U.S. Congressman Pat Tiberi | Representing the 12th District of Ohio


Measure Would Promote Fair Competition Among Medicare Suppliers

f t # e
Washington, June 20, 2014 | comments

U.S. Congressman Pat Tiberi (R-OH) and U.S. Congressman John Larson (D-CT) introduced the Medicare Competitive Bidding Improvement Act to make durable medical equipment, prosthetic and orthotic devices, and supplies (DMEPOS) suppliers’ bids binding in the competitive bidding program to promote fair competition, better protect seniors and support small businesses.


Durable medical equipment and supplies include items like blood sugar monitors, home oxygen, and walkers. The competitive bidding program was intended to reduce out-of-pocket expenses for seniors. The president’s healthcare law required CMS to expand the bidding program. It is now administered in 100 areas nationwide including eight in Ohio. 


“The current bid process is flawed. Auction experts agree that it encourages low-ball bidding and will lead to market failure,” said Congressman Tiberi, a member of the Ways and Means Committee. “This bill would reduce the number of bad actors participating in the program by imposing a penalty if the supplier does not accept a contract, promoting fairness among suppliers. Removing bad actors from the process would encourage higher quality equipment, supplies, and services for seniors.”


"Medicare beneficiaries deserve access to the medical products and services they need to keep them healthy,” said Congressman Larson. “A fair bidding process for suppliers will promote timely access to higher quality medical equipment for seniors and the disabled. I am pleased to work on this legislation with Representative Tiberi and look forward to continuing our efforts to improve the bidding process.” 


Currently supplier bids are non-binding, meaning if the Centers for Medicare and Medicaid Services (CMS) offers a contract to a bidder, that bidder can accept or reject that contract. Non-binding bids encourage low-ball bids because suppliers know they do not have to actually supply the products at those bid levels and are only bidding to participate in the program. In the latest bidding round, CMS indicated 10 percent of bidders that were offered contracts did not accept them, yet the prices were included when CMS calculated the bid rates. The low-ball bids and other elements of the program’s structure led to a 45 percent reimbursement cut for suppliers, hurting small businesses. Thousands of beneficiaries across the country have voiced their concerns about the program. They’ve seen significant delays in receiving necessary medical supplies and equipment and they are concerned the program limits choices and offers lower quality goods.


The Medicare Competitive Bidding Improvement Act would increase price transparency and promote fair competition among DMEPOS suppliers by making bids binding. A supplier would have to obtain a bid bond, also known as a surety bond, for each bidding area in which it would like to submit bids. A private, third-party firm would make a financial assessment of the bidder and charge the bidder for the bond based upon the bidder’s financial performance. If the bidder is offered a contract and their bid is below the bid price set by CMS, the bidder must accept the contract, and the Secretary of Health and Human Services would retain the bid bond as a performance guarantee. When the contract is successfully completed, the Secretary would return the bid bond to the bidder. If the bidder does not accept the contract, the Secretary will collect on the bond. If a bidding entity is not offered a contract or is offered one below their bid rate and chooses not to accept it, their bid bond would be returned. This would help ensure that suppliers submit bids in good faith. These market-based reforms increase competition and would create more certainty for suppliers, and for seniors giving them increased access to more quality products and services.



This bill is cosponsored Congresswoman Diane Black (R-TN), Congressman Pete Visclosky (D-IN), Congressman Bill Johnson (R-OH), and Congressman Dave Joyce (R-OH).