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Educational Information

Affordable Care Act (ACA): The Patient Protection and Affordable Care Act (Affordable Care Act) of 2010 expanded the number of Round 2 areas and mandated that all areas of the country are subject to either DMEPOS Competitive Bidding or payment rate adjustments using competitively bid rates by 2016.

Authorized Official (AO): The authorized official must be an individual identified as the authorized official on the CMS 855-S enrollment application. This individual 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. For registration purposes, there can only be one AO for an organization. The AO may approve or reject the request for backup authorized officials (BAO) and end users to access and enter data in the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Bidding System (DBidS.)

Backup Authorized Official (BAO): One or more individuals listed on the CMS 855-S enrollment application as an AO and who can serve as a backup to the authorized official (AO) in order to avoid disruption in the bidding process should the AO leave the organization or become unavailable during the bid window. For registration purposes, there can be one or more BAOs in an organization.

Balance Sheet: A financial statement that summarizes a company’s assets, liabilities, and owner’s equity at a specific point in time.

Beneficiary: A person who has health care insurance through the Medicare program.

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. The bid should consider all costs associated with furnishing an item.

Bidder Number: System generated number that identifies each unique bidding entity, assigned after you have completed the business organization section of Form A in DBidS.

Bid Price/Amount: The amount a bidder offers to furnish a competitively bid item to Medicare beneficiaries in a specific competitive bidding area (CBA) as part of the Competitive Bidding Program. The bid amount must be bona fide for each item (identified by the Healthcare Common Procedural Coding System (HCPCS) code) in accordance with 42 C.F.R. §414.414(b)(4). It should be rational, feasible, and supportable, include the cost of furnishing the item throughout the CBA (except for skilled nursing facilities and nursing facilities that elect to participate as specialty suppliers) for the duration of the contract period, and include overhead and profit.

Bid Window: The period of time during which the bidder can submit bids for consideration in a competitive bidding round. No bids are accepted after the bid window closes.

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 the CMS website.

Common Control: Commonly controlled suppliers are those where one or more of a supplier’s owners is also an officer, director, or partner of another supplier.

Common Ownership: Common ownership amongst suppliers exists when one or more suppliers has an ownership interest totaling at least five percent in the other(s). The term "ownership interest" is defined as "the possession of equity in the capital, stock, or profits of another supplier."

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. The area is defined by ZIP codes and may be larger than or smaller than the related metropolitan statistical area (MSA).

The national mail-order CBA includes all parts of the United States, including the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa.

Competitive Bidding Implementation Contractor (CBIC): The CMS contractor that is responsible for conducting certain functions, including assisting CMS with performing bid evaluations, supporting CMS’ education efforts, and monitoring the Medicare DMEPOS Competitive Bidding Program.

Competitive Bidding Program: A program where CMS solicits bids from qualifying suppliers, establishes a single payment amount, and awards contracts within a designated CBA.

Contract Supplier: An entity awarded a contract by CMS to furnish items under a Competitive Bidding Program.

Covered Document Review Date (CDRD): The date that the required hardcopy financial documents, submitted by bidding suppliers, must be received by the CBIC in order for the documents to be reviewed and the bidder notified of any missing financial documents. Eligible bidders are then provided an opportunity to submit the missing documents.

Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Bidding System (DBidS): An online application system used to submit bids electronically for the DMEPOS Competitive Bidding Program.

End User: In DBidS, an end user has privileges to enter data on Form A and Form B, but does not have the authority to approve Form A or certify Form B.

Enterprise Identity Management (EIDM): An identity management system that issues electronic identities and access (e.g., user IDs and passwords) to CMS web-based applications, such as DBidS.

