More transparency needed: supplier capacity, bonafide bids

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Thursday, December 20, 2018

WASHINGTON – Stakeholders also plan to push for transparency on how CMS determines supplier capacity.

In the past, the agency has manipulated capacity based on a provider’s historical capacity. That means, a provider may submit a bid with a supplier capacity for 100 walkers, but CMS, in looking at the provider’s historical capacity, determines it can do 200 walkers.

“You have contract suppliers who say, ‘I was a winner and because I was the only local supplier, I was forced to do 8,000 walkers, and I don’t want to do that many,’” Brummett said.

Additionally, stakeholders plan to push for transparency on how CMS determines bonafide bids.

“What’s the threshold for verification,” Brummett said. “We don’t feel like CMS has anything in writing. If I bid $100 on an item and my product invoice from the manufacturer says $99—to me that’s not a sustainable price; it hasn’t allotted for overhead, etc. So if a bid is X% below the ceiling, should it automatically trigger a verification?” 

The introduction of lead-item pricing raises other questions about bonafide bids, including, will the agency apply the verification process just to the lead item, or all items?

“We think it should apply to all items,” Bachenheimer said.

On supplier capacity and bona fide bids, stakeholders plan to make recommendations, but they’re still “brainstorming” and “tossing around ideas” right now, they say.