Round Two Survey Predictions, Round Two Survey Predictions,

Projections, the Round 1 Recompete, Projections, the Round 1 Recompete, and an update on the MPP Alternativeand an update on the MPP Alternative

GAMES GAMES

2012 Annual Convention2012 Annual Convention

August 7, 2012

Presented by Mark HigleyPresented by Mark HigleyVice President – Development

VGM Group, Inc.

(O) 888-224-1631

(C) 319-504-9515

mark.higley@vgm.com

To begin…To begin…

Round 2: Round 2: Predictions & ProjectionsPredictions & Projections

““And the survey says”…And the survey says”…

But, first let’s a take a look at some Statistics 101:

The Standard Normal DistributionThe Standard Normal Distribution(Z) Table is NOT applicable here…(Z) Table is NOT applicable here…

The Standard Normal distribution has a mean of 0 and a standard deviation of 1.

For NCB, It’s an “F” Distribution!For NCB, It’s an “F” Distribution!(How far will take right skewed tail go???)(How far will take right skewed tail go???)

The F distribution is a right-skewed distribution used most commonly in Analysis of Variance

Where will this one fall???Where will this one fall???

Our sampling surveys…Our sampling surveys…

• Three (3) Populations: Three (3) Populations:

1.1. Large VGM Members (n=33)Large VGM Members (n=33)

2.2. Suppliers Who Attended VGM Bidding Suppliers Who Attended VGM Bidding Seminars (n=123)Seminars (n=123)

3.3. ““Public” Supplier via Blog (n=70)Public” Supplier via Blog (n=70)

• Oxygen Supplies and Oxygen Supplies and EquipmentEquipment

Suppliers Who Attended VGM Bidding Seminars Suppliers Who Attended VGM Bidding Seminars (n=123)(n=123)

1). Your overall category discount from the 1). Your overall category discount from the current CBA allowable approximated:current CBA allowable approximated:

1-10% 2.7%10-15% 1.4%15-20% 5.4%20-25% 24.3%24.3%25-30% 20.3%%30-35% 21.6%35-40% 6.8%40-45% 10.8%45- 50% 6.8%>50% 0%

2). Your actual $ bid for Payment Class “A” 2). Your actual $ bid for Payment Class “A” (stationary and portable) approximated:(stationary and portable) approximated:

$165 - $175 (*) 1.3%$155- $165 5.3%$145 - $155 5.3%$135 - $145 13.3%$125 - $135 20.0%20.0%$115 - $125 20.0%20.0%$105 - $115 10.7%$ 95 - $105 6.7%$ 85 - $95 4.0%< $85 13.3%

(*) This “top number” approximates the current allowable(*) This “top number” approximates the current allowable

3). As compared to your current oxygen patient 3). As compared to your current oxygen patient census, you submitted an indicated “unit bid census, you submitted an indicated “unit bid capacity” by:capacity” by:

An amount less than yourcurrent patient census 20.0%Identical to current patient census 24.0%24.0%Increased by 1% - 5% 22.7%Increased by 5% - 15% 6.7%Increased by 15% - 25% 12.0%Increased by 25% - 50% 6.7%Increased by 50% - 100% 5.3%Increased by 100% - 200% 2.7%Increased by more than 200% 0%

• Standard (Power and Standard (Power and Manual) Wheelchairs, Manual) Wheelchairs, Scooters, and Related Scooters, and Related AccessoriesAccessories

1). Your overall category discount from the 1). Your overall category discount from the current CBA allowable approximated:current CBA allowable approximated:

1-10% 5.6%10-15% 9.5%15-20% 13.1%20-25% 14.3%25-30% 22.6%22.6%30-35% 14.3%35-40% 3.6%40-45% 10.7%45-50% 5.6%>50% 0%

2). Your actual $ bid for K0823 (standard power 2). Your actual $ bid for K0823 (standard power chair) approximated:chair) approximated:

$3500 - $3725 2.4%$3200 - $3500 5.9%$2900 - $3200 20.0%$2600 - $2900 11.8%$2300 - $2600 27.1%27.1%$2000 - $2300 16.5%$1800 - $2000 1.2%<$1800 15.3%

3). As compared to your current PMD census, 3). As compared to your current PMD census, you submitted an indicated “unit bid capacity” by:you submitted an indicated “unit bid capacity” by:

An amount less than yourcurrent patient census 12.0%Identical to current patient census 32.5%32.5%Increased by 1% - 5% 25.0%Increased by 5% - 15% 12.5%Increased by 15% - 25% 3.7%Increased by 25% - 50% 2.5%Increased by 50% - 100% 2.5%Increased by 100% - 200% 1.3%Increased by more than 200% 0%

