Small Suppliers and Networks

20.5.1 - Small Suppliers and Networks (Rev. 1502; Issued: 05-09-08; Effective/Implementation Date: 06-09-08) The Act mandates that appropriate steps be taken to ensure that small suppliers have an opportunity to be considered for participation in the Medicare DMEPOS Competitive Bidding Program. For competitive bidding purposes, the definition of a small supplier is a supplier that generates $3.5 million or less in annual receipts, including Medicare and non-Medicare revenue. Small suppliers have the option to form networks for bidding purposes. A network is a group of small suppliers that form a legal entity to provide competitively bid items throughout the entire geographical area of a CBA. The requirements for networks are as follows: • A single legal entity must be formed for the purpose of submitting a bid as a network. • One supplier must be designated as the primary supplier. • The network must identify itself as a network and identify all members of the network in the bid application. Each member of the network must be independently eligible to bid. Each member of the network must satisfy all required eligibility, financial and accreditation requirements, and is responsible for the quality of the products, care and services provided to Medicare beneficiaries. If any member of the network is not compliant with these requirements, the network contract may be terminated. • All contracts or other legal documents necessary to create the network entity must be in place and signed before the network entity may submit a bid. • The network must include at least two but not more than 20 members. Each member of a network must furnish all the items in the product category for which the network is awarded a contract. • Network members can only join one network per product category per CBA. • Only small suppliers that are unable independently to serve the entire geographic area of a CBA may join the network. • Each member of the network must sign a certification statement that must be included as part of the network’s bid application. The certification statement must specify that the supplier joined the network because it is unable independently to furnish all of the items in the product category for which the network is submitting a bid to beneficiaries throughout the entire geographic area of the CBA. • The network cannot be anticompetitive. Any suspected cases of Federal antitrust violations are referred to the Department of Justice for review. • For bid evaluation purposes, a network’s combined total market share for each product category cannot exceed 20 percent of the Medicare demand for that product category in the CBA at the time of bidding. However, once a network receives a contract, the network may expand and exceed the 20 percent limit on market share. • Network members may not bid independently or as a member of another network for the same product category for which the network submits a bid in the same CBA. A supplier can join different networks for different product categories or in different CBAs. • If a network is awarded a contract, each member of the contracted network will submit its own Medicare claims and will be paid directly by Medicare for products and services it furnishes under the Medicare DMEPOS Competitive Bidding Program.