Competitive Bidding Definitions

The following definitions deal with terms commonly used in the Competitive Bidding process.

Authorized Official:The authorized official must be appointed by the supplier and be the supplier’s general partner, chairman of the board, chief financial officer, chief executive officer, president, direct owner of the supplier organization, or must hold a position of similar status and authority within the supplier’s organization. The authorized official has the legal authority granted by the supplier to submit a bid on behalf of the company and to enter into a contract with Medicare to furnish competitively bid items to Medicare beneficiaries.

Balance Sheet:The position statement that presents the cumulative financial position of a firm at a specific date. The balance sheets reports financial position in terms of the basic economic model of the enterprise: Assets = Creditors’ Equity + Owners’ Equity.

Bid:An offer to furnish an item for a particular price and time period that includes, as appropriate, any services that are directly related to the furnishing of the item.

Bid Price:The amount for which a bidder offers to provide a competitive bid item to Medicare beneficiaries in a specific competitive bidding area as part of the competitive bidding program.

Bidder Number:System generated number that identifies each unique bidding entity. Every time a bidder submits a bid as a different legal entity, it will be assigned a new bidder number.

Bidding Window:The period of time during which the bidder can submit bids for consideration in a competitive bid round.

Centers for Medicare & Medicaid Services (CMS) Approved Accreditation Organization:An organization that has been approved by CMS to accredit suppliers of DMEPOS items. A listing of approved accreditation organizations can be found by visiting:

Competitive Bidding Area (CBA):An area established by the Secretary for the purposes of the Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program.

Competitive Bidding Implementation Contractor (CBIC):The CMS contractor that helps to implement the Medicare DMEPOS Competitive Bidding Program.

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.

Common Ownership or Control:For purposes of this definition—(i) an ownership interest is the possession of equity in the capital, stock or profits of another supplier; (ii) a controlling interest is one or more of owners of a supplier is an officer, director or partner in another supplier; and (iii) two or more suppliers are commonly-owned if one or more of them has an ownership interest totaling at least 5 percent in the other(s).

Contract Supplier:An entity awarded a contract by CMS to furnish items under a competitive bidding program.

Entity:For competitive bidding purposes, the term entity refers to a unique bidder. For example, every time a supplier submits a bid as an individual company and then submits a different bid as a member of a network for a different product category or in a different CBA, it will be considered a different entity. However, if a supplier with common owners and multiple locations submits a bid, 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.

Healthcare Common Procedure Coding System (HCPCS):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.

Income Statement: A financial report on the results of a business’s performance as reflected in the profitability of a business over a certain period it itemizes the revenues and expenses of past that led to the current profit or loss.

Item:A product included in the competitive bidding program that is identified by a HCPCS code, which may be specified for competitive bidding (for example, a product when it is furnished through mail order), or a combination of codes and/or modifiers, and includes the services directly related to the furnishing of that product to the beneficiary. Items that may be included in a competitive bidding program are:

  1. Durable medical equipment (DME), as defined in 42 C.F.R. §414.202 and further classified into the following categories:
    1. Inexpensive or routinely purchased items, as specified in 42 C.F.R. §414.220(a);
    2. Items requiring frequent and substantial servicing, as specified in 42 C.F.R. §414.222(a);
    3. Oxygen and oxygen equipment, as specified in 42 C.F.R. §414.226(b); and
    4. Other DME (capped rental items), as specified in 42 C.F.R. §414.229.
  2. Supplies necessary for the effective use of DME.
  3. Enteral nutrients, equipment, and supplies.
  4. Off -the-shelf (OTS) orthotics, which are orthotics described in section 1861(s)(9) of the Social Security Act that require minimal self-adjustment for appropriate use and do not require expertise in trimming, bending, molding, assembling, or customizing to fit a beneficiary.

Key Personnel:The key personnel includes such individuals as officers, partners, directors, managing employees, or members of the board of directors.

Letter of Intent:A signed letter that represents an agreement to enter into a subcontracting relationship, but is not the contract between the supplier and the subcontractor.

Multiple Locations:Two or more locations that are owned by one owner or by more than one owner (commonly-owned or controlled). Each location must be identified by its unique 10-digit NSC#.

National Supplier Clearinghouse Number (NSC #):The National Supplier Clearinghouse number required to bill Medicare for DMEPOS.

Network:A group of between two to 20 small suppliers that meet certain requirements, including that they cannot independently furnish all of the items in the product category for which the network is submitting a bid to beneficiaries throughout the entire geographic area of the CBA, and that collectively submit a bid as a single entity.

Network Member:Any member of a network, including the primary network member.

Primary Network Member:The network member that submits a bid on behalf of the network.

Product Category:A grouping of related items that are used to treat a similar medical condition.

Request for Bids (RFB):A part of the formal process by which CMS is requesting eligible Medicare DMEPOS bidders to submit bids for the amount in which they would furnish items and services included in the competitive bid program, as well certain documents (hardcopy and/or electronic) that demonstrate that the bidder meets applicable financial, quality and accreditation requirements.

Sanctions:Include, but are not limited to, debarment from any Federal program, sanctions issued by the Office of Inspector General (OIG),) or other federal entities, or sanctions issued at the state or local level. This includes any actions taken against any member of the board of directors, chief corporate officers, high-level employees, affiliated companies,, network members, or subcontractors.

Single Location:A supplier with one location that is owned by one or more owners and represented by a single NSC#.

Single Payment Amount:Allowed payment for an item furnished under a competitive bidding program.

Small Supplier:A supplier that generates gross revenue of $3.5 million or less in annual receipts including Medicare and non-Medicare revenue.

Specialty Supplier:A SNF or NF that has been awarded a competitive bidding contract and elects to furnish competitively bid items only to its own residents to whom it would otherwise furnish Part B services

Statement of Cash Flow:Includes cash flow resulting from operating, financing, and investing activities.

Subcontractor:An entity an individual, or a group of individuals that contract with a contract supplier to supply a service either to a contract supplier or directly to the beneficiary for which Medicare payment is made to the contract supplier for the cost of the service.


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