CMS Announces Timeline for Next Phase of DMEPOS Competitive Bidding

CMS has announced its detailed timeline for recompeting the supplier contracts awarded under Round 2 of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program and the National Mail-Order diabetic testing supplies competition. All current Round 2 and National Mail-Order diabetic testing supplies contracts will be up for rebidding. The current contract period expires on June 30, 2016; the new contracts will begin on July 1, 2016. The first key date in the recompete cycle is December 18, 2014, when supplier registration for bidding opens, and the actual bid window opens on January 22, 2015. The full timeline is as follows (note that dates are subject to change):

12/18/2014 -- Registration for user IDs and passwords opens
1/6/2015 -- Authorized Officials strongly encouraged to register no later than this date
1/20/2015 -- Backup Authorized Officials strongly encouraged to register no later than this date
1/22/2015 -- CMS opens bid window for Round 2 Recompete and national mail-order recompete
2/17/2015 -- Registration closes
2/23/2015 -- Covered Document Review Date for bidders to submit financial documents
3/25/2015 -- Bid window closes
Winter 2016 -- CMS announces single payment amounts, begins contracting process
Spring 2016 -- CMS announces contract suppliers, begins contract supplier education campaign
Spring 2016 -- CMS begins supplier, referral agent, and beneficiary education campaign
July 1, 2016 -- Implementation of Round 2 Recompete & national mail-order recompete contracts/prices

Suppliers considering participating in bidding are encouraged to make sure their enrollment records are up to date with the National Supplier Clearinghouse (NSC) and in the Provider Enrollment, Chain, and Ownership System (PECOS) to prevent being disqualified from bidding. For more information, including a summary of the changes to the product categories and competitive bidding areas in the Round 2 recompete, see our previous overview.  

GAO Analyzes Medicare DMEPOS Competitive Bidding Results

The GAO has released a report entitled “Medicare: Bidding Results from CMS’s Durable Medical Equipment Competitive Bidding Program,” which includes a wide variety of data on level of savings in each bidding round, characteristics of suppliers, reasons for disqualification of bids, and related data. The report does not include recommendations.

CMS Publishes Corrections to Home Health PPS, DMEPOS Surety Bond Rules

On December 2, 2014, CMS published a correction to its November 6, 2014 final 2015 Medicare home health prospective payment system (PPS) rule to correct a technical error related to the applicability date for a therapy reassessment provision.  Separately, on November 24, 2014, CMS published a notice making technical amendments to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) supplier surety bond requirements under 42 CFR 424.57. According to the preamble, the notice corrects non-substantive regulatory paragraph designations, an omission, and a technical correction to previously published regulatory text, and makes terminology and cross-references changes.

CMS to Conduct Hyperbaric Oxygen Prior Authorization Pilot Program

CMS intends to conduct a three-year Medicare prior authorization model for non-emergent hyperbaric oxygen therapy services in Illinois, Michigan, and New Jersey, where CMS contends there have been high rates of improper payments for these services. Under this model, CMS will require that all relevant clinical or medical documentation requirements are met before services are rendered to beneficiaries and before claims are submitted for payment; no new clinical documentation requirements will be created. The model is scheduled to begin on March 1, 2015.  CMS also recently announced a similar prior authorization model for repetitive scheduled nonemergent ambulance transports.

OIG Assesses Changes in Medicare Mail Order Diabetes Test Strips Market Share

The OIG has released a report that examines the extent to which Medicare mail order market share for diabetes test strips changed after the start of national mail order competitive bidding for these items on July 1, 2013. According to the OIG, based on a sample of 1,210 claims, there was a somewhat greater concentration of market share three months after competitive bidding contracts went into effect compared to before bidding. Specifically, after competitive bidding was instituted, two types of test strips accounted for 44% of the Medicare mail order market share (up from 34%), three types made up 58% of the market share (up from 51%), and 10 types accounted for 91% (up from 75%). The OIG intends for CMS to use this information to evaluate the effect of the mail order bidding program on the types of diabetes test strips available to beneficiaries, and to assess whether bidders have met their statutory obligations to demonstrate that their bids cover at least 50%, by volume, of all types of mail order diabetes test strips.

CMS Releases 2015 Medicare DMEPOS Fee Schedule

CMS has released the Medicare DMEPOS fee schedule files that are effective January 1, 2015.  The DMEPOS fee schedule update factor for 2015 is 1.5%. 

