CMS-10169 - Revised Supporting Statement part A PRA_FINAL (August 2015)

Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS)
Competitive Bidding Program
Supporting Statement Part A
OMB#: 0938-1016; CMS10169
Background
Since 1989, Medicare has been paying for durable medical equipment (DME) and supplies (other than customized items)
using fee schedule amounts that are calculated for each item or category of DME identified by a Healthcare Common
Procedure Coding System (HCPCS) code. Payments are based on the average supplier charges on Medicare claims from
1986 and 1987 and are updated annually on a factor legislated by Congress. For many years, the Government
Accountability Office and the Office of Inspector General of the U.S. Department of Health and Human Services have
reported that these fees are often highly inflated and that Medicare has paid higher than market rates for several
different types of DME. Due to reports of Medicare overpayment of DME and supplies, Congress required that the
Centers for Medicare & Medicaid Services (CMS) conduct a competitive bidding demonstration project for these items.
Accordingly, CMS implemented a demonstration project for this program from 1999-2002 which produced significant
savings for beneficiaries and taxpayers without hindering access to DMEPOS and related services. Shortly after a
successful demonstration of the competitive bidding program, Congress passed the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (“Medicare Modernization Act” or “MMA”) and mandated a phased-in
approach to implement this program over the course of several years beginning in 2007 in 10 metropolitan statistical
areas (MSAs). This statute specifically required the Secretary to establish and implement programs under which
competitive bidding areas (CBAs) are established throughout the United States for contract award purposes for the
furnishing of certain competitively priced items and services for which payment is made under Medicare Part B. This
program is commonly known as the “Medicare DMEPOS Competitive Bidding Program,” and it is projected to save $17.2
billion for beneficiaries and $25.8 billion for the Medicare program over the next 10 years.
CMS conducted its first round of bidding for the Medicare DMEPOS Competitive Bidding Program in 2007 with the help of
its contractor, the Competitive Bidding Implementation Contractor (CBIC). CMS published a Request for Bids (RFB)
instructions and accompanying forms for suppliers to submit their bids to participate in the program. During this first
round of bidding, DMEPOS suppliers from across the U.S. submitted bids identifying the MSA(s) to service and the
competitively bid item(s) they wished to furnish to Medicare beneficiaries. CMS evaluated these bids and contracted
with those suppliers that met all program requirements. The first round of bidding was successfully implemented on July
1, 2008.
On July 15, 2008, however, Congress delayed this program in section 154 of the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA). MIPPA mandated certain changes to the competitive bidding program which
included, but are not limited to: a delay of Rounds 1 (competition to begin in 2009) and 2 of the program (competition
to begin in 2011 in 70 specific MSAs); the exclusion of Puerto Rico and negative pressure wound therapy (NPWT) from
Round 1 and group 3 complex rehabilitative power wheelchairs from all rounds of competition; a process for providing
feedback to suppliers regarding missing financial documentation; and a requirement for contract suppliers to disclose to
CMS information regarding subcontracting relationships. Section 154 of the MIPPA specified that the competition for
national mail-order items and services may be phased in after 2010 and established a rule requiring that a bidder
demonstrate that its bid covers 50 percent (or higher) of the types of diabetic testing strips, based on volume (the “50
percent rule”) for national mail-order competitions. This section of MIPPA also specified that competitions to phase in
additional areas could occur after 2011.

As required by MIPPA, CMS conducted the competition for the Round 1 Rebid in 2009. The Round 1 Rebid contracts and
prices became effective on January 1, 2011. The Affordable Care Act (ACA), enacted on March 23, 2010, expanded the
Round 2 competition by adding an additional 21 MSAs, bringing the total MSAs for Round 2 to 91. The competition for
Round 2 began in December 2011. CMS also began a competition for National Mail-Order of Diabetic Testing Supplies
(DTS) at the same time as Round 2. The Round 2 and National Mail-Order contracts and prices were implemented on
July 1, 2013.
The MMA requires the Secretary to recompete contracts not less often than once every 3 years. The Round 1 Rebid
contract period for all product categories except mail-order diabetic supplies expired on December 31, 2013. (Round 1
Rebid contracts for mail-order diabetic testing supplies ended on December 31, 2012.) The competition for the Round 1
Recompete began in August of 2012. The Round 1 Recompete contracts and prices became effective on January 1, 2014
and will expire on December 31, 2016. Round 2 and National Mail-Order contracts and prices will expire on June 30,
2016.
The most recent approval for this information collection request (ICR) was issued by OMB on June 10, 2013. That ICR
included the estimated burden to collect the information in bidding Forms A and B for the Round 1 Recompete. We are
now seeking approval to collect the information in Forms A and B for competitions that will occur before 2017. For these
upcoming competitions CMS will publish a slightly modified version of the RFB instructions and accompanying Forms A
and B so that suppliers will be better able to identify and understand the requirements of the program. We decided to
modify the RFB instructions and forms based on our experience from the last round of competition. The end result is
expected to produce more complete and accurate information to evaluate suppliers. No new collection requirements
have been added to the modified RFB instructions or Form A or B. We have made no changes to Form C or the estimated
number of respondents. However, the per response burden and the frequency of collection will change, effective July 1,
2016, when the quarterly requirement changes from a quarterly (January, April, July, and October) submission to a semiannual (January and July) submission. Finally, we are retaining without change the Change of Ownership (CHOW)
Purchaser Form and the CHOW Contract Supplier Notification Form, the Subcontracting Disclosure Form, and Form D and
their associated burden under this ICR. We intend to continue use of these
Forms on an ongoing basis.

