House, Senate Ready to Address Biggest Flaw in Medicare Competitive Bidding Program

WASHINGTON, Jan. 13, 2015 /PRNewswire-USNewswire/ -- Bipartisan legislation, introduced today by Representatives Tiberi (R-Ohio) and Larson (D-Conn.) and Senators Portman (R-Ohio) and Cardin (D-Md.) would help stop the speculative bidding that has marred the Medicare competitive bidding program for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). The American Association for Homecare (AAHomecare) applauds these leaders for their determination to put the patients first by bringing prudence to the flawed bidding process.

H.R. 284 and S. 148 would ban non-binding bids, one of the biggest problems with the bidding program. 244 economic experts from around the world, a group that includes Nobel Prize laureates, agree that the current Medicare bidding scheme is unsustainable, citing the lack of binding bids as a primary shortcoming of the program.

Officials from Centers for Medicare and Medicaid Services (CMS) have repeatedly said that CMS does not have the statutory authority to require binding bids, and that Congress must authorize CMS to require binding bids. With the next cycle of competitive bidding opening in less than two weeks, Congress must act now to protect Medicare beneficiary access to critical medical equipment.

Since CMS began implementing the bidding program in 2011, bidders have been allowed to submit suicide low-ball bids with no obligation to accept the contract at the price they bid at. 

In a move that greatly diminishes the integrity of the program, CMS uses all of the bids, including those of speculative low-ball bidders, to establish median bid prices. CMS arbitrarily assigns prices somewhere between the lowest and highest bids. The entire process has been cloaked in secrecy because CMS never discloses exactly how the reimbursement rates are determined.

H.R. 284 and S. 148, similar to legislation filed in late 2014, will make all bids binding and require proof of licensure for the next rounds of bidding. This addresses a major flaw in the program and deters speculative bidding without generating a cost. There are three main provisions in the bills:

• Providers will need to prove licensure before they submit bids
• Bidders would be required to obtain a bid bond.
• Bonds could be forfeited if the contract is declined at or above the bid price.

"It's clear that disability advocates, economists and auction experts have all been correct in criticizing the bidding program," said Tom Ryan, president and CEO of AAHomecare. "The network of DMEPOS providers has been broken, and hundreds of providers across the country have gone out of business or downsized. This means that the most vulnerable people in our society, seniors and people living with disabilities, are having a difficult time accessing home medical equipment prescribed by their physicians."

The HHS Office of Inspector General (OIG) plans to look into whether Medicare beneficiaries' access to durable medical equipment has been hurt by the competitive bidding program.

The OIG late last month told Rep. Tom Price (R-GA) that, after 137 House members asked the OIG to look into the DME competitive bidding program in July, it will conduct a national study looking at beneficiaries' access to DME.

"This legislation will help CMS avoid repeating the mistakes of the past," said Ryan. "The existing prices set by CMS are the product of a profoundly flawed program and do not reflect the true cost of doing business.  Requiring bidders to stand by their bids will result in bids that are serious and sustainable; essential elements missing from the current process."

The American Association for Homecare represents providers of home medical or durable medical equipment and services who serve the needs of millions of Americans who require prescribed oxygen therapy, wheelchairs, enteral feeding, and other medical equipment, services, and supplies at home. Visit www.aahomecare.org.

SOURCE American Association for Homecare

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http://www.aahomecare.org