Medicare and Medicaid Programs; Calendar Year 2026 Home Health Prospective Payment System (HH PPS) Rate Update; Requirements for the HH Quality Reporting Program and the HH Value-Based Purchasing Expanded Model; Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program Updates; DMEPOS Accreditation Requirements; Provider Enrollment; and Other Medicare and Medicaid Policies

The Comprehensive Error Rate Testing (CERT) program measures improper payments in the Medicare Fee-For-Service (FFS) program. CERT is designed to comply with the Payment Integrity Information Act of 2019 (Pub. L. 116-117). As stated in the CERT 2024 Medicare FFS Supplemental Improper Payment Data report, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) claims had an improper payment rate of 21.4 percent, accounting for approximately 6.1

percent of the overall Medicare FFS improper payment rate.\54\ Over the years we have implemented conditions of payment and other requirements to decrease the improper payment rate for DMEPOS.

\54\ https://www.cms.gov/files/document/2024-medicare-fee-service-supplemental-improper-payment-data.pdf.

Currently, the scope of payment for medical supplies, appliances, and devices, including prosthetics and orthotics, are defined at 42 CFR 410.36(a) and the scope and certain conditions for payment of durable medical equipment (DME) are described at Sec. 410.38. Medicare pays for DMEPOS items only if the beneficiary's medical record contains sufficient documentation of the beneficiary's medical condition to support the need for the type and quantity of items ordered. In addition, other conditions of payment must be satisfied for the claim to be paid. Conditions of payment vary by item but are specified in statute and in our regulations. These conditions are further detailed in our manuals and in local and national coverage determinations. Additionally, for certain DMEPOS items we require suppliers to follow a prior authorization process through which a request for provisional affirmation of coverage is submitted for review before a DMEPOS item is furnished to a beneficiary and before a claim is submitted for payment.\55\ Prior authorization plays an important role in ensuring Medicare's coverage, coding, and payment requirements are met, allowing suppliers a provisional assurance of claim coverage.

\55\ https://www.cms.gov/research-statistics-data-and-systems/monitoring-programs/medicare-ffs-compliance-programs/dmepos/downloads/dmepos_pa_required-prior-authorization-list.pdf.

On December 30, 2015, we published a final rule in the Federal Register titled “Medicare Program; Prior Authorization Process for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies” (80 FR 81674), hereinafter referred to as the “December 2015 final rule,” that established a permanent prior authorization program nationally. The December 2015 final rule was based on the authority outlined in section 1834(a)(15) of the Act, which permits the Secretary to develop and periodically update a list of DMEPOS items that the Secretary determines, based on prior payment experience, are frequently subject to unnecessary utilization and to develop a prior authorization process for these items. Specifically, the December 2015 final rule established a new provision at Sec. 414.234 that specified a process for prior authorization of DMEPOS items frequently subject to unnecessary utilization.

In addition, Sec. 414.234(b) details criteria needed for inclusion on the Master List of Items Potentially Subject to Face-to-Face Encounter and Written Order Prior to Delivery and/or Prior Authorization Requirements (“Master List”). Placement on the Master List makes an item eligible for CMS to require prior authorization as a condition of payment. CMS selects items from the Master List that will require prior authorization as a condition of payment, and we publish notice of such items in the Federal Register.

Prior authorization supports ongoing efforts to safeguard beneficiaries' access to medically necessary items and services, while reducing improper Medicare billing and payments. This is important because documentation of practitioner involvement, including their orders for DMEPOS items and documented medical necessity (as assessed under prior authorization), is all used to support proper Medicare payment for DMEPOS items.

In the November 8, 2019, Federal Register, we published a final rule titled “Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule Amounts, DMEPOS Competitive Bidding Program (CBP) Proposed Amendments, Standard Elements for a DMEPOS Order, and Master List of DMEPOS Items Potentially Subject to a Face- to-Face Encounter and Written Order Prior to Delivery and/or Prior Authorization Requirements” (84 FR 60648), hereinafter referred to as the “2019 ESRD PPS & DMEPOS final rule.”

