(a) Requirement to submit a bid. Except as provided under § 414.404(b), in order for a supplier to receive payment for items furnished to beneficiaries under a competitive bidding program, the supplier must submit a bid to furnish those items and be awarded a contract under this subpart.

(b) Grouping of items into product categories. (1) Composite bids, as defined in § 414.402, are submitted for lead items, as defined in § 414.402.

(2) The bid amount for each lead item in a product category included under the DMEPOS CBP for the first time must not exceed the unadjusted fee schedule amount for the lead item.

(3) The bid amount for each lead item in a product category included in a prior competition, if it has been 1 year or less since a SPA was paid for the item in the prior competition, must not exceed, for the same CBA, the lesser of—

(i) The most recent SPA for the item plus 10 percent; or

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

(4) The bid amount for each lead item in a product category included in a prior competition, if it has been more than 1 year since a SPA was paid for the item in the prior competition, must not exceed the lesser of the—

(i) Most recent SPA made for the item, as adjusted by the percentage change in the Consumer Price Index for all Urban Consumers (CPI-U) from the mid-point of the most recent 12-month period the SPA was in effect to the date that is 6 months prior to the date CMS announces the dates suppliers may register and submit bids under the current round of competition, plus 10 percent; or

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

(5) The bid amount for each lead item in a product category included in a prior competition but made under a bid for a new CBA, must not exceed the lesser of the—

(i) Adjusted fee schedule amount for the item plus 10 percent; or

(ii) Unadjusted fee schedule amount for the item.

(6) The bids submitted for standard power wheelchairs paid in accordance with the special payment rules at § 414.409(a) cannot exceed the average monthly payment for the bundle of items and services that would otherwise apply to the item under subpart D of this part.

(7) The bids submitted for continuous positive airway pressure (CPAP) devices paid in accordance with the special payment rules at § 414.409(a) cannot exceed the 1993 fee schedule amounts for these items, increased by the covered item update factors provided for these items in section 1834(a)(14) of the Act.

(8) Suppliers shall take into consideration the special payment rules at § 414.409(d) when submitting bids for furnishing power wheelchairs under competitions where these rules apply.

(9) The bid amount submitted for rental of class II continuous glucose monitors included as a lead item in a product category in a remote item delivery competitive bidding program for the first time must not exceed the payment amount that would otherwise apply to the monthly fee schedule amount for the supplies for the class II continuous glucose monitor under subpart D of this part plus the average of the purchase fee schedule amounts that would otherwise apply to the class II continuous glucose monitor for the areas included in the remote item delivery competitive bidding program divided by 60.

(10) The bids amount submitted for rental of insulin infusion pumps included as a lead item in a product category in a remote item delivery competitive bidding program for the first time must not exceed the nonrural payment amount that would otherwise apply to the supplies and accessories for the insulin infusion pump under subpart D of this part, with the application of § 414.210(g), for a 1-month period plus the total nonrural rental fee schedule amounts that would otherwise apply to rental of the insulin pump for 13 months of continuous use under subpart D of this part, with the application of § 414.210(g), divided by 60.

(11) The bid amounts submitted for an OTS back brace or OTS knee brace included as a lead item in a product category in a remote item delivery competitive bidding program for the first time cannot exceed the average nonrural payment amount that would otherwise apply to the item under subpart D of this part, with the application of § 414.210(g), for the areas included in the remote item delivery competitive bidding program.

(12) Notwithstanding paragraphs (b)(9) through (11) of this section, the bid amount for each lead item in a product category in a remote item delivery competitive bidding program for the first time must not exceed the average payment amount that would otherwise apply to the item under subpart C, D, or Q of this part for the areas included in the remote item delivery competitive bidding program.

(c) Furnishing of items. A bid must include all costs related to furnishing all items in the product category, including all services directly related to the furnishing of the items.

(d) Commonly-owned or controlled suppliers. (1) For purposes of this paragraph—

(i) An ownership interest is the possession of equity in the capital, stock or profits of another supplier;

(ii) A controlling interest exists if one or more of owners of a supplier is an officer, director or partner in another supplier; and

(iii) Two or more suppliers are commonly-owned if one or more of them has an ownership interest totaling at least 5 percent in the other(s).

(2) A supplier must disclose in its bid each supplier in which it has an ownership or controlling interest and each supplier which has an ownership or controlling interest in it.