A.

Justification

1.

Need and Legal Basis

Section 302 of the MMA amended section 1847 of the Social Security Act (the Act) to require the implementation of the
DMEPOS competitive bidding program. The Act provided the program requirements for the submission of bids in
establishing payment rates and the awarding of contracts; provided the requirements for mergers and acquisitions; and
a requirement for the Secretary to re-compete contracts not less often than once every 3 years. These regulations were
published on April 10, 2007 (72 FR 17992).
Section 154 of the MIPPA amended the Act to require each supplier that is awarded a contract in the competitive
bidding program to disclose each subcontracting relationship the supplier has in furnishing items and services under its
contract within 10 days of entering into its contract with CMS. The statute also requires that contract suppliers disclose
within 10 days each subsequent subcontracting relationship entered during the 3 year contract period with CMS. The
contract supplier must also provide information on whether each subcontractor meets accreditation requirements, if

applicable to the subcontractor.
In the January 16, 2009 Federal Register (74 FR 2873), we incorporated a number of provisions in the MIPPA related to
the Round 2 and National Mail-Order Competitions. We also indicated that we would streamline financial documents
collected as part of the RFB to include 1 year of documents instead of the 3 years collected in the 2007 Round 1
competition.
Section 6410 of the ACA amended section 1847 of the Act to add 21 MSAs to the 70 MSAs MIPPA designated for the
Round 2 competition, for a total of 91 MSAs.
In the November 29, 2010 Federal Register (75 FR 73611) we incorporated the statutory requirement to conduct the
Round 2 competition in 91 MSAs into our regulations and established the requirements for conducting a national
competition for furnishing diabetic testing suppliers on a mail order basis.

2.

Information Users

Bidding Forms A & B:
The information collected is used by CMS and its agents to choose the contract suppliers. DMEPOS suppliers submit bids
in order to compete to become a contract supplier to furnish competitively bid items to Medicare beneficiaries who live
in a CBA. CMS has published RFB instructions to guide suppliers in submitting their bids and on the competitive bidding
program requirements. Bids are submitted electronically via DBidS, the Medicare DMEPOS Competitive Bidding
Program online bidding system. The bids submitted before the close of the 60 day bid window are evaluated to
determine which suppliers will become contract suppliers. All information submitted by the suppliers is considered and
evaluated. In addition, a thorough analysis is performed of all information submitted to determine the financial viability
and quality of the supplier. Bid prices that are submitted as part of the winning suppliers’ bids are used by CMS to
establish the single payment amounts for competitively bid items and services.
In preparation for future rounds of competition, we have made changes to the RFB instructions and accompanying
Forms A & B to make these documents more user-friendly and to better clarify the bidding requirements for DMEPOS
suppliers. The changes provided clarifying language to incorporate changes in terminology and plain writing principles
to eliminate obsolete or duplicative information.

Semi-Annual Reporting Form C:
Form C collects prospective information on the brands of products suppliers intend to offer to Medicare beneficiaries.
The form allows contract suppliers to update product brand information or to verify that there is no change in the
brands of product that will be offered to Medicare beneficiaries. The brands each contract supplier reports on Form
C will be posted on the Internet to help customer services representatives at 1-800-MEDICARE, clinicians, beneficiaries,
and caregivers locate contract suppliers that furnish specific products. No changes have been made to this form from

the previously approved version. However, effective July 1, 2016, we have changed the reporting
frequency for Form C from quarterly to semi-annually which constitutes a decrease in burden to contract
suppliers. We intend to continue use of this form in the current and future rounds of competition.