In the 2019 ESRD PPS & DMEPOS final rule, we finalized technical corrections; updates to definitions and documentation requirements; standard elements of a DMEPOS order; established one harmonized Master List; revised factors for placing an item on the Required Prior Authorization List; and established the authority to exempt compliant suppliers from the prior authorization process. We noted that we believe this exemption process meets our fiduciary obligation to protect the Medicare Trust Funds while remaining cognizant of contractor resource limitations and supplier burden. Specifically, Sec. 414.234(c)(1)(ii) clarifies that CMS may elect to exempt suppliers from prior authorization upon demonstration of compliance with Medicare coverage, coding, and payment rules through such prior authorization process. We did not provide specifics on this exemption process in the regulatory text. However, we received comments suggesting that prior authorization be reserved for aberrant billers and suggesting that CMS consider compliance incentives to waive prior authorization for suppliers that are compliant with billing requirements. We stated that we would consider these suggestions in future rulemaking. 2. Provisions of the Proposed Rule

Prior authorization for certain DMEPOS items ensures that Medicare beneficiaries continue to receive medically necessary items while protecting the Medicare Trust Funds from improper payments, and at the same timekeeping the medical necessity documentation requirements unchanged for suppliers. We proposed to add language to Sec. 414.234(c)(1) that provides additional specificity for the exemption process in Sec. 414.234(c)(1)(ii).

To reduce supplier burden and effectively utilize contractor resources, we proposed to clarify circumstances under which CMS would exempt a supplier from the prior authorization process (see Sec. 414.234(c)(1)(ii)(A)) upon demonstration of compliance with Medicare coverage, coding, and payment rules and that this exemption would remain in effect until CMS withdraws the exemption. We will exempt suppliers that achieve a prior authorization provisional affirmation threshold of at least 90 percent during an initial or periodic assessment. We believe that, by achieving this percentage, the supplier will be demonstrating an understanding of the requirements for submitting accurate claims. We do not believe it is necessary for a supplier to achieve 100 percent compliance to qualify for an exemption because unintentional and sporadic errors could occur that are not deliberate or systematic attempts to submit claims that are not payable. In addition, we proposed that we would withdraw an exemption if evidence becomes available, based on a review of claims, that the supplier has begun to submit claims that are not payable based on Medicare's billing, coding or payment requirements. If the rate of non- payable claims submitted becomes higher than 10 percent during a periodic assessment, we would withdraw the exemption.

In proposed Sec. 414.234(c)(1)(ii)(B), we proposed to provide 60- day notice of an exemption from mandatory prior

authorization requirements. Similarly, we proposed to provide 60-day notice if an exemption is withdrawn, to give the supplier time to begin submission of prior authorization requests, in compliance with mandatory requirements. We solicited comments on these proposals and received a small number of comments. The following is a summary of the comments we received and our responses.

Comment: Several commenters supported the proposed prior authorization exemption process.

Response: We appreciate the commenters' support.

Comment: A commenter recommended that suppliers should be provided with a choice to be exempt from prior authorization, as some suppliers may want to continue to obtain prior authorization to ensure claims meet Medicare medical need requirements.

Response: We thank the commenter for the suggestion and respond by clarifying that suppliers that find value in the prior authorization program may decline the exemption.

Comment: A commenter suggested that we modify the analyses on compliance approval ratings for national suppliers with more than 10 locations by using the organization's tax identification numbers or legal entity, inclusive of all locations, versus individual PTAN or individual location to ensure an accurate sample size. The commenter stated that this will allow for more manageable implementation and reduce the potential volume of audits.

Response: We appreciate the suggestion and will continue to assess methodologies and adjust in the future, if needed; however, at this time we believe our current methodology provides us with the information needed to make the most accurate determination of compliance.

Comment: A commenter suggested we set a minimum number of surveys, such as 20, to ensure sufficient sample size occurs.

Response: We appreciate the suggestion and agree that sample sizes are important when assessing data; however, because we have suppliers that may not meet this minimum threshold, we are unable to incorporate this suggestion.

Comment: A few commenters urged CMS to apply exemptions equitably and transparently, requesting that CMS develop criteria that would avoid creating a two-tiered system favoring larger suppliers. Another commenter supported a more formal and transparent process for granting and rescinding prior authorization exemptions.

Response: We agree that there should be equity and transparency in the exemption process and believe we have achieved that by providing our metrics in this rule and by applying it consistently to all suppliers. We do not believe this creates a two-tiered system favoring larger suppliers.

Comment: A commenter recommended we include contingency mechanisms for extraordinary circumstances in situations where electronic communication with plans and CMS may be disrupted, such as a natural disaster.

