Congress proposes bid bond requirement for Medicare DMEPOS competitive bidding

Hospital Board

On December 8, 2014, Ohio representative Patrick J. Tiberi introduced HR 5809, entitled Medicare DMEPOS Competitive Bidding Improvement Act of 2014, to the House of Representatives.

What is the DMEPOS Competitive Bidding Program?

The DMEPOS Competitive Bidding Program was established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The program implements a competition between suppliers for selected Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) in a given competitive bidding area (CBA). The goal of the program is to reduce out-of-pocket expenses for beneficiaries of Medicare and save money for the Medicare program while ensuring beneficiary access to quality items and services.

How does the DMEPOS Competitive Bidding Program work?

The bidding process involves four steps:

  1. Suppliers submit a bid for selected products through a web-based application.
  2. Program representatives review the bids and evaluate them for eligibility, bid price, financial stability and more.
  3. Contracts are awarded to the most attractive bids.
  4. Contract suppliers are paid the bid price amount, which is determined based on a median of all winning bids for an item.

What are the proposed surety bond requirements?

According to the text, the purpose of this bill is:

“To amend title XVIII of the Social Security Act to require State licensure and bid surety bonds for entities submitting bids under the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive acquisition program, and for other purposes.”

If passed, the Medicare DMEPOS Competitive Bidding Improvement Act of 2014 would require bidders to secure a state license and a bid surety bond to participate in the DMEPOS competitive bidding program. Its purpose is to provide evidence of financial stability among bidders. The required amount of the bid bond would not be less than $50,000 or more than $100,000 for each competitive bidding area.

For successful bidders who do not accept the offered contract, the bidding entity will forfeit the bid bond if the bid is at or below the product category’s median composite bid rate. If the bid is above the product category’s median composite bid rate and the successful bidder does not accept the contract, the Secretary will return the bid bond within 90 days of the notice of nonacceptance. Likewise if the bid is unsuccessful, the Secretary will return the bid bond within 90 days of the notice of nonacceptance.

The last action on this bill occurred on December 12, 2014, when it was referred to the Subcommittee on Health by the House Energy and Commerce.

The experts at SuretyBonds.com are on the lookout for more information and will publish more about this potential surety bond requirement as it becomes available. In the meantime, if you have any questions about bid and other types of surety bonds, click here to connect with an expert surety specialist. Or, give us a call at 1 (800) 308-4358 between 7 a.m. and 7 p.m. CST Monday through Friday.

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