NCB 101: How to Get Started, Successfully
- By Don Clayback
- Mar 03, 2008
The second-round national competitive bidding (NCB) metropolitan statistical areas (MSAs) have been announced along with product categories. So while the Centers for Medicare &Medicaid Services (CMS) had yet to announce specific deadlines and ZIP codes as we went to press, if you live in one of those MSAs, it’s time to start planning your strategy. We asked Don Clayback of The MED Group for advice on how to get started.Q: I’m a supplier in one of the 70 second-round MSAs. I may want to bid, but I’m not sure. What do I do first?
Your first step is to get educated. Get familiar with the basics of the program. The second step is to identify the impact on your business now and into the future. From there, determine your interest and level of participation. Learn as much as you can about what went on in Round 1.
Visit the Competitive Bidding Implementation Contractor (CBIC) Web site (www.dmecompetitivebid.com). Look at the announced product categories, and consider what categories you may bid in. Take advantage of whatever educational programs you can access. At The MED Group we have developed a tailored NCB Support Program for our members. This includes a series of “Preparing Your Bid” e-conferences, hands-on workshops, and our proprietary NCB Assistant, an online costing and bid system. Stay tuned for CMS updates.
Q: If I’m leaning toward NOT participating, will I be in good company? Or should I expect most of my local competitors to submit bids?
To choose not to bid is a major decision and requires serious analysis. This is a “winners take all” in that if you are not a winning bidder, you will no longer be able to provide/bill Medicare for those products. Right now, we don’t have real Round 1 numbers, but I think it’s reasonable to say most, if not all, primary HME companies in a CBA submitted a bid.
Q: What information do I need to gather as part of the bid process?
In simple terms, you need to register as a bidder, gather company information and bid information, submit your bid submission package both online and in hard copy form as appropriate, and then await announcement of the winners.
There is a great deal of information required. You’ll need to gather a variety of business information… ownership, locations, ID numbers, management, financial statements, credit report, etc. You also need to gather the revenue and expense information for the specific items you’ll be bidding on. This includes the specific products you’ll be supplying (by manufacturer and model number), how many units you can provide, their costs, the direct and indirect expenses you incur in providing them, and the desired profit you need to be sure your bid amount is realistic for your business.
Take the necessary time to gather the right information, and then use it to put together an educated and logical bid.
Q: How can I avoid bidding too low, i.e., making a bid that I can’t later support?
This is the most critical part of the process. You need to submit a winning bid, which means not just that you are one of the companies awarded a contract, but that you get the business at an amount you can stay in business at. Every company must approach this process in a thorough and fully informed manner.
This requires a lot of thought, data, and analysis. At MED we have created our NCB Assistant. This is an online product database and bid calculation system. It allows members to select from a database of more than 5,000 products to use in their bid submission. This identifies the manufacturer, model, and product cost. Members are then able to load in their other expenses to arrive at the “total cost” of providing the item. From there you add the profit margin that is needed, and you then have the amount at which you need to bid.
Once you have determined your bid amount, you then can evaluate it against the current allowable and the Round 1 winning bid amount (once it has been released). This system is customizable to the needs of individual companies and covers the key areas involved in developing a winning bid. A bidding company needs to either create their own bidding tools and worksheets or look to other sources to obtain these resources.
Q: What advice do you have for suppliers considering NCB participation?
First, determine the impact on your business, both as it stands now and looking at your plans for the future. Start your preparation now! Second, get educated and develop your gameplan. Assemble your team, identify your resources, and determine the system you will be using to develop your bid. Mapping out a timeline from start to submission is critical. Don’t underestimate the time that will be required and the detailed business information you’ll need.
Q: What have we learned so far from Round 1 of NCB?
First, that CMS was not ready as they had said they would be. The problems encountered by the bidders were completely unfair and unnecessary. The industry had been expressing concerns all along, and those comments were ignored. The Round 1 bidding suppliers paid the price in man hours, dollars, and frustrations.
The announcement of the winning bids, both the providers and the new fee schedules, will provide key information for those bidding in Round 2.
For Round 2 bidders, starting early and gathering your information is key. You need to know the rules and allow yourself as much time as possible to work on your bid submissions. Hopefully, the lessons from Round 1 will lay the foundation for the Round 2 bid submission process to be much smoother. l
This article originally appeared in the March 2008 issue of Mobility Management.
Don Clayback is VP of government relations for The MED Group, based in Lubbock, Texas. Contact The MED Group by calling (800) 825-5633, or by visiting www.medgroup.com.