• Enteral Nutrients, Enteral Nutrients, Equipment and Supplies-Equipment and Supplies-

1). Your overall category discount from the 1). Your overall category discount from the current CBA allowable approximated:current CBA allowable approximated:

1-10% 7.7%10-15% 9.6%15-20% 21.2%21.2%20-25% 11.5%25-30% 11.5%%30-35% 11.5%35-40% 1.9%40-45% 17.3%45-50% 7.7%>50% 0%

2). Your actual $ bid for B4150 Enteral Formula 2). Your actual $ bid for B4150 Enteral Formula approximated:approximated:

$.60 -.$.67 23.5%$.56 -.$.59 5.9%$.52 -.$.55 13.7%$.48 -.$.51 9.8%$.44 -.$.47 35.3%35.3%$.40 -.$.43 2.0%$.36 -.$.39 0%< $.36 9.8%

3). As compared to your current enteral patient 3). As compared to your current enteral patient census, you submitted an indicated “unit bid census, you submitted an indicated “unit bid capacity” by:capacity” by:

An amount less than yourcurrent patient census 22.6%Identical to current patient census 28.3%28.3%Increased by 1% - 5% 22.6%Increased by 5% - 15% 3.8%Increased by 15% - 25% 9.4%Increased by 25% - 50% 3.8%Increased by 50% - 100% 3.8%Increased by 100% - 200% 0%Increased by more than 200% 5.1%

• CPAP Devices, Respiratory CPAP Devices, Respiratory Assist Devices, and Related Assist Devices, and Related Supplies and Accessories-Supplies and Accessories-

1). Your overall category discount from the 1). Your overall category discount from the current CBA allowable approximated:current CBA allowable approximated:

1-10% 4.0%10-15% 2.7%15-20% 14.7%20-25% 25.3%25.3%25-30% 21.3%%30-35% 20.0%35-40% 6.7%40-45% 0%45-50% 5.3%>50% 0%

2). Your actual $ bid for E0601 (Continuous 2). Your actual $ bid for E0601 (Continuous Airway Pressure Device)Airway Pressure Device) approximated:approximated:

$950 - $1020 2.6%$900- $950 1.3%$850 - $900 0%$800 - $850 7.8%$750 - $700 11.7%$700 - $750 15.6%$650 - $700 19.5%$600 - $650 14.3% < $600 27.3%27.3%

3). As compared to your current PAP patient 3). As compared to your current PAP patient census, you submitted an indicated “unit bid census, you submitted an indicated “unit bid capacity” by:capacity” by:

An amount less than yourcurrent patient census 23.0%Identical to current patient census 23.0%Increased by 1% - 5% 28.4% 28.4%Increased by 5% - 15% 9.5%Increased by 15% - 25% 5.4%Increased by 25% - 50% 5.4%Increased by 50% - 100% 4.1%Increased by 100% - 200% 1.4%Increased by more than 200% 0%

• Hospital Beds and Related Hospital Beds and Related Accessories-Accessories-

1). Your overall category discount from the 1). Your overall category discount from the current CBA allowable approximated:current CBA allowable approximated:

1-10% 1.1%10-15% 6.7%15-20% 12.4%20-25% 27.0%27.0%25-30% 14.6%%30-35% 13.5%35-40% 9.0%40-45% 9.0%45-50% 6.7%>50% 0%

2). Your actual $ bid for E0260 (Semi-electric 2). Your actual $ bid for E0260 (Semi-electric hospital bed) approximated:hospital bed) approximated:

$1200- $1250 0%$1150- $1200 2.2%$1100- $1150 5.6%$1050- $1100 4.4%$1000- $1050 15.6%$ 950- $1000 14.4%$ 900- $950 13.3%$ 850- $900 15.6% <$850 28.9%28.9%

3). As compared to your current hospital bed 3). As compared to your current hospital bed patient census, you submitted an indicated “unit patient census, you submitted an indicated “unit bid capacity” by:bid capacity” by:

An amount less than yourcurrent patient census 22.3%Identical to current patient census 32.9%32.9%Increased by 1% - 5% 24.7%Increased by 5% - 15% 5.9%Increased by 15% - 25% 4.7%Increased by 25% - 50% 4.7%Increased by 50% - 100% 2.4%Increased by 100% - 200% 2.4%Increased by more than 200% 0%

