Networks for Small Suppliers in Competitive Bidding

Round 2028 asks every bidder to cover the whole country. For a large national supplier that is a licensing project. For a small regional company it can be impossible, especially where a state requires a physical location inside its borders. The Social Security Act requires CMS to give small suppliers an opportunity to take part, and the competitive bidding rules offer two tools: a small supplier target and the option to bid as a network.

Who counts as a small supplier?

Under 42 CFR 414.402, a small supplier is one "that generates gross revenue of $3.5 million or less in annual receipts including Medicare and non-Medicare revenue." CBIC's Small Supplier Considerations fact sheet, updated October 7, 2026, says the test uses the bidding entity's most recent tax return filed with the IRS as of the day it bids, and the entity attests to its status in the bid. It must still meet the definition on the day it signs a contract, unless it has told CMS otherwise by amending its bid in Connexion. CMS says it will review Medicare claims data for bidders that attest to small supplier status and may ask for tax returns, and an inaccurate attestation can be referred to the Office of Inspector General or the Department of Justice.

What is a bidding network?

The rules are in 42 CFR 414.418, "Opportunity for networks":

• A network has "at least 2 but not more than 20 small suppliers."
• It must "form a single legal entity that acts as the bidder and submits the bid." Any agreement forming the network goes to CMS, and the network identifies itself and all of its members.
• Each member must meet the bidder requirements in 414.414(b) through (d), which cover eligibility, financial standards and quality standards.
• A small supplier cannot bid on its own for the same product category in the same area as a network it belongs to, and cannot be in two networks bidding the same category in the same area.
• The network cannot be anticompetitive.
• Each member certifies that it joined because it is "unable independently to furnish all of the items in the product category" throughout the area.
• At the time of the bid, the network's market share for each category it bids cannot exceed 20 percent of Medicare demand for that category in the area.
• If the network gets a contract, each member submits its own claims and is paid directly by Medicare for what it furnishes.

How does a network solve the licensing problem?

By pooling it. CBIC's Licensure for Bidders fact sheet says that to be awarded a Round 2028 contract, "all network member locations included on the bid must collectively meet all applicable enrollment requirements, including accreditation and applicable licensing for each" state, DC and territory in the nationwide area. A CBIC FAQ confirms the case CMS was asked about directly: small suppliers that cannot individually meet state requirements "such as the requirement for a physical location in a specific state" may form a network that meets them together.

So a network of regional suppliers can combine a member with an Alabama location, another with an Indiana facility, and others holding out-of-state permits and registrations, as long as the licenses are current in PECOS for the members' locations on the bid by the close of the bid window. The general rule for a single bidder applies to the network too: if a state requires a license, at least one location on the bid must hold it.

Why is one weak member a risk to everyone?

Because the network is evaluated as one bidder. CBIC's fact sheet says if any member is found ineligible "and no other network member is able to satisfy the requirement (e.g., meeting a licensure requirement for a particular State/Territory), or one or more members are no longer a small supplier, the entire network is disqualified." If a member withdraws after bidding closes but before contracts are awarded, the network is also disqualified. In practice, that means every member's accreditation, licenses, enrollment and revenue status need to be checked before the network commits, and kept clean until award.

Which documents does a network upload?

According to CBIC, the primary network member uploads in Connexion, in addition to all required financial documents:

• The network legal agreement, including any contracts needed to create the network as a legal entity, signed by every member before the network bids.
• A certification statement, printed from the end of Form B in Connexion and signed by each member, that it joined because it could not furnish all items in the category throughout the area on its own.

The network bids as one entity for the bid surety bond as well. CBIC's updated bond fact sheet says each member does not need its own bond; one bid surety bond is required for a network bidding in Round 2028, with the legal business name on the bond matching the network's. For the nationwide remote item delivery area that bond is $100,000.

How do networks fit the 30 percent small supplier target?

CMS sets a target that at least 30 percent of contract suppliers in each competition be small suppliers. Qualified bidders at or below the pivotal bid are offered contracts first. If that group falls short of the target, CMS offers additional contracts to qualified small suppliers with the lowest composite bids above the pivotal bid until the target is met or none remain. Network members are counted individually toward the 30 percent, but if a network qualifies, the whole network is offered a contract. CBIC's example: if three more small suppliers are needed and the next qualifying bidder is a network of 10, all 10 are offered a contract. Single payment amounts are calculated before the target process and do not change because of it.

One caution from CBIC: a small supplier offered a contract only to meet the target (its bid was above the pivotal bid) must still be a small supplier to accept it.

Is antitrust a concern?

Yes, and CMS says so. Section 414.418(b)(4) bars anticompetitive networks, and CBIC published Antitrust Guidance in August 2026 reminding bidders that price fixing, bid rigging and agreements to allocate customers or divide markets are illegal. Commonly owned or commonly controlled suppliers also cannot compete against each other. Networks should involve counsel on the agreement and on how prices are set.

What should a small supplier weigh before joining?

• Whether you can meet the requirements alone. Networks are for suppliers that cannot, and each member certifies that.
• Every partner's accreditation scope for all items in the categories bid, since accreditation exemptions do not apply to competitive bidding.
• Every partner's licenses and the dates they expire relative to the close of the bid window, which CMS currently targets for March 10, 2027.
• Revenue headroom under $3.5 million through contract signing.
• How claims, delivery and patient service will actually work across members, since each submits its own claims.

Where can we help a network?

We do not form networks, draft network agreements or set bid prices; that is work for your counsel and your team. What we do is the licensing and enrollment groundwork for each member: a state-by-state license map showing which member covers which state, the license applications each member's owner or officer signs, and the 855S changes of information that put each license into PECOS. A DMEPOS Readiness Review ($149, credited toward a package) per member is a sensible first step; state licenses are $699 each ($899 in California, Florida, Georgia and Alabama). No one can promise a contract. Read Round 2028: what suppliers need now for the full timeline.