Competitive Bidding:
Important Issues Applicable to the
Round Two “Recompete”
http://vgmncbservices.com/
This webinar offers all HME providers contemplating placing bids in the "Round 2
Recompete" program an opportunity to prepare for the myriad of steps and procedures
required by the competitive bid contractor. Attendees will have access to online "tools" and
checklists to assist them in the process. A live question and answer period will be offered, in
addition to participants being able to email Mark specific concerns and scenarios and/or
issues that they would not rather discuss during the webinar. Participants are urged to
review these documents in detail (see link above).
My Contact Information:
• Mark Higley, Vice President - Regulatory Affairs
[email protected] O: 888.224.1631 C: 319.504.9515
• Please email me your questions! I will respond today.
• You may call me tomorrow most of the day. It will help if
you email me the question first and request a call to
follow-up.
• FAQs from the webinars will be posted to my vgm.com
front page blog tomorrow.
As you already know…
• On July 15, 2014, CMS announced its plans to recompete the
supplier contracts awarded in Round 2 of the DMEPOS
Competitive Bidding Program and the National Mail-Order
diabetic testing supplies competition. (It is required by statute to
do at least every three years.)
• The current contract period expires June 30, 2016; the new
contracts will begin on July 1, 2016 (which is a contract period of
two and one half years).
• For the recompete, CMS is making changes to both the
composition of the product categories (including adding new
products) and the number of competitive bidding areas (CBAs).
The product categories to be included in the Round
2 Recompete are as follows:
• Enteral Nutrients, Equipment and Supplies
• General Home Equipment and Related Supplies and
Accessories (includes hospital beds and related
accessories, group 1 and 2 support surfaces,
commode chairs, patient lifts, and seat lifts)
• Nebulizers and Related Supplies
• Negative Pressure Wound Therapy (NPWT) Pumps
and Related Supplies and Accessories
• And…
• Respiratory Equipment and Related Supplies and
Accessories (includes oxygen, oxygen equipment,
and supplies; continuous positive airway pressure
(CPAP) devices and respiratory assist devices (RADs)
and related supplies and accessories)
• Standard Mobility Equipment and Related
Accessories (includes walkers, standard power and
manual wheelchairs, scooters, and related
accessories)
• Transcutaneous Electrical Nerve Stimulation (TENS)
Devices and Supplies
• CMS is conducting the Round 2 Recompete in virtually the
same geographic areas that were included in Round 2.
• BUT…Because of changes to the metropolitan statistical
areas and boundary changes to ensure that no CBA is
included in more than one state, however, there will be
117 CBAs in the Round 2 Recompete (compared to 91 in
the current Round 2 competition).
• A list of the ZIP codes included in each CBA is also available
on the CBIC website (dmecompetitivebid.com – click on
upper left “Round 2 Recompete tab) .
• Here are some screenshots from
http://www.dmecompetitivebid.com/palmetto/cbicrd2rec
ompete.nsf/DocsCat/Home (*)
(*) Or just Google “CBIC” or dmecompetitivebid
See the left menu tabs for current information and
status. Registration and the Bid Window is open…
And…review this tab to review the videos, fact sheets, bid
evaluation data, and bid worksheets…
Here is updated timeline for the Round 2 Recompete:
So…let’s start with common questions we receive…
• There was already a “Round 1 recompete”
that affected, for example, Charlotte and
Miami and the rest of the original nine CBA
areas. What’s different this time around for
providers considering placing a bid or bids in
Birmingham?
• The Categories!...the current Oxygen and CPAP
Devices/Respiratory Assist Devices product categories
were combined into a single product category; the
current Walkers and Wheelchairs/Scooters categories
were combined into a single product category
• A new General Home Equipment category was
created, including the previous Hospital Beds and
Support Surfaces categories in addition to new
products; and a new TENS devices product category
was added.
• The external infusion pumps and supplies product
category, which was bid in the Round 1 Recompete, is
not included in the Round 2 Recompete.
• The general home equipment category
removes transcutaneous electrical nerve
stimulation (TENS) devices.
• The nebulizers and related supplies are now
separate category (as compared to the Round
1 respiratory equipment category which
included these products).
• CBAs in multi-state MSAs have been defined
so that there are no multi-state CBAs.
