Open Door Debate: ‘Bona Fide’ Remains Point of Contention

BALTIMORE — Exasperated diabetes suppliers challenged CMS
officials at Tuesday’s Special Open Door Forum on DMEPOS competitive bidding, the
fifth in a series of eight planned calls.

One diabetic products provider said he did not win a contract
the first time around because the bid came in at 53 percent of the
allowable. “I could pretty much stretch it at 25 percent off of the
allowable, but 53 percent is hard for me,” said the Florida-based
provider. “Most major brands I can’t even buy at that sort of
discount.”

Cindy Dreher, content and policy lead for CMS’ Competitive
Bidding Implementation Contractor, responded by explaining that CMS
officials are “looking for a realistic bid amount that can be
supported by some sort of documentation like a manufacturer’s
invoice. So if it comes in unrealistically low, then we will
contact that supplier and ask for that type of documentation.”

The provider reiterated that at 53 percent, most of the major
brands become too expensive. “This is not a viable business at that
bid,” he added.

With that, the moderator moved on to the next call, only to hear
from yet another Florida diabetes provider who pointed out that the
endocrinologists she deals with would not prescribe “cheap, generic
products” to their patients. “You cannot supply any of those strips
at $17 a box,” she said. “None.”

Much of the conference specifically call focused on the nuts and
bolts of how a bid is evaluated, and reiterated upcoming deadlines.
(View a timeline with
deadlines for competitive bidding.) According to the
posted presentation on the CBIC Web site, CMS
officials will verify eligibility and follow through by: evaluating
financial strength; calculating demand and capacity; setting the
pivotal bid; deriving the single payment amount (the median of the
winning bids); applying the small supplier provision; and finally
awarding contracts.

With 546 participants on the line, and just a 30-minute window
for questions, the spotlight inevitably fell on the question of
“bona fide” bids. Low-ball bids were a large concern among many
callers, as was the process of accurately determining bona fide
bids as in this exchange:

California provider: Is there some calculation you are going to
do to add overhead and profit to make sure that [the bid] could
legitimately be done? Or is just cost going to be the bona fide
number you are looking for?

Dreher: “That is all we are going to be doing ….”

(In a commentary on the issue of “bona fide” bids (Commentary:
Nothing ‘Bona Fide’ about Rebid, HomeCare Monday,
Sept. 14), Rob Brant, general manager of City Medical Services,
North Miami Beach, Fla, expressed a similar frustration. “The main
flaw of the program is that Medicare is not going to verify that a
company can actually offer products and services at these bid
rates,” said Brant, who also serves as president of the Accredited
Medical Equipment Providers Association (AMEPA). “CMS talked about
bona fide bids, but all they said is that they are going to check
the bids against the manufacturers’ wholesale costs. They are still
not going to look at the costs of doing business. People are still
going to be able to put in bids that they can’t afford.”)

On the topic of capacity, one provider asked: “If we bid that we
can handle 30 oxygen concentrators a month, and all of a sudden we
get 65 orders a month, are we allowed to refuse those excess
orders?

Dreher reiterated, “As a contract supplier, you are expected to
serve any Medicare beneficiary who resides in or visits the CBA,
and your contract will say that you can’t refuse a beneficiary who
is in a contract area.”

CMS has scheduled three remaining Special Open Door calls on the
Round 1 rebid for Oct. 7, Oct. 14 and Nov. 4. For information,
check the CBIC Web site at www.dmecompetitivebid.com. (Click “Suppliers,” then
“Education Events.”)

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