Providers get testy with CMS over low bids

Sunday, October 11, 2009

BALTIMORE – HME providers gave CMS officials an earful during Tuesday’s Special Open Door Forum on national competitive bidding, slamming the agency for not doing enough to prevent unrealistically low bids.

In particular, diabetic suppliers expressed dismay and scorn that CMS approved bids during last year’s aborted Round 1 that dropped pricing on test strips by an average  of 43%. They fear the same thing will happen during this fall’s rebid.

 “At $17 a box for test strips, you are losing money,” said one incredulous provider. “Suppliers like me will not take Medicare when you are going to lose money. How are you going to prevent this from happening up front?”

Said another provider: “It’s impossible. That is not a viable business at that bid.”

CMS’s Joel Kaiser addressed this concern by explaining that the agency will compare bids that look unrealistically low with manufacturers’ invoices.

“We will be careful to make sure there are deals in place with manufacturers to obtain those testing supplies at or below the amount bid,” he said. “We’ll be doing a thorough analysis of those low bids to ensure they are viable and bonafide.”

Another provider, however, suggested that examining manufacturers’ invoices (or similar documents, such as cost reports) would not be enough to determine a bid’s viability. Overhead and other business expenses must also be considered, he said.

A CMS official responded: “That is all we are going to do. We are not going to go in and look at your overhead or your other costs because there is no way for us to do that. It is just based on the ability to provide that item at that cost, based on some type of documentation.”

Other questions CMS and CBIC officials addressed at the forum included:

Q. If a winning provider typically handles 30 oxygen concentrators a month, but suddenly sees his business jump to 65 month, can he refuse the excess orders?

A. If you don't have those supplies on hand, you can work with the beneficiary to find another contract supplier who can help them. But CMS will be monitoring that and it should not occur regularly.

Q. Can a provider bid in a CBA where he doesn’t have a physical location?

A. You can’t, unless your existing location can serve the beneficiaries in that CBA. You cannot submit a bid with the intent of opening a location should you be awarded a contact in that CBA.

Tuesday’s Special Open Door Forum attracted 546 listeners and was titled “How a bid is evaluated.” It was the fifth of eight special forums CMS has scheduled to help providers through the bidding process.

A Power Point presentation can be downloaded now from the CBIC Web site at A transcript of the forum and an audio recording will be available at that link on Oct. 7

The next bidding conference, “The Bid Submission Process,” will be held Oct. 7 from 2 pm to 3 pm EST.