The Social Security Act requires that in developing procedures relating to bids and the awarding of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP) Contracts, the Centers for Medicare & Medicaid Services (CMS) takes appropriate steps to ensure small suppliers of items and services have an opportunity to be considered for participation in the Medicare DMEPOS CBP. A small supplier target and the ability to network are two provisions that help foster small supplier participation in the DMEPOS CBP.
Small Supplier Definition
For competitive bidding purposes, a small supplier is defined as a supplier that generates gross revenue of $3.5 million or less in annual receipts, including both Medicare and non-Medicare revenue. The program aims to have at least 30 percent of contract suppliers be small suppliers.
Small Supplier Target
During bid evaluation, qualified suppliers who meet all program eligibility requirements and whose composite bids are at or below the pivotal bid are offered contracts first. If the 30 percent small supplier target is not met from that group, additional contracts are offered to qualified small suppliers with composite bids above the pivotal bid. This process continues until the 30 percent target is reached or no more qualified small suppliers remain for that product category in the competitive bidding area (CBA).
It is important to note that single payment amounts are calculated before the small supplier target process begins and do not change as a result of the small supplier target process.
Ability of Small Suppliers to Bid as a Network
If you are a small supplier unable to independently furnish all of the items in the product category to Medicare beneficiaries throughout the entire geographic area of a CBA, you have the option of joining a network. A network may be comprised of at least two, but no more than 20 small suppliers.
Network Eligibility Rules
Each network must form a single legal entity that acts as the bidder and submits the bid. If any single member is found to be ineligible without at least one other network member able to satisfy the requirement (i.e., meeting a licensure requirement for a particular State/Territory), the entire network is disqualified from receiving any further consideration. Additionally, if one or more members withdraw from the network after bidding closes but before contracts are awarded, the network is disqualified from further consideration.
How Networks Are Counted for the Small Supplier Target
Network members are counted individually when calculating the 30 percent small supplier target; however, if a network qualifies, the entire network is offered a contract. For example, if three small suppliers are needed to reach the 30 percent target and the next qualifying small supplier above the pivotal bid is a network with 10 members, all 10 members of that network would be offered a contract.