House Passes Medical Equipment Bidding Reforms

The House of Representatives has passed a bill to reform the Medicare competitive bidding program for home medical equipment, earning praise from industry leaders who have pushed for the changes.

“The House passing H.R. 284 is a huge step towards reforming the bidding process, but our work is not done,” said Tom Ryan, president and CEO of the American Association for Homecare (AAHomecare), in a statement issued Tuesday. “We will continue to work with lawmakers in the Senate to call for quick action on this bipartisan and budget-neutral legislation.”

The Competitive Bidding Improvement Act addresses the way that the Centers for Medicare & Medicaid Services awards contracts to providers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). Since 2011, CMS has accepted non-binding bids from suppliers and providers. This policy has created a situation in which providers can submit a low-ball bid, but then refuse to honor the bid if CMS decides to award a contract at that pricing level.

Because CMS considers all bids—including the low-ball numbers—in establishing median bid prices, the entire process has become detached from competitive market prices and driven hundreds of providers out of business, according to AAHomecare and others in opposition. These critics include Medicare home health beneficiaries, who have said their access to needed equipment and supplies has been sharply compromised.

To address the non-binding bids issue, H.R. 284 requires that providers obtain a bid bond. If CMS offers a contract at or above the bid price, the provider must accept or forfeit the bond.

Providers also would have to prove they have appropriate licensure to take part in the bidding process.

If the bill becomes law this year, revenues from the forfeited bonds would total about $1 million for the government during the 2015 to 2025 period, the Congressional Budget Office recently estimated. CBO does not believe that the changed bidding process would drive up DMEPOS prices appreciably.

The bill was spearheaded in the House by Reps. Pat Tiberi (R-Ohio) and John Larson (D-Conn.). It passed on a voice vote Monday.

The companion Senate version, currently referred to the Committee on Finance, was introduced by Sens. Rob Portman (R-Ohio) and Ben Cardin (D-Md.).

Written by Tim Mullaney