• Walkers and Related Walkers and Related Accessories Accessories

1). Your overall category discount from the 1). Your overall category discount from the current CBA allowable approximated:current CBA allowable approximated:

1-10% 1.3%10-15% 6.3%15-20% 10.1%20-25% 8.9%25-30% 20.3%20.3%30-35% 15.2%35-40% 16.5%40-45% 10.1%45-50% 11.4%>50% 0%

2). Your actual $ bid for E0143(Walker, Folding, 2). Your actual $ bid for E0143(Walker, Folding, Wheeled) approximated:Wheeled) approximated:

$86 - $90 16.7%$81- $85 6.0%$76 - $80 16.7%$71 - $75 13.1%$66 - $70 15.5%$60 - $65 8.3%$56 - $61 3.6%< $56 20.2%20.2%

3). As compared to your current walker patient 3). As compared to your current walker patient census, you submitted an indicated “unit bid census, you submitted an indicated “unit bid capacity” by:capacity” by:

An amount less than yourcurrent patient census 19.0%Identical to current patient census 32.9%32.9%Increased by 1% - 5% 25.3%Increased by 5% - 15% 6.3%Increased by 15% - 25% 6.3%Increased by 25% - 50% 5.1%Increased by 50% - 100% 2.5%Increased by 100% - 200% 1.3%Increased by more than 200% 1.3%

• Support Surfaces (Group 2 Support Surfaces (Group 2 Mattresses and Overlays) -Mattresses and Overlays) -

1). Your overall category discount from the 1). Your overall category discount from the current CBA allowable approximated:current CBA allowable approximated:

1-10% 4.5%10-15% 5.6%15-20% 5.6%20-25% 11.2%25-30% 11.2%30-35% 11.2%35-40% 15.7%40-45% 4.5%45-50% 18.0%18.0%>50% 12.4%

2). Your actual $ bid for E0277 (Powered 2). Your actual $ bid for E0277 (Powered Pressure-Reducing Air Mattress) approximated:Pressure-Reducing Air Mattress) approximated:

$6200 - $6500 3.9%$5900 - $6200 0%$5600 - $5900 2.6%$5200 - $5600 5.2%$4900 - $5200 2.6%$4700 - $4900 13.8%$4500 - $4700 20.0%< $4500 51.9%51.9%

3). As compared to your current support surface 3). As compared to your current support surface patient census, you submitted an indicated “unit patient census, you submitted an indicated “unit bid capacity” by:bid capacity” by:

An amount less than yourcurrent patient census 22.1%Identical to current patient census 33.8%33.8%Increased by 1% - 5% 20.8%Increased by 5% - 15% 7.8%Increased by 15% - 25% 5.2%Increased by 25% - 50% 3.9%Increased by 50% - 100% 5.2%Increased by 100% - 200% 0%Increased by more than 200% 1.3%

• Negative Pressure Wound Negative Pressure Wound Therapy (NPWT) Pumps Therapy (NPWT) Pumps and Related Supplies and and Related Supplies and Accessories-Accessories-

1). Your overall category discount from the 1). Your overall category discount from the current CBA allowable approximated:current CBA allowable approximated:

1-10% 17.1%10-15% 0%15-20% 14.3%20-25% 11.4%25-30% 22.9%22.9%30-35% 8.6%35-40% 11.4%40-45% 0%45-50% 14.3%>50% 0%

2). Your actual $ bid for E2402 (Negative 2). Your actual $ bid for E2402 (Negative Pressure Electrical Pump) approximated:Pressure Electrical Pump) approximated:

$14500 - $15500 9.1%$13500 - $14500 9.1%$12500 - $13500 3.0%$11500 - $12500 15.2%$11000 - $11500 21.2%21.2%$10500 - $11000 0%$10000 - $10500 15.2%$ 9500 - $10000 12.1%$ 9000 - $9500 0%< $9000 15.2%

3). As compared to your current NPWT patient 3). As compared to your current NPWT patient census, you submitted an indicated “unit bid census, you submitted an indicated “unit bid capacity” by:capacity” by:

An amount less than yourcurrent patient census 6.1%Identical to current patient census 27.3%Increased by 1% - 5% 42.4%42.4%Increased by 5% - 15% 6.1%Increased by 15% - 25% 9.1%Increased by 25% - 50% 3.0%Increased by 50% - 100% 0%Increased by 100% - 200% 0%Increased by more than 200% 6.1%

• National Mail-Order National Mail-Order Diabetic Supplies -Diabetic Supplies -

1). Your overall category discount from the 1). Your overall category discount from the current CBA allowable approximated:current CBA allowable approximated:

1-10% 0%10-15% 0%15-20% 0%20-25% 0%25-30% 0%0%30-35% 0%35-40% 0%40-45% 50%50%45-50% 50%50%>50% 0%

2). Your actual $ bid for A4253KL (Blood Glucose 2). Your actual $ bid for A4253KL (Blood Glucose Test Strips) approximated:Test Strips) approximated:

$30 - $33 0%$27- $29 0%$24 - $26 0%$21 - $23 0%$18 - $20 0%$15 - $17 100%100%$12 - $14 0%< $12 0%

3). As compared to your current patient census, 3). As compared to your current patient census, you submitted an indicated “unit bid capacity” by:you submitted an indicated “unit bid capacity” by:

An amount less than yourcurrent patient census 50%50%Identical to current patient census 0%Increased by 1% - 5% 0%Increased by 5% - 15% 50%50%Increased by 15% - 25% 0%Increased by 25% - 50% 0%Increased by 50% - 100% 0%Increased by 100% - 200% 0%Increased by more than 200% 0%

Large n=33 / Seminar n=123 / Public n=70

All category discount % Top Code Current vs./Bid Capacity Offering

Oxygen Large Suppliers 25-30% Concentrator  $175/$125-$135 5-15%

Oxygen Seminar Suppliers 20-25% Concentrator  $175/$125-$135 Identical no increase

Oxygen Public Suppliers 25-30% Concentrator  $175/$125-$135 1-5%

Wheelchairs Large 30-35% K0823 $3725/$2000-$2300 5-15%

Wheelchairs Seminar 25-30% K0823 $3725/$2300-$2600 Identical no increase

Wheelchairs Publicn=3: 20-25%, 25-30%, 30-35% K0823 $3725/$2600-$2900 1-5%

Enterals Large 25-30% B4150 formula $.67/$.48 - %$.51 5-15%

Enterals Seminar 15-20% B4150 formula $.67/$.44 - %$.47 Identical no increase

Enterals Public 25-30%B4150 formula $.67/$.52-$.55, $.44-$.47 1-5%

CPAP Large 30-35% E0601 CPAP $1020/$650-$700 5-15%

CPAP Seminar 20-25% E0601 CPAP $1020/<$600 1-5%

CPAP Public 25-30% E0601 CPAP $1020/<$600 1-5%

Hospital Beds Large 20-25%E0260 Semi Bed $1250/$950-$1000 5-15%

Hospital Beds Seminar 20-25% E0260 Semi Bed $1250/<S850 Identical no increase

Hospital Beds Public 25-30% E0260 Semi Bed $1250/<$850 1-5%

Large n=33 / Seminar n=123 / Public n=70

All category discount % Top Code Current vs./Bid Capacity Offering

Walkers Large 30-35% E0143 Walker $90/$71-$75 5-15%

Walkers Seminar 25-30% E0143 Walker $90/<$56 Identical no increase

Walkers Public 30-35% E0143 Walker $90/$76-$80 1-5%

Support Surfaces Large 40-45% E0277 Mattress $6500/$<$4500 5-15%

Support Surfaces Seminar 45-50% E0277 Mattress $6500/$<$4500 Identical no increase

Support Surfaces Public 30-35% E0277 Mattress $6500/$<$4500 1-5%

NPWT Large 10-15%E2402 Pump $15500/$13500-$14500 1-5%

NPWT Seminar 25-30%E2402 Pump $15500/$11000-$11500 1-5%

NPWT Public 1-10%E2402 Pump $15500/$13500-$14500, $11500-$12500 1-5%

Mail Order Diabetic Large No bids    

Mail Order Diabetic Seminar n=2: 45-45%, 45-50% A4253KL Strip $33/$15-$17 n=2: <census, 5-15%

Mail Order Diabetic Public 1-10% A4253KL Strip $33/$27-$29 1-5%

Final predictions and projections…Final predictions and projections…

• Research analysts at Credit Suisse, in its recent coverage of Lincare Holdings (LNCR) suggest a projected 30% reduction in overall fees for Round 2.

• Their sample consisted of 29 companies varying 500K to 100 million in revenues. Several VGM members were contacted.

• The survey not only inquired as to whether the company bid, and, if it did, as to what discounts were offered, but requested information on the likelihood that the company would sell their business or reject participation at a certain level of “greater than” round two discounting.

• Lastly: Did the company bid multiple CBAs?