Beneficiary Survey Form D:
Form D is a previously approved beneficiary survey. This form is used to monitor beneficiary satisfaction with the
program and to assist CMS in determining if the program is meeting its objectives. No changes have been made to this
form from the previously approved version. We intend to continue use of this form in the current and future rounds of
competition.
Subcontracting Disclosure:
By law, each contract supplier must disclose each subcontracting relationship the supplier has in furnishing items and
services under its contract within 10 days of entering into its contract with CMS. Contract suppliers are also required to
disclose within 10 days each subsequent subcontracting relationship entered during the 3 year contract period with
CMS. The subcontracting reporting requirement has assisted us in monitoring the use of subcontractors by contract
suppliers and subcontractor compliance with quality standards and accreditation. No changes have been made to this
form from the previously approved version. We intend to continue its use in the current and future rounds of
competition.
Change of Ownership
CMS collects information from DMEPOS suppliers participating in a CHOW that involves a competitive bidding
contract. Information is collected through a combination of Internet based forms and hardcopy submission of
documentation associated with a merger or acquisition. CMS evaluates this information to determine if a DMEPOS
supplier that merges with or acquires a contract supplier meets the conditions for awarding a competitive bidding
contract as specified in regulations. These conditions include compliance with Medicare enrollment requirements,
state licensure requirements, quality standards, accreditation, and financial standards. The CHOW process ensures
the proper transfer of contractual obligations between DMEPOS suppliers and CMS. No changes have been made
to this form from the previously approved version. We intend to continue use of this form in the current and future
rounds of competition.

3.

Use of Information Technology

Bidding Forms A & B:
All bidding suppliers must submit their bidder information, bids, and signature/s electronically into Forms A & B using
the on-line system (DBidS). This system allows suppliers to easily and consistently provide the necessary information.
Suppliers are allowed to make changes to their bids at any time prior to the close of the bid window, at which time
suppliers are required to complete, approve and certify their bids. The CBIC will use the appropriate technology to
secure the safety of the bidding information transmitted to them. Assistance and technical support is available to help
suppliers throughout the competitive bidding process. Suppliers will be required to submit supporting documentation
such as financial documents and network agreements to the CBIC in hardcopy.
Semi-Annual Reporting Form C:
Product brand information that contract suppliers enter during the bidding process will be used to pre-populate the
Supplier Directory on the Medicare website. The suppliers will fill out Form C online at the CBIC website throughout the

contract period. This form is required semi-annually to update any changes to the products the supplier plans to
make available. The online form will be printed and mailed or faxed (preferred) to the CBIC where it will be
uploaded to the Medicare Website. This form must be signed by a company official. Assistance and technical
support is available to help suppliers in completing Form C. CMS will use electronic methods such as web postings
and listserv messages to communicate information regarding Form C.
Beneficiary Survey Form D:
The beneficiary survey (Form D) will be conducted telephonically. A random sample of beneficiaries will be identified to
obtain a sample size of 400 respondents per CBA. The six question survey will be completed via Computer Assisted
Telephone Interview (CATI) by a CMS contractor. Results will be stored in an electronic database using commonly
available software.
Subcontracting Disclosure:
For suppliers that are awarded a contract, CMS, through the CBIC, will collect this information to keep records of
subcontracting relationships. This information includes the name, address and telephone number of the subcontractor,
the type of work that the subcontractor will be providing (i.e., inventory, delivery and set up, or repair) and evidence of
accreditation by a CMS approved accreditation organization. The purpose of collecting this information is to comply with
the disclosure requirement on subcontractors in MIPPA and to ensure that subcontractors meet applicable accreditation
requirements. Suppliers are required to print and submit the subcontracting disclosure form in hardcopy format to the
CBIC by fax (preferred) or mail. No signature is required on this form.
Change of Ownership
DMEPOS contract suppliers participating in a Change of Ownership will be required to complete the CHOW forms on the
CBIC website. These forms include the Contract Supplier Notification Form (60-day notice) and the Purchaser Form (30day notice). These forms were designed to make it easier for suppliers to provide the 60-day and 30-day notices
required by regulations, to provide pertinent information to describe the CHOW transaction and to provide suppliers
with a checklist of other required information. Suppliers are required to print and submit these forms in hardcopy
format along with other associated CHOW documents to the CBIC by fax (preferred) or mail. The information collection
requires the signature of each organization’s Authorized Official (AO).