• There are 117 CBAs in the Round 2
Recompete.
• The coverage area,
however, is virtually
Identical!!
Multi-state MSAs are no longer:
PHILADELPHIA-CAMDEN-WILMINGTON, PA-NJ-DE-MD
Round 2 Current
Multiple State CBA
Round 2 Recompete CBA
Philadelphia
• I believe there is an opportunity with the
Recompete to improve the reimbursements
(“single payment amounts”) for Round 2
products and services.
• For some bidding companies, these product
categories combine products not typically
furnished by the supplier in the today’s
marketplace.
• For example, HMEs furnishing oxygen and
oxygen equipment do not necessarily furnish
CPAP devices and RADs.
• The combining of product categories (e.g., oxygen and CPAP) might
result in a reduction in the amount of out-of-area bidders, who, in
previous rounds, bid CPAP in virtually all areas of the country.
• Delivery of CPAP supplies have seen, arguably, an increase in dropshipments. Now that the bidding supplier must also offer oxygen
and oxygen equipment in the same CBAs (requiring comparably
more in-home service), I anticipate a decrease in the number of
out-of-area contracts offered (with a resulting increase in
reimbursement/single payment amounts).
• There are also about 15% less supplier locations in the
marketplace.
Supplier
Type
Supplier Type Code Description
Code
Count of Suppliers
with Active Med ID
(11/01/2010)
Count of Suppliers
with Active Med ID
(11/01/2011)
Count of Suppliers
with Active Med ID
(11/01/2012)
Count of Suppliers
with Active Med ID
(11/01/2013)
Count of Suppliers
with Active Med ID
(11/01/2014)
54
MED SUPPLY COMPANY
9,438
9,503
8,880
8,222
7,881
A6
MEDICAL SUPPLY COMPANY WITH RESPIRATORY THERAPIST
2,109
1,972
1,941
1,876
1,793
53
MEDICAL SUPPLY COMPANY WITH ORTHOTIC-PROSTHETIC
701
698
704
679
764
51
MEDICAL SUPPLY COMPANY WITH ORTHOTIC PERSONNEL
416
403
391
361
358
52
MEDICAL SUPPLY COMPANY WITH PROSTHETIC PERSONNEL
313
287
269
248
242
B3
MEDICAL SUPPLY COMPANY WITH PEDORTHIC PERSONNEL
61
74
99
113
104
B1
OXYGEN & EQUIPMENT
66
81
96
93
93
58
MEDICAL SUPPLY COMPANY WITH REGISTERED PHARMACIST
59
70
74
87
91
13,163
13,088
12,454
11,679
11,326
TOTAL
vgmncbservices.com
And “Servicing the Entire CBA”
• A contract supplier must furnish competitively bid
items to any beneficiary who maintains a permanent
residence in or who visits a CBA and who requests
those items from the contract supplier.
• A large number of House Representatives and the
OIG recognize that a number of contract suppliers
are not providing products as required by their CB
contracts. AAHomecare will continue to work with
House Representatives regarding this problem.
• The CBIC also recognizes the existence of the
“access” problem. It is identifying noncompliant
contract suppliers by conducting “secret shopper”
telephone calls.
• Currently occurring in your service area? Turn the
violating supplier in to your regional liaison!
EXAMPLE: Florida Liaison is Latisha Davis
• Very important!!! – HME providers must be aware that
the “bid limits” for all Round 2 recompete items will
revert back to the current Medicare Fee Schedule. In
simpler terms, the upper bidding amount will not “start
at” the current reimbursement (single payment amount)
in effect now for a Round 2 CBA.
• By way of example, one month’s rental of E1390 oxygen
concentrator in most CBAs range from SPA
reimbursement from $90 = $100. The recompete bid
limit for this item will be $178.24 (plus any inflation
adjustment… $180.92) and NOT $90-something…
USE the VGM Worksheets!!!
Let’s do an example from the actual
worksheets…
The four worksheets exactly mirror the official CBIC bid preparation worksheets available online at
http://www.dmecompetitivebid.com/palmetto/cbicrd2recompete.nsf/docsCat/Round%202%20Recompete~
Bidding%20Suppliers~Bidding~Bid%20Preparation%20Worksheets?open&expand=1&navmenu2=Bidding^Su
ppliers^BiddingL3&navmenu=Bidding^Suppliers||
Select one or more of the four regional worksheets (about 30 metro CBAs are on each worksheet). The
VGM versions are here: http://www.vgmncbservices.com/
The metropolitan bidding areas in each of the four worksheets are in alphabetical order.
