In a Round 2 area? Pull your credit report and think twice before declaring your capacity


To say that providers are living, eating and breathing competitive bidding right now is probably an understatement. By extension, we are, too.

There pretty much isn't a day that goes by that we don't get an email from at least one provider asking us a question about competitive bidding or, more frequently, making a point to us about competitive bidding.

A provider emailed Managing Editor Theresa today about a deadline that is quickly approaching that he says few providers know about. Here's the deal, according to the provider:

Providers who plan to participate in the program must submit a credit report, and they must submit said credit report "within 90 days prior" to the opening of the bid window. Well, the bid window is scheduled to open Jan. 30. That's the week after next. The provider called the CBIC to confirm that this is the case. It is.

"That means that if a company does not pull their credit report before Jan. 30 (assuming that the bid window actually opens on that date) then they may be disqualified," he wrote.

Last week, Editor Liz (that's me!) got an email from a provider who had recently attended a competitive bidding seminar and learned that capacity has everything to do with how the bid rate turns out. Here's the deal, according to the provider:

Providers must tell CMS what percentage of the bid area they can cover, with the most being 20%. When CMS looks at the pool of bids it receives, its goal is to reach 120% capacity to cover for contingencies. If all providers tell CMS they can cover 20% of the bid area, the agency will award the bid to the six lowest bidders (6x20=120) and average their bids to determine the bid rate. If those six lowest bidders bid $10, $11, $12, $13, $14 and $15, the average bid will be $12.50. But if all providers tell CMS they can cover 1% of the bid area, the agency will have to award the bid to 120 bidders, and the average bid will be spread across 120 bids instead of six.

"Is this huge or what?" the provider wrote. "The only argument I heard against offering 1% is that by offering 20% you drive the competition out, but at what cost?"

HME News can't possibly follow up on all of the intricacies of competitive bidding (see first example) and it definitely can't give advice on how to bid (see second example), but I thought these two items were good food for thought.

Liz Beaulieu