Small Supplier Considerations/Small Supplier Target Fact Sheet

The Social Security Act mandates that appropriate steps be taken to ensure that small suppliers have an opportunity to be considered for participation in the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. For competitive bidding purposes, a small supplier is a supplier that generates gross revenue of $3.5 million or less in annual receipts including Medicare and non-Medicare revenue. The program attempts to have at least 30 percent of contract suppliers be small suppliers. Historically, 59 percent of contract suppliers in prior rounds (excluding national mail-order competitions) were small suppliers.

During bid evaluation, qualified suppliers that meet all program eligibility requirements and whose composite bids1 are less than or equal to the pivotal bid2 will be offered a contract to participate in the Medicare DMEPOS Competitive Bidding Program. If not enough qualified small suppliers are at or below the pivotal bid to meet the small supplier target, additional contracts are offered to qualified small suppliers with a composite bid above the pivotal bid. Contracts are offered until the 30 percent target is reached or no more qualified small suppliers for that product category are in that competitive bidding area.

Network members are counted individually for purposes of the small supplier target, but the entire network would be offered a contract. For example, if three small suppliers are needed to meet the 30 percent target and the next small supplier above the pivotal bid is a network with 10 members, then all members of that network would be offered a contract.

It's important to note that the single payment amounts are calculated before the small supplier target process and do not change as a result of the process.


1Composite bid means the bid submitted by the supplier for the lead item in the product category.
2Pivotal bid means the lowest bid for the lead item in the product category based on bids submitted by suppliers for a product category in a competitive bidding area (competition) that includes a sufficient number of suppliers to meet the projected beneficiary demand for the items in that competition.

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Updated: 05/07/2019