Entity: For competitive bidding purposes, the term “entity” refers to a unique bidder. For example, for a supplier that is commonly owned and/or commonly controlled and has multiple locations, 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 (Profit and Loss Statement or Statement of Operations): A financial report on the results of a business’ performance as reflected in the profitability of a business over a certain period. It itemizes the revenues and expenses of past performance 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) other than class III devices under the Federal Food, Drug and Cosmetic Act, as defined in 42 CFR §414.202 of this part and group 3 complex rehabilitative wheelchairs and further classified into the following categories:
     (i) Inexpensive or routinely purchased items, as specified in 42 CFR §414.220(a).
     (ii) Items requiring frequent and substantial servicing, as specified in 42 CFR §414.222(a).
     (iii) Oxygen and oxygen equipment, as specified in 42 CFR §414.226(c)(1).
     (iv) Other DME (capped rental items), as specified in 42 CFR §414.229.
(2) Supplies necessary for the effective use of DME other than inhalation drugs.
(3) Enteral nutrients, equipment, and supplies.
(4) Off-the-shelf orthotics, which are orthotics described in Section 1861(s)(9) of the 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.

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.

Mail-Order: Any item shipped or delivered to the beneficiary’s place of residence, regardless of the method of delivery. A non mail-order item is one that a beneficiary or caregiver purchases at a local pharmacy or supplier storefront rather than having the item delivered to the beneficiary’s residence. Diabetic testing supplies are the only items included in the current national mail-order competition.

Medicare Advantage Plan: A type of Medicare health plan offered by a private company that contracts with Medicare to provide beneficiaries with Part A and Part B benefits. Medicare services are covered by the plan and aren’t paid for under Original Medicare. Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Savings Account Plans.

Metropolitan Statistical Area (MSA): Area designated by the U.S. Office of Management and Budget (OMB) for the purposes of census data and other urban population calculations. An MSA can include major cities and the suburban areas surrounding them.

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

National Provider Identifier (NPI): A unique, 10-digit, sequentially assigned national identification number that is mandated by The Health Insurance Portability and Accountability Act of 1996 (HIPAA) to be used by health care providers, health plans, and health care clearinghouses in all administrative and financial HIPAA transactions.

National Supplier Clearinghouse (NSC): CMS’ designated national enrollment contractor for DMEPOS suppliers.

Network: A group of between two to twenty (20) small suppliers that form a legal entity to provide competitively bid items throughout an entire CBA. These suppliers must certify they cannot independently furnish all competitively bid items in the product category to beneficiaries throughout the entire geographic area of the CBA for which the network is submitting a bid. The network collectively submits a bid as a single entity.

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

Original Medicare: Original Medicare is fee-for-service coverage under which the government pays your health care providers directly for your Part A and/or Part B benefits.

Parent-Subsidiary: Parent-subsidiaries are separate entities where one entity has ownership and control of another entity. In general, a parent entity is a company that owns controlling interests in one or more companies. A subsidiary is a company that is controlled by a parent company.

Pricing, Data Analysis and Coding Contractor (PDAC): The CMS contractor responsible for providing suppliers and manufacturers with assistance in determining which HCPCS code should be used to describe DMEPOS items for the purpose of billing Medicare.

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.

Provider Enrollment, Chain and Ownership System (PECOS): The Internet-based application that can be used in lieu of the Medicare enrollment application (i.e., paper CMS 855) to enroll, view or change enrollment information, track the enrollment application process, add or change a reassignment of benefits, submit changes to existing enrollment information, reactivate an existing enrollment record, or withdraw from the Medicare Program.

Provider Transaction Access Number (PTAN): Supplier’s enrollment numerical identifier assigned by the National Supplier Clearinghouse (NSC). Previously referred to as the NSC supplier number or billing number.

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 for which they would furnish items and services included in the Competitive Bidding Program, as well as certain documents (hardcopy and/or electronic) that demonstrate the bidder meets applicable financial and eligibility requirements.

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

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 skilled nursing facility (SNF) or nursing facility (NF) that is awarded a competitive bidding contract to furnish competitively bid items only to its own residents to whom it would otherwise furnish Part B services.

Statement of Cash Flows: Includes cash flows resulting from operating, financing, and investing activities.

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

last updated on 08/11/2015


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