Medicare traditionally has paid DMEPOS suppliers through fee schedule amounts based on suppliers’ historical charges to Medicare. The purpose of CBP is to improve how Medicare payment amounts are set by paying only competitively selected contract suppliers amounts based on competitive bids, thereby providing Medicare program savings and reducing Medicare beneficiaries’ out-of-pocket expenses for DMEPOS items and services. CMS and its CBP implementation contractor—Palmetto GBA—administer and implement the CBP and its bidding rounds. In each competitive bidding area included in a CBP bidding round, suppliers can bid for one or more product categories’ CBP-covered items.evaluated based on the supplier’s eligibility, financial status, and bid prices. From this evaluation, the CBP payments—referred to as single payment amounts—are determined for each CBP-covered item in each The suppliers’ bids are competitive bidding area, and the winning suppliers are selected. Winning suppliers are then offered CBP contracts. If the supplier accepts its contract offer, it agrees to accept Medicare assignment on the CBP- covered items for the product category and in the competitive bidding area involved,amounts. and to be paid the relevant CBP single payment CMS was also required to take steps to ensure that small suppliers could be awarded CBP contracts, and accordingly set a target that 30 percent of the qualified suppliers in each product category in each competitive bidding area would be small suppliers as defined for CBP. where the small supplier target is not initially met, CMS may award additional small suppliers CBP contracts after the agency has determined the number of suppliers needed to meet or exceed CMS’s estimated beneficiary demand. To help ensure beneficiary access and choice, CMS tries to award at least five contracts in each product category in each CMS is required by law to recompete the CBP competitive bidding area.contracts at least once every three years. (See fig. 1 for CBP’s legislative history and program implementation timeline.) For CBP, CMS has defined a small supplier as one that generates gross revenue of $3.5 million or less in annual receipts including both Medicare and non-Medicare revenue. A qualified supplier is a bidder that has met certain requirements, including having been found financially sound, and its bids will be used to determine the single payment amounts and to select the contract suppliers. Pub. L. No. 105-33, § 4319(a), 111 Stat. 251, 392-4 (1997) (codified, as amended, at 42 U.S.C. § 1395w-3). Pub. L. No. 108-173 § (302)(b), 117 Stat. 2066, 2224-30 (2003) (codified, as amended, at 42 U.S.C. § 1395w-3). Items and services covered by the competition were durable medical equipment (DME) and related supplies, off-the-shelf orthotics, and enteral nutrients and related equipment and supplies. Pub. L. No. 110-275, § 154(a)(2), 122 Stat. 2494, 2560-3 (2008) (codified, as amended, at 42 U.S.C. § 1395w-3). The Medicare Improvements for Patients and Providers Act of 2008 and implementing regulations require CMS to notify suppliers of missing financial documentation if their bids are submitted within the covered document review date, which is the later of: (1) 30 days before the final date for the close of the bid window; or (2) 30 days after the bid window opens. For the round 1 rebid, CMS was required to notify eligible suppliers of missing financial documentation within 45 days after the end of the covered document review date. For other competitive bidding program (CBP) rounds, CMS is required to notify eligible suppliers of missing financial documentation within 90 days after the end of the covered document review date. The national mail-order competition includes all parts of the United States, including the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa. The CBP rounds include: Round 1 rebid. CMS awarded contracts to 356 contract suppliers for the provision of DME items and services in nine product categories in nine competitive bidding areas. The contracts took effect on January 1, 2011 and expired after three years on December 31, 2013, except for the mail-order diabetic testing supplies contracts, which expired on December 31, 2012. Round 2. Round 2 expands CBP to another 100 competitive bidding areas in 91 metropolitan statistical areas. The single payment amounts for covered items were effective July 1, 2013 under round 2 contracts. The round 2 product categories are the same as the round 1 rebid except for the addition of the negative pressure wound therapy (NPWT) category, the deletion of the complex power wheelchairs and mail-order diabetic supplies categories, and the extension of the support surfaces category to all round 2 competitive bidding areas.The round 2 contracts are for a term of 3 years. National mail-order diabetic testing