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Competitive Bidding Round 2021: Recent Updates And What Happens Next

The CBIC “development phase” is now completed. It ran from October 31 – December 17, 2019, where the contractor developed (reviewed) for bona fide bids, missing financial documents under covered document review, and preliminary bid evaluation (the various eligibility requirements including licensure, accreditation, bid bonds, etc.). Note: Many bidding entities were disqualified due to lack of, or improper submission of, the bid bonds.  
 
The CBIC is currently in the bid evaluation phase. The CBIC and NSC are currently processing the responses they received. Once those tasks are completed in a few weeks, they will determine which bidders move forward in the bid evaluation process based on the information received.
 
The CBIC will then move to the financial document review to ensure bidders submitted the required documents and then determine each qualifying bidder’s tax extract and financial documents to meet the financial standards. The minimum score is 39.5 points. How does it work?
 
CMS uses the required financial documents to calculate standard accounting ratios for each bidder. These ratios, along with the credit report and numerical credit score or rating, are used to evaluate a bidder’s financial health. CMS uses the methodology to compute a financial score for each bidder, with a maximum score of 100 points: 80 points from the ratios and 20 points from the numerical credit score or rating.
 
For each standard accounting ratio, all bidders with a computable ratio will be arrayed in order from best to worst ratio. Bidders in the bottom 10 percent of the array for a specific ratio will receive a score of 1. Bidders in the top 10 percent of the array for a specific ratio will receive the maximum score (7.6 or 9.6). The remaining bidders’ (i.e., those falling in-between the top and bottom 10 percent) scores will be prorated between 1 and 7.6/9.6.
 
Eight ratios have a maximum score of 7.6, while the quality of earnings and operating cash flow to sales ratios both have a maximum score of 9.6. These two ratios are valued higher due to their emphasis on cash flow. (Cash flow is an indication of how money moves into and out of the company and how the company pays its bills, thus making it a reliable measure of financial stability.) Bidders will have their scores for each individual ratio totaled for a maximum score of 80 points.
 
CMS uses a five tier scoring system for the bidder’s credit report and numerical credit score or rating, which aligns with the various approved credit reporting agencies’ evaluation criteria. Bidders can receive a maximum of 20 points for their credit report and numerical credit score or rating, which will be added to their cumulative financial score. The minimum financial score to be eligible for further evaluation is 39.5. Bidders with a financial score below 39.5 will be disqualified from the program, thereby eliminating those bidders with the highest financial risk. Historically, 94 percent of bidders submitting a complete bid (i.e., Form A was approved, Form B was certified, and all required documents were received) have surpassed the minimum financial score of 39.5 throughout each round of the DMEPOS Competitive Bidding Program.
 
The minimum financial score for a bidder to receive additional capacity beyond its historical amount is 49.5. Historically, 60 percent of bidders submitting a complete bid have surpassed the minimum financial score of 49.5 throughout each round of the DMEPOS Competitive Bidding Program. Both the 39.5 and 49.5 minimum financial score thresholds have remained consistent throughout all rounds of the DMEPOS Competitive Bidding Program.
 
This is the last bid evaluation process to determine who the qualified bidders are. All qualified bidders are arrayed from the lowest to the highest bid amounts for the potential to be offered a contract. 
 
The CBIC will then review bidder capacity to meet projected beneficiary demand, conduct a final licensure and PTAN verification check, finalize the single payment amounts (SPAs), identify bidders for contract offers, and notify winners that their offers are posted in Connexion. Remember, the SPAs are now based on the pivotal bid and the maximum winning bid amount for the lead item. The CBIC will then calculate the SPAs for the non-lead items based on the published ratios. This is where they determine the percentage of small suppliers.
 
If your company is not offered a contract, you will receive an email notification that your disqualification notice is posted in Connexion. If you disagree with CMS’ decision, you have 30 days from its posting to request a bidder inquiry or review of the decision. You must make your request in Connexion, as it will not be accepted via mail, email, or telephone call. If the contractor agrees that it made mistakes in the initial review, they will reverse the decisions, and there is potential for additional contract offers. (Note: This will not affect the SPA).
 
It is during the contracting phase where suppliers’ bid surety bond status is determined. If you are offered a contract and your lead item bid amount was at or below the median lead item bid amount, also known as the composite bid rate, that will be noted on the offer in Connexion. If you forfeit the bond, that means CMS will collect $50,000 from your bid surety bond company and the surety company will collect that amount from you. If you do not receive a contract offer or decline an offer for a CBA where your lead item bid amount is above the median composite bid rate, your bid surety bond will not be subject to forfeiture.
 
Questions or concerns? Contact Mark Higley anytime at [email protected] or (888) 224-1631.

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