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 for small suppliers to bid as a network are two provisions that help foster small supplier participation in the DMEPOS CBP.
Small Supplier Attestation
For the DMEPOS CBP, 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 (42 CFR § 414.402), on its most recent tax return filed with the Internal Revenue Service (IRS).
If the bidding entity is a small supplier based on its most recent tax return filed with the IRS as of the day you submit a bid, you will attest to that status as part of the bid. On the day you sign a DMEPOS CBP Round 2028 Contract, the bidding entity must still meet the small supplier definition based on its most recent tax return filed with the IRS, unless you notified CMS that you are no longer a small supplier, and CMS later offered you a contract.
Specifically, if after submitting your bid you determine the bidding entity will no longer meet the definition of a small supplier at the time of signing the contract, you must notify CMS by uploading an amendment to the bid in Connexion, the DMEPOS CBP’s secure portal, that includes the Bidder Number and a statement specifying the Legal Business Name of the entity amends its bid to state it no longer meets the definition of a small supplier in 42 CFR 414.402.
- If you are in the winning array (i.e., your composite bid qualifies for a contract regardless of small supplier status): You may still receive a contract even if you notify CMS that you are no longer a small supplier.
- If you are offered a contract solely to help meet the 30 percent small supplier target (i.e., your composite bid is above the pivotal bid): You cannot accept the award for that competitive bidding area (CBA) and product category combination (competition). You must continue to qualify as a small supplier to accept that competition on your DMEPOS CBP Round 2028 Contract.
Consequences of Inaccurate Small Supplier Attestations
If you attest you are a small supplier in your bid and CMS determines that your most recent tax return (filed with the IRS on or before the date you bid) shows total revenue exceeds $3.5 million at the time you submitted your bid or that the return is fraudulent or otherwise inaccurate, CMS may refer the matter to the Office of Inspector General and/or the Department of Justice, and CMS may pursue remedies allowable by law.
CMS will review Medicare fee-for-service claims data for the bidding entities that attest to being a small supplier on their bid to confirm the accuracy of the small supplier status (90 Federal Register 29274 (July 2, 2025) and 90 Fed. Reg. 55552 (Dec. 2, 2025)). CMS may request a tax return if a bidder certifies it is a small supplier and it raises concern.
If you attest you are a small supplier in your bid and you are awarded a contract, one of the terms of the contract will be that you are a small supplier as of the day you sign the contract, unless you have notified CMS as discussed above. If you sign the contract with this term without the notification to CMS as discussed above, and CMS determines that your most recent tax return (filed with the IRS on or before the date you signed your contract) as of when you signed your contact shows total revenue exceeds $3.5 million or that the return is fraudulent or otherwise inaccurate, you will be in breach of contract, and CMS may use any of the remedies available under 42 CFR § 414.422(g) in addition to the actions above, including:
- Suspending the contract;
- Terminating the contract; and
- Precluding you from participating in the next round of the DMEPOS CBP.
Small Supplier Target
The small supplier target is one way CMS ensures small suppliers have an opportunity to be considered for participation in the DMEPOS CBP. Under 42 CFR § 414.414, CMS sets a target for small supplier participation by multiplying 30 percent by the number of suppliers meeting specified program requirements and whose composite bids are equal to or lower than the pivotal bid calculated for the product category. During bid evaluation, suppliers that meet all program 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 of suppliers, 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 because of the small supplier target process.
Ability of Small Suppliers to Bid as a Network
The ability of small suppliers to bid as a network is another way CMS ensures small suppliers have an opportunity to be considered for participation in the DMEPOS CBP. If you are a small supplier unable to independently furnish all the items in the product category to Medicare beneficiaries throughout the entire country in Round 2028, you have the option of joining a network, as set forth in 42 CFR § 414.418. 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 and no other network member is able to satisfy the requirement (e.g., meeting a licensure requirement for a particular State/Territory), or one or more members are no longer a small supplier, 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.
Network Documentation Requirement at Bidding
If you are bidding as part of a network, the primary network member1 must upload in Connexion the following required documents in addition to all required financial documents:
- Network Legal Agreement: Any agreement, including contracts, required to create the network as a legal entity. The agreement must be in place and signed by each member of the network before the network submits a bid.
- Certification Statement: Each network member must sign a statement certifying that it joined the network because it was unable to independently furnish all items in the product category throughout the entire CBA. The primary network member must print the certification statement at the end of Form B in Connexion and have each network member sign the statement before uploading it into Connexion.
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, the entire network would be offered a contract, and CMS would consider the small supplier target met.
1 The primary network member is the supplier that is responsible for submitting the bid on behalf of the network.