(3) Commonly-owned or controlled suppliers must submit a single bid to furnish a product category in a CBA. Each commonly-owned or controlled supplier that is located in the CBA for which the bid is being submitted must be included in the bid. The bid must also include any commonly-owned or controlled supplier that is located outside of the CBA but would furnish the product category to the beneficiaries who maintain a permanent residence in the CBA.

(e) Mail order suppliers. (1) Suppliers that furnish items through the mail must submit a bid to furnish these items in a CBA in which a mail order competitive bidding program that includes the items is implemented.

(2) Suppliers that submit one or more bids under (e)(1) of this section may submit the same bid amount for each item under each competitive bidding program for which it submits a bid.

(f) Applicability of the mail order competitive bidding program. Suppliers that do not furnish items through the mail are not required to participate in a nationwide or regional mail order competitive bidding program that includes the same items. Suppliers may continue to furnish these items in—

(1) A CBA, if the supplier is awarded a contract under this subpart; or

(2) An area not designated as a CBA.

(g) Requiring bid surety bonds for bidding entities—(1) Bidding requirements. A bidding entity may not submit a bid(s) and be awarded a contract for a competition unless it obtains a bid surety bond for the CBA from an authorized surety on the Department of the Treasury's Listing of Certified Companies and provides proof of having obtained the bond by submitting a copy to CMS by the deadline for bid submission

(2) Bid surety bond requirements. (i) The bid surety bond issued must include at a minimum:

(A) The name of the bidding entity as the principal/obligor;

(B) The name and National Association of Insurance Commissioners number of the authorized surety;

(C) CMS as the named obligee;

(D) The conditions of the bond as specified in paragraph (g)(3) of this section;

(E) The CBA covered by the bond;

(F) The bond number;

(G) The date of issuance; and

(H) The bid bond value of $50,000.00.

(ii) The bid surety bond must be maintained until it is either collected upon due to forfeiture or the liability is returned for not meeting bid forfeiture conditions.

(3) Forfeiture of bid surety bond. (i) When a bidding entity is offered a contract for a CBA/product category (“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 submitted for that CBA will be forfeited and CMS will collect on the bond via Electronic Funds Transfer (EFT) from the respective bonding company. As one bid surety bond is required for each CBA in which the bidding entity is submitting a bid, the failure to accept a contract offer for any product category within the CBA when the entity's bid is at or below the median composite bid rate will result in forfeiture of the bid surety bond for that CBA.

(ii) Where the bid(s) does not meet the specified forfeiture conditions in paragraph (g)(3)(i) of this section, the bid surety bond liability will be returned within 90 days of the public announcement of contract suppliers for the CBA. CMS will notify the bidding entity that it did not meet the specified forfeiture requirements and the bid surety bond will not be collected by CMS.

(4) Penalties. (i) A bidding entity that has been determined to have falsified its bid surety bond may be prohibited from participation in the DMEPOS Competitive Bidding Program for the current round of the Competitive Bidding Program in which it submitted a bid and also from participating in the next round of the Competitive Bidding Program. Offending suppliers will also be referred to the Office of Inspector General and Department of Justice for further investigation.

(ii) A bidding entity, whose composite bid is at or below the median composite bid rate, that—

(A) Accepts a contract award; and

(B) Is found to be in breach of contract for nonperformance of the contract to avoid forfeiture of the bid surety bond will have its contract terminated and will be precluded from participation in the in the next round of the DMEPOS Competitive Bidding Program.

(5) Bid surety bond riders. (i) Bid surety bonds submitted prior to the deadline for bid submission are reviewed to determine if they contain any deficiencies that would make the applicable bid(s) ineligible to receive a DMEPOS CBP supplier contract offer. If any deficiency is found that can be rectified under paragraph (g)(5)(ii) of this section, CMS will notify the bidder of the deficiency(ies) and allow the bidder to submit a bid surety bond rider to rectify the deficiency(ies).

(ii) Bidding entities can submit a bid surety bond rider to correct the identified deficiency(ies) applicable to any of the bid surety bond requirements outlined in paragraphs (g)(2)(i) and (ii) of this section. No other deficiency(ies) can be rectified by a bid surety bond rider.

(iii) Bidding entities notified of a bid surety bond deficiency have 10-business days after the date of the notice to submit a bid surety bond rider. The bidder must receive the bid surety bond rider from the authorized surety that issued the original bid surety bond.