Each of the metro areas is identical as to the HCPCS codes within each category. However each metro area
is unique with regard to the historical utilization, code weight and bid limit. The bid limits are at the current
2015 fee schedule — and NOT the previous Round 2 single payment amounts!
Open a spreadsheet and select a CBA of interest.
In the “Your Bid Amount” column (M) there is a “fail-safe” feature: If you include a typo (too common in
previous rounds) that is either above the current Bid Limit/Fee Schedule for any HCPC item in any category,
or more than 55% below the Bid Limit, it will turn RED. This is not suggesting a bid for any code will be
disqualified for being non “bona-fide” but more so to prevent the accidental input of, for example, $1.00
versus $100.
Also note the “Undiscounted Composite Bid for Category” amount (in $) under Column
L. This is the weight of each item times the current fee schedule/bid limit and then
summed.
If you wish to achieve a category discount of 30%, you would need to have this undiscounted
composite bid amount reduced by 30%. The worksheet allows you to see this “bottom line”
as you input your bid amounts.
The far right column indicates “how much” each of the product codes will move the
composite bid. If the individual code is significant (that is it moves the composite bid more
than 5% it is notated in RED.
With the exception of the TENS category, most of the codes in the categories are
insignificant. Some are less than 1/10th of one percent. A few are even less. Look for the
codes in RED first and concentrate on these items. Insignificant codes can generally be
discounted at minor amounts (even one cent) without lowering the overall composite bid.
(Try it!!)
Meet Financial Standards
• All bidders must meet certain “financial standards”
• Bidding suppliers are required to submit specified financial documents for the
most recent year in which a tax return has been submitted.
• For the Round 2 recompete financial documents will represent calendar or
fiscal year 2013 or 2014.
• See official documents at:
• CMS determines a supplier’s financial viability based
on financial ratios calculated from the bidder’s
submitted financial information.
• The financial ratios can be found on the CBIC website.
• All bidders must meet CMS’ established financial
thresholds to be considered for a contract
• Commentary and examples of common HME ratios
and other financial metrics are included on this link:
http://vgmncbservices.com/FallSeminar
Series/FSS.asp
You need a recent credit report
(90 days)
• https://creditreports.dnb.com/m/home
Some tips and common issues…
• Bidders do not have to submit a bid for all
recompete product categories and CBAs but
may choose to bid for certain product
categories in certain CBAs.
• However, the program (and DBidS software)
requires bidders to submit bids for ALL codes
within the category.
• Contracts are awarded only to locations listed on
Form A in the online DMEPOS Bidding System
(DBidS).
• It is important that suppliers identify the PTANs of all
locations that will provide competitively bid items in
a CBA; only those locations identified on the bid will
be included in the contract and eligible for Medicare
payment for competitively bid items at the time the
program begins.
• Multiple commonly owned locations bidding?
Submit financials documents from ALL location!!
Commonly Owned
and/or Controlled Locations
• Suppliers may not bid against themselves for the same
product category in the same CBA.
• Therefore, commonly owned or commonly controlled
suppliers must submit one bid that includes all commonly
owned and/or controlled locations that would furnish
competitively bid items in the same product category in the
designated CBA.
• Separate bids submitted for the same product category in
the same CBA by supplier organizations that are commonly
owned or controlled will be disqualified.
“Bona Fide” Bids
• CMS requires that all bid amounts must be bona fide (rational
and feasible for the bidder to furnish at the bid price) and that
“suppliers should not submit a bid for an item at a loss in
order to improve their chances of winning a contract”.
• “Suppliers should include all costs related to furnishing an
item to the beneficiary in the bid price. CMS will evaluate bids
to ensure that they are bona fide and may request that a
supplier submit additional information, such as
manufacturers’ invoices, to validate the bid amount.”
• See VGM worksheets for “bona-fide” bid check!!!
The bidding process includes three steps:
• 1. Register for user ID and password
• 2. Submit bid in the bidding system
• 3. Mail required hardcopy documents
Registered? If not – time to do it!
