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.
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.
RSS Feed