(Medicare Claims Processing Manual)

(4)  Ca pped rental items furnished on a rental basis.  Grandfathered supplier  means a noncontract supplier that elects to continue to furnish grandfathered items to beneficiaries in a CBA to whom the supplier had furnished the items prior to implementation of the competitive bidding program.  The beneficiary must elect to continue to receive the item from the grandfathered supplier.   Item  means a product included in a competitive bidding program that is identified by a HCPCS code, which may be specified for competitive bidding (for example, a product when it is furnished through mai l order), or a combination of codes and/or modifiers.  An item also includes the services directly related to the furnishing of that product to the beneficiary, including caregiver training and follow -up, suppliers shipping charges, maintaining rented equipment in proper order, education, delivery, set -up and retrieval as appropriate.   Item weight  is a number assigned to an item based on national allowed services for that item when compared to other items in the same product category.   Mail order refers to  items ordered remotely (i.e., by phone, email, internet, or mail) and delivered to the beneficiarys residence by common carriers (e.g., U.S. Postal Service, Federal Express, United Parcel Service) and does not include items obtained by beneficiaries from  local supplier storefronts.   Mail order contract supplier is a contract supplier from which items are ordered remotely and that furnishes items through common carrier (e.g., U.S. Postal Service, Federal Express, and United Parcel Service) to beneficiaries  who maintain a permanent residence in a CBA.   Metropolitan Statistical Area (MSA)  has the same meaning as that given by the Office of Management and Budget.  Minimal self -adjustment means an adjustment that the beneficiary, caretaker for the beneficiary, or supplier of the device can perform and does not require the services of a certified orthotist (that is, an individual certified by either the American Board for Certification in Orthotics and Prosthetics, Inc., or the Board for Orthotist/Prosthetist Certification) or an individual who has specialized training.   Physician  has the same meaning as in section 1861(r) of the Act.   Nationwide competitive bidding area means a CBA that includes the United States, its Territories, and the District of Columbia.   Nationwide mail order contract supplier means a mail order contract supplier that furnishes items in a nationwide competitive bidding area.   Network  means a group of small suppliers t hat form a legal entity to provide competitively bid items throughout the entire geographic area of a CBA.   Noncontract supplier  means a supplier that is not awarded a contract by CMS to furnish items included in a competitive bidding program.  Off-The-Shelf (OTS) orthotics are orthotics that require minimal self -adjustment for appropriate use and do not require expertise in trimming, bending, molding, assembling, or customizing to fit the individual.   Pivotal bid  means the lowest composite bid based on bids submitted by suppliers for a product category that includes a sufficient number of suppliers to meet beneficiary demand for the items in that product category.   Product category  means a grouping of related items that are used to treat a similar medical condition.  Regional competitive bidding area  means a CBA that consists of a region of the United States, its Territories, and the District of Columbia.   Regional mail order contract supplier means a mail order contract supplier that furnishes items in a re gional competitive bidding area.   Single payment amount  means the allowed payment amount for an item furnished under a competitive bidding program.  Small supplier  means a supplier that generates gross revenue of $3.5 million or less in annual receipts, including Medicare and non -Medicare revenue.   Specialty supplier  means a skilled nursing facility (SNF) or nursing facility (NF) that, at the time of bidding, elects  to furnish certain competitive bidding items only to its residents and that is awarded a contract.   Supplier  means an entity with a valid Medicare supplier number, including an entity that furnishes an item through the mail.  Treating practitioner means a physician assistant, nurse practitioner, or clinical nurse specialist, as those terms are defined in section 1861(aa)(5) of the Act.   Weighted bid means the item weight multiplied by the bid price submitted for that item.   20 - DMEPOS Competitive Bidding Process  (Rev. 1502; Issued:  05- 09-08; Effective/Implementation Date:  06 -09-08)  To be considered for participation in the Medicare DMEPOS Competitive Bidding Program, suppliers must submit a bid in each CBA for each product category that they want to furnish to Medicare beneficiaries. DMEPOS suppliers must submit a bid amount for ever y item within a product category.  All DMEPOS suppliers that submit a bid must meet the eligibility requirements in 42 CFR 411.414(b)- (d) and the bidding requirements established in the RFB.  The RFB may be found on the CBIC Web site at http://www.dmecompetitivebid.com .  Bids are evaluated to determine whether the supplier will be able to participate in the program for the duration of the contract period.  A composite bid (a suppliers weighted bids for all i tems within a product category within a CBA) is calculated for each supplier by product category and by CBA.  