Sponsored by Bayer logo

Fast Facts

DMEPOS competitive bidding process will begin April 2007.
CMS has announced the 10 MSAs where competitive bidding will be introduced.
CMS has announced the product categories included in the first competitive bidding project.
The Final Rule governing competitive bidding ensures that at least 30 percent of bid winners are small businesses.
Suppliers must obtain accreditation to participate in competitive bidding. The ONLY exception to the rule is a pharmacy that maintains a Part B supplier billing number to submit Part B drug claims and administer vaccinations.
Ten agencies have been approved to accredit suppliers of DMEPOS.

Important Links:

How Healthy is Your Pharmacy?

By William Popomaronis, R.Ph.

Financial Measures for the DMEPOS Competitive Bidding Released by CMS

CMS has released the measures that will be used to evaluate the financial stability of suppliers that bid under the new Medicare DMEPOS Competitive Bidding Program. All bids must include certain financial documentation in order for the supplier to be considered for a contract under the program. CMS and its Competitive Bidding Implementation Contractor (CBIC) will evaluate each bidder's financial documentation to determine whether the supplier will be able to participate in the program and maintain viability for the duration of the contract period.

The financial measures are standard accounting ratios commonly used to evaluate financial health. The following financial ratios will be used:

Current ratio = current assets/current liabilities
Collection period = (accounts receivable/sales) x 360
Accounts payable to sales = accounts payable/net sales
Quick ratio = (cash + accounts receivable)/current liabilities
Current liabilities to net worth = current liabilities/net worth
Return on sales = net sales/inventory
Sales to Inventory
Working capital = current assets - current liabilities
Quality of earnings = cash flow from operations/(net income + depreciation)
Operating cash flow to sales = cash flow from operations/(revenue - adjustment to revenue)

CMS and the CBIC will calculate each bidder's financial ratios using the financial information submitted as part of the bid. CMS and the CBIC will also be utilizing the supplier's credit history in evaluating the financial health of the supplier.

William Popomaronis, R.Ph., is vice president, long term and home health care services for the National Community Pharmacists Association (NCPA). He is also the only pharmacist member of Medicare’s Program Advisory and Oversight Committee (PAOC), which provides advice on the development and implementation of the DME Competitive Acquisition Program.

Bayer HealthCare, Diabetes Care, has underwritten the costs of this communication. The information expressed in this communication are the views of NCPA. Bayer is not responsible for the accuracy of the information expressed in this communication. Any questions related to DME Accreditation and/or Competitive Bidding for DMEPOS should be directed to the Centers for Medicare and Medicaid Services or NCPA.


	Sponsored by Fast Facts DMEPOS competitive bidding process will begin April 2007. CMS has announced the 10 MSAs where competitive bidding will be introduced. CMS has announced the product categories included in the first competitive bidding project. The Final Rule governing competitive bidding ensures that at least 30 percent of bid winners are small businesses. Suppliers must obtain accreditation to participate in competitive bidding. The ONLY exception to the rule is a pharmacy that maintains a Part B supplier billing number to submit Part B drug claims and administer vaccinations. Ten agencies have been approved to accredit suppliers of DMEPOS. Important Links: Medicare DME Home Page Medicare DME blog Medicare DMe-Alert Archive How Healthy is Your Pharmacy? By William Popomaronis, R.Ph. Financial Measures for the DMEPOS Competitive Bidding Released by CMS CMS has released the measures that will be used to evaluate the financial stability of suppliers that bid under the new Medicare DMEPOS Competitive Bidding Program. All bids must include certain financial documentation in order for the supplier to be considered for a contract under the program. CMS and its Competitive Bidding Implementation Contractor (CBIC) will evaluate each bidder's financial documentation to determine whether the supplier will be able to participate in the program and maintain viability for the duration of the contract period. The financial measures are standard accounting ratios commonly used to evaluate financial health. The following financial ratios will be used: Current ratio = current assets/current liabilities Collection period = (accounts receivable/sales) x 360 Accounts payable to sales = accounts payable/net sales Quick ratio = (cash + accounts receivable)/current liabilities Current liabilities to net worth = current liabilities/net worth Return on sales = net sales/inventory Sales to Inventory Working capital = current assets - current liabilities Quality of earnings = cash flow from operations/(net income + depreciation) Operating cash flow to sales = cash flow from operations/(revenue - adjustment to revenue) CMS and the CBIC will calculate each bidder's financial ratios using the financial information submitted as part of the bid. CMS and the CBIC will also be utilizing the supplier's credit history in evaluating the financial health of the supplier.

	William Popomaronis, R.Ph., is vice president, long term and home health care services for the National Community Pharmacists Association (NCPA). He is also the only pharmacist member of Medicare’s Program Advisory and Oversight Committee (PAOC), which provides advice on the development and implementation of the DME Competitive Acquisition Program.

	Bayer HealthCare, Diabetes Care, has underwritten the costs of this communication. The information expressed in this communication are the views of NCPA. Bayer is not responsible for the accuracy of the information expressed in this communication. Any questions related to DME Accreditation and/or Competitive Bidding for DMEPOS should be directed to the Centers for Medicare and Medicaid Services or NCPA.