‘Finally’: Binding bids become law

Friday, April 17, 2015

WASHINGTON – Industry stakeholders took a quick victory lap last week, after binding bids language was passed as part of the “doc fix” bill, but then got back to work.

“This is a big step, finally, to have this legislation passed,” said Tom Ryan, president and CEO of AAHomecare.

President Obama signed the “doc fix” bill, which prevents a 21.2% cut to physician payments, into law on April 16. In addition to binding bids, the bill requires providers to provide proof of licensure.

CMS must apply the changes to the next Round 2, but stakeholders hope to work with the agency to get the changes implemented as soon as the next Round 1.

“Our champions in Congress said, ‘Let’s get this passed into law, and then we’ll see what we can do to improve upon that,’” said Cara Bachenheimer, senior vice president of government relations for Invacare.

The law will also give the industry a leg to stand on as it pushes forward with the next item on its agenda: Stopping the expansion of bid pricing into non-bid and rural areas on Jan. 1. Stakeholders have already drafted language and lined up champions for a bill to delay or phase-in these changes.

“We have to be very careful about expanding this program,” said Ryan. “We have had speculative bidders who caused artificially low single payment amounts and we are going to be relying on those SPAs in rural and non-bid areas. That’s really a warning light and we will take that message to the Hill.”

To strengthen its position, AAHomecare is aligning with other industry groups to create and present a unified strategy.

“We’ve shot ourselves in the foot too often,” said Ryan. “An aligned industry makes for a better chance of getting what we want accomplished.”


In reading through the text of H.R. 2, I have a couple of big questions.

According to Section 522(a), an entity may not submit a bid unless the entity has obtained a bid surety bond (aka 'bid bond') in an amount no less than $50,000 and not more than $100,000 for each CBA in which the entity bids.

Also, the bond will be forfeited if a bidder declines the contract and their bid was below the SPA.  If forfeited, "the Secretary shall collect on it."

Does this mean that the Secretary will collect $50,000 - $100,000 for each forfeited bid bond?  If not, then what is the point of having the bond be for such a large amount?  I understand the Surety Bond requirement being so high, but the bid bond amount?

Can anyone clarify please?