Binding Bids Bill Unveiled

H.R. 4920 aims to correct key competitive bidding failings by making all bids binding and requiring surety bonds for bids.

• By David Kopf
• Jun 26, 2014

Aiming to negate some of the most damaging elements of CMS’s competitive bidding program, Reps. Pat Tiberi (R-Ohio) and John Larson (D-Conn.) have introduced H.R. 4920, legislation that would make all bids binding as well as require providers to obtain bonds before bidding.

The issue of competitive bidding operating on non-binding bids has long been cited as a major flaw in the program, because it lets companies engage in the sort of low-ball bidding at prices that some bidders have no intention of honoring. This has led to many longtime providers being bid out of categories of competitive bidding areas they had served, sever reimbursement cuts, and patients experiencing diminished access to care.

Titled the Medicare DMEPOS Competitive Bidding Improvement Act of 2014, the legislation would also require that providers put up surety bonds — “biding bonds” — before submitting their bids to ensure those providers would truly bid an amount they could support. So, for example, if CMS offers a winning provider a contract and the provider declines to sign it, CMS can collect the bond. And when a provider wins a contract, the bid bond transfers to the performance bond that is already required.

“Reps. Tiberi and Rep. Larson have introduced this bill, which aims to be bipartisan, non-controversial, and budget neutral — the critical elements that legislation needs to be passed into law,” said Cara Bachenheimer, senior vice president for Government Relations at Invacare Corp. “If a bidder has a real financial stake when submitting bids, economists expect more responsible bids to be submitted. The bill would insert a level of integrity and accountability into the bid program that simply doesn't have it today.”

“When Congress tasked CMS with implementing a bidding program for home medical equipment, I don’t believe it was their intent to have them invent a new bidding process whose rules, historically, had never been used,” Stephen Ackerman, CEO of Spectrum Medical Inc. and a member of the AAHomecare Board of Directors. “The program developed failed to incorporate the most fundamental aspect of fair and successful auctions, which is to only allow binding bids to count. The proposed legislation sponsored by Congressmen Tiberi and Larson is a critical step in correcting this flawed interpretation.”

Tom Ryan, president and CEO of the American Association for Homecare thanked Bachenheimer for her work with Rep. Tiberi, as well as OAMES, HOMES, ATHOMES and the new Great Lakes Association, which he said “were crucial in getting additional support for this bill.”

“Making changes doesn’t happen overnight; it requires perseverance and patience, and we’re grateful to these folks for sticking with it and continually pushing the issue to the forefront of their representatives’ minds,” Ryan continued. “This success really hammers home just how important it is for individuals to connect with their lawmakers.