4.

Duplication of Efforts

Bidding Forms A & B:
This information collection does not duplicate any other effort, and the information cannot be obtained from any other
source.
Semi-Annual Reporting Form C:
This information collection does not duplicate any other effort, and the information cannot be obtained from any other
source. The information collection will only be required when suppliers need to update information related to the
brands of products they offer.
Beneficiary Survey Form D:

This information collection does not duplicate any other effort, and the information cannot be obtained from any other
source. Additionally, the information is needed to evaluate the program and to compare results between CBAs and to
areas where the program has not been implemented.
Subcontracting Disclosure:
This information collection does not duplicate any other effort, and the information cannot be obtained from any other
source.
Change of Ownership
In accordance with §414.422(d)(2)(ii), a successor entity in a CHOW is not required to duplicate previously submitted
information if the previously submitted information is still current. However, each CHOW is unique having variations in
the product categories and competitive bidding areas included in the competitive bidding contract being transferred.
CMS must verify that the purchasing supplier meets all program requirements including enrollment requirements,
financial standards, accreditation, and licensure requirements for each product category and CBA. This information
collection is required to ensure the proper transfer of a competitive bidding contract to another DMEPOS supplier as a
result of a CHOW. CMS will utilize applicable information that is available in enrollment records or on file from the
bidding process and will only request information when it is not on file or current.

5.

Small Businesses

These information collections will impact small businesses. However, CMS has attempted to reduce the burden on
these suppliers by requiring them to submit only those forms that are essential to implement and monitor the program
according to regulations. CMS has made an effort to minimize the burden associated with the process by publishing
guidance with fact sheets, FAQ’s, and providing online forms with checklists of other required documents.
In developing bidding and contract award procedures, section 1847 (b)(6)(D) of the Act requires us to take appropriate
steps to ensure that small suppliers of items and services have an opportunity to be considered for participation in the
Medicare DMEPOS Competitive Bidding Program. Section 1847(b)(2)(A)(ii)) of the Act also states that the needs of small
suppliers must be taken into account when evaluating whether an entity meets applicable financial standards. We note
that CMS has also implemented numerous regulatory provisions to reduce burden on small suppliers. These provisions
are described in the April 10, 2007 and January 16, 2009 regulations and will remain in effect for future rounds of
competition.

6.

Less Frequent Collection

Bidding Forms A & B:
Section 1847 of the Act requires suppliers to submit a bid for every new round of competitive bidding in order to be
considered for the award of a contract. The Secretary is required to recompete contracts not less often than once every
3 years. During the bidding process, each bidder will be required to submit one Form A. Bidders will be required to
submit one Form B for each product category/competitive bidding area for which a bid is submitted. The statute

provides no options for less frequent collection. Failure to collect this information will result in non-compliance with
statutory requirements and the loss of billions of dollars in savings that are already included in the federal budget
baseline.
Form C:
Contract suppliers will be able to update their product information on a semi-annual basis throughout the contract
period. We believe that semi-annual updating of product information (Form C) will provide suppliers adequate
opportunity to keep their information current and will provide beneficiaries timely information on the products available
to them.
Form D:
The beneficiary survey will be conducted twice for each round of competition. This survey will be administered by the
CBIC pre and post-implementation of competitive bidding. A random-sampling procedure will be used to select
beneficiaries for the survey.
Subcontracting Disclosure:
This information is collected on a schedule that is required by law. Contract suppliers are required to notify CMS of any
subcontracting relationships that involve items or services provided under a competitive bidding contract. The initial
subcontracting notification occurs within 10 days of contract awards. Contract suppliers are required to notify the CBIC
any time there is a change in subcontractors during the 3-year contract period.
Change of Ownership
This information is collected only when a contract supplier undergoes a CHOW. The purpose of CMS collecting
information associated with a CHOW is to evaluate whether a supplier that acquires or merges with a contract supplier
is willing to accept the responsibilities and liabilities of a competitive bidding contract and meets the requirements for
becoming a contract supplier under the Medicare DMEPOS Competitive Bidding Program. These requirements include
Medicare enrollment, licensure requirements, quality standards, accreditation, and financial standards. The CHOW
process ensures the proper transfer of contractual obligations between DMEPOS suppliers and CMS.

7.

Special Circumstances

Suppliers may regard CHOWs as confidential. CMS has stated that it will protect the confidentiality of supplier
information to the extent permitted by law. The information collected will be stored in a locked area with restricted
access. CMS and its contractors, as well as the Government Accountability Office (GAO) and the Office of Inspector
General (OIG) will have access to the data, but will report information only in an aggregate or anonymous form.