•
http://www.dmecompetitivebid.com/palmetto/cbicrd2recompete.nsf/docsCat/Round%202%20Recompete~Bidding%20Su
ppliers~Registration?open&expand=1&navmenu=Bidding^Suppliers||)
• In part, the text reads: In order to submit a bid for the DMEPOS
Competitive Bidding Program Round 2 Recompete and the national mailorder recompete, you are required to obtain a user ID and password to
access the online DMEPOS bidding system (DBidS). To do so, you must
first register in the Individuals Authorized Access to the CMS Computer
Services (IACS) online application. Even if you registered during a
previous round (Round 1 Recompete, Round 2, or the national mail-order
competition), you must register in IACS again. Please keep your user ID
and password as you will be asked to use them again in the future.
• Several companies report that they have tried to follow those
instructions and received a message something to the effect of “that my
SS# and e-mail address were already in use so you cannot register”.
• There is a toll-free help line: Competitive Bidding
Implementation Contractor (CBIC) customer service center tollfree at 877-577-5331 between 9 a.m. and 9 p.m. prevailing
Eastern Time, Monday through Friday.
• During a call to the customer service center the CSR
acknowledged that the information is misleading.
• Here is the bottom line: The fix is to go into IACS under your
previous registration, go to “my profile” and then go to “Add
App.” Select “DMEPOS”…and the rest is just straightforward
data entry.
• Most of the CSRs are now aware of the issue. Have a problem?
Call the number above…or call me.
Bidding: “Form A”
• Form A requests information about the
bidder’s organization and the organization’s
locations that are included in the bid.
• Suppliers must identify their organizations as
one of a specific business organization type
(supplier with single location, supplier with
multiple locations, or network).
“Form A”
• Form A requires the bidder to provide identifying
information, such as the legal business name, doingbusiness-as name, mailing address, and physical address
for both the business organization and for each location
identified by the PTAN.
• Bidders will also select the CBA(s)/product category(s) for
which they are bidding.
• Only the PTANs entered on the bid will be included in a
contract award and will be the only PTANs qualified to
receive payment from Medicare for competitively bid
items
Suppliers are only required to complete
ONE Form A…
• Suppliers submit ONE Form A, regardless of the
number of CBAs and product categories being bid.
• Exception: If a supplier has more than one location
within the same CBA and one or more of the
locations furnishes a different product line that does
not compete against the other location(s), the
supplier will have distinct bidder numbers and must
complete separate Form As representing each bidder
number.
“Commonly Owned” or “Commonly
Controlled”…
• Commonly owned suppliers are those where one or
more of them has an ownership interest totaling at
least 5 percent in the other(s). The term “ownership
interest” is defined as “the possession of equity in the
capital, stock, or profits of another supplier,” as
defined in 42 CFR 414.412(e).
• Commonly controlled suppliers are those where one
or more of the supplier’s owners is also an officer,
director, or partner in another supplier.
• Commonly owned or commonly controlled suppliers
must submit one bid that includes all commonly
owned or controlled locations that would furnish the
same product category within the designated CBA.
• Separate bids submitted for the same product
category in the same CBA by commonly owned or
controlled supplier organizations will be disqualified.
• Not certain or confused?? Call me…
“Form B”…the Bidding Form
• Includes the bidding forms for each product
category/CBA.
• A separate Form B is required for each competition. (*)
• Requests historic information about the supplier’s
experience in the product category and/or CBA. The
supplier must provide the number of units it has
furnished to all customers, Medicare and non-Medicare,
for the top 80% of the HCPCS codes in the product
category during the past calendar year in the CBA.
• Form B requires suppliers to identify the manufacturer
and model of the products they plan to make available to
beneficiaries in the CBA.
• This information will be used to populate the Medicare
Supplier Directory on the Medicare website,
http://www.medicare.gov/.
• The supplier directory will list the manufacturer
information for the top items provided by contract
suppliers to allow beneficiaries to make informed choices
about the available products.
• Need a model number for an obscure product? Call VGM
Wholesale at 866-613-5101
Bidding on Multiple CBAs? Multiple
Form B “Glitch” reported…
• There is a slight delay in the DBidS application when a supplier
modifies its bid to add competitions.
