With the new lead item pricing methodology for Round 2021, will the non-lead item bid amounts be screened by the Centers for Medicare & Medicaid Services (CMS) to ensure they are bona fide?

A supplier’s bid for a lead item represents its bid for furnishing the lead item and all non-lead items in the product category, i.e., each supplier now submits one composite bid for furnishing all of the items in the product category as a whole. Therefore, due to lead item pricing, it is not feasible to use pricing documentation (e.g., invoices) alone to determine if the supplier’s composite bid is bona fide. While the lead item is, generally speaking, the major revenue generator for suppliers, CMS will review pricing documentation for the lead item and other information to substantiate the supplier’s ability to furnish both the lead item and non-lead items in the product category.

For example, in addition to requiring pricing documentation for the lead item, suppliers who are required to substantiate their bid will also be required to submit a narrative rationale that describes their ability to furnish all items in the product category. An acceptable narrative rationale should demonstrate how the supplier considered the impact its bid amount for the lead item would have on the potential single payment amounts for the non-lead items. If a supplier is asked to provide a narrative rationale and documentation to substantiate its bid amount and they do not provide the necessary information, or the information provided does not substantiate its bid amount, that supplier’s bid for the applicable competitive bidding area (CBA) and product category combination(s) will be disqualified.

As a reminder, Round 2021 of the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program will be the first time that bid surety bonds are required. While we will continue to screen and evaluate all bids to ensure they are bona fide, requiring that bidders obtain a bid surety bond for each CBA in which they submit a bid is an additional measure to ensure that bids are bona fide in Round 2021. 

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Updated: 07/09/2019