The Centers for Medicare & Medicaid Services (CMS) is incorporating some important changes in the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program for Round 2021. These changes include several initiatives that are part of CMS’ ongoing continuous improvement process for the program, many of which are outlined in the revised regulations at 42 CFR §414.414 and §414.416.
Competitive Bidding Areas (CBAs)
On January 1, 2021, CMS is consolidating the competitive bidding areas (CBAs) included in Round 1 2017 and Round 2 Recompete by conducting Round 2021 in the same geographic areas for a total of 130 CBAs. Refer to the Competitive Bidding Areas page for more information.
New product categories for Round 2021 include off-the-shelf (OTS) back braces, OTS knee braces, and
non-invasive ventilators. On April 9, 2020, the non-invasive ventilators product category was removed from Round 2021 due to the novel COVID-19 pandemic. In addition, some items and services have been shifted to different product categories to accommodate the lead item pricing methodology. Round 2021 will include a total of 16 product categories. Refer to the Product Categories page for more information.
As a result of Section 50414 of the Bipartisan Budget Act (BBA) of 2018, CMS is not including a national mail-order (NMO) program for diabetes testing supplies in Round 2021. Section 50414 of the BBA of 2018 mandates several changes to the NMO program, and CMS is working on making these required changes.
Revised Terminology and Definitions (§414.402)
Bid – an offer to furnish an item or items for a particular price and time period that includes, where appropriate, any services that are directly related to the furnishing of the item or items.
Composite Bid – the bid submitted by the supplier for the lead item in the product category.
Lead Item – the item in a product category with multiple items with the highest total nationwide (all states, District of Columbia, Puerto Rico and the Virgin Islands) Medicare allowed charges of any item in the product category prior to each competition.
Median Composite Bid Rate1 – the median lead item bid amount for all bidding entities included in the calculation of the single payment amounts within the competition.
Single Payment Amounts (SPAs)
In prior rounds of the DMEPOS Competitive Bidding Program, the single payment amount (SPA) for an item was equal to the median of the bids submitted for that item by bidders whose composite bids were equal to or below the pivotal bid for that product category in a CBA. In Round 2021, as a result of the final rule published on November 14, 2018 (CMS-1691-F), the SPA for a lead item is equal to the maximum bid submitted for that item by bidders whose lead item bids are equal to or below the pivotal bid for that product category in a CBA.
Lead Item Pricing
In Round 2021, CMS is implementing the lead item pricing methodology for all items included in the product categories. This means that rather than submitting individual bids for each item within a product category, bidders will only submit one bid for the lead item in the product category. The supplier’s bid for the lead item represents the supplier’s bid for furnishing the lead item and all other items (the non-lead items) in the product category. Bids for the lead item in the product category will be used to calculate the single payment amounts (SPAs) for all of the items within that product category. The SPA for the lead item is the maximum bid submitted for that item by bidders whose bids for the item are in the winning range in that CBA and product category. The SPAs for the non-lead items within the product category are determined by multiplying the lead item SPA by a relative ratio. The ratios are based on the historic differences in the fee schedule amounts for the lead item and non-lead items. Refer to the Lead Item Pricing fact sheet and the Lead Item Pricing Calculator for more information.
Bid Surety Bonds
Bidders must obtain a $50,000 bid surety bond from an authorized surety on the List of Certified Companies on the Department of the Treasury’s website for each CBA for which they submit a bid. A copy of the bid surety bond(s) must be uploaded in Connexion, the DMEPOS Competitive Bidding Program’s secure portal, by the close of the bid window. Each bid surety bond must include at a minimum:
- The bidding entity’s legal business name as the principal/obligor (this is the same company name in the Business Organization Information section of Form A in the DMEPOS Bidding System (DBidS));
- The name and National Association of Insurance Commissioners (NAIC) number of the authorized surety;
- CMS as the named obligee;
- The CBA covered by the bond;
- The bond number;
- The date of issuance;
- The bid surety bond value of $50,000; and
- The conditions of the bond defining when the bond will be subject to forfeiture, as specified in
42 CFR §414.412(g)(3)(i).
When a bidding entity is offered a contract for a competition and its composite bid for the competition is at or below the median composite bid rate for all bidding entities included in the calculation of the single payment amounts within the competition, and the bidding entity does not accept the contract offer, its bid surety bond for that CBA will be forfeited. If the forfeiture conditions aren’t met, the bid surety bond liability will be returned to the bidder within 90 calendar days of the public announcement of the Round 2021 contract suppliers. Refer to the Bid Surety Bonds fact sheet for more information.