These composite bids are then ranked in order from the highest to the lowest.  The lowest ranked composite bid that includes a sufficient number of qualified suppliers to meet beneficiary demand for the items in a product category will become the pivotal bid.  Qualified suppliers that meet all of our requirements and whose composite bids are less than or equal to the pivotal bid will be offered a contract to participate in the Medicare DMEPOS Competitive Bidding Program.  Also, additional small suppliers may be added to meet our small supplier target (see section 20.5.1).  During the contracting process, additional suppliers may be awarded a contract  to meet beneficiary demand.   20.1 - Items Subject to Competitive Bidding  (Rev. 1502; Issued:  05-09- 08; Effective/Implementation Date:  06 -09-08)  The general categories of items that are subject to competitive bidding include:   DME and medical supplies, including supplies necessary for the use of DME and items used in infusion and drugs (other than inhalation drugs), but excluding class III devices under the Federal Food, Drug, and Cosmetic Act.   Enteral nutrients, equipment, and supplies;   OTS orthotics  DMEPOS items subject to competitive bidding are phased in under the programs, beginning with the highest cost and highest volume items and services or those items and services that the Secretary determines have the largest savings potential.  Specific items are designated for inclusion in competitive bidding programs through program instructions or other means (e.g., Web site posting).  A listing of the items per CBA for round 1 of the DMEPOS Competitive Bidding Program is available at the CBIC Web site, http://www.dmecompetitivebid.com.  20.2 - Competitive Bidding Areas (CBAs)  (Rev. 1502; Issued:  05-09- 08; Effective/Implementation Date:  06 -09-08)  A CBA is designated by specific ZIP Codes.  A CBA that is i dentified with a specific MSA may be concurrent with, larger than or smaller than the related MSA depending on a variety of considerations.  Areas that may be exempt from the Medicare DMEPOS Competitive Bidding Program include rural areas and areas with lo w population density within urban areas (i.e., MSAs) that are not competitive, unless there is a significant national market through mail order for a particular item or service.  The CBA will be the area within which certain DMEPOS items must be furnished by contract suppliers unless an exception applies.  CBAs are designated through program instructions or other means (e.g. Web site posting).  A listing of the ZIP Codes per CBA for round 1 of the DMEPOS Competitive Bidding Program is available at CBIC Web site, http://www.dmecompetitivebid.com.  ZIP Codes for future rounds will also be listed on this Web site.  The DME MACs will be notified of any changes to ZIP Codes as often as weekly via systematic updates to VMS.   20.3 - No Administrative or Judicial Review  (Rev. 1502; Issued:  05-09- 08; Effective/Implementation Date:  06 -09-08)  There is no administrative or judicial review for:    The awarding of contracts;   The establishment of payment amounts;  Designation of CBAs;  The phase-in of competitive bidding programs;  The selection of items for competitive bidding programs; or   The bidding structure and number of contract suppliers selected.  A denied claim is not appealable if the denial is based on a determination by CMS that a competitively bid item was furnished in a CBA in a manner not authorized by 42 CFR 414 Subpart F.  20.4 - Eligibility Requirements to Submit a Bid  (Rev. 1502; Issued:  05-09- 08; Effective/Implementation Date:  06 -09-08)  To be eligible to bid, all suppliers must meet the requirements in 42 CFR 414.414.  For example, the suppliers must be in good standing and have an active National Supplier Clearinghouse number (NSC#), meet quality standards and be accredited by a CMS approved accreditation organization (unless CMS specifies that a pending accreditation application is acceptable) for the item being bid.  Suppliers must be accredited by the deadline specified by CMS in order to be offered a contract.   20.5 - Becomin g a Contract Supplier  (Rev. 1502; Issued:  05-09- 08; Effective/Implementation Date:  06 -09-08)  Qualified suppliers that meet all competitive bidding requirements including, but not limited to, eligibility, financial and accreditation requirements and whos e composite bids are less than or equal to the pivotal bid, will be offered a contract to become a contract supplier.  Contract suppliers will be held to all of the terms of their contracts for the duration of the contract period.  See section 30 of this c hapter for more information about contract supplier responsibilities.  For the first round of competitive bidding, the contract period is July 1, 2008 through June 30, 2011, with the exception of mail order diabetic supplies, whose contract period is July 1, 2008 through March 31, 2010.  The length of a contract period may not exceed 3 years.   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 en sure 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 networks 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 J ustice for review.    For bid evaluation purposes, a networks 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 receive s 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 supplie r can join different networks for different product categories or in different CBAs.