Response: We appreciate the commenter's suggestion; however, without more information or details on why this may be needed or how this may benefit suppliers that may or may not qualify for an exemption, we are unable to incorporate this suggestion.

Comment: Some commenters, while supportive, stated that prior authorization creates excessive administrative burden, penalizes clerical errors, and greatly impairs beneficiary access to medically necessary care.

Response: This rule focuses exclusively on the prior authorization exemption process, which will reduce burden, and not the required prior authorization program in its entirety. Therefore, this comment is outside of the scope of this rule.

After consideration of public comments, we are finalizing all of our proposals to clarify circumstances under which CMS would exempt a DMEPOS supplier from the prior authorization process, including our proposal to provide notice of the exemption, or the withdrawal of the exemption, from prior authorization requirements.

Section 1847(a) of the Act, as amended by section 302(b)(1) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173), requires the Secretary of the Department of Health and Human Services (the Secretary) to establish and implement competitive bidding programs (CBPs) in competitive bidding areas (CBAs) throughout the United States for contract award purposes for the furnishing of competitively priced DMEPOS items and services, including:

Certain DME and medical supplies (as defined in section 1834(a)(13) of the Act) for which payment would otherwise be made under section 1834(a) of the Act.

Enteral nutrients, equipment, and supplies (enteral nutrition) described in section 1842(s)(2)(D) of the Act.

Off-the-shelf (OTS) orthotics for which payment would otherwise be made under section 1834(h) of the Act.

Lymphedema compression treatment items (as defined in section 1861(mmm) of the Act) for which payment would otherwise be made under section 1834(z) of the Act. 1. Benefits of the DMEPOS CBP

The DMEPOS CBP utilizes bids submitted by DMEPOS suppliers to establish applicable payment amounts under Medicare Part B for certain DMEPOS items and services.

The primary goal of the DMEPOS CBP is to reduce excessive Medicare payments for DMEPOS items and services by awarding contracts to a group of suppliers with the lowest bid amounts that have the capacity to furnish the items and services needed in each CBA. In accordance with section 1847(b)(2)(A)(iii) of the Act, contracts cannot be awarded if the total amounts to be paid to contract suppliers in the area are not expected to be less than the total amounts that would otherwise be paid under the DMEPOS fee schedules. Another goal is to provide the best value DMEPOS to achieve positive health outcomes for Medicare beneficiaries. In accordance with section 1847(b)(2)(A)(i) of the Act, contracts cannot be awarded to any supplier that does not meet the quality standards established in accordance with section 1834(a)(20) of the Act. From 2011 through 2018, both of these goals were successfully accomplished for many categories of DMEPOS items and services mandated for inclusion under the program that had the highest volume in terms of total allowed charges. The DMEPOS CBP provides additional benefits that are arguably just as important as lowering excessive payment rates. In general, when the DMEPOS CBP lowers the allowed amounts paid for items and services, it decreases the incentive for committing fraud. Limiting the number of contracts awarded in a competition also reduces the number of suppliers with which a contract supplier must compete for Medicare business. The lower the number of contracts awarded, the greater the chance a supplier receiving a contract has to maintain a steady stream of business and potentially increase their volume of business. The lower the number of contract awards, the more valuable the contracts become, creating a greater

incentive for bidding entities to bid more competitively.

Another important benefit of the DMEPOS CBP is that it ensures access to covered DMEPOS items and services. Pursuant to section 1847(b)(3)(A) of the Act and 42 CFR 414.422, the terms of an awarded contract require that a contract supplier must agree to furnish items under its contract to any beneficiary who maintains a permanent residence in, or who visits, the CBA and who requests those items from that contract supplier. For example, a supplier with a contract to furnish oxygen and oxygen equipment, a product category that includes highly profitable items like oxygen concentrators, and less profitable items like liquid oxygen, must provide access to liquid oxygen as a term of their contract. Contract suppliers may not elect to only furnish the more profitable items and services included in a product category under their contract or to only furnish the items and services to beneficiaries who are less costly to serve (due to, for example, lower shipping or delivery costs for those that live in close proximity to the contract supplier's location). In contrast, suppliers of items not included under the DMEPOS CBP are not mandated to furnish any item or service to any beneficiary. They may elect not to serve beneficiaries in hard-to-reach places or not to furnish items such as liquid oxygen and oxygen equipment that are not as profitable as other items such as stationary oxygen concentrators. 2. Standard Payment Rules for DMEPOS Items and Services and Competitive Bidding Demonstrations