CMS Adopts Major Changes to Medicare DMEPOS Payment/Coverage Policy Inside/Outside of Competitive Bidding Areas

This post was written by Elizabeth Carder-Thompson, Carol C. Loepere, and Debra A. McCurdy.

On November 6, 2014, CMS published a final rule that makes significant and highly technical changes to Medicare payment policies for durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS).  Notably, the rule finalizes a new methodology for adjusting Medicare DMEPOS fee schedule payment amounts across the country using information from the Medicare DMEPOS Competitive Bidding Program (CBP). CMS estimates that this methodology will cut Medicare DMEPOS reimbursement by more than $4.4 billion over fiscal years 2016 through 2020. The rule also finalizes a mechanism to test the use of bundled monthly payment amounts for certain DME under competitive bidding; modifies CBP change of ownership (CHOW) and termination of contract rules; and codifies Medicare hearing aid coverage policy. Note that CMS did not adopt its proposal to clarify practitioner qualifications for providing custom fitting services for orthotics. The following is a summary of the final rule, with particular emphasis on revisions to CMS’s July 11, 2014 proposed rule.

Adjustment to DMEPOS Pricing in Non-CBAs.  The Affordable Care Act mandates that, by January 1, 2016, CMS use pricing information from competitive bidding to adjust DME fee schedule amounts for items furnished in areas where the CBP is not implemented. CMS also is authorized (but not mandated) to make such adjustments for off-the-shelf (OTS) orthotics and enteral nutrients, supplies, and equipment furnished outside of competitive bidding areas (CBAs).

CMS has adopted a complex framework and methodology for adjusting fee schedule amounts based on CPB single payment amounts (SPAs), which are the allowed payments for items furnished in a CBA based on the median of successful bids. The primary methodology, which applies a regional adjustment with national limits, will be used for items bid in more than 10 CBAs. In short, CMS will determine adjusted fee schedule amounts for areas within the contiguous United States based on “regional SPAs” (RSPAs) that are calculated from the average SPAs for an item from all CBAs located in the region. The adjusted payment amount for an item will equal the RSPA limited by a national floor and ceiling of not less than 90 percent and not more than 110 percent of the national average. In contrast, in rural areas that have not been subject to competitive bidding, adjusted fee schedule amounts will be based on 110 percent of the national average RSPA (note that in the final rule, CMS adopted an expanded definition of rural areas eligible for this provision). CMS also adopted special rules for adjustments in areas outside of the contiguous United States.

A second methodology will be used for lower-volume items or other items that were bid in no more than 10 CBAs. Payment amounts for these items in non-CBAs will be 110 percent of the unweighted average of the SPAs where CBPs are implemented. CMS provides additional methodologies to account for other special situations, including when the only available SPA for an item is from a CBP no longer in effect, when accessories are used with different types of base equipment, and when SPAs for lower levels of service are higher than SPAs for higher levels of service. CMS also plans to apply national mail order CBP payments to mail order items furnished in the Northern Mariana Islands.

CMS will update adjusted payment amounts each time an SPA changes following a new competition; no inflation adjustment factor will be applied to adjusted fee schedule amounts. The adjusted fee schedule amounts will become the new bid limits for future rounds of competitive bidding.

In response to comments requesting a transition period, CMS has agreed to phase in adjusted payment amounts over six months. Specifically, CMS will make adjustments to the fee schedule amounts for claims with dates of service from January 1, 2016, thru June 30, 2016, based on 50 percent of the un-adjusted fee schedule amount and 50 percent of the adjusted fee schedule amount. The methodology will be fully implemented as of July 1, 2016. CMS offers the following example: if the unadjusted fee schedule amount that would have gone into effect on January 1, 2016 was $100, and the amount resulting from the final rule methodology is $75, the fee schedule amount in effect on January 1, 2016, will be $87.50. Beginning on July 1, 2016, the fully adjusted fees ($75) will apply. According to CMS, this policy “provides suppliers with an adequate amount of time to make adjustments to their businesses in light of the reduced payment amounts and is more than enough time to determine if the payment amounts are impacting access to items and services in any part of the country.”

