BALTIMORE--CMS is likely grappling with far fewer bids for the first round of competitive bidding than it anticipated--about 90 percent fewer, according to attendees at Thursday's meeting of the Program Advisory and Oversight Committee.

CMS had projected it would receive about 16,000 bids in its initial round of DMEPOS bidding; in reality, it has probably received fewer than 1,500, according to PAOC member Cara Bachenheimer, vice president of government relations for Elyria, Ohio-based Invacare Corp.

And of those bids, she continued, there is no way of knowing how many are valid.

CMS convened the PAOC, formed to advise the agency on competitive bidding, for the Oct. 11 meeting, its first since May of 2006.

While the agency has remained mum about the number of bids it received by the Sept. 25 deadline, only 2,200 provider locations are accredited across the first 10 competitive bidding areas, officials said during the meeting.

Those bidders remaining in the accreditation pipeline won't push the number much higher. Some 100 are still pending accreditation by the Oct. 31 deadline, Sandra Bastinelli, division director for medical review and education in CMS' Program Integrity Group, told committee members.

That means the maximum possible universe of sites in the first round is approximately 2,300.

Whether competitive bidding can work with that number of providers is up for debate.

Bachenheimer said maybe a greater percentage of bidders would win contracts, but that would depend on the capacity that bidders state and that CMS and Palmetto GBA, its Competitive Bidding Implementation Contractor, believe is possible. She surmised that CMS was surprised by the low figure. "I think the number of 'real' suppliers is much smaller than CMS expects--or there are a lot of numbers that shouldn't be out there."

If that's the case, Bachenheimer said, it might demonstrate that CMS' system of giving out numbers needs to be scrutinized.

However, Herb Kuhn, recently named CMS deputy administrator, said he was "very pleased by the number of suppliers who responded" to the bidding process. Kuhn added that he was confident "we'll have a pretty robust offering" of suppliers for beneficiaries in the first 10 CBAs.

Others at the meeting, attended by an estimated 150 to 200 HME stakeholders, weren't so sure.

Based on calculations from Waterloo, Iowa-based VGM, Vice President of Development Mark Higley told CMS during public comments that the buying group has about 3,000 member locations owned by approximately 2,000 companies. Using that ratio, he said, the 2,200 locations that are accredited so far probably represent 1,500 to 1,600 companies.

Higley also confirmed the highest sequential bidder number the buying group could find among its members was about 1350.

"They have eight percent of eligible providers and they're happy with that?" asked VGM's John Gallagher, vice president of government relations. "It doesn't make sense." If there aren't enough winning suppliers, he added, beneficiaries' access to care will be limited where there are shortfalls. "I don't understand how that would be a positive," he said.

"It's very troublesome that their estimates in the final rule exceed [the number of bidders] by about 10 times," said meeting attendee Dave McCausland, senior vice president of planning and government affairs for The Roho Group, Belleville, Ill.

"If they so dramatically overestimated the number of bidders, what does that do to quality, access and choice? If you have 10 times fewer providers offering these products in any [CBA], some of which are quite expansive geographically, how close is the nearest product for the patient and caregiver?" McCausland wondered.

"If there are 10 times fewer suppliers," he continued, "... the winners will have fewer competitors, and both referral sources and beneficiaries will have fewer choices."

Under its bid evaluation structure, CMS will determine how many suppliers bidding below its "pivotal" bid are needed to meet beneficiary demand for each product category in each CBA. If it doesn't get enough suppliers from below the pivotal bid, CMS will move up to higher bids until it has enough suppliers to meet the capacity it needs.

But the final rule doesn't address the scenario of "running out" of bidders eligible to win contracts, Bachenheimer pointed out.

"What's not addressed at all is what happens if you don't have enough bidders, period, or if you get into those that don't meet financial or other criteria," Bachenheimer said.