CMS Final Rule Covers Key Bidding Elements

New rule bases bid ceilings on 2015 unadjusted fee schedule; lowers surety bond to $50K per CBA bid.

MEDTRADE; Atlanta — CMS issued a final rule (bit.ly/2dVQZYI) on Friday that includes key changes to the completive bidding program, particularly provisions on bid ceilings and surety bonds, according to an update from the American Association for Homecare.

The rule was announced in advance of its publication in the Federal Register on Nov. 4, and covers a broad array of competitive bidding concerns:

  • Bid ceilings for future rounds of competitive bidding will be based on the unadjusted 2015 fee schedule, instead of CMS’s earlier proposal to establish bid ceilings at the current pricing per competitive bidding area (CBA). This prevents constantly downward bidding on each re-compete.
  • Bidding providers must now obtain a lower, $50,000 bid surety bond for each CBA associated with a bid. The rule also sets surety bonds forfeiture conditions if bidders do not enter a contract when their composite bids are at, or below the offered amount.
  • The appeals process now extends to all breach of contract actions CMS can take under the bidding program, rather than just for contract termination actions.
  • To help prevent the creation of price inversions — which has occurred in Round Two — the rule includes a provision for lead item bidding for certain product categories in future rounds.

AAHomecare noted that the surety bond provisions stem from work done by AAHomecare and other HME stakeholders to include surety bond requirements in comprehensive Medicare-related legislation (H.R. 284 and S.148), which was passed and signed into law in April 2015

The final rule also brings CMS regulations into alignment with provisions in the 2015 legislation that require bidders to meet state-level licensure requirements.

“We’re happy that CMS has decided to use a common-sense approach with regards to bid ceilings for future bidding rounds,” AAHomecare president and CEO Tom Ryan said. “It’s also good to see that CMS is moving forward with surety bond requirements this industry has advocated for; this is an important step in keeping non-serious and unqualified bidders out of future rounds.

“However, the bidding program still needs significant fixes on a variety of fronts,” he added. “AAHomecare will continue to push for legislation that would roll back part of the deep reimbursement cuts for non-bid areas in the post-election lame duck Congressional session.”

“We are pleased that CMS changed the original provision of a $100,000 bid bond to a $50,000 bid bond,” said Kim Brummett, AAHomecare’s vice president of Regulatory Affairs. “The Association recommended this change to CMS based on input from our members and other industry stakeholders.”

More information is also available in CMS’ fact sheet on the rule at go.cms.gov/2f67LS1.

About the Author

David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on Twitter at @postacutenews.

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