To Network Or Not?

With plans shattered by surprise provisions regarding networks that appeared in the DMEPOS competitive bidding final rule, network members and facilitators are trying to pick up the pieces and form them into new bidding strategies.

In the final rule, published in the April 10 edition of the Federal Register, CMS limited provider networks for the purposes of competitive bidding to 20 members, each of whom can have no more than $3.5 million in gross revenues. The draft proposal had placed a ceiling of $6.5 million on providers in networks; it did not include a limit on the number of providers who could join. It also required networks to centralize their billing, a provision that disappeared from the final rule.

“[CMS] got much more conservative about who could be in a network,” says Jim Walsh, general counsel for The VGM Group in Waterloo, Iowa. “You have a much smaller footprint for networks and a much narrower reason for being in a network.”

The changes sent emerging networks into a scramble. “We've been working on these networks for over a year. We don't know what we're going to do,” says Robert M. Arado, administrator of Med Trust Tampa Bay. Arado's HME company, Caremed Respiratory Services, spearheaded the Tampa networking effort.

“We never expected this. We were blindsided by this rule that was never mentioned in the draft proposal.”

The major issue, Arado says, is the cap on network membership. While Tampa is not among the first 10 MSAs where competitive bidding will roll out, Miami is, and Arado was on his way there to assist sister organization Med Trust Corp. of Southern Florida. The Miami organization has about 90 members, he says, while the Tampa network includes about one-third that number.

“We need to take a look at the numbers and look at the logistics,” Arado says, noting that the $3.5 million figure is not a problem in Miami, but the 20-member cap is. “These are small, family-owned businesses that may have 50 patients, 100 patients, and they are getting referrals from a few doctors that favor them.”

Without a network, there is no chance these companies could bid for a Medicare contract, he says.

Indeed, one of the stipulations of the final rule is that each member of the network must submit a statement certifying that it joined the network because it cannot furnish all of the items in a product category to beneficiaries throughout the competitive bidding area.