Competitive bidding analysis

Sunday, May 20, 2007

Everyone should know that CMS opened the competitive bidding window on May 15. Suppliers have until 9 p.m. EST July 13, 2007, to submit bids. Clearly, anyone who wants to bid should have begun this process by now. Information on the bid process, the bidding forms and questions and answers about competitive bidding are on the Competitive Bidding Implementation Contractor (CBIC) Web site. The CBIC also has posted a Webcast on the competitive bidding program rules and how to complete the bid forms. Anyone preparing a bid should take the time to listen to these programs.

Given the amount of information that suppliers must have available to compute and submit their bids, the 60-day bid window could prove to be a challenge for many suppliers. Suppliers should be approaching their bid preparation systematically so that they can resolve any unexpected problems before the bid window closes. Deciding on a bid amount is only one aspect of submitting a bid. Suppliers must take the time to understand the bidding rules, the type of supporting documentation they must submit, and what, if any, disclosures they must make. Suppliers must also collect and organize their supporting documentation and prepare or finalize any legal documents they will submit with their bids. Even one of these tasks can be a challenging project on its own. For suppliers who do not have a separate team to prepare the bids, key personnel will have to manage the bidding process while also running the operations.

Adding to the complexity of the process is the piecemeal way CMS has issued guidance to suppliers. The final rule contains important information on bid submission and evaluation, but many critical requirements have been issued informally through program transmittals or the CBIC Web site ( A supplier who is not familiar with the basic requirements or where to find answers to questions will face hurdles. Consequently, it is important to understand the threshold requirements for winning a bid because these can guide your bid preparation. First, CMS has stated that only bids from suppliers who meet the program's eligibility requirements will be considered. Only suppliers accredited by an accrediting organization recognized by CMS and who meet quality standards can be awarded contracts. Unaccredited suppliers may submit a bid, provided that their accreditation application is pending. Suppliers must be accredited by Aug. 31, 2007, if they want to be awarded a contract.

CMS's eligibility standards also require suppliers to be enrolled in good standing in the Medicare program; disclose information pertaining to past or current sanctions, program related convictions, exclusions or debarments; hold all necessary state and local licenses; and meet financial standards identified by CMS. Importantly, the type of financial information a supplier must submit will depend on the supplier's choice of business entity. For example, the financial documentation that sole proprietors will be required to submit will be different from that of public companies. Finally, suppliers must submit a "bona fide" bid that complies with all of the terms and conditions contained in the request for bids. While CMS does not define what it means by "bona fide," the term usually means "valid" or "legitimate." This at least suggests that CMS will be examining bids to determine their validity, although there is no explicit provision in the rule that would require CMS to perform this type of review.

Given the scope of this program and the confusing collection of program guidance that has been issued to date, suppliers should be working steadily to complete their bid package. No one should underestimate the challenge of having it done in 60 days.

Healthcare attorney Asela Cuervo is based in Washington, D.C.