Special Bundled Payment Rules for Certain DME under the CBP.  CMS is adopting – with revisions – its proposal to test a limited phase-in of bundled payments for certain types of DME subject to competitive bidding, under the auspices of the CMS Center for Medicare and Medicaid Innovation’s demonstration authority. Under the final rule, CMS will provide continuous bundled monthly payments for the equipment, supplies, accessories and any necessary maintenance and repairs for certain items under competitive bidding in place of capped rental policies. CMS will only apply this policy initially to standard power wheelchairs and continuous positive airway pressure (CPAP) devices furnished under the CBP (CMS had initially proposed including a broader array of products in this initiative). CMS will initially test this payment model in no more than 12 CBAs in conjunction with competitions that begin on or after January 1, 2015; any expansion of the program would follow program evaluation and future notice and comment rulemaking.

Under this policy, the SPA for the monthly rental of DME will be based on bids for the monthly rental of DME and all item and service associated with the rental equipment, including all related supplies, accessories, maintenance, and servicing. Separate payment for replacement of equipment, repair or maintenance and servicing of equipment, or for replacement of accessories and supplies necessary for the effective use of the equipment would not be allowed. CMS is also adopting various special transition policies, grandfathered supplier provisions, rules regarding repair and maintenance of beneficiary-owned power wheelchairs, and rules to ensure that bids submitted for items paid on a continuous rental basis are less than would otherwise be paid. CMS will provide advance notice to suppliers and beneficiaries about any special payment rules to be included in a CBP.

DMEPOS CBP CHOW Rules. Current competitive bidding rules prohibit the sale of a competitive bidding contract. Under the current rules, CMS may permit the transfer of a contract to an entity that merges with or acquires a competitive bidding contract supplier, but only if the new owner assumes all rights, obligations, and liabilities of the entire competitive bidding contract.

CMS is adopting its proposal (with technical revisions) to permit transfer of part of a competitive bidding contract under very specific circumstances. Specifically, a contract supplier will be permitted to sell a distinct company (e.g., an affiliate, subsidiary, sole proprietor, corporation, or partnership) that furnishes one or more specific product categories (PCs) or serves one or more specific CBAs and transfer the portion of the contract initially serviced by the distinct company, including the PC(s), CBA(s), and location(s), to a qualified successor entity that meets all competitive bidding requirements. CMS will require a contract supplier that wants to sell a distinct company having a CBP contract to notify CMS 60 days before the anticipated date of a CHOW, and submit any required documentation within 30 days of the anticipated CHOW.

For CMS to approve the transfer, several conditions will have to be met. For instance:

  • Every CBA, PC, and location of the company being sold must be transferred to the new qualified owner.
  • All CBAs and PCs in the original contract that are not explicitly transferred by CMS must remain unchanged in that original contract for the duration of the contract period (unless subject to a subsequent CHOW).
  • All current CHOW requirements set forth at 42 CFR § 414.422(d)(2) must be met.
  • The sale of the company must include all of the company’s assets associated with the CBA and/or PCs.
  • CMS must determine that transferring part of the original contract will not result in disruption of service or harm to beneficiaries.
  • The new supplier must meet all applicable competitive bidding requirements.
  • The contract supplier and successor entity must enter into a novation agreement with CMS, and the successor entity must accept all rights, responsibilities, and liabilities under the competitive bidding contract.

This policy will apply to contracts issued in future rounds of the CPB, starting with the Round 2 Recompete.

Termination of a Competitive Bidding Contract. CMS adopted its proposal to clarify the effective date of “termination” in the termination notice that it sends to a contract supplier found to be in breach of a competitive bidding contract. Specifically, a contract will be terminated automatically if the supplier does not timely file a hearing request or submit a corrective action plan. CMS also will require a supplier whose competitive bidding contract is being terminated to notify affected beneficiaries that it is no longer a contract supplier no later than 15 days prior to the effective date of termination.

Hearing Aid Coverage. The final rule codifies current Medicare Benefit Policy Manual provisions regarding hearing aids that can be considered a prosthetic device and not subject to the statutory exclusion of hearing aids from Medicare coverage. CMS did not adopt its policy to exclude auditory osseointegrated implant (AOI) devices from coverage.

Minimal Self-Adjustment of Orthotics. CMS had proposed to clarify the “specialized training” that is needed to provide custom fitting services for orthotics if providers are not certified orthotists. The proposal would have limited those individual considered to have specialized training to physicians, treating practitioners, occupational therapists, and physical therapists. Orthotics adjusted by other individuals without “specialized training” would be considered off-the-shelf orthotics” (which are subject to the competitive bidding program). In the final rule, CMS did not adopt this proposal.

