House Reps Introduce New Bill to Correct DME Competitive Bidding

A bi-partisan bill introduced this week by two members of the U.S. House of Representatives aims to correct what some believe to be a crucial flaw in the Centers for Medicare & Medicaid Services’ (CMS) competitive bidding program for durable medical equipment (DME). 

H.R. 4920, the DMEPOS Competitive Bidding Improvement Act of 2014, would make all bids binding and require providers to obtain bonds before bidding in the CMS program. 

“Stakeholders and economists have repeatedly cited the non-binding bids as a major flaw in the bidding program that has already put hundreds of providers out of business and jeopardized the health of some Medicare beneficiaries,” stated the American Association for Homecare in a release.

In a report published two years ago, the Center for Regulatory Effectiveness detailed problems caused by “non-binding bids,” encouraging what some have referred to as “gaming the system.”

In some scenarios, bidders who were offered contacts at less than what they bid under the CMS program did not have to accept the contract offer. 

“Moreover, even if the contract offer was at or higher than their bid price, bidders still did not have to honor their bids,” the Center wrote. “In short, CMS’ decision to allow non-binding bids meant that bidders did not have to be willing to actually provide the specified medical equipment at the price they bid.”

Flaws such as these have been highlighted by several industry trade groups, such as AAHomecare and the National Association for Home Care & Hospice (NAHC), in their efforts to bring more transparency to the CMS program’s second round of bidding.

“It’s stunning that even before the bidding program was implemented auction experts told the government the non-binding bids would be a huge problem, but it was implemented anyway,” stated Tom Ryan, president of AAHomecare. “We’ve reached the point where Congress has begun to understand the unnecessary pain and suffering the bidding program is causing for patients, and providers alike.”

The introduction of H.R. 4920 by Reps. Pat Tiberi (R-OH) and John Larson (D-CT) is just the latest attention the competitive bidding program has been gaining from members on Capitol Hill. 

Last month, a bipartisan letter from 36 U.S. Senators to CMS called for the agency to delay Round 2 of the bid program. That letter also had bipartisan support, having been led by Sens. John Thune (R-SD), Robert Casey (D-PA) ad John Hoeven (R-ND).

In April 2013, a bill sponsored by Rep. Tom Price (R-GA)—H.R. 1717—to reverse the DME competitive bidding program has been gaining support among others in Washington. To date, the bill currently has 180 sponsors from both sides of the aisle. 

Despite the growing attention from Washington, CMS still has shown little inclination to delay Round 2 of the bid program, let alone take much corrective action.

“The program developed failed to incorporate the most fundamental aspect of fair and successful auctions, which is to only allow binging bids to count,” stated Stephen Ackerman, CEO of Spectrum Medical Inc. and a member of the AAHomecare Board of Directors.

“The proposed legislation sponsored by Congressmen Tiberi and Larson is a critical step in correcting this flawed interpretation,” he added. “We thank them for taking this action and hope bipartisan support will quickly follow.”

Written by Jason Oliva