8.

Federal Register/Outside Consultation
Federal Register
The 60-day Federal Register notice published on April 18, 2014.

Outside Consultation

Section 1847(c) of the Act required the Secretary to establish a Program Advisory and Oversight Committee
(PAOC) to provide advice to the Secretary with respect to the following functions:
The implementation of the Medicare DMEPOS Competitive Bidding Program;
The establishment of financial standards for entities seeking contracts under this program and taking into
account the needs of small suppliers;
The establishment of requirements for collection of data for the efficient management of the program;
The development of proposals for efficient interaction among manufacturers, providers of services, suppliers
(as defined in section 1861(d) of the Social Security Act) and individuals; and
The establishment of quality standards for DME suppliers under section 1834(a)(20) of the Act.
In addition, section 1847(c)(3)(B) authorized the PAOC to perform additional functions to assist the Secretary in
carrying out the Medicare DMEPOS Competitive Bidding Program as the Secretary may specify. As authorized
under section 1847(c)(2), the PAOC members were appointed by the Secretary of Health and Human Services and
represented a broad range of stakeholders in the competitive bidding program. We met with the PAOC numerous
times since 2004 and consulted with them on virtually all aspects of the program. We did not receive any advice
from the PAOC that would indicate a need to change the information collection discussed in this ICR.

9.

Payments/Gifts to Respondents

We will not be providing gifts or any payments (other than remuneration under the contract) to contract suppliers.

10.

Privacy

CMS will maintain the confidentiality of proprietary and financial information to the extent provided by law and will
follow the procedure stated in 45 CFR 5.65. CMS will not share information about any supplier with other suppliers.
However, an independent evaluator may be granted access to a supplier’s information as permitted by law. Any reports
that are created to evaluate the program will be reported in an anonymous or aggregate format. Supplier information
may be reviewed as required by law by the U.S. Government Accountability Office (GAO) and the Department of Health
and Human Services (DHHS) Office of Inspector General (OIG), and by the Department of Justice (DOJ) as permitted by
law. CMS will request that any reports created to evaluate the program by the GAO and DHHS/OIG will report
information in an anonymous or aggregate format.
All contractor staff with access to supplier’s information will be required to sign a statement agreeing to maintain the
confidentiality of each supplier’s information.

11.

Sensitive Questions

There are no questions of a sensitive nature related to the collection of information for the Medicare DMEPOS
Competitive Bidding Program.

12.

Burden Estimates (Hours & Wages)

Bidding Form A
Form A is used to identify the bidding supplier. This form will include information for all locations that will be included
with the supplier’s bid(s). We have estimated the number of respondents (bidders) for upcoming rounds of
competition (e.g., the Round 2 Recompete, the National Mail-Order (NMO) Recompete, and the next Round 1
competition for contracts that will start in 2017) based on our experience from prior rounds of competition. Each
bidding supplier will be required to complete one Form A for each round in which it bids. We anticipate that this form
will be completed by the equivalent of an Administrative Services Manager with a median hourly wage of $38.98. This
wage is based on the May 2012 Occupational Employment Statistics from the Bureau of Labor Statistics. We estimate
the burden for each bidder to complete Form A to be eight hours and $311.84. We do not know how many suppliers will
bid in a given round of competition; however, for purposes of this paperwork burden estimate, we will assume that the
number of bidders will be roughly the same as in previous rounds of competition. Our total burden estimates for Form
A are as follows:

Competition
Round 2
National Mail-Order
Round 1
Total
Annualized Total

Form A
Number of
Bidders
2,640
245
1,011
3,896
1,299

Total Hours
21,120
1,960
8,088
31,168
10,389

Cost
$823,258
$76,401
$315,270
$1,214,929
$404,976

Bidding Form B
Suppliers will use Form B to submit bids for DMEPOS Products. This form will be completed once for each CBA/product
category combination with an estimated completion time of 12 hours.
We do not know how many bids suppliers will submit; however, for purposes of this paperwork burden estimate, we will
assume that each Round 2 Recompete bidder will complete 18 Form Bs, each National Mail-Order bidder will complete
one Form B, and each bidder for Round 1 2017 contracts will complete 6 Form Bs. We anticipate that this form will be
completed by the equivalent of an Administrative Services Manager with a median hourly wage of $38.98. This wage is

based on the May 2012 Occupational Employment Statistics from the Bureau of Labor Statistics. Our total burden
estimates for Form B are as follows:

Competition
Round 2
National Mail-Order
Round 1
Total
Annualized Total

Estimated
Number
of Bidders
2,640
245
1,011
3,896
1,299

Form B
Estimated
Number of
Form Bs
47,520
245
6,066
53,831
17,944

Total Hours
570,240
2,940
72,792
645,972
215,324

Total Cost
$22,227,955
$114,601
$2,837,432
$25,179,988
$8,393,329

Form C
We have made no changes to Form C or the estimated number of respondents. However, effective July 1, 2016, the per
response burden and the frequency of collection will change when the quarterly (January, April, July, and October) Form
C submission requirement is reduced to a semi-annual (January and July) submission requirement. The burden
estimates for Form C are based on time to update product brand information the contract supplier is planning to make
available to Medicare beneficiaries. C o n t r a c t Suppliers will be required to review the manufacturer and make of
products and update any information that has changed since the previous quarterly submission. We estimate the time
required to complete this process to be 20 minutes for each submission. We anticipate that this form will be completed
by the equivalent of an Administrative Assistant with a median hourly wage of $17.30. This wage is based on the May
2014 Occupational Employment Statistics from the Bureau of Labor Statistics. We estimate the burden for each supplier
to complete Form C to be 20 minutes semi-annually for an annual cost of $11.52. Our total burden estimates for Form C
are listed in the table below. It should be noted that burden estimates cover the PRA approval period and we have listed
the burden by calendar year. Based on experience, we estimate that there will be 867 respondents for Round 2, 15 for
the National Mail-Order program, and 365 for the Round 1 Recompete.

Form C
Annual Burden
Hours & Costs

Calendar
Year
CY 2014
CY 2015
CY 2016

Round 1
474
474
243

CY 2017

243

Round 2
1,156
1,156
578
578

National Mail
Order
20
20
10

Total Hours
1,650
1,650
831

Total Cost
$26,186
$26,186
$14,376

10

831

$14,376

Total Cost

$81,124

Annual Cost

$20,281

Form D
We have made no changes to Form D, the number of respondents, or the frequency of collection from the previously
approved ICR. Form D is the beneficiary survey that is utilized to evaluate satisfaction levels with the competitive bidding
program and to assist CMS in determining if the program is achieving its stated goals. Form D is completed twice during
each round of competition. The survey is conducted pre- and post-implementation of competitive bidding. The time to
complete the survey is approximately 15 minutes each time it is administered. The survey will be completed with 400
beneficiaries in each Competitive Bidding Area.
Form D
Round
Round 1
Round 2
National Mail Order
Total (per 3 years)
Annualized Total

Number of
Beneficiaries
3,600
40,000
400
44,000
14,667

Burden Hours
1,800
20,000
200
22,000
7,333

Contract Supplier’s Disclosure of Subcontractors
We have made no changes to the contract supplier’s disclosure of subcontractors form, the estimated number of
respondents, the per-response burden, or the frequency of collection from the previously approved ICR. Section
414.422(f) states that a supplier entering into a contract with CMS must disclose information on each subcontracting
arrangement that the supplier has to furnish items and services under the contract and whether each subcontractor
meets the accreditation requirements in §424.57, if applicable. Section 414.422(f) also requires that the required
disclosure be made no later than 10 days after the date a supplier enters into a contract with CMS or 10 days after a
supplier enters into a subcontracting arrangement after entering into a contract with CMS. The burden associated with

the requirements in §414.422(f) is the time and effort necessary to disclose the information to CMS. This information
includes: name of subcontractor; address of subcontractor locations servicing the competitive bidding area (CBA);
telephone number of subcontractor; a statement identifying the type of work the subcontractor will be performing for
the contract supplier; and a copy of the subcontractor’s accreditation certification from the CMS deemed accreditation
organization.
We do not know how many contract suppliers will decide to use subcontractors. However, based on previous