CMS Publishes Final 2015 ESRD PPS Rule

CMS published its final rule to update the Medicare end-stage renal disease (ESRD) PPS for CY 2015 on November 6, 2014. For CY 2015, the final ESRD PPS base rate is $239.43, which reflects a 0.0 percent update mandated by section 217(b)(2) of PAMA, and the application of a wage index budget-neutrality adjustment factor to the CY 2014 ESRD PPS base rate of $239.02. Nevertheless, CMS estimates that the rule will increase payments to ESRD facilities by approximately $30 million in 2015 due to updates to the outlier threshold amounts. The final rule also, among other things: rebases the ESRD bundled market basket using 2012 data; revises the market basket measures; updates the labor-related share value with a two-year transition; clarifies the eligibility criteria for the low volume payment adjustment; and implements a PAMA provision providing that payment for ESRD-related oral-only drugs will not be made under the ESRD PPS prior to January 1, 2024. CMS also adopted updates to the ESRD Quality Incentive Program (QIP) for payment years 2017 and 2018, including changes to the measure sets and establishment of a new scoring methodology beginning in 2018. Finally, the rule makes significant changes to Medicare reimbursement policy for DME, prosthetics, orthotics, and supplies (DMEPOS), as discussed in a separate post.

Final CY 2015 Medicare Payment Rules in the Pipeline

CMS is expected to publish several major final Medicare payment rules for 2015 in the coming days. The agency has already submitted to the White House Office of Management and Budget (OMB) for regulatory clearance the final 2015 rules updating Medicare payments for outpatient hospitals, ambulatory surgical centers, home health agencies, and end-stage renal disease facilities, along with reimbursement policy updates impacting suppliers of durable medical equipment, prosthetics, orthotics, and supplies. The final Medicare physician fee schedule rule is not yet at OMB, but it should be following shortly. While the text of the regulations are not yet available, we expect that the rules will be put on display at the Federal Register in the near future. We will be providing summaries of the final rules in future updates.

CMS Fingerprint-Based Background Checks are Underway - Impacting "High-Risk" Providers and Suppliers

CMS's long-awaited fingerprint-based background check screening process is underway for certain “high-risk” providers and suppliers participating in federal health care programs (specifically, Medicare, Medicaid, and the Children’s Health Insurance Program). Under CMS regulations, individuals who maintain a 5 percent or greater direct or indirect ownership interest in a provider or supplier in the high risk category -- including newly-enrolling home health agencies (HHAs) and newly-enrolling durable medical equipment, orthotics, prosthetics, and supplies (DMEPOS) suppliers -- are subject to a fingerprint-based criminal history report check of the Federal Bureau of Investigations (FBI) Integrated Automated Fingerprint Identification System.

This week CMS announced that the fingerprint-based background check process was launched on August 6, 2014. CMS confirmed that not all providers and suppliers in the “high” screening category will be included in the first phase of the background checks. Fingerprint-based background checks eventually will be required, however, “for all individuals with a 5 percent or greater ownership interest in a provider or supplier that falls into the high risk category and is currently enrolled in Medicare or has submitted an initial enrollment application.”

Medicare Administrative Contractors will send letters to the applicable providers or suppliers listing all 5 percent or greater owners who are required to be fingerprinted, and applicable individuals will have 30 days from the date of the notification letter to be fingerprinted at one of at least three specified locations. Fingerprints will be forwarded to the FBI, which will compile the background history and share results with the Fingerprint-based Background Check (FBBC) contractor (Accurate Biometrics). The FBBC will provide CMS with a "fitness recommendation" for the individual indicating whether the criminal history record information contains enrollment violations or otherwise fails to meet CMS enrollment requirements; CMS will then make the final determination about the provider or supplier.

Ways and Means Committee Seeks Comments on Medicare Program Integrity Bill

The Chairman of the House Ways and Means Subcommittee on Health is seeking comments on a draft bill, the Protecting Integrity in Medicare Act of 2014, that is “aimed at combating fraud, waste and abuse in the Medicare program.” The bill covers a range of Medicare and Medicaid policies, from establishing new alternative sanctions for technical physician self-referral violations to providing more flexibility in meeting durable medical equipment (DME) documentation requirements. Among other things, the bill would: 