• As the application gathers the data to present on the screen, there is
a five second or less delay before the page is refreshed. The
timeframe could be longer depending on the user's Internet
connection.
• Additionally, if a supplier wants to make changes to its location
information, this cannot be done in DBidS. The application was
enhanced to populate the PTAN information with the data in PECOS.
The only way to update the information is by submitting an update to
the NSC on the CMS-855S or via the online PECOS portal.
• Questions? Call the CBIC at 877-577-5331
The Bidding Form:
• Total Estimated Capacity – Requires suppliers to
provide their “expected” capacity.
• The total estimated capacity indicates the number of
units per HCPCS code you estimate you can furnish
throughout the entire CBA for one (1) year.
• The bid preparation worksheet on the CBIC website
contains the unit by product category definitions and
historical utilization.
CMS’ Capacity Instructions…
• “To determine your expected capacity, calculate the
number of units you currently furnish in the area on a
yearly basis and add units you would be capable of
providing annually as of the start of the contract period.
It is anticipated that suppliers can maintain this level or
greater throughout the contract period.”
• However, and as most of you know, I have
comments on some of the pitfalls relative to its
effect on your bid, and the industry as a whole…
Bidding Form, continued…
• Bid Price – The amount for which a supplier can
furnish the item, “including all costs associated with
furnishing the item”.
• “The bid price must be rational and feasible and
must indicate the cost of furnishing a new item or
the rental of a new item at the bid price submitted.”
• Item description, bid type, item weight and fee
schedule amount will be provided on the bid form.
• After a supplier has completed Form B, the authorized official
or backup authorized official must (electronically) certify
Form B for consideration of a contract.
• Bids will be evaluated based on the information provided in
DBidS and submitted in the package of hardcopy documents.
• Once the bid window closes, all bids are considered final and
cannot be amended by the bidder. Bidders can check the
DBidS status page for 45 days after the bid window closes to
confirm that their online bid is complete, approved, and
certified by the authorized official or backup authorized
official, and whether their hardcopy documents have been
received by the CBIC.
Certification Statement
• After completing Form A and Form B, the AO must
certify the bid in DBidS. In order for a bid submission
to be complete, an AO or backup AO must approve
Form A and certify that the information provided is
true, correct, and complete.
• The certification statement serves as the bidder’s
electronic signature.
• Bidders can verify the status of their bid by visiting the
DBidS home page.
Steps you can take now:
• Have a copy of the required state license(s) on file
with the National Supplier Clearinghouse (NSC) and
in the Provider Enrollment, Chain and Ownership
System (PECOS) for the physical location(s) that will
be on your bid to provide the items in the product
category(s).
• Make sure your CMS-855S enrollment application is
up-to-date with the NSC and in PECOS and indicates
the products you furnish in the states where you
provide the items.
• For reference purposes, review the NSC DMEPOS State
License Directory on its website at
www.palmettogba.com/NSC
• The directory provides general state licensing requirements
and contact information for each state’s licensing board or
agency. The directory is only a guide. Licensing requirements
change periodically, and it remains the responsibility of the
bidding supplier to identify and obtain all required licenses.
• For more information about licensure requirements, consult
the appropriate license issuing agency listed on the guides or
call the NSC at 866-238-9652.
http://www.palmettogba.com/Palmetto/Providers.nsf/docsCat/National%20Supplier%20Clearin
ghouse~Resources~Licensure%20Information~Licensure%20Information?open
Hard Copy Documents
http://www.dmecompetitivebid.com/palmetto/cbicrd2recompete.nsf/docsCat/Round%202%20
Recompete~Bidding%20Suppliers~Bidding~Required%20Financial%20Documents?open&expan
d=1&navmenu2=Bidding^Suppliers^BiddingL3&navmenu=Bidding^Suppliers||
http://www.dmecompetitivebid.com/Palmetto/Cbicrd2Recompete.Nsf/files/23_Hardcopy_D
ocument_Package_Checklist.pdf/$File/23_Hardcopy_Document_Package_Checklist.pdf
Competitive Bidding:
Part 2 – 2015 and Beyond…
The Affordable Care Act amended the Medicare Modernization
Act statute to mandate use of information from the DMEPOS
competitive bidding program to adjust the fee schedule amounts
for DME in areas where competitive bidding programs are not
implemented by no later than January 1, 2016.
