(a) General rule. The rules set forth in this section govern the evaluation and selection of suppliers for contract award purposes under a competitive bidding program.

(b) Basic supplier eligibility. (1) Each supplier must meet the enrollment standards specified in § 424.57(c) of this chapter.

(2) Each supplier must disclose information about any prior or current legal actions, sanctions, revocations from the Medicare program, program-related convictions as defined in section 1128(a)(1) through (a)(4) of the Act, exclusions or debarments imposed against it, or against any members of the board of directors, chief corporate officers, high-level employees, affiliated companies, or subcontractors, by any Federal, State, or local agency. The supplier must certify in its bid that this information is completed and accurate.

(3) Each supplier must have all State and local licenses required to perform the services identified in the request for bids. CMS may not award a contract to any entity in a CBA unless the entity meets applicable State licensure requirements.

(4) Each supplier must submit a bona fide bid that complies with all the terms and conditions contained in the request for bids.

(5) Each network must meet the requirements specified in § 414.418.

(c) Quality standards and accreditation. Each supplier furnishing items and services directly or as a subcontractor must meet applicable quality standards developed by CMS in accordance with section 1834(a)(20) of the Act and be accredited by a CMS-approved organization that meets the requirements of § 424.58 of this subchapter, unless a grace period is specified by CMS.

(d) Financial standards—(1) Financial document requirements. (i) By the close of the bid window, the bidding entity must, in accordance with paragraph (d)(2) of this section, submit a business credit report with a numerical credit score or rating, unless the bidding entity is unable to generate a business credit report with a numerical credit score or rating because the bidding entity has not been in operation long enough to generate a numerical score or rating.

(ii) By the close of the bid window, a bidding entity that is unable to generate a business credit report with a numerical credit score or rating is required to submit both a business credit report showing no data or insufficient information to generate a credit score and a personal credit report with a numerical credit score or rating from the bidding entity's Authorized Official or Delegated Official listed in CMS' PECOS.

(iii) The bidding entity must submit the documentation described in paragraphs (d)(1)(i) and (ii) of this section containing the approved crediting agency, an approved numerical credit score or rating, the name of the bidding entity or authorized official or delegated official, as applicable, and the date that the credit report was prepared, which must be generated within the 90 calendar days prior to the opening of the bid window in a form and manner specified by CMS. If the numerical credit score or rating is generated separately from the credit report, the bidding entity's name and the date it was prepared must be shown on the credit report and included with the numerical credit score or rating.

(iv) The bidding entity must attest in the bidding system that it is submitting one bid that includes all commonly owned or commonly controlled locations, and that it will furnish the lead item and all non-lead items in the same competition.

(2) Financial scoring methodology. A credit report scoring list is published before the opening of the bid window in the round specific Request for Bids Instructions or a fact sheet or both which includes all of the following:

(i) The approved credit agencies from which a bidding entity must obtain business and personal credit reports as applicable with a numerical credit score or rating. Bidding entities that must obtain both a business and personal credit report with a numerical credit score or rating do not have to utilize the same approved credit agency for both.

(ii) The approved business and personal credit reports as applicable and associated numerical credit scores or ratings that must be submitted.

(iii) The scoring system that will be utilized to determine if a bidding entity meets the financial sustainability threshold.

(e) Evaluation of bids. CMS evaluates composite bids submitted for a lead item within a product category by doing all of the following:

(1) Calculating the number of suppliers selected to furnish the items and services in the competition in accordance with paragraph (h) of this section.

(2) Arraying the composite bids from the lowest composite bid price to the highest composite bid price.

(3) Selecting the number of suppliers and networks calculated under paragraph (e)(1) of this section that meet the requirements in paragraphs (b) through (d) of this section with the lowest composite bids.

(f) Expected savings. A DMEPOS CBP supplier contract is not awarded for a competition under this subpart unless CMS determines that the SPA to be paid to contract suppliers for the lead item would be no greater than the lesser of—

(1) 110 percent of the adjusted fee schedule amount for the item, if applicable; or

(2) The unadjusted fee schedule amount for the item.

