CliffsNotes: How to bid smart

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Friday, May 24, 2019

YARMOUTH, Maine – HME providers are swimming in changes surrounding Round 2021, so HME News hopped on the “Bid Smart” webcast last week to hear what would float to the top in a one-hour webcast. Here are some highlights.

Know the ceiling

If there’s one thing the dream team that is Kim Brummett, Cara Bachenheimer and Mark Higley drove home, it’s this: The new bid ceiling is not the current reimbursement rates. It's the 2015 rates plus CPIs updates (also known as the unadjusted 2019 rates)—and those rates are significantly higher. Using oxygen concentrators as an example, the current rate, on average, is $72.50; and the bid ceiling is $189. The easiest way to stay in tune with the new bid ceiling is by using the calculators available at www.dmecbpeducation.com; the calculators feature the ceiling in the same spreadsheet where a provider can try out various bids.

Don’t ignore non-lead items

Speaking of bidding, Bachenheimer noted that even CMS has discussed the need for providers to look at the impact of their bids for lead items on rates for non-lead items. “You have to bid high enough so you can provide all the items,” she said. “My favorite quote from CMS is, if the supplier can’t accept a reduction of 50% for a non-lead item, they would need to factor this into what they bid for the lead item because the bid for the lead item would also represent their bid for furnishing all of the items in the product category.”

Pay to play

A new requirement for providers: the bid surety bond, which will create a “chilling effect” on speculation, Higley says. Providers must obtain a $50,000 bond in each of the 130 areas that they plan to submit a bid. The bond requires providers in the lower half of an array to accept contracts and remain in good standing for at least 90 days. Higley explained that if 100 providers bid for a category in an area, for example, 70 might get rejected and 30 might be offered contracts. The bottom 15 bidders have to accept contracts; the top 15 bidders “can rip up the offer with no penalty, whatsoever,” Higley says.

Pass the test

Bachenheimer noted that the industry had pushed for more transparency in terms of how CMS analyzes and qualifies bidders, and the agency recently released an FAQ with some details. Step 1 in the process: CMS will look at a provider’s financial documents and assign them a score. Step 2: The agency will perform an analysis to determine whether or not the provider can meet demand. And it goes on from there.

Be careful with capacity

If a provider’s capacity is low—which will be the case for providers that didn’t participate in the last round of bidding—that’s not necessarily a bad thing. As long as a provider’s bid is in the array, the more providers with lower capacities, the more will make it into the array. Providers should simply use their historical capacity, because that’s generally what CMS will use, as long as the provider’s financials are sound, explained Bachenheimer.

To listen to a recording of the webcast, go here

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