Medicare began paying for DME and orthotics (leg, arm, back, and neck braces) on a fee schedule basis beginning January 1, 1989, in accordance with section 1834(a) of the Act. The fee schedule payment rules for orthotics were subsequently relocated under new section 1834(h) of the Act. In 2001, payment on a fee schedule basis was implemented for enteral nutrition covered under the prosthetic device benefit defined under section 1861(s)(8) of the Act based on the authority provided by section 1842(s)(2) of the Act. The Medicare allowed payment amounts for these DMEPOS items and services are based on the lower of the supplier's actual charge on the claim or the fee schedule amount for the item. Prior to implementation of the fee schedules, payment for these items and services was made in accordance with the reasonable charge payment methodology mandated by section 1842(b)(3) of the Act, which based the Medicare allowed payments for these items in a given calendar year based on what suppliers charged for furnishing the items and services in the preceding calendar year. The reasonable charge payments began in 1966 and increased each year without any limit on inflation until October 1986.

The statute mandates a very specific methodology for calculating the fee schedule amounts. The fee schedule amounts for DME, which were first implemented in 1989, are based on the average of the reasonable charges paid for the item during 1986 and 1987 in each State, increased on an annual basis by covered item update factors in accordance with section 1834(a)(14) of the Act. The statewide fee schedule amounts for the contiguous United States are limited by a national ceiling and floor based on the median of the statewide fee schedule amounts (ceiling) and 85 percent of the median of the statewide fee schedule amounts (floor). The fee schedule amounts for orthotics are based on the average of the reasonable charges paid for the item during 1986 and 1987 and are increased on an annual basis by covered item update factors in accordance with section 1834(h)(4) of the Act. For areas within the contiguous United States, the fee schedule amounts are based on the average reasonable charges in ten regions of the United States. The regional fee schedule amounts are limited by a national ceiling and floor based on 120 percent of the average of the regional fee schedule amounts across all States (ceiling) and 90 percent of the average of the regional fee schedule amounts across all States (floor). The fee schedule amounts for enteral nutrition were the nationwide fee schedule amounts from 2002 through 2015. The nationwide fee schedule amounts were based on the lower of the average of the reasonable charges paid for the item in 1995 or 2002, increased on an annual basis by update factors in accordance with section 1842(s)(1)(B) of the Act. In 2016, the fee schedule amounts for enteral nutrition were adjusted based on information from the DMEPOS CBP and converted to statewide fee schedule amounts. For items of DME and orthotics that were not paid for under Medicare during 1986 and 1987, the fee schedule amounts for the items are established using the fee schedule amounts for comparable items or supplier price lists in accordance with regulations at 42 CFR 414.238. For items of enteral nutrition that were not paid for under Medicare in either 1995 or 2002, the fee schedule amounts for the items are established using the fee schedule amounts for comparable items or supplier price lists in accordance with regulations at 42 CFR 414.112.

Complaints and reports about excessive rental payments for DME began in the 1960s and early 1970s. As early as May 1972, the idea of using competitive bidding to reduce reasonable payments was presented in a report by the Government Accountability Office (GAO), then referred to as the General Accounting Office.\56\ In response to rapidly growing expenditures for DME in the early 1980s, CMS, then referred to as the Health Care Financing Administration, contracted with Abt Associates, Inc., to design Medicare competitive bidding demonstrations for DME, which were planned to go into effect in 1987 in nine metropolitan statistical areas (MSAs). However, Congress imposed a funding moratorium on the demonstrations before they could be implemented. Throughout the 1980s and 1990s, excessive Medicare payments for DME continued to be the focus of reports by the Department of Health and Human Services, Office of Inspector General (OIG) and the GAO, as well as media outlets and Congressional Hearings. Section 4319 of the Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33) mandated demonstration projects for competitive bidding for oxygen and oxygen equipment and other Part B items and services, other than physician services. CMS contracted with Abt Associates, Inc., to design the competitive bidding demonstrations mandated by the BBA of 1997, and many aspects of the demonstrations designed in the 1980s were incorporated into the demonstrations held in Polk County, Florida, for oxygen equipment and supplies, hospital beds and accessories, enteral nutrition, urological supplies, and surgical dressings from October 1, 1999 through September 30, 2002, and in San Antonio, Texas, for oxygen equipment and supplies, hospital beds and accessories, wheelchairs and accessories, general orthotics, and nebulizer drugs from February 1, 2001, through December 31, 2002. The Medicare payment amounts under the demonstrations were lowered by approximately 19 percent. Statistical and qualitative data indicate that beneficiary access and quality of services were essentially unchanged.