CMS-1614-P is now FINAL!
• The Affordable Care Act amended the Medicare Modernization Act
statute to mandate use of information from the DMEPOS
competitive bidding program to adjust the fee schedule amounts
for DME in areas where competitive bidding programs are not
implemented by no later than January 1, 2016.
• CMS estimates that by applying bid rates throughout the entire
United States it would save over $7 billion over FY 2016 through
2020.
• This affects about half of the Medicare FFS beneficiary lives!!
• Proposed (changes to) the methodology for making
national price adjustments based upon information
gathered from (all previous) competitive bidding
program (CBPs).
“
National” Pricing
• How? Adjust fee schedule amounts for states in different regions
of the country based on previous competitive bidding round
pricing in these “regions”.
• The regional prices would be limited by a national ceiling (110%
of the average of regional prices) and floor (90% of the average
of regional prices)
• There were three possible “Regions” (see next)
• The “BEA” regional array was selected.
• CMS determines a regional price for each state equal
to the average of the single payment amount for an
item or service from the CBAs that are fully or
partially located in the same region where the state
is located.
• CMS determines a national average price equal to
the average of the regional prices.
• The regional price cannot be greater than 110
percent of the national average nor less than 90
percent of the national average price.
• Adjust fee schedules annually using CPI-U
• Revise the SPA each time there is a new round
of bidding.
• Use national ceiling for rural states and outside
contiguous US.
• “Although we believe that the costs of furnishing items and
services in rural areas are different than the costs of
furnishing items and services in urban areas, there is no
evidence to support a statement that the difference in costs is
significant.
• However, in order to proceed cautiously on this matter in the
interest of ensuring access to covered DMEPOS items and
services, we are proposing to phase in the price adjustments,
as explained below, so that we can monitor the impact of the
adjustments as they are gradually phased in.”
While not released…
• We have the current SPAs in all markets from
the current programs.
• As CMS has provided us the methodology to
determine the regional payment amounts
(RSPAs), and has confirmed that the “BEA”
regional array will be utilized, we can hence
determine the RSPAs now.
Summary of Provisions
• The new adjusted pricing for DMEPOS CBP items will begin
on January 1, 2016. This will be a phase-in process over 6
months, allowables will be reduced by 50% on 1/1/16 and
100% on 7/1/16.
• CMS finalized a pricing methodology for non-competitive
bidding areas.
• A rural area will be defined as a postal zip code that has
more than 50 percent of its geographic area outside of a
metropolitan area (MSA) or a zip code that has a low
population density area that was excluded from a
competitive bidding area. The payment amount will be 110
percent of the average of the SPAs of all the areas where
CBPs are implemented.
• Let’s use an example.
• A fictional HME provider has asked me what the
reimbursement would be in north Winston county for a
month of oxygen on January 1 2016 and after July 1,
2016…
• Some of Winston county is in a metropolitan area but
not included in the CBA (bid area).
• Alabama is in the Southeast region.
• Using the averages of the oxygen single payment
amounts in the of all CBAs in this region, the
reimbursement would be $136.57 on January 1, 2016,
and then $94.89 on July 1, 2016.
• But how about service areas not adjacent to a
metropolitan area in Alabama?
• These rural areas that have not been subject
to competitive bidding, and hence the
adjusted fee schedule amounts will be based
on 110 percent of the national average RSPA.
• As noted earlier, CMS has adopted an
expanded definition of rural areas eligible for
this provision.
• The array of ZIP codes defined as rural will be
released sometime in 2015.
• Thus, the RSPA in rural Alabama for E1390 is
$103.38.
• Lastly, how about a state that has NO CBAs?? CMS
dubs these states as “rural” or “frontier”
• In this case the SPA would again be 110% of the
national average.
Can we see (now) the actual RSPAs?
• Yes! AAH Regulatory Council has created a
document which includes the high utilization
codes. Go to:
http://vgmncbservices.com/Documents/RSPAPricingAnalysis.xlsx
Summary…
Contact Information
• Mark Higley, Vice President - Regulatory Affairs
[email protected] O: 888.224.1631 C: 319.504.9515