Mistake could exclude providers from competitive bidding

Sunday, January 6, 2008

BALTIMORE – An honest mistake could keep some HME providers from participating in the first round of national competitive bidding.

In late December, CMS sent letters to providers who made the following mistake when assembling their bids: Instead of submitting the acquisition cost of a product, they supplied the monthly rental amount. By doing this, the providers appear to be submitting low-ball bids, which CMS wants to prevent.

Several providers reported to The VGM Group that they’d received a certified letter from Palmetto GBA, the competitive bidding contractor (CBIC). The letter notified the providers that CMS questioned the legitimacy of one or more bids, and that the providers must respond on or before Jan. 7, 2008, or risk disqualification in the product category in question.

The letter cites CMS’s authority to accept only “bona fide” bids—that is, bids that are rational for a particular product. Generally, this is interpreted as a bid that exceeds the acquisition cost for the item, said Mark Higley, VGM’s vice president-development. (This prevents bidders from extreme “low-balling” to effectively guarantee that their bid amounts will be under the pivot—or cutoff—point in the overall array of bids.) Accordingly, the letter demands proof of the bidder’s acquisition costs. Bidders may submit this proof via fax (the recommended method, according to the contractor) or via certified mail.

“We hope that CMS will err on the side of giving the supplier the benefit of the doubt and allow for a correction to be made on a program that has such drastic consequences,” said Walt Gorski, AAHomecare’s vice president of government affairs.

CMS has advised recipients of the letter that "it is important to note that bid amounts may not now be revised."

With that in mind, VGM advises the following: All providers who have unintentionally bid on a monthly rental bid basis should immediately contact CMS per the instructions included on the letter. Attach the appropriate acquisition documentation. Also include a detailed letter explaining the issues with "Form B," e.g., the two columns indicating "RR" and "1 unit = 1 month,” and state clearly that your intention was to bid the item at the "purchase" amount (that is, at 10x the submitted bid). Finally, politely request CMS’s consideration to accept the bid as “bona fide.”

In all, Higley suspects between 100 and 200 providers may have received the letters.