Consistent with past rounds of competitive bidding, all bids will be screened and evaluated to ensure they are bona fide, both as to the lead item and as to all non-lead items in a product category. When requesting information to support the bona fide nature of a bid, CMS has traditionally asked bidding entities to provide a narrative rationale that describes the bidding entity’s ability to furnish lead and non-lead items in the product category and to provide supporting documentation that substantiates the bidding entity’s ability to obtain the lead item for less than its bid amount. CMS requires the narrative rationale explain how the bidding entity considered the impact that its bid amount for the lead item would have on the potential SPAs for the non-lead items.
Specifically, the narrative rationale and supporting documentation should demonstrate to CMS that the bidding entity considered all anticipated costs (including overhead) and desired profit associated with furnishing both the lead item and non-lead items in the product category throughout the competitive bidding area.
The types of documentation that can substantiate a bid amount include, but may not be limited to:
- manufacturer invoices;
- receipts (including retail sales receipts);
- letters of intent from manufacturers or wholesalers;
- manufacturer price lists; and
signed written quotes.
This documentation should clearly identify the specific lead item Healthcare Common Procedure Coding System (HCPCS) code for which the bid amount is being verified. The lead item documentation may be obtained from manufacturers, distributors, retail sales facilities, internet sales facilities, or any other sources that can legally sell suppliers the lead item. All documentation should readily display the contact information of the source (e.g., manufacturer, distributor, etc.) for verification.