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Round 2021 Competitive Bidding Program Updates

To our valued members:

VGM Government Relations will be offering regular updates to events and timelines relative to the upcoming Round 2021 competitions for the 16 product categories in 130 CBAs.

This article highlights licensure issues and also includes a historical summary of earlier evaluations and procedures, as well as the likely future steps to initiate the 2021 program.

To begin, all suppliers that submitted bids for the Round 2021 program will be receiving notifications related to an additional review* to ensure applicable licenses are current and up-to-date before contracts are awarded.  

The notices to prepare suppliers for the third bid licensure evaluation will begin soon, and the CBIC will forward three emails to bidders over a period of time. All licensure updates should be made via the NSC Web Form Submission portal at https://www4.palmettogba.com/NSC_WebForm_Submission/

Suppliers should not upload any documents in Connexion in response to these reminders.

As always, the CBIC cannot offer a bid to a supplier that does not have a current license. (Appropriate licensing does not necessarily suggest the supplier will receive a contract offer.)

Accordingly, please ensure that all requisite licenses are up-to-date. Again, if you need to upload a license, please use the NSC Web Form Submission portal at https://www4.palmettogba.com/NSC_WebForm_Submission/. Do not send to the CBIC.  

*The first license check was initiated at the close of the bid window (Sept 19, 2018) and the second was completed during the preliminary bid evaluation (PBE) process in Dec 2019.  

VGM is most aware that concerns might pick up during this notification. We are here to help! Please reach out to the VGM competitive bidding response team as needed at 800-642-6065.

Historical and Upcoming Round 2021 Procedures, Timelines and Events

IDENTIFY COMPLETE BIDS (Completed)
CBIC validated a complete bid by ensuring:

  • An approved Form A
  • At least one certified Form B
  • At least one bid surety bond for a competitive bidding area (CBA) indicated on the bid
  • At least one required financial document
NOTIFY BIDDERS OF ACTIONS REQUIRING RESPONSES IN CONNEXION (Ongoing)
Inform Bidders to view their “my to-do” list in Connexion.
View and respond to the following, if applicable: (Completed)
  • Bona Fide Bid Notice (10/31 – 11/14/19)
  • Notice of Covered Document Review Findings (CDTD) (11/15 – 12/02/19)
  • Preliminary Bid Evaluation (PBE) (12/03 – 12/17/19)
Review and Accept/Decline Contract Offers (Fall, 2020)
 
BONA FIDE BID EVALUATION (Ongoing)
  • Screen and evaluate bid amounts for each CBA and product category combination (“Competition”)
  • Evaluate and compare to all bid amounts for the same lead item throughout all CBAs
  • Notify identified bidders to substantiate bid amounts
PROCESS FOR REVIEWING COVERED DOCUMENTS )
  • Tax Return Extract
  • Income Statement
  • Balance Sheet
  • Statement of Cash Flows
  • Credit Report with Numerical Credit Score or Rating
PERFORM PRELIMINARY BID EVALUATION (PBE) PROCESS (Ongoing)
  • Active PTAN
  • Accreditation
  • Licensure
  • Common Ownership/Control
CONDUCT BID EVALUATION BASED ON BIDDERS’ RESPONSES TO NOTICES (Ongoing)
  • Determine bids are bona fide
  • Verify all required financial documents are received
  • Validate eligibility requirements for active PTAN, licensure, accreditation, and common/ownership control

BID SURETY BOND REQUIREMENTS (Completed)
Each bidder was required to obtain a bid surety bond in the amount of $50,000 for each CBA for which they submit a bid.

FINANCIAL DOCUMENT REVIEW (Ongoing)
Financial documents must:
  • Be for the most recent year they filed a tax return with the IRS
  • Be for the same 12-month time period as the tax extract
  • Be on the same organizational level as the tax extract
FINANCIAL STANDARDS 
CMS uses the tax return extract and the financial documents to calculate standard financial ratios for each bidder. These ratios, along with the numerical credit score or rating, are used to calculate a bidder’s financial score.
The maximum financial score a bidder could receive is 100 points – 80 points from the financial ratios and 20 points from the numerical credit score or rating.
The minimum financial score to be eligible for further evaluation is 39.5 points.
  • It is CMS’ intention to set the threshold for disqualification at a level that would eliminate only very poor performers.
  • This threshold has remained consistent throughout all rounds of the DMEPOS competitive bidding program.

