CMS finalizes changes to bid program

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Friday, October 28, 2016

WASHINGTON – CMS issued a final rule Oct. 28 with a number of changes to competitive bidding, including establishing bid limits for future rounds of the program based on the fee schedule rates before they were adjusted.

“This will avoid a downward trend where the new, lower bid limits apply to each subsequent round of bidding based on fee schedule rates adjusted using bidding information from the previous round,” the agency stated. “This will help enhance the long-term viability of the program and allow suppliers to take into account both decreases and increases in costs in determining their bids, while ensuring that payments under the program do not exceed the amounts that would otherwise be paid had the program not been implemented.”

Other changes to competitive bidding in the rule:

  • Requiring bidding entities to obtain a bid surety bond from an authorized surety on the Department of the Treasury’s Listing of Certified Companies for each competitive bidding area associated with their bid. The bond must be finalized at $50,000 and must indicate the CBA specific to that bond.
  • Requiring that a contract will not be awarded to a bidding entity unless the entity meets applicable state licensure requirements. “This revision does not reflect a change in policy as CMS already has a regulation in place that requires suppliers to meet applicable state licensure requirements,” the agency stated.
  • Extending the appeals process to all breach-of-contract actions that CMS may take under the competitive bidding program, rather than just for contract termination actions. CMS will issue a notice of breach of contract, which will include any breach-of-contract actions the agency intends to take.

The final rule also includes a provision addressing inverted prices for similar items with different features under competitive bidding prior to adjusting fee schedule amounts paid in non-bid areas. CMS will use the weighted average of the prices for the similar items in a product category as the revised price for the items that will then be sued to adjust the fee schedule amounts.

Responding to the final rule, the Council for Quality Respiratory Care said it was pleased CMS will implement bid limits based on the previous fee schedule for future rounds of the program, but it continues to believe there are “fundamental problems” with the program that need to be addressed before rates were applied in non-bid areas.

“It is imperative that Congress fix this problem by reinstating the phase-in of the new rates in non-competitive bidding areas and require CMS to engage with stakeholders to reconsider methodology for setting rates in non-competitive bidding areas,” it stated.