  • Establish an alternative fixed financial penalty for individuals and entities that voluntarily disclose a technical Stark violation (e.g., an arrangement that is not in writing or that is not signed by one or more parties) through the Self-Referral Disclosure Protocol; the per-arrangement penalty would be capped at $5,000 if submitted within the year of the noncompliance and $10,000 thereafter;
  • Require a study on how to establish a permanent physician-hospital gainsharing program;
  • Expand the professionals who can document DME face-to-face encounters beyond physicians to align with the professionals who can furnish such encounters;
  • Establish claims processing edits to prevent Medicare payments for incarcerated, unlawfully present, and deceased individuals;
  • Require Medicare administrative contractors (MACs) to establish improper payment outreach and education programs, and modify how MACs prioritize efforts to reduce improper payment or error rates;
  • Allow Medicaid fraud control units to investigate abuse and neglect in home and community based facilities;
  • Provide the HHS OIG with up to 1.5% of all amounts collected from Medicare false claim and fraud cases;
  • Give the Secretary greater flexibility to protect Medicaid from fraud, waste, and abuse;
  • Improve incentives for individuals to report Medicare fraud and abuse under the Senior Medicare Patrol;
  • Require valid prescriber National Provider Identifiers to be included on pharmacy claims;
  • Revise the process for renewing MAC contracts;
  • Create a high-risk beneficiary drug management program under the supervision of a Part D plan sponsor;
  • Require the Secretary to issue guidance on the application of the “Common Rule” to clinical data registries;
  • Revoke eligibility for Medicare benefits for providers convicted of defrauding the Medicare program under certain circumstances;
  • Require home health agencies to obtain a surety bond in the amount of at least $50,000 as a condition of Medicare participation;
  • Require prior authorization (PA) for certain chiropractic visits, blepharoplasty, and browplasty surgeries and expand a PA demonstration for non-emergent ambulance services;
  • Require Social Security numbers to be removed from beneficiary Medicare cards; and
  • Require the Secretary to include vacuum erection systems in the DME competitive bidding program by 2016.

Subcommittee Chairman Kevin Brady (R-TX) will accept comments on the discussion draft until September 1, 2014.

CMS Call on Expanded Medicare Prior Authorization for Power Mobility Devices Demonstration (Aug. 12)

CMS is hosting a conference call on Tuesday, August 12, 2014 to discuss its planned expansion of its current demonstration project testing a prior authorization (PA) process for Medicare power mobility device claims.  This demonstration was launched on September 1, 2012 in seven states with what CMS describes as “high populations of fraud- and error-prone providers” – California, Illinois, Michigan, New York, North Carolina, Florida, and Texas.  CMS now seeks to extend the program to 12 additional states beginning October 1, 2014: Pennsylvania, Ohio, Louisiana, Missouri, Maryland, New Jersey, Indiana, Kentucky, Georgia, Tennessee, Washington, and Arizona.  The CMS call is intended to provide an opportunity for suppliers and providers to receive information and ask questions about the expanded demonstration.

CMS Proposes ESRD PPS Update for CY 2015

On July 11, 2014, CMS published a proposed rule to update the Medicare end-stage renal disease (ESRD) PPS for CY 2015, which CMS anticipates would increase total payments to all ESRD facilities by 0.3% compared to CY 2014. While CMS projects that the ESRD market basket update, as adjusted for MFP, would have been 1.6%, the “Protecting Access to Medicare Act of 2014” (PAMA) sets the CY 2015 ESRD payment update at 0.0 percent. After applying a proposed wage index budget-neutrality adjustment factor, CMS estimates that the CY 2015 ESRD PPS base rate would be $239.33 under the proposed rule. The proposed rule also would, among other things: rebase the ESRD bundled market basket using 2012 data; update outlier Medicare Allowable Payment (MAP) and fixed dollar loss amounts (which will increase payments to ESRD facilities for beneficiaries requiring higher resource utilization); revise the market basket measures; update the labor -related share value with a two-year transition; clarify the eligibility criteria for the low volume payment adjustment ; and implement a PAMA provision providing that payment for ESRD-related oral-only drugs will not be made under the ESRD PPS prior to January 1, 2024. CMS also proposes updates to the ESRD Quality Incentive Program (QIP) for payment years 2017 and 2018. Finally, the proposed rule would make significant changes to Medicare reimbursement policy for DME, prosthetics, orthotics, and supplies (DMEPOS). CMS will accept comments on the proposed rule until September 2, 2014.

CMS Announces Plans for Medicare DMEPOS Competitive Bidding Round 2 Recompete and National Mail-Order