Bid: 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.).
Bid Ceiling: 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, CMS has raised the bid ceiling to 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.
Bid price/amount: The amount a bidder is willing to accept to offers to furnish a competitively bid item to Medicare beneficiaries in a specific CBA as part of the competitive bidding program. It should be rational, feasible, and supportable; include the cost of furnishing the item (services, delivery, etc.) throughout the CBA (except for SNFs and NFs that elect to participate as specialty suppliers) for the duration of the contract period; and include overhead and profit.
Bidding window: The period of time during which bidders can submit bids for consideration in a competitive bidding round. No bids are accepted after the bid window closes.
Bona Fide Bids: 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.
CBA: Competitive Bidding Area. Defined by specific ZIP codes related to an MSA. The CBA may be concurrent with, larger than, or smaller than the related MSA, depending on a variety of considerations (for example, the exclusion of low population-density areas within an MSA or the inclusion of areas outside of an MSA that are part of a normal service area for suppliers in that MSA). The CBA will be the area wherein only contract suppliers may furnish certain DMEPOS items to beneficiaries, unless an exception is permitted by regulations.
CBIC: Competitive Bidding Implementation Contractor. The CMS contractor that is responsible for conducting certain functions of the competitive bidding program, including assisting CMS with performing bid evaluations, supporting CMS’ education efforts, and monitoring the program.
CBP: Competitive Bidding Program. A program established under this rule in a CBA to solicit bids from qualifying suppliers, establish a single payment amount, and award contracts within a designated CBA.
CMS: The Centers for Medicare & Medicaid Services. Federal agency within the United States Department of Health and Human Services (HHS) that administers the Medicare program and works in partnership with state governments to administer Medicaid, the Children's Health Insurance Program (CHIP), and health insurance portability standards.
Composite Bid: Note: This is a new definition and is not the composite bid from previous rounds. The bid submitted by the supplier for the lead item in the product category.
Entity: For competitive bidding purposes, the term “entity” refers to a unique bidder. For example, for a supplier that is commonly owned and/or commonly controlled and has multiple locations, all the locations furnishing competitively bid items within the designated CBA are considered one entity
Fee schedule: Medicare Part B payment amounts, as authorized by section 1834 of the Social Security Act, for DMEPOS items and services that are not included in the competitive bidding program.
Gap Period: The period of time where there would be no contract suppliers and payment for all items and services previously included under the CBP would be based on the lower of the supplier’s charge for the item or fee schedule amounts adjusted in accordance with sections 1834(a)(1)(F) and 1842(s)(3)(B) of the Social Security Act.
HCPCS: Healthcare Common Procedure System. A standardized coding system used to process certain claims, including those for DMEPOS items and services, submitted to Medicare, Medicaid, and other health insurance programs by providers, physicians, and other suppliers.
Lead Item: The item in a product category with multiple items that haswith the highest total nationwide Medicare allowed charges of any item in the product category prior to each competition. CMS will identify the lead item through guidance. The bid on the lead item is defined as the “composite bid” even though it is only for one product.
Lead Item Pricing: 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.
Maximum Winning Bid: 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.
MSA: Metropolitan Statistical Area. Area designated by the U.S. Office of Management and Budget (OMB) for the purposes of census data and other urban population calculations. An MSA can include major cities and the suburban areas surrounding them.
Network: A group of between two and 20 small suppliers that form a legal entity to provide competitively bid items throughout an entire CBA. These suppliers must certify they cannot independently furnish all competitively bid items in the product category to beneficiaries throughout the entire geographic area of the CBA. The network collectively submits a bid as a single entity
Non-lead Item Pricing: Single Payment Amounts for a non-lead item would be based on the relative difference in the fee schedule amounts for the lead and non-lead item before the fee schedule amounts were adjusted based on information from the CBP.
NSC: National Supplier Clearinghouse. The CMS contractor with responsibility for managing the assignment and maintenance of Medicare supplier numbers to the home medical equipment industry
Pivotal Bid: The lowest composite bid (i.e., the clearing price for the bids on the lead item product) based on bids submitted by suppliers for a product category that includes a sufficient number of suppliers to meet beneficiary demand for items in that category.
Product Category: A grouping of related items that are used to treat a similar medical condition.
PTAN: Provider Transaction Access Number. Previously referred to as the National Supplier Clearinghouse (NSC) supplier or billing number.
Single Payment Amount (SPA): Allowed payment for an item furnished under a competitive bidding program.
Subcontractor: An entity, individual, or group of individuals that contracts with a contract supplier to supply a service either to a contract supplier or directly to the beneficiary. Medicare payment is made to the contract supplier for the cost of the service.