Home Health & Hospice Week

Don't forget to factor in rising gas prices.

The clock is ticking toward the close of bidding for round one of Medicare’s DMEPOS competitive bidding program, but if you’re too quick to bid, you could seriously undercut your reimbursement for years to come.

Consultants and others report that some suppliers are considering basing their bids on a formula that doesn’t take costs fully into account.

“That is a really dangerous thing to do,” warns Denise Fletcher, attorney with Brown & Fortunato in Amarillo, TX.

Avoid this: Suppliers are making a big mistake if they think it makes sense to arrive at a bid amount simply by discounting the current fee schedule amount for an item by a certain percentage, agrees Miriam Lieber of Lieber Consulting in Sherman Oaks, CA. Lieber also reports hearing of suppliers asking consultants to throw out percentage discounts as an answer to their bid price.

“Picking a random number is a potential nightmare since it will cause low-balling, which in turn will skew the winning bid price,” she cautions.

Do this instead: To ensure that your bid price is one you can live with for three years--with some allowance for profit--take a close look at costs associated with the product in question.

Make Only Educated Guesses

Besides the cost of the item itself, don’t neglect to factor in such expenses as order processing, delivery costs and the cost of staffing at a level that’s appropriate for servicing beneficiaries’ needs.

Tripping point: “Many suppliers don’t have a good handle on their costs,” says Fletcher, and that must change before companies vie for a Medicare contract.

“Gas prices alone could be a huge variable over the next three years,” she says. “Take that into account as you calculate your bid if you will be paying your own fuel costs.”

Even mail-order diabetic suppliers should consider delivery costs, though there’s likely to be less up and down with charges from delivery firms such as UPS.

Bottom line: “Consider the fact that you still have to make a profit to remain viable,” says Lieber.

Note: Jeffrey Baird of Brown & Fortunato will present an Eli-sponsored audioconference, “Competitive Bidding 101: The Secret to Winning the Bidding War,” June 14 at 1 pm ET. Sign up at http://www.audioeducator.com/ or by calling 1-800-874-9180. For a subscriber discount, use this code: 15%OFFAUDIOHH.