Recently Introduced Legislation Revisits Flaw in Competitive Bidding

News
WASHINGTON (Jan. 13, 2015)—Bipartisan legislation, introduced today by Reps. Tiberi, R-Ohio, and Larson, D-Conn., and Sens. Portman, R-Ohio, and Cardin, D-Md., would ban nonbinding bids within the Medicare competitive bidding program for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). 
 
Since CMS began implementing the bidding program in 2011, bidders have been allowed to submit low-ball bids with no obligation to accept the contract at the bid price. CMS uses all of the bids to establish median bid prices.
 
HR 284 and S-148, similar to legislation filed in late 2014, will make all bids binding and require proof of licensure for the next rounds of bidding. There are three main provisions in the bills:
 
  • Providers will need to prove licensure before they submit bids. 
  • Bidders would be required to obtain a bid bond. 
  • Bonds could be forfeited if the contract is declined at or above the bid price.
 
“It’s clear that disability advocates, economists and auction experts have all been correct in criticizing the bidding program,” said Tom Ryan, president and CEO of AAHomecare. “The network of DMEPOS providers has been broken, and hundreds of providers across the country have gone out of business or downsized. This means that the most vulnerable people in our society, seniors and people living with disabilities, are having a difficult time accessing home medical equipment prescribed by their physicians.”
 
The HHS Office of Inspector General (OIG) plans to look into whether Medicare beneficiaries' access to durable medical equipment has been hurt by the competitive bidding program. The OIG late last month told Rep. Tom Price, R-Ga., that, after 137 House members asked the OIG to look into the DME competitive bidding program in July, it will conduct a national study looking at beneficiaries' access to DME. 
 
“This legislation will help CMS avoid repeating the mistakes of the past,” said Ryan. “The existing prices set by CMS are the product of a profoundly flawed program and do not reflect the true cost of doing business. Requiring bidders to stand by their bids will result in bids that are serious and sustainable; essential elements missing from the current process.”
 

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