REVIEW BIDDER CAPACITY TO MEET PROJECTED DEMAND (Ongoing)
Calculate projected beneficiary demand.

REVIEW BIDDER CAPACITY TO MEET PROJECTED DEMAND (Ongoing)
Determine bidder’s capacity to meet projected demand.
Step 1:  Analyze bidder’s financial health to determine ability to furnish estimated capacity.
  • Bidder’s financial score meets minimum financial threshold to receive additional capacity beyond historical amount
  • Bidder’s accepted capacity is greater than 20% of projected demand
Establishes preliminary single payment amounts (SPAs) until completion of Step 2.
 
Step 2: Perform additional analysis to ensure demand is met if some bidders, who plan to expand, need time to ramp up to estimated capacity.
Evaluate bidders’ capacity to confirm they are capable of furnishing items at levels exceeding historical capacity.
  • Use most recent 12 months of claim data
  • Perform prior to calculating final SPAs
  • Perform additional scrutiny of bidders’ capacity
Group 1:
  • Meets minimum required financial threshold to receive additional capacity
  • Has experience providing lead item in the CBA
  • Has sufficient ramp-up revenue
CMS accepts the higher of estimated or historical capacity for Group 1 bidders.
 
Group 2:
  • Meets minimum required financial threshold to receive additional capacity
  • Does not have experience providing lead item in the CBA, but experienced in other CBAs where bids submitted
  • Has sufficient ramp-up revenue
Use experience factor to determine the capacity for Group 2 bidders: Number of CBAs with lead item experience/Total number of CBAs bid for lead.
 
Group 2 bidders’ capacity is adjusted by multiplying estimated capacity in each competition with no experience by the factor.
  • Example:  5/10 = .5  
  • 1000 * .5 = 500
Group 3:
  • Does not meet minimum required financial threshold to receive additional capacity
  • Is a new or specialty supplier
  • Does not have experience providing lead item in the CBA
CMS accepts the historical capacity for Group 3 bidders, which is zero for bidders with no experience furnishing the lead item.
 
CONDUCT FINAL LICENSURE & PTAN VERIFICATION (Ongoing)
  • Ensure licensure is maintained for contract award
  • Verify each location on a bid is still active
CALCULATE SPAS & IDENTIFY BIDDERS FOR CONTRACT OFFERS (Summer 2020)
  • Finalize the pivotal bid and selection of winning suppliers
  • Set SPA based off the maximum winning bid amount for the lead item and calculate SPAS for all non-lead items based on ratios
  • Determine percentage of small suppliers
BEGIN CONTRACTING PHASE 
  • Announce SPAs (Summer 2020)
  • Post Contract Offers in Connexion (Fall 2020)
POST DISQUALIFICATIONS & BEGIN INQUIRY PROCESS (Fall 2020)
Post disqualification notices in Connexion.
  • Request review (inquiry) of disqualification reason in Connexion within 30 calendar days of the date on the bid disqualification letter
  • Limit one inquiry per bidder number – no new or follow-up inquiries considered after the 30-day deadline
RETURN OR FORFEITURE OF BID SURETY BONDS (Fall - Winter 2020)
  • Contract offer for CBA and lead item bid amount at or below median composite bid rate = Forfeit surety bid bond if contract declined
  • No contract offer or decline offer for CBA where lead item bid amount is above median composite bid rate = Return surety bid bond liability
IMPLEMENT ROUND 2021 (January 2021)
  • Implement Round 2021 on January 1, 2021
  • Furnish items to Medicare beneficiaries by contract suppliers
  • Provider other options to non-contract suppliers
GRANDFATHERING PROVISION (January 2021)
  • Applies to oxygen and rented durable medical equipment (DME) only; not applicable to enteral nutrition
  • Limited to items under rental agreement at the time the Round 2021 is implemented
  • Notify beneficiaries whether you chose to become a grandfathered supplier or not
  • Reimbursement based on the Round 2021 SPAs
SUBCONTRACTING OPTIONS (January 2021)
Subcontractors may perform the following:
  • Purchase of inventory
  • Delivery, setup and instruction on use of the item
  • Repairs of rented equipment
Notify CMS of any subcontracting arrangements
 
CBIC CUSTOMER SERVICE CENTER & EMAIL UPDATES (Ongoing)
  • Open 9:00 a.m. to 5:30 pm Eastern Time M-F
  • 877-577-5331

 

 

 

 

 

 

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