The deadline for bids is getting close. In addition to checking and double-checking bid packages, suppliers should remember to verify the number of lead-item units CMS needs to service the targeted competitive bidding area (CBA) in its entirety. Expected demand is a critical consideration that should inform, and support the reasonableness of, every Form B capacity estimate. Offering more than the whole area needs may suggest an error in the calculation.
CMS first uses bid price, then bid capacity, to determine how many contracted suppliers the agency will need in each bidding area. CMS sets maximums for price through bid limits and maximums for collective estimates through projected beneficiary demand units. Despite the availability of these contextual resources, suppliers may enter uninformed and flawed estimates which may compromise the contracting process.
Lead-Item Estimates Should Include …
According to CMS, bidders should start with their own historical sales of the targeted lead item in the specific CBA under bid. While a certain amount of growth may be anticipated, the final estimate should be reasonable in relation to the supplier’s actual volume and CMS’ expected demand for the area.
To keep it real, as the kids say, bidding suppliers should not include historic sales:
Don’t Forget to Convert Most Rented Items to Purchase Units
To avoid extreme over-projection, suppliers should use caution when calculating capacity for rental items. With the exception of oxygen and ventilators, for which capacity should be estimated in rental units, CMS expects suppliers to convert all other products, including capped rental items, to purchase units. For capped rentals, suppliers should divide the number of historic rental months by 10 to calculate unit capacity for bid purposes.
Check for Reasonableness
In the end, when the number crunching is complete, the estimated capacity should make sense in the circumstances. Would it surprise you to know CMS only expects nine E0260 hospital bed purchases in Fresno, CA for the entire 2021 calendar year? 2,065 E1390 oxygen concentrator rentals in Pierce and St. Croix Counties, WI? 158 E0601 PAP purchases in Mercer County, PA? Something must be off if a bidder’s estimated capacity is 1,500 CPAPs for Mercer County, eh?
The objective is to reasonably estimate each bidder’s ability to serve a specific area with a specific product. With all of the spreadsheets and calculations and variables, it is easy to forget that. And so, as the closing of the bid window approaches, MiraVista urges suppliers to revisit projected beneficiary demand units in all CBAs to ensure estimates are accurate and contextual.
CMS first uses bid price, then bid capacity, to determine how many contracted suppliers the agency will need in each bidding area. CMS sets maximums for price through bid limits and maximums for collective estimates through projected beneficiary demand units. Despite the availability of these contextual resources, suppliers may enter uninformed and flawed estimates which may compromise the contracting process.
Lead-Item Estimates Should Include …
According to CMS, bidders should start with their own historical sales of the targeted lead item in the specific CBA under bid. While a certain amount of growth may be anticipated, the final estimate should be reasonable in relation to the supplier’s actual volume and CMS’ expected demand for the area.
To keep it real, as the kids say, bidding suppliers should not include historic sales:
- To non-Medicare beneficiaries.
- Outside the specific CBA.
- Of items other than the singular lead-item .
Don’t Forget to Convert Most Rented Items to Purchase Units
To avoid extreme over-projection, suppliers should use caution when calculating capacity for rental items. With the exception of oxygen and ventilators, for which capacity should be estimated in rental units, CMS expects suppliers to convert all other products, including capped rental items, to purchase units. For capped rentals, suppliers should divide the number of historic rental months by 10 to calculate unit capacity for bid purposes.
Check for Reasonableness
In the end, when the number crunching is complete, the estimated capacity should make sense in the circumstances. Would it surprise you to know CMS only expects nine E0260 hospital bed purchases in Fresno, CA for the entire 2021 calendar year? 2,065 E1390 oxygen concentrator rentals in Pierce and St. Croix Counties, WI? 158 E0601 PAP purchases in Mercer County, PA? Something must be off if a bidder’s estimated capacity is 1,500 CPAPs for Mercer County, eh?
The objective is to reasonably estimate each bidder’s ability to serve a specific area with a specific product. With all of the spreadsheets and calculations and variables, it is easy to forget that. And so, as the closing of the bid window approaches, MiraVista urges suppliers to revisit projected beneficiary demand units in all CBAs to ensure estimates are accurate and contextual.
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