CMS Takes First Steps to Cut Medicare DMEPOS Fees Based on Competitive Bidding Prices

On February 26, 2014, CMS published an advance notice of proposed rulemaking (ANPRM) seeking public comments on two potential changes to Medicare reimbursement for durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) that could impact payment to DMEPOS suppliers nationwide regardless of whether they participate in competitive bidding. At this point, CMS is providing more questions than answers on the future of Medicare DMEPOS reimbursement policy, as discussed below.

First, CMS is requesting comments on how to implement a statutory requirement that it use pricing information from the DMEPOS competitive bidding program to adjust Medicare payments for DMEPOS items and services furnished outside of competitive bidding areas (CBAs). By way of background, the Affordable Care Act (ACA) requires CMS to use information from the DMEPOS competitive bidding program to adjust DME fee schedule amounts in areas where competitive bidding programs are not implemented by January 1, 2016; CMS also is authorized (but not mandated) to make such adjustments for off-the-shelf orthotics and enteral nutrients, supplies, and equipment in areas where competitive bidding programs have not been established. CMS must promulgate its methodology for making such adjustments through notice and comment rulemaking, and it must consider costs outside of CBAs compared to rates in CBAs.

Prior to issuing a proposed methodology for adjusting payments in non-CBAs, CMS is soliciting public comments on a number of aspects of this policy, including the following:

  • Do the costs of furnishing DMEPOS items and services vary based on the geographic area in which they are furnished, and if so, how should the methodology account for these geographic variations?
  • Do the costs of furnishing DMEPOS items and services vary based on population size, distance covered, or other logistical or demographic factors?
  • How should CMS adjust payments for items that have not been included in all competitive bidding programs (such as transcutaneous electrical nerve stimulation (TENS) devices that have only been included in nine Round 1 areas so far)?
  • Should competitive bidding programs be established in all areas of the country for a few high-volume items to gather general cost information (e.g., rural vs. urban area costs)?
  • What factors should be used to determining a competitive service area in rural areas?

In addition to seeking comments related to adjustments of DMEPOS payments outside of CBAs, CMS is considering potential modifications to its competitive bidding payment policy to allow the use of bundled payments for certain types of DME and enteral nutrition. Under this concept, which would require future rulemaking, suppliers would submit one bid that reflects the average per beneficiary monthly cost of furnishing the DME, supplies, and accessories along with the maintenance and servicing costs. CMS would make monthly payments to the supplier for as long as the equipment were medical necessary; that is, rental payments would no longer reach a cap, but at the same time, CMS would no longer make separate payment for supplies, accessories, enteral nutrients, or maintenance and servicing. The supplier would retain title to the equipment. Whether CMS proceeds with proposing this change depends on issues such as administrative burden and feasibility, as well as other potential issues raised in public comments. CMS states that it is particularly interested in feedback on issues such as:

  • Are lump sum purchases and capped rental payment rules for DME and enteral nutrition equipment still needed if monthly payment amounts can be established under competitive bidding?
  • Are there reasons that beneficiaries need to own expensive DME or enteral nutrition equipment rather than use such equipment as needed on a continuous monthly basis?
  • What would be the advantages and disadvantages to beneficiaries and suppliers associated with such a bundled approach?
  • Would bundled monthly payment adversely impact beneficiary access to personalized items such as speech generating devices and specialized wheelchairs?
  • If CMS maintains payment on a capped rental, rent-to-own basis or lump sum purchase basis, should CMS require that the supplier that transfers the equipment title to the beneficiary be responsible for all maintenance and servicing of the beneficiary-owned equipment for the remainder of the equipment's reasonable useful lifetime with no additional payment? The associated costs ostensibly would be factored into bids and payment amounts.
  • Would payment on a bundled, continuous rental basis adversely impact the beneficiary's ability to direct their own care, follow a provider’s plan of care, or provide for appropriate care transitions?

Comments are due to CMS by March 28, 2014. Interested parties will have another opportunity to comment on these provisions when the proposed regulations are issued.

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