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A Successful Competitive Bidding Model

A Successful Competitive Bidding Model. July 8, 2014. Brief Legislative History. The Balanced Budget Act of 1997 -Demonstration Projects The Medicare Prescription Drug, Improvement and Modernization Act of 2003 —Established NCB to be phased in in successive rounds starting with 10

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A Successful Competitive Bidding Model

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  1. A Successful Competitive Bidding Model July 8, 2014

  2. Brief Legislative History • The Balanced Budget Act of 1997-Demonstration Projects • The Medicare Prescription Drug, Improvement and Modernization Act of 2003—Established NCB to be phased in in successive rounds starting with 10 • The Medicare Improvements for Patients and Providers Act of 2008—Halted Round 1 after 14 days • Patient Protection and Affordable Care Act of 2011—Requires Round 2 to be expanded from 70 to 91 MSAs and extend NCB rates nationally by 2016 • Budget Control Act of 2011—Requires Medicare Provider Payments cut 2% (AKA—Sequestration) • American Taxpayer Relief Act of 2012—Requires HHS to apply payment rates from national mail order for diabetic supplies to non-mail order

  3. Financial Impact Discount Capacity Sustainable Growth Rate/Sustainable Loss Rate Key Threats Rate Cut Deductibles Audits

  4. Elements of Strategy • Acceptable Profit Margin—Know It/Operate to It! • Costs Associated with NCB Contract • Capabilities, Vulnerabilities and Intentions of Rivals • Consequences of Winning • Consequences of Not Winning

  5. Planning for NCB Identify SWOT Create Strategic Plan Identify Tactics to Accomplish Plan Manage to Plan Cash Flow vs. A/R

  6. CB Preparation and Planning Core Competencies Cash Flow Management Outrun the Sins of Your Past

  7. Business Expansion • Open or acquire location in CBA • Open new locations for additional bid opportunity • Acquire non- CBA for diversification • Expand to Non-CBAs • Diversify Payor Mix (Medicare still best payor) • Direct Contracts • Hospice • Veterans Administration • SNFs

  8. NCB Is In Place—Now What? • The Strategic Planning Process • Plan A—Winning Our Bids is Critical • The Winner’s Curse—now what? • Changes in operations • Changes in staffing • ABC process now really kicks into gear • Know your business/know your weaknesses • Plan B—Not Winning Provides Chaos and Opportunity • Rely on branches in non-NCB areas (2016) • New programs/New services not affected by NCB (managed care, specialty programs Vents, Infusion, Retail, Adjacent Business Opportunities • Plan C—Sell your company…

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