From the report…From the report…

• 68% of survey participants (29 companies varying 500K to 100 mil in revenues) would look to sell businesses / contracts or reject participating with a > 35% reduction in fees.

• 36% surveyed submitted bids other than their residing MSA.

Re the multiple CBA bidding…Re the multiple CBA bidding…• Nothing too surprising here; the 36% who bid

multiple CBAs is about what we expected from our sampling of VGM members.

• Many CBAs are relatively closely adjacent, and as there is no binding bid requirement, HMEs can select which ones they wish to service. (Also, companies that reply to surveys frequently are larger and/or more efficient. I doubt that 36% of all the 8000 bidding companies opted for a multiple CBA offer…)

Bottom line…Bottom line…

• Our surveys were much larger (this was n=29; we received about 230) and the summary sheets are included in this presentation reprinted below for your reference.

• Weighting product categories with larger reimbursements accordingly, these results suggest about a 28% reduction overall…certainly within a reasonable confidence interval of the CS result.

• The Round One “Recompete”…The Round One “Recompete”…

(Charts here…)DMEPOS Competitive Bidding Round 1 Re-bid

Weighed Average Savings

Product Category

Charlotte Cincinnati Cleveland Dallas Kansas City

Oxygen 29% 34% 37% 29% 27%

Standard PMD 18% 16% 21% 26% 21%

Complex PMD 10% 9% 13% 25% 4%Mail-Order Diabetic 54% 55% 54% 55% 54%

Enterals 24% 31% 29% 26% 27%

CPAP/RAD 34% 33% 34% 22% 37%

Hospital Beds 33% 40% 41% 36% 28%

Walkers 28% 34% 34% 35% 28%Support Surfaces

(Charts here…)DMEPOS Competitive Bidding Round 1 Re-bid

Weighed Average Savings

Product Category

Miami Orlando Pittsburgh Riverside Average

Oxygen 27% 33% 37% 28% 31%

Standard PMD 31% 30% 22% 18% 23%

Complex PMD 22% 21% 14% 10% 14%Mail-Order Diabetic 55% 57% 57% 58% 56%

Enterals 30% 28% 31% 29% 28%

CPAP/RAD 32% 33% 36% 31% 34%

Hospital Beds 32% 37% 38% 34% 36%

Walkers 35% 33% 38% 34% 33%Support Surfaces 49% 49%

““DMEPOS Competitive Bidding DMEPOS Competitive Bidding Round 1 Recompete Announced”Round 1 Recompete Announced”

• Earlier this year CMS announced plans to recompete the supplier contracts awarded in the Round 1 Rebid of the DMEPOS Competitive Bidding Program.

• CMS is required by law to recompete contracts under the DMEPOS Competitive Bidding Program at least once every three years.

• The Round 1 Rebid contract period for all product categories except mail-order diabetic supplies expires on Dec 31, 2013. The Round 1 Recompete product categories are:

• Respiratory Equipment and Related Supplies and Respiratory Equipment and Related Supplies and Accessories Accessories

◦includes oxygen, oxygen equipment, and supplies; continuous positive airway pressure (CPAP) devices, respiratory assist devices (RADs), and related supplies and accessories; and standard nebulizers

• Standard Mobility Equipment and Related Standard Mobility Equipment and Related Accessories Accessories

◦includes walkers, standard power and manual wheelchairs, scooters, and related accessories

• General Home Equipment and Related General Home Equipment and Related Supplies and Accessories Supplies and Accessories

◦includes hospital beds and related accessories, group 1 and 2 support surfaces, transcutaneous electrical nerve stimulation (TENS) devices, commode chairs, patient lifts, and seat lifts

• Enteral Nutrients, Equipment and Supplies Enteral Nutrients, Equipment and Supplies

• Negative Pressure Wound Therapy Pumps and Negative Pressure Wound Therapy Pumps and Related Supplies and Accessories Related Supplies and Accessories

• External Infusion Pumps and Supplies External Infusion Pumps and Supplies

• Concerns of these new product groupings for the Round One “Recompete” exist by stakeholders

• The new groupings include products that have never been competitively bid before (either in the Demonstration Projects from the 1990s or Round One) and groups products into higher-level categories that are overly broad.

• Outside of the scope of the policies CMS published in the competitive bidding final rule regarding how product categories would be defined for this program.

• The expanded scope of the categories makes it difficult, if not impossible, for many small and specialty providers to bid

• The specialized, service-intensive nature of providing external infusion pumps makes them inappropriate for bidding.

