Pharmacy relieved about final rule on DMEPOS bidding

May 7, 2007

CMS issues final rule for competitive acquisition program for DMEPOS suppliers

The National Association of Chain Drug Stores released this statement, "The regulation establishes that bidding on the ability to deliver diabetes supplies will be limited to mail-order suppliers, and that drugs sold by retail pharmacy will not be required to be bid. Drugs sold at retail will continue to be reimbursed for now based on the Medicare fee schedule, rather than at the lowest price bid. This should ensure that patients with diabetes will continue to have access to their neighborhood pharmacies and to crucial continuity of care."

Commenting on CMS' regulation, which provides protections for small providers, including establishing a target number for small suppliers equal to 30% of the number of winning suppliers, Popomaronis said, "CMS designated a 30% target rule to make every effort to include up to 30% of small suppliers in a competitive bid product category. NCPA is pleased that CMS recognizes the value that small suppliers provide."

Jim Walsh, president of VGM Management, a management service company for home medical equipment dealers and a subsidiary of Healthcare Quality Association on Accreditation, wasn't as enthusiastic about the 30% rule. "The rule paid lip service to small businesses," he said. "They will allow networks to bid, but they limited the size of anyone who'd be in the network to $3.5 million total volume [in gross revenues] and to a maximum of 20 outlets per metropolitan statistical area [MSA]. You can't go over those limits with a network."

Walsh went on to say that competitive bidding could potentially destroy customer service and force DME pharmacies out of business. "People are having a tough time already," he said. "There have been price cuts of roughly 25% over the past five years. Twenty-five percent of gross revenue in most retail business is gone. This new round of competitive acquisition promises another 20% to 25% cut, and businesses just can't survive that. In the end, patients will get crummy service. Instead of people getting high- quality products and high-quality service, they'll get the cheapest products and the worst service as long as [CMS] makes it difficult for new companies to come in."

Meanwhile, the Council for Quality Respiratory Care (CQRC), a coalition of oxygen therapy providers and manufacturers, expressed concern that the competitive bidding process could jeopardize the level of quality of care for patients. CQRC stated, "The new bidding process is based solely on price, thereby excluding therapy-related services and patient-support services essential to the delivery of quality care. The winning bid will simply result in the lowest common denominator and not take into account these critical services. It also discourages the use of higher-priced innovative technologies that government and health officials have supported in separate rule-making."

The final rule is effective on June 11. For more, see http://www.cms.hhs.gov/CompetitiveAcqforDMEPOS/.