experience, we estimate that approximately 684 Round 2 contract supplier locations and approximately 150 Round 1
Recompete contract supplier locations will disclose an average of two subcontracting relationships each. We estimate
that subcontracting relationships will remain stable after the initial disclosure with only about 2% of suppliers reporting
changes in subcontracting throughout the three year contract period. We do not anticipate that national mail-order
contract suppliers will use subcontractors.
We have previously estimated that the burden for contract suppliers to disclose the first subcontracting relationship to
be approximately 20 minutes. This time includes ten minutes for locating and completing the online form and ten
minutes to verify the subcontractor’s accreditation. An additional ten minutes is included for each additional
subcontractor. The total time for the average subcontracting disclosure consisting of two subcontractors is 30 minutes.
We anticipate that this form will be completed by the equivalent of an Administrative Assistant with a median hourly
wage of $15.87 based on the May 2011 Occupational Employment Statistics from the Bureau of Labor Statistics, We
estimate the burden for each supplier to complete the initial subcontracting disclosure to be 30 minutes and $7.94. The
burden for subsequent disclosures is 20 minutes and $5.24.
Each supplier would complete one 30 minute episode to complete the initial reporting requirement. We use a fraction
of this amount (1 hour annually) to illustrate the process for subsequent disclosures that may occur during the three
year contract period. One hour would represent three individual updates of subcontracting relationships at 20 minutes
per update. We do not anticipate that national mail-order contract suppliers will use subcontractors. Our total burden
estimates for subcontracting notifications are as follows:

Competition

Locations with
Subcontractors

Subcontracting
Initial Burden
Hours

684
150

342
75

Round 2
Round 1

Subsequent
Annual
Disclosure Hours
21
4.7

Subcontracting
Burden Hours

Calendar Year
CY 2014
CY 2015
CY 2016
Total Cost
Annual Total

Round 1
75
4.7
4.7

Round 2
21
21
352.5

Total Hours
96
26
357.2

Total Cost
$1,524
$413
$5,669
$7,606
$2,535

We have made no changes to the Change of Ownership Forms, the estimated number of respondents, the per-response
burden, or the frequency of response from the previously approved version. In accordance with Article V of the DMEPOS
competitive bidding contract and §414.422(d), a contract supplier participating in a CHOW must provide CMS advance
notice of the transaction. Suppliers are required to submit both a 60-day and 30-day advance notice in order to provide
CMS enough time to adequately evaluate the purchasing supplier. This notice is required to ensure the successor entity
in a transaction meets all program requirements and has agreed to accept all rights, liabilities, and obligations of the
competitive bidding contract.
Contract suppliers must use the Change of Ownership Contract Supplier Notification Form (60 day notice) and the
Change of Ownership Purchaser Form (30 day notice) forms to provide the required notice.
We estimate that it will take approximately 20 minutes to review the CHOW requirements. This time includes review of
the CHOW Fact sheet and CHOW FAQ’s on the CBIC website. We estimate that it will take approximately 10 minutes to
complete the Change of Ownership Contract Supplier Notification Form and 60 minutes to complete the Change of
Ownership Purchaser Form. Without the use of these standardized forms, it would take suppliers much longer to
assemble and organize the required information.
Each form is to be completed and submitted one time only for each CHOW transaction. The Contract Supplier
Notification Form will be completed by the seller and the Purchaser Form will be purchasing supplier. We believe that
the process to complete and submit the two forms will be completed by a General or Operations Manager. Based on
2011 Bureau of Labor Statistics data, the mean hourly wage for a General or Operations Manager is $55.04. We estimate
that the cost for both the selling and purchasing supplier to review the fact sheet in order to prepare the forms is (0.33 x
$55.04 x 2) $36.60 each. The burden to complete and submit the CHOW Contract Supplier Notification Form is (0.17
hour x $55.04) $9.36 and to complete and submit the CHOW Purchaser Form (1.0 hour x $55.04) $55.04. The total time
and cost for each transaction is estimated to be 1 hour and 50 minutes and $101.00.
We do not know how many CHOWs will occur annually. However, we estimate that we will receive the following
number of CHOW transaction each year: 8 transactions for Round 1, 80 transactions for Round 2, and four transactions
for national mail-order.
CHOW 60
& 30 Day
Notices
Burden
Hours
Calendar
Year

Round
1

Round
2

CY 2014
14.6
146.4
CY 2015
14.6
146.4
CY 2016
14.6
146.4
Total
43.8
439.2
Average Annual Cost
Average
Change of Ownership (CHOW)
FormsAnnual Hour Burden

National
Mail Order

Total
Hours

Total
Cost

7.3
7.3
7.3
22.0

168.4
168.4
168.4
505.2

$9,267
$9,267
$9,267
$27,801
$9,267
168

Annual Burden Summary:
The following table includes the burden estimates associated with this PRA application.
Burden Summary
Annual
Hours
Form
Form A
10,389
Form B
215,324
Form C
1,241
Form D
7,333
Subcontracting
160
CHOW
168
Total
235,024

13.

