Small Supplier Provisions
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The Medicare Modernization Act directs CMS to “take appropriate steps to ensure that small suppliers of items and services have an opportunity to be considered for participation in the program.” CMS has chosen two approaches in implementing this direction in the final regulations. First, if fewer than 30% of the successful bidders in a product category in a CBA are small suppliers, CMS will offer contracts to additional small suppliers. Second, small suppliers will be permitted to form networks that will submit bids on behalf of all network members. For purposes of both of these provisions, CMS has defined “small supplier” to mean a supplier with annual gross revenues of $3.5 million or less.
Additional Small Supplier Contracts
After evaluating composite bids in each product category in each CBA, CMS will set a target number of small suppliers that will be awarded contracts. The target will be 30% of the number of successful bidders in the category. CMS will count the number of small suppliers among the successful bidders, and will then offer contracts to additional qualified small suppliers, beginning with the lowest unsuccessful composite bid, until the target for small supplier participation is reached. The bids of the additional small suppliers will not be used in the calculation of single payment amounts.