• Consideration: CMS ungroup the consolidated product categories and create individual categories for the HME items and related supplies and accessories similar to the product categories for the Round One Re-bid and Round Two and exclude external infusion pumps from bidding.

CMS is conducting the Round 1 Recompete CMS is conducting the Round 1 Recompete in the same competitive bidding areas in the same competitive bidding areas

(CBAs) as the Round 1 Rebid. (CBAs) as the Round 1 Rebid.

• A list of the specific items in each product category is available on the Competitive Bidding Implementation Contractor (CBIC) website http://dmecompetitivebid.com/

• The specific ZIP codes in each Round 1 Recompete CBA are also available on the CBIC website.

Boundaries are virtually Boundaries are virtually unchanged…unchanged…

““Single Payment Amounts” from Single Payment Amounts” from Round 1 revert to fee schedule…Round 1 revert to fee schedule…

• Suppliers will NOT be bidding “against” the current SPAs. The bid limit is expected to be the original pre-program fee schedule

Round 1 Recompete – Next Steps Round 1 Recompete – Next Steps

• Now: CMS begins pre-bidding supplier awareness program

• “Summer” (??) 2012: CMS announces bidding schedule & begins bidder education program and Bidder registration period to obtain user ID and password begins

• “Fall” (??) 2012: Bidding begins

An Update on the An Update on the MARKET PRICING MARKET PRICING

PROGRAMPROGRAM

244 Economists – Auction Experts 244 Economists – Auction Experts

• Current program is flawed

• Bids must be binding commitments

• Median pricing method encourages low ball bids

• Composite bid method incentivizes bids that are not related to costs

• Lack of transparency: bidder’s quantity, quality standards and performance obligations are unclear

• “This collection of problems suggests that the program over time may degenerate into a “race to the bottom” in which suppliers become increasingly unreliable, product and service quality deteriorates, and supply shortages become common. Contract enforcement would become increasingly difficult and fraud and abuse would grow.”

• “Implementation of the current design will result in a failed government program.”

Auction Experts PlanAuction Experts Plan• April 1, 2011 mock auction with Professor Peter Cramton

(I participated)

• Conducted on the internet

• Descending clock auction

• Encourages only serious bidders to participate

• Clearing price sets the bid price

• Streamlined and efficient- Immediate information and results

- Timing – close to implementation

- Real transparency

- Lead product in category is bid

Development of Industry AlternativeDevelopment of Industry Alternative

• Political reality requires a replacement plan- vs. H.R. 1041 repeal bill

• Economists’ recommendations- September 2010 letter to the Hill

- April 1, 2011 Auction conference

- April 2011 letter to Obama Administration

- Jan 2012 Data from CMS

• Industry refinement of economists’ proposal

Industry Market Based Pricing ProposalIndustry Market Based Pricing Proposal

• Fundamental structural changes for a sustainable program

• Prevention of low ball bids- Binding bids

- Cash deposits

- Improved capacity rules

Key features…Key features…

• Products- Same as under current program

• Geographic Areas

- Same as under current program

• 2 product categories bid per market

• Remaining 7 product categories prices established via reference pricing

• Smaller bidding areas

• Pricing- Lead product(s) in each category are bid

- Remaining products priced via reference pricing

• Timing- Implementation date same as under current program

- Bidding occurs close to implementation

• Cost - Political requirement of budget neutrality

- Round 1 contracts

MPP Talking Points for the HillMPP Talking Points for the Hill

• Current program is a failure and must be replaced

• MPP is a sustainable market-based system

• Includes same HME items as current bid program

• Implemented on same timeframe

• 2 product categories are bid per geographic area, 7 additional categories in the same areas have prices reduced based on auctions conducted in comparable geographic areas

• Bid areas are smaller than MSAs, more homogeneous

• Bids are binding, cash deposits required to ensure only serious bidders participate

• Bid price is based on clearing price, not median price of winners

• Same rural areas that are exempted in current program are exempted in MPP

Capitol Hill…Capitol Hill…• CBO Score

• Introduction of Bill(s)?

• Timing? Due to the fact that many of the categories and regions in the proposal will be different from current policy, it is feasible CMS will have to conduct a formal rulemaking process,

• Need for intense grassroots activity through December

• Impact of Election year dynamics

• Lame Duck session opportunities

Meanwhile….Meanwhile….

• CMS continues implementation of Round 1, 2 and now 3…

Thank You!Thank You!

Mark HigleyMark HigleyVice President – Development

VGM Group, Inc.

(O) 888-224-1631

(C) 319-504-9515

mark.higley@vgm.com