Annual
Cost
$404,976
$8,393,329
$20,281
$0
$2,535
$9,267
$8,836,293

Capital Costs

The information required is information that is readily available to suppliers, and the suppliers should have the
equipment necessary to collect and furnish the information. The equipment needed to process these forms is the same
equipment that would be needed to provide routine business functions for a DMEPOS business. As a result, there should
be no extra capital cost to respondents for recordkeeping resulting from the collection of this information.

14.

Cost to Federal Government

Form A & B Costs
The government incurs approximate annual costs of $1 million for contractor work to operate and maintain the DBidS
system. These costs are more than offset by the savings resulting from program implementation: which are estimated to
be $17.2 billion for beneficiaries and $25.8 billion for the Medicare program over the next 10 years.

Form C Costs
Costs to the Federal government include both labor and operational expenses incurred by the Competitive Bidding
Implementation Contractor (CBIC). Costs include web development and deployment, document control and processing of
hardcopy submissions, reporting, data analysis, web/listserv outreach and education, data transmission, and outreach to
non-responding suppliers. The cost to process the Form C information is estimated to be $108,250 per quarter for all
rounds of competition with a projected annual cost of $433,956. For 2016-2017, the cost to process the Form C
information is estimated to be $50,000 per quarter for all rounds of competition with a projected annual cost of $350,000
in CY 2016 and $200,000 in CY 2017.
Form D Costs
Costs to the Federal government include both labor and operational expenses incurred by the Competitive Bidding
Implementation Contractor (CBIC). The CBIC subcontracts the beneficiary survey to another entity. The estimated cost
to complete the survey for Round 1 is $175,000. The estimated cost to complete the survey for Round 2 and the
National Mail Order Program is $600,000.
Subcontracting Costs
Costs to the Federal government include both labor and operational expenses incurred by the CBIC. Costs include time
to prepare and send reminder listserv messages, review disclosures, enter data, verify accreditation, and communicate
with suppliers on specific issues. The annual estimated cost to process subcontracting disclosures for all rounds of
competition is $99,389.

Change of Ownership
Costs to the Federal government include both labor and operational expenses incurred by the CBIC. The cost to process
CHOW information for a CHOW of moderate complexity is estimated to be $2,519 per CHOW. The operational costs
include time for document control, data system modifications, posting reports, review of program requirements,
financial assessment, correspondence, and postage.

15.

Changes to Burden

The variables impacting burden are unique to each round of competition and we have described the anticipated
variability based on historical data and/or estimates from past experience. Variables contributing to burden differences
between rounds of competition include the number of the number of bidders, the number of bids, contract suppliers,
the number of subcontractors utilized by contract suppliers, and the frequency of ownership changes.
The total burden for this package has increased as a result of the necessity to collect bidding information for
competitions that will occur before 2017. We are revising this package to adjust the burden accordingly and reflect the
use of Forms A and B. In the Background section, we have described the method to report the total burden associated
with use of these forms.
The previous ICR did not reflect any burden for Forms A and B because the information in these forms had already been
collected for the Round 1 Recompete, Round 2 and the National Mail-order program. In this ICR, the burden for Form A for
all upcoming rounds of competition is 1,299 responses and 10,389 hours. The burden for Form B for all rounds of
competition is 1,299 responses and 17,944 hours.
We have made no changes to Form C or the estimated number of respondents. However, the per response burden and the
frequency of collection will change, effective July 1, 2016, when the requirement changes from a quarterly (January, April,
July, and October) submission to a semi-annual (January and July) submission. This change will constitute a decrease in
burden to suppliers and will reduce the amount of resources and costs required to carry out Form C processes by the
CBIC. The burden for Form C for all upcoming rounds of competition is 2,494 responses and 1,241 hours.

We have made no changes to the contract supplier’s disclosure of subcontractors form, the estimated number of
respondents, the per-response burden, or the frequency of collection from the previously approved ICR. We note that
we have made a slight adjustment to the burden estimates for this form from the previous ICR since this ICR reflects 3
full years for Round 2 The previous ICR reflected 2.5 years for Round 2 due to the implementation date.
There are no changes or adjustments to the burden estimates for the contract supplier’s disclosure of subcontractors
form, Form D, or the CHOW forms from the previously approved ICR.

16.

Publication/Tabulation Dates

There are no plans to publish any of the information collection detailed in this package.

17.

Expiration Date

CMS would like to request an exemption from displaying an expiration date as these forms are used on a continuing
basis.

18.

Certification Statement
There are no exceptions to the certification statements.

B. Collection of Information Employing Statistical Methods
This collection of information does not employ statistical methods.