The “Financial Capacity” Audit: Responding to Form A Inquiries

Answer Summary:

In mid-September, CMS auditors review the financial data submitted in Form A. If your Estimated Capacity (bid volume) is high but your Credit Score is low or missing, you will receive a “Financial Capacity Inquiry.” This is a demand for proof. Providers must respond by uploading bank statements, lines of credit, or audited financial statements to prove they have the liquid capital to purchase the inventory they promised to deliver.

Introduction:

You bid to supply 5,000 CPAP machines.

CMS checked your credit report. It shows a small line of credit and a history of late payments.

The algorithm flagged you: “High Risk of Contract Default.”

Now, you have an email asking for “Financial Verification.”

This is your chance to prove the algorithm wrong. If you fail this audit, CMS will cap your capacity at your historical level (e.g., 50 units), effectively killing your growth.

What CMS is Looking For

They want to answer one question: Liquidity.

Can you afford to buy the inventory before Medicare pays you?

• The Ratio: They look for a healthy “Current Ratio” (Assets / Liabilities).
• The Cash: They want to see cash on hand.

The “Line of Credit” Defense

The best way to answer this inquiry is with a letter from your bank.

• The Document: A committed Letter of Credit (LOC).
• The Narrative: “While our current cash is low, we have secured a $1M LOC specifically for this contract expansion. See attached bank letter.”
• Why it works: It proves liquidity without requiring cash in the bank today.

The “Supplier Terms” Defense

If you don’t have a bank loan, use your vendors.

• The Document: A letter from your manufacturer (e.g., ResMed, Philips).
• The Narrative: “Our supplier has extended us 90-day terms for the duration of this contract. We do not need cash upfront.”

WWS Value Proposition: We Build the Financial Case

Wonder Worth Solutions helps you gather the financial evidence. We work with your CFO or accountant to structure the response in a way that satisfies the CMS auditor’s liquidity concerns.