CMS Releases Financial Yardstick for NCB; Bidders’ Conferences Start Today

BALTIMORE–In a flurry of activity related to the implementation
of national competitive bidding, CMS has scheduled a series of
bidders’ conferences, posted bid limit revisions for some HCPCS
codes and released the measuring stick it will use to evaluate
bidders’ financial stability.

With its 60-day bidding window to close July 13, the agency has
set three educational teleconferences for bidders this week. Each
call will last approximately one hour, including time for questions
and answers. The following calls are scheduled:

—Submitting Your Bid: Today, 2 p.m. ET – This
conference is designed to help bidders navigate the competitive
bidding submission system.

—Understanding the Bidding Rules: Wednesday, June 6, 2
p.m. ET – Officials will discuss issues such as common
ownership, the types of financial documents that must be submitted
as part of an application, small business provisions, the bidding
evaluation process and time frames.

—Product Categories: Friday, June 8, 2 p.m. ET
– Topics will include how product categories were
selected, what constitutes the mail-order diabetic testing supplies
category and what is included in the grandfathering provisions.

There is no charge for the teleconferences, but providers must
register for the calls in order to receive the dial-in number and a
pass code.

Last week, CMS also released the measures that will be used to
evaluate the financial stability of providers who compete in the
bid. According to program requirements, all bids must include
financial documentation in order for a provider to be considered
for a contract.

According to the release, “CMS and its Competitive Bidding
Implementation Contractor (CBIC) will evaluate each bidder’s
financial documentation to determine whether the supplier will be
able to participate in the program and maintain viability for the
duration of the contract period.”

The agency said the measures it will use are “standard
accounting ratios commonly used to evaluate financial health.”
Those ratios include:

• Current ratio = current assets/current liabilities
• Collection period = (accounts receivable/sales) x 360
• Accounts payable to sales = accounts payable/net sales
• Quick ratio = (cash + accounts receivable)/current
  liabilities
• Current liabilities to net worth = current liabilities/net
  worth
• Return on sales = net sales/inventory
• Sales to Inventory
• Working capital = current assets – current liabilities
• Quality of warnings = cash flow from operations/ (net income +
  depreciation)
• Operating cash flow to sales = cash flow from operations/
  (revenue – adjustment to revenue)

The provider’s credit history also will be considered in the
evaluation of its financial health, CMS said.

In related news, the top three HCPCS codes in each of the
competitive bidding product categories were posted on the CBIC site
last week.

CMS also issued notice of several changes. It has revised bid
limit amounts for HCPCS code E2374 (power wheelchair accessory hand
or chin control interface, standard remote joystick [not including
controller], proportional, including all related electric fixed
mounting hardware, replacement only).

The new fee schedule amounts will be implemented on July 2 as
part of the July DMEPOS Fee Schedule Update and will be effective
for claims with dates of service on or after Jan. 1, 2007. CMS
advised providers who have already submitted bids for product
category 3 to consider revising their bids to reflect the
changes.

In addition, CMS made technical corrections to item weights for
products in categories 2 (standard wheelchairs, scooters and
related accessories) and 3 (complex rehab power wheelchairs and
related accessories).

The FAQ section of the CBIC Web site also has been updated with
questions and answers on networks, payments, product categories,
small suppliers and competitive bidding areas.

For more information or to register for the teleconferences,
visit the CBIC Web site at www.dmecompetitivebid.com.