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CMS files the Proposed Rule that sheds light on the next round of the Competitive Bidding Program

Published in VGM Government Relations on July 01, 2025

On June 30, 2025, CMS filed the anticipated Proposed Rule that includes updates to the Competitive Bidding Program (CBP). Public comments are due 60 days from June 30, 2025.  

Below is a high-level summary of the rule. It is critical to note that, according to the Proposed Rule Fact Sheet dated June 30, 2025, CMS has stated that they have not announced the specific product categories they are bidding or the specific timeframe for the next competition. Those specifics will be forthcoming in a future CMS announcement. 

Proposed Rule Highlights: 

Potential New Product Categories 

  • Ostomy, tracheostomy, and urological supplies (Definitions were revised to categorize each as medical equipment and thus subject to CBP inclusion). 
  • Continuous Glucose Monitoring (CGM) and insulin pumps (reimbursed on a bundled monthly rental basis for both CB and non-CB areas and reclassified under the frequent and substantial servicing payment category). 
  • OTS Upper Extremity Orthotics - this category would be new to the CB program.

Remote Item Delivery (RID) CBP

This would essentially be a mail order program for certain products that are frequently drop shipped to patients. Products being considered for inclusion in the RID method are ostomy, tracheostomy, urological, CGM, and OTS upper extremity orthotic products.

Two RID CBP options are proposed for a given product category:  

  • Establish one nationwide RID CBP. 
  • Establish multiple RID CBPs covering different regions of the country. 

Accreditation 

  • Require DME suppliers to get reaccredited annually instead of every three years 

SPA Calculation 

  • Revise the lead item SPA calculation to use the 75th percentile of winning bids for the lead item. While other methods for setting the SPAs are also mentioned in the proposed rule, this 75th percentile method seems to be the method CMS is favoring.
  • Revise the ratio for non-lead items in a product category to be based on the 2015 fee schedule rate for each specific area instead of the average of the 2015 fee schedule rate for all areas. 

Contract Award Determinations 

  • Revise how CMS determines the number of contracts to award by using supplier utilization information for product categories included in prior rounds and current supplier utilization for new product categories. Regardless of what they ultimately decide here, the outcome will likely be fewer contracts awarded for each product category in each CBA.

SPA Increase 

Allow for an annual increase to SPAs to account for inflation for multiyear contracts. 

Bid Limits And Conditions For Awarding Contracts If Savings Are Not Expected 

  • Items included for the first time: the bid limits would be the amounts otherwise paid for the items. 
  • Previously included items: the bid limits would be the most recent SPA for the items plus 10 percent. If it has been more than a year since the SPA was last in effect, the inflation-adjusted SPA plus 10 percent. 
  • In no event would the bid limit be allowed to exceed the unadjusted fee schedule amount. 

Financial Documentation Changes 

  • Remove requirement to submit a tax return extract, income statement, balance sheet, or statement of cash flows. 
  • Continue requiring submission of a credit report with a numerical credit score and/or rating from one of the four approved credit reporting agencies during the bid window, and by the CDRD if the supplier wants to be eligible for the process for reviewing covered documents. 
  • Continue using a five-tier scoring system in the evaluation of the credit report with a numerical credit score and/or rating, which will be utilized to establish a financial score. 
  • Cease using supplier financial scores when determining the capacity to assign to each supplier to meet projected beneficiary demand. 
  • Require suppliers attest that they meet the small supplier threshold in the DMEPOS Bidding System (DBidS), or any successor system, if applicable. 

New Contract Clause 

  • Addition of a new clause allowing CMS to unilaterally terminate or modify supplier contracts if certain conditions are met due to a PHE allowing CMS to revert to the general fee-for-service program requirements. 

The VGM Government Relations team will continue to analyze, develop action items, and provide updates as they become available. 

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