\56\ “Need for Legislation to Authorize More Economical Ways of Providing Durable Medical Equipment Under Medicare,” B-164031 (4), May 12, 1972.

The DMEPOS CBP was modeled after the successful demonstration programs

from the late 1990s and early 2000s. For more information about the demonstrations, refer to the proposed rule titled, “Medicare Program; Competitive Acquisition for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) and Other Issues,” published in the Federal Register on May 1, 2006 (hereafter referred to as the “2006 proposed rule”) (71 FR 25654). During the initial development of the DMEPOS CBP, we received substantial feedback from the Program Advisory and Oversight Committee (PAOC), mandated by section 1847(c) of the Act, as amended by section 302(b)(1) of the MMA, to provide advice to the Secretary with respect to the following functions:

The implementation of the Medicare DMEPOS CBP.

The establishment of financial standards for entities seeking contracts under the Medicare DMEPOS CBP, taking into account the needs of small providers.

The establishment of requirements for collection of data for the efficient management of the Medicare DMEPOS CBP.

The development of proposals for efficient interaction among manufacturers, providers of services, suppliers (as defined in section 1861(d) of the Act), and individuals.

The establishment of quality standards for DMEPOS suppliers under section 1834(a)(20) of the Act.

The DMEPOS CBP was initially implemented using the final rule titled, “Medicare Program; Competitive Acquisition for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) and Other Issues,” published in the Federal Register on April 10, 2007 (72 FR 17992), hereafter referred to as the “2007 final rule.” Additional changes were made to the DMEPOS CBP in subsequent rulemaking. 3. Phased In Implementation of the DMEPOS CBP

As discussed previously, section 1847(a) of the Act provides discretion to phase in items into the DMEPOS CBP. Section 1847(a)(1)(B) and (D) of the Act mandate the phase-in of the DMEPOS CBP in nine of the largest MSAs (known as “Round 1”, implemented on January 1, 2011), followed by 91 additional large MSAs (known as “Round 2”, implemented on July 1, 2013), and finally in additional areas, which do not necessarily need to be tied to MSAs. Although the DMEPOS CBP is mandated to be expanded into areas throughout the United States, no timeframe is provided for when all areas must be phased in under the DMEPOS CBP. In accordance with section 1847(a) of the Act, rural areas and areas with low population density within urban areas that are not competitive may be excluded from the DMEPOS CBP, unless there is a significant national market through mail order for a particular item or service. Section 1847(b)(3)(B) of the Act mandates that the contracts awarded to suppliers under the CBP must be recompeted not less often than once every 3 years. In accordance with these directives, we initiated several rounds of the DMEPOS CBP, as summarized in table FF- 25: [GRAPHIC] [TIFF OMITTED] TR02DE25.051

For competitions under the DMEPOS CBP prior to July 1, 2016, there were some CBAs that included MSAs that spanned multiple states. However, starting on July 1, 2016 (Round 2 Recompete), those CBAs were sub-divided so that there are no multi-state CBAs. This has resulted in the DMEPOS CBP operating in 130 CBAs throughout the nation, and those CBAs contain approximately half of the enrolled Medicare Part B population. The other half of the Medicare Part B population resides in areas where the DMEPOS CBP has not yet been phased-in, including approximately 275 MSAs, which we refer to as non-competitive bidding areas (non-CBAs).

In competitions under the DMEPOS CBP prior to Round 2021, bidding entities bid for contracts for furnishing multiple items and services, identified by Healthcare Common Procedure Coding System (HCPCS) Level II codes, under several different product categories. The product categories included in the CBPs prior to and including Round 2021 are as follows:

National Mail Order CBA: Diabetes testing supplies.

