CMS proposes bid surety bonds

Tuesday, June 28, 2016

WASHINGTON – CMS is seeking to require providers to obtain bid surety bonds, according to a proposed rule.

In proposed updates to the End-Stage Renal Disease Prospective Payment System, CMS would require bidders to get a $100K surety bond for each area they bid in.

The rule also proposes forfeiture conditions for the bid surety bonds. If a bidder does not accept a contract offer when its composite bid is at or below the median composite bid rate for suppliers used in the calculation of the single payment amount, the bid surety bond for the applicable CBA will be forfeited and CMS will collect on it. In instances where the bidder does not meet the forfeiture conditions specified in the rule, the bid surety bond liability will be returned to the bidder within 90 days of the public announcement of the contract suppliers for the CBA.

The proposed rule also contained several other bid-related items.

Appeals process

The rule also proposes to an appeals process for all breach of contract actions that CMS may take under the competitive bidding program, rather than just for contract termination actions. As a result, CMS will no longer be issuing a notice of termination, but rather a notice of breach of contract, which will include any breach of contract action CMS intends to take.

Bid limits

The rule proposes that bid limits for individual items for future rounds of competitive bidding would be based on the unadjusted fee schedule rates. This would 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. This would help to enhance the long term viability of the program and would allow suppliers to take into account both decreases and increases in costs in determining their bids.