42 CFR 414.412 - Submission of bids under a competitive bidding program.

§ 414.412 Submission of bids under a competitive bidding program.

(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) Bids are submitted for items grouped into product categories.

(2) The bids submitted for each item in a product category cannot exceed the payment amount that would otherwise apply to the item under subpart C of this part, without the application of § 414.210(g), or subpart D of this part, without the application of § 414.105, or subpart I of this part. The bids submitted for items in accordance with paragraph (d)(2) of this section cannot exceed the weighted average, weighted by total nationwide allowed services, as defined in § 414.202, of the payment amounts that would otherwise apply to the grouping of similar items under subpart C of this part, without the application of § 414.210(g), or subpart D of this part, without the application of § 414.105.

(3) 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.

(4) 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.

(5) 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.

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

(d)Separate bids.

(1) Except as provided in paragraph (d)(2) of this section, for each product category that a supplier is seeking to furnish under a Competitive Bidding Program, the supplier must submit a separate bid for each item in that product category.

(2) An exception to paragraph (d)(1) of this section can be made in situations where price inversions defined in § 414.402 have occurred in past competitions for items within groupings of similar items within a product category. In these situations, an alternative method for submitting bids for these combinations of codes may be announced at the time the competition begins. Under this alternative method, the combination of codes for the similar items is the item for bidding purposes, as defined under § 414.402. Suppliers submit bids for the code with the highest total nationwide allowed services for calendar year 2012 (the “lead item”) within the grouping of codes for similar items, and the bids for this code are used to calculate the single payment amounts for this code in accordance with § 414.416(b)(1). The bids for this code would also be used to calculate the single payment amounts for the other codes within the grouping of similar items in accordance with § 414.416(b)(3). For subsequent competitions, the lead item is identified as the code with the highest total nationwide allowed services for the most recent and complete calendar year that precedes the competition. The groupings of similar items subject to this rule include -

(i) Hospital beds (HCPCS codes E0250, E0251, E0255, E0256, E0260, E0261, E0266, E0265, E0290, E0291, E0292, E0293, E0294, E0295, E0296, E0297, E0301, E0302, E0303, and E0304).

(ii) Mattresses and overlays (HCPCS codes E0277, E0371, E0372, and E0373).

(iii) Power wheelchairs (HCPCS codes K0813, K0814, K0815, K0816, K0820, K0821, K0822, K0823, K0824, K0825, K0826, K0827, K0828, and K0829).

(iv) Seat lift mechanisms (HCPCS codes E0627 and E0629).

(v) TENS devices (HCPCS codes E0720 and E0730).

(vi) Walkers (HCPCS codes E0130, E0135, E0140, E0141, E0143, E0144, E0147, E0148, and E0149).

(e) 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.

(f)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 paragraph (f)(1) of this section may submit the same bid amount for each item under each competitive bidding program for which it submits a bid.

(g)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.

(h)Requiring bid surety bonds for bidding entities -

(1)Bidding requirements. For competitions beginning on or after January 1, 2017, and no later than January 1, 2019, a bidding entity may not submit a bid(s) for a CBA 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 (h)(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 (h)(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.

[ 72 FR 18085, Apr. 10, 2007, as amended at 79 FR 66264, Nov. 6, 2014; 81 FR 77966, Nov. 4, 2016]

Title 42 published on 2015-11-28

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 42 CFR Part 414 after this date.

  • 2017-03-22; vol. 82 # 54 - Wednesday, March 22, 2017
    1. 82 FR 14639 - Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2017; Medicare Advantage Bid Pricing Data Release; Medicare Advantage and Part D Medical Loss Ratio Data Release; Medicare Advantage Provider Network Requirements; Expansion of Medicare Diabetes Prevention Program Model; Medicare Shared Savings Program Requirements; Corrections
      GPO FDSys XML | Text
      DEPARTMENT OF HEALTH AND HUMAN SERVICES, Centers for Medicare & Medicaid Services
      Final rule; correction.
      This correcting document is effective March 21, 2017 and is applicable beginning January 1, 2017.
      42 CFR Parts 405, 410, 411, 414, 417, 422, 423, 424, 425, and 460
The section you are viewing is cited by the following CFR sections.