Round 1 2017 and Round 2 Recompete: Enteral Nutrients, Equipment and Supplies; General Home Equipment and Related Supplies and Accessories (including hospital beds, pressure reducing support surfaces,

commode chairs, patient lifts, and seat lifts); Nebulizers and Related Supplies; Negative Pressure Wound Therapy (NPWT) Pumps and Related Supplies and Accessories; Respiratory Equipment and Related Supplies and Accessories (including oxygen and oxygen equipment, continuous positive airway pressure (CPAP) devices, and respiratory assist devices (RADs)); Standard Mobility Equipment and Related Accessories (including walkers, standard manual wheelchairs, and standard power wheelchairs); and Transcutaneous Electrical Nerve Stimulation (TENS) Devices and Supplies.

Round 2021: OTS Back Braces and OTS Knee Braces.

In past rounds of competition, CMS allowed a 60-day bidding window for bidding entities to prepare and submit bids. Our regulation at Sec. 414.412 specifies the rules for submission of bids under the DMEPOS CBP. Each bid submission is evaluated, and contracts are awarded to qualified bidding entities in accordance with the requirements of section 1847(b)(2) of the Act and the regulation at Sec. 414.414, which specifies conditions for awarding contacts, including a financial standard evaluation of each bidding entity that submits a bid. This process included a review of tax records, credit reports, and other financial data, which led to the calculation of a financial score, similar to processes used by lenders when evaluating the viability of a company. All bidding entities must meet the financial standards established for the program to be offered a contract. Applying financial standards to bidding entities is needed to assess the expected financial health and quality of bidding entities, and to ensure that the selected bidding entities are able to continue to serve market demand throughout the duration of the contract period. 4. Bid Surety Bonds

Section 522(a) of the Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10) (MACRA) requires bid surety bonds and State licensure for entities submitting bids under the DMEPOS CBP and was implemented as part of the final rule titled, “Medicare Program; End- Stage Renal Disease Prospective Payment System, Coverage and Payment for Renal Dialysis Services Furnished to Individuals With Acute Kidney Injury, End-Stage Renal Disease Quality Incentive Program, Durable Medical Equipment, Prosthetics, Orthotics and Supplies Competitive Bidding Program Bid Surety Bonds, State Licensure and Appeals Process for Breach of Contract Actions, Durable Medical Equipment, Prosthetics, Orthotics and Supplies Competitive Bidding Program and Fee Schedule Adjustments, Access to Care Issues for Durable Medical Equipment; and the Comprehensive End-Stage Renal Disease Care Model,” published in the Federal Register on November 4, 2016 (81 FR 77834) (hereinafter referred to as the “2016 ESRD PPS & DMEPOS final rule”). Section 522(a) of MACRA added section 1847(a)(1)(G) of the Act to require bidders to submit a bid surety bond by the deadline for bid submission. We implemented section 522(a) of MACRA during the next round of competitive bidding following enactment of MACRA, which was Round 2021, even though Round 2021 began after the time period specified in the statute. Section 1847(a)(1)(H)(i) of the Act provides that in the event that a bidder is offered a contract for any product category for a CBA, and its composite bid for such product category and area was at or below the median composite bid rate for all bidders included in the calculation of the single payment amount (SPA) for the product category and CBA, and the entity does not accept the contract offered, the bid surety bond(s) for the applicable CBAs will be forfeited and the Secretary will collect on the bid surety bond(s). In instances where a bidder does not meet the bid surety bond forfeiture conditions for any product category for a CBA as specified in section 1847(a)(1)(H)(i) of the Act, then the bid surety bond liability submitted by the entity for the CBA will be returned to the bidder within 90 days of the public announcement of the contract suppliers for such product category and area. Detailed conditions of the bid surety bonds were implemented in the 2016 ESRD PPS & DMEPOS final rule (81 FR 77931). The regulation (subsequently redesignated from Sec. 414.412(h) to Sec. 414.412(g) (see 83 FR 56922)) requires bidders to obtain bid surety bonds, and if an entity is offered a contract for any product category for a CBA, its composite bid for such product category and area is at or below the median composite bid rate for all bidders included in the calculation of the SPA(s) for the product category/CBA combination, and the entity does not accept the contract offered, the bid surety bond for the applicable CBA will be forfeited and CMS will collect on the bid surety bond via Electronic Funds Transfer from the respective bonding company. We believe the bid surety bond requirement encourages all bidding entities to submit substantiated bid amounts--that is, to further prevent bidding entities from submitting a low bid amount to have a better opportunity in being offered a DMEPOS Contract.

On June 30, 2025, CMS issued a proposed rule with a 60-day comment period on the issues related to the provisions of this final rule.