(g) Special rules for small suppliers—(1) Target for small supplier participation. CMS ensures that small suppliers have the opportunity to participate in a competitive bidding program by taking the following steps:

(i) Setting a target number for small supplier participation by multiplying 30 percent by the number of suppliers that meet the requirements in paragraphs (b) through (d) of this section and whose composite bids are equal to or lower than the pivotal bid calculated for the product category;

(ii) Identifying the number of qualified small suppliers whose composite bids are at or below the pivotal bid for the product category;

(iii) Selecting additional small suppliers whose composite bids are above the pivotal bid for the product category in ascending order based on the proximity of each small supplier's composite bid to the pivotal bid, until the number calculated in paragraph (g)(1)(i) of this section is reached or there are no more composite bids submitted by small suppliers for the product category.

(2) The bids by small suppliers that are selected under paragraph (g)(1)(iii) of this section are not used to calculate the single payment amounts for any items under § 414.416 of this subpart.

(h) Sufficient number of contract suppliers. (1) Notwithstanding paragraph (h)(1)(ii) of this section, for competitions included in the DMEPOS CBP in 2018 or 2023, the first time a competition is recompeted after 2023, the number of contract suppliers selected to furnish items and services in the competition is double the number of contract suppliers that furnished at least 5 percent of total allowed services for the lead item furnished by contract suppliers to the applicable beneficiary population during 2018 or 2023, adjusted up or down based on the percentage change in Part B enrollment in the CBA since 2018 or 2023, and rounded to the nearest whole number.

(i) CMS adjusts the number of contract suppliers selected in accordance with paragraph (h)(1) of this section for a competition to ensure the number selected is—

(A) Not less than 50 percent of the total number of contract suppliers that furnished the lead item in 2018 or 2023 rounded up to the nearest whole number;

(B) Not more than 75 percent of the total number of contract suppliers that furnished the lead in 2018 or 2023 rounded down to the nearest whole number; and

(C) At least 2.

(ii) [Reserved]

(2) For competitions included in the DMEPOS CBP in 2018 or 2023, the first time a competition is recompeted after 2023 in accordance with paragraph (h)(1) of this section, the number of contract suppliers selected to furnish items and services in the competition is equal to the number of contract suppliers CMS selected the first time the competition was recompeted after 2023 in accordance with paragraph (h)(1) of this section, trended up or down based on the percentage change in Part B enrollment in the CBA since the first year (12-month period) of the most recent DMEPOS CBP supplier contract period, and rounded to the nearest whole number.

(3) For competitions not included in the DMEPOS CBP in 2018 or 2023—

(i) The first time a competition is conducted after 2023, the number of contract suppliers selected to furnish items and services is 125 percent of the number of suppliers that furnished at least 3 percent of total utilization for the lead item in the product category and CBA during the most recent calendar year, and rounded to the nearest whole number, unless there would be less than 2 contract suppliers, in which case the number of contract suppliers will be 2.

(ii) For all subsequent recompetes for the competition, the number of suppliers selected to furnish items and services is equal to the number of contract suppliers selected in the prior competition or recompete, as applicable, trended up or down based on the percentage change in Part B enrollment in the CBA since the first year (12-month period) of the most recent DMEPOS CBP supplier contract period, and rounded to the nearest whole number.

(i) Selection of new suppliers after bidding. (1) Subsequent to the awarding of contracts under this subpart, CMS may award additional contracts if it determines that additional contract suppliers are needed to meet beneficiary demand for items under a competitive bidding program. CMS selects additional contract suppliers by—

(i) Referring to the arrayed list of suppliers that submitted bids for the product category included in the competitive bidding program for which beneficiary demand is not being met; and

(ii) Beginning with the supplier whose composite bid is the first composite bid above the pivotal bid for that product category, determining if that supplier is willing to become a contract supplier under the same terms and conditions that apply to other contract suppliers in the CBA.

(2) Before CMS awards additional contracts under paragraph (i)(1) of this section, a supplier must submit updated information demonstrating that the supplier meets the requirements under paragraphs (b) through (d) of this section.