An offer to furnish an item or items for a particular price and time period that includes, where appropriate, any costs services that are directly related to the furnishing of the item or items (services, delivery, etc.).
The bid ceiling is the limit against which bidders can submit bids for the lead item in each product category in each CBA. Under this revised CBP, the bid ceiling is the 2015 Medicare fee schedules. This means that bidders can bid for the lead item in a product category up to the level of the 2015 Medicare fee schedule for the item. The 2015 Medicare fee schedule can be found here.
In November 2016, CMS announced it was raising the bid ceiling for future bid rounds (see here). CMS’ revised regulation specified that the bid limits will be the fee schedules that would apply if none of the competitive bid program derived reductions were applied to the fee schedule. Therefore, the bid limits, or ceilings, for the 2021 bid round is the 2015 Medicare fee schedule amount, updated by applicable CPI updates, for the lead item in each product category. Originally in the 2014 regulation CMS set the bid limit to the adjusted fee schedule. However, CMS raised the ceiling recognizing that the bid program would not be sustainable if the bid ceiling was lowered each round. Bidders should be mindful of this new higher bid ceiling.
Bidders are required to make sure their bids are “bona fide.” This means that the bid prices must be sufficient to ensure that the bidder can provide the lead and all the non-lead items, including all related services, at the price levels that result from the lead item pricing method. CMS and its CBIC contractor will perform “bona fide” bid analyses to make sure that bidders bids are at sufficient levels to ensure appropriate access.
CMS will use “lead item pricing” in the next round of bidding. This means that bidders will submit a bid for the “lead item” in each product category. The lead item will be the item in the product category with the highest total national Medicare allowed charges the previous year. All other items in the product category will be priced off that lead item, based on the relative payment levels reflected in the 2015 Medicare fee schedules (prior to competitive bid-based pricing). Therefore, while bidders will only be submitting one price for each product category for each bid area, bidders should analyze how that lead item’s price will dictate/affect the prices for all the other items in the product category. The ”bid calculator” on this web site can be used to understand how different prices for a lead item will affect all the non-lead items in a product category.
CMS is changing the methodology to determine the price for the lead item in each product category. The bid price is called the “single payment amount,” or “SPA” for items in the bid program. Under the reformed/revised system, CMS will establish the SPA for the lead item in each product category in a CBA based upon the maximum (highest) bid amount by suppliers in the winning range. That is, once the group of initial contractors are identified, the SPA for the lead item in a product category will be set at the highest bid price of those contractors.