Tightening Up The Rules For Bidding On Medicare Equipment Contracts (H.R. 284)

What is H.R. 284?

(Updated July 21, 2017)

This bill would  impose new requirements on private firms that are bidding to supply medical products through Medicare. Through amendments to the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive acquisition program through Medicare, this bill aims to avoid low ball bids on Centers for Medicare and Medicaid Services (CMS) contracts. 

Currently, bids for CMS contracts are non-binding — meaning that bidders can bid for the sake of participating, and if their bid is chosen they won’t have to supply the products at that price level.

If passed, this bill would prohibit the Secretary of Health and Human Services (HHS) from accepting a bid from a supplier unless it:

• Meets state licensure requirements for the area for all items in the bid submitted for a product category.

• Has obtained a bid surety bond of between $50,000 and $100,000 for each bid area.

This bill also outlines how bid bonds should be treated after they are submitted:

• For successful bidders that do not accept the contract, if their composite bid rate is at or below the median composite bid for that category - the bid bond would be forfeited and the Secretary of HHS would collect on it.

• If a successful composite bid is above the median but the offer is declined, the bid bond would be returned within 90 days of the bidder’s notice of nonacceptance.

• For losing bidders, the bid bond would also be returned within 90 days of their notice of nonacceptance.

Argument in favor

This legislation would make the Medicare bidding process more transparent, and prevent bidders from submitting predatory low-ball bids. It also protects Medicare beneficiaries and taxpayer dollars.

Argument opposed

Requiring vendors to fulfill their bids could discourage some vendors from bidding in the first place, which may in turn affect the amount of medical supplies available through Medicare.

Impact

Medicare beneficiaries who need medical devices, Medicare medical suppliers, businesses bidding to supply medical products through Medicare, and the Secretary of Health and Human Services.

Cost of H.R. 284

The CBO estimates that this legislation would increase revenues by $1 million between 2015-2025, with bid bond forfeitures totalling less than $500,000 per year. Further, it projects that any additional costs to the government would have an insignificant effect on the federal budget.

Additional Info

In-Depth:

This bill also outlines how bid bonds should be treated after they are submitted:

• For successful bidders that do not accept the contract, if their composite bid rate is at or below the median composite bid for that category — the bid bond would be forfeited and the Secretary of HHS would collect on it.

• If a successful composite bid is above the median but the offer is declined, the bid bond would be returned within 90 days of the bidder’s notice of nonacceptance.

• For losing bidders, the bid bond would also be returned within 90 days of their notice of nonacceptance.

Of Note:

An essentially identical version of this bill was introduced in the House during June 2014, but it failed to progress out of committee while the 113th Congress was in session.

Media:

Sponsoring Rep. Patrick Tiberi (R-OH) Press Release

CBO Estimate

PR Newswire

The Ripon Advance

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