Required Financial Documents Evaluation
All required financial documents must be uploaded in Connexion by the close of the bid window. However, in an effort to limit disqualifications in Round 2021, if a financial document(s) is deemed unacceptable (e.g., ending cash on the statement of cash flows does not equal the cash reported on the balance sheet), the bidder will not automatically be disqualified. Rather, these bidders will receive a zero score for all financial ratios associated with the unacceptable document(s). In these situations, a bidder may still be able to receive a financial score that meets the financial requirements and be eligible for further evaluation. Please see the Financial Documents page and the Financial Measures page for additional information.
Licensure and Accreditation Requirements for Bidders
In prior rounds of the DMEPOS Competitive Bidding Program, if a bidder included multiple locations (identified by a Provider Transaction Access Number (PTAN)) on a bid for a CBA and product category combination, those locations could collectively meet the accreditation and applicable state licensing requirements for the larger product categories including multiple products (e.g., general home equipment product category). However, as discussed above, some items and services have been shifted to different, smaller product categories to accommodate the lead item pricing methodology. As a result of these smaller product categories, each individual supplier location on a bid must meet all accreditation and applicable state licensing requirements for every item in the product category to be considered for a contract. For instance, if the accreditation and state licensing requirements to furnish CPAP devices and/or supplies are different from the accreditation and state licensing requirements to furnish RADs, each supplier location on the supplier’s bid for the CPAP devices and RADs product category must meet the accreditation and state licensing requirements to furnish both RADs and CPAP devices and/or supplies. Please see the Licensure for Bidders fact sheet and the DMEPOS Accreditation page on CMS.gov for additional information.
Round 2021 Precluded Suppliers
Contract suppliers whose contracts for Round 2 Recompete, National Mail-Order Recompete and/or Round 1 2017 were terminated and who were ultimately precluded from participation in the next round of bidding aren’t permitted to participate in Round 2021 of the DMEPOS Competitive Bidding Program.
Important: If the bidding entity (i.e., the company identified in the Business Organization Information section of Form A in DBidS) is precluded, the bidding entity will not be considered for a contract offer(s). If the bidding entity is not precluded, but its bid(s) includes a precluded supplier’s location(s), the bid(s) including the precluded supplier’s location(s) will be disqualified unless a non-precluded supplier(s) has a qualified location(s) on the same bid(s). In this situation, the precluded supplier’s location(s) will not be considered and only the non-precluded supplier’s location(s) will be considered.
Uploading Required Documents in Connexion
As with past competitive bidding rounds, suppliers will submit bids (Form A and Form B) electronically through DBidS. However, new to Round 2021, the required documents that accompany the bid(s) must be uploaded in Connexion by the close of the bid window. Hand-delivered, mailed, faxed, or emailed packages will not be considered. The Request for Bids (RFB) Instructions explain how to access Connexion and upload required documents.
Review of Bid Disqualification
There is no administrative or judicial review for the awarding of DMEPOS competitive bidding contracts (section 1847(b)(11)(B) of the Social Security Act and 42 CFR §414.424(a)(2)). However, bidders that receive a bid disqualification notice in Connexion will have the opportunity to submit an inquiry regarding the bid disqualification(s), just as CMS has allowed in previous rounds of competition. New for Round 2021, the inquiry must be submitted in Connexion within 30 calendar days of the date on the bid disqualification notice. No new or follow-up inquiries can be submitted after the 30 calendar day deadline. Upon receipt of the inquiry, CMS will re-evaluate all bid disqualification reasons, and the bidder will receive a notice in Connexion with CMS’ findings. Please note that the bid surety bond requirements and forfeiture conditions under 42 CFR §414.412(g) apply to all bidders, including bidders that receive contract offers after the resolution of the bidder inquiry. Additional information regarding the bidder inquiry process will be provided at a later date.
1See the Calendar Year 2019 End-Stage Renal Disease (ESRD)/DMEPOS Final Rule for additional information.