supplies program. The CBP national mail-order diabetic testing supplies program competition was conducted at the same time as round 2, and its competitively determined single payment amounts were effective July 1, 2013. Unlike in the round 1 rebid, suppliers bidding for the national program had to demonstrate that their bids would cover at least 50 percent, by sales volume, of all types of diabetic testing strips on the market. These contracts are for a term of 3 years. Non-mail order Medicare payments are the same as the mail-order single payment amounts for the CBP-covered items. Round 1 recompete. In anticipation of the expiration of the round 1 rebid contracts, in 2012 CMS recompeted contracts for the nine round 1 rebid competitive bidding areas, referred to as the round 1 recompete. The round 1 recompete’s six product categories differ from the round 1 rebid categories by adding infusion pumps, NPWT pumps, deleting complex wheelchairs, and creating a new category that includes home equipment, such as hospital beds and commode chairs. The recompete contracts have a 3-year term, with an effective date of January 1, 2014. A contract supplier may no longer participate in CBP if CMS terminates its contract, if it voluntarily withdraws from Medicare, or if it has experienced a certain type of change of ownership. CMS can terminate a contract supplier’s CBP contract if a supplier fails to meet its contractual obligations. In that case, CMS may request that the supplier submit a corrective action plan, suspend or terminate the contract, preclude it from participating in CBP, or revoke its billing number. A contract supplier that has its CBP contract terminated may continue to operate as a Medicare supplier and submit Medicare claims for non-CBP covered items and services. Contract suppliers may choose to voluntarily withdraw from Medicare, and thus no longer be a Medicare supplier. Contract suppliers may also have a change in ownership that impacts their participation in CBP, but their CBP contracts may be transferred only under certain circumstances. A change in ownership, also referred to as a CHOW, may result in either (1) a new entity or company that did not exist before the merger or acquisition transaction; or (2) a successor entity or company that exists before the transaction, merges or acquires a contract supplier, and continues to exist as it did before the transaction. If a contract supplier is negotiating an ownership change, the supplier must notify CMS in advance and CMS may award the CBP contract to the entity that merges with or acquires the contract supplier in certain circumstances. These circumstances include when the successor entity is acquiring the assets of the contract supplier and submits a signed agreement to CMS in advance of the acquisition stating that it will assume all obligations under the contract. Medicare beneficiaries residing in competitive bidding areas have several sources available to help them locate contract suppliers and receive assistance for CBP-related issues. CBP Online Contract Supplier Locator. To locate a CBP contract supplier, beneficiaries can use the CMS online supplier locator tool on CMS’s Medicare website. The contract locator tool contains the names of the contract suppliers in each competitive bidding area, as well as the product categories for which they furnish CBP-covered items. Contract suppliers are responsible for submitting information regarding the specific brands of items they furnish in the upcoming quarter, and CMS uses this information to update the supplier locator. 1-800-MEDICARE Inquiries. CMS has directed beneficiaries to call its 1-800-MEDICARE beneficiary help line with CBP questions— referred to by CMS as inquiries. Callers are assisted by trained CBP customer service representatives (CSR) who use several scripts to answer general questions about CBP and specific product categories and assist beneficiaries in finding CBP suppliers. If a beneficiary’s inquiry cannot be addressed by the scripts, the CSR will forward the inquiry to an advanced-level CSR who will research the issue and respond to the beneficiary’s inquiry. Palmetto GBA and CMS regional offices. Palmetto GBA, the CBP implementation contractor, investigates all beneficiary or supplier complaints related to alleged CBP contract violations. In addition, Palmetto GBA provides CBP-related information and updates through its website. Local Palmetto GBA staff are stationed in the competitive bidding areas and work with CMS regional staff to monitor CBP activities and identify and address any emerging issues. CMS also uses its regional offices as the focal point for calls that cannot be resolved by 1-800-MEDICARE; for example, the offices may assist when a CSR is unable to help a beneficiary find a contract supplier. Competitive Acquisition Ombudsman (CAO).