Summary of CMS' Bidder's Conference on How a Bid is Evaluated
Dear PMC Members:
The Centers for Medicare and Medicaid Services (CMS) held the fifth in a series of competitive bidding "bidder conferences" on How a Bid Is Evaluated. CMS began by reminding providers that while the deadline has already passed, all prospective bidders can still register their authorized operators (AOs) online and have until October 9th to register backup authorized operators (BAOs). Online registration for all users will terminate November 4th at 9pm (EST). CMS also warned providers that user id's and passwords cannot be shared and that all operators must have registered and have their own passwords.
Bid Evaluation Process
CMS will receive online bid data and hardcopy documents. Financial documents sent to the CBIC must be postmarked prior to the close of bidding. Providers should put their assigned bidding number on each page of documents they submit. Providers must, therefore, register and submit Form A on Dbids to get a bidding number prior to submission of their financials.
If the provider sends documents before the Covered Document Review Date (CDRD) (currently set for November 21st) will be notified of any missing documents within 45 days and have an additional 10 business days from the date of notice to resubmit the missing documents to the CBIC. Once the bidding period ends, no changes will be allowed to bid amounts or other changes.
CMS will validate information on the bidding forms with information at the NSC, state licensure boards, accreditation organizations and boding underwriters. In addition, CMS will verify bid eligibility by ensuring that bids in product categories are not higher than the current fee schedule.
Bids will also be reviewed to ensure its bona-fide. CMS will look at the feasibility of the bid and review submitted documentation to see if the submitted bid is rationale and sustainable. If CMS questions a bid they could ask for additional information or disqualify the bid for that product category.
Evaluation of Financial Strength
CMS will review financials to ensure that bidders are able to meet the market demands for the term of the contract. Using tax documents and credit scores, CMS will calculate financial ratios, determine an aggregate financial score, compare this score to a predetermined threshold and adjust provider capacity based on this financial score. In determining demand, CMS will calculate historical data in the Competitive Bidding Area (CBA) and then calculate provider capacity to meet beneficiary demand, limiting anyone provider to 20% of the CBA to ensure at least 5 winning bidders for each product category.
Calculate and Array Composite Bids
CMS will calculate composite bids for each provider in each product category in each CBA. Bids will then be arrayed from lowest to highest per product in each CBA.
Set Pivitol Bid
The lowest compsite bid that includes sufficient number of providers to meet demand will be the pivitol bid. Bids at or below this pivitol bid will be selected as winning bids.
Single Payment Amount
The median bid for the product category becomes the single payment amount (SPA). The SPA is the amount that will be paid to all contracted providers for that product category in the CBA.
Apply Small Provider Provision
CMS will establish a small provider target by multiplying the number of providers whose composite bids at or below the pivitol bid by thirty percent. CMS will then identify the number of small providers whose composite bids are at or below the pivitol bid. CMS will then try to meet the target by awarding additional contracts to providers who were above the pivitol bid.
Award Contracts
Contracts will be sent by mail to all winning providers. The contract will specify product category, CBA, and SPA for the item. Letters will be sent to those providers whose bids were above the winning range. If not enough winning bidders accept contracts, CMS will offer contracts to providers whose bids were above the winning range. These providers, however, would be offered the SPA. Providers whose bids were disqualified will also be notified.
The nest CMS Bidder's Conference is scheduled for October 7th from 2-3pm (ET). The PMC will provide details on how to participate once they are made available.
