparedness and Response Supplemental Appropriation Act ($7.8 billion)

At present, the committee consists of 20 members led by Brian Miller, the newly appointed special inspector general for pandemic recovery (SIGPR).

In its first report to Congress, the committee recommended the passage of S.3751 to expedite the hiring of staff to conduct oversight activities because the volume of work exceeds the PRAC’s resources. So far, S.3571 has only five bipartisan co-sponsors, and all but one signed on to the bill in May. Swift passage is unlikely.

We do not expect these initiatives to move quickly, but we do expect steady progress. Government watchdogs will intensify their scrutiny of these massive funding campaigns as the PHE risks subside. We predict auditors will ask suppliers for increasing amounts of data to ensure no mistakes go undetected.

SOURCE LINKS
https://pandemic.oversight.gov/about
https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000472.asp
https://www.oversight.gov/sites/default/files/oig-reports/SIGPR-Initial-Report-to-Congress-August-3-2020.pdf
https://www.congress.gov/bill/116th-congress/senate-bill/3751/text
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​This morning, several of our (K)notes Plus clients in Jurisdictions B and C reported large up-ticks in Medicare CO-151 denials on capped rental items.  During our research, a CGS customer service representative confirmed a systemwide issue causing erroneous denials since yesterday. The company has not yet resolved the issue.

Keep an eye on the Claims Payment Alert page for updates. We expect CGS will soon post confirmation of the issue, as well as any future solutions, to the site.

Unfortunately, 151 denials are medical necessity denials which normally preclude resubmission. For now, we recommend setting these aside because resubmitted claims will deny as duplicate. We hope CGS will automatically reprocess affected claims after correcting the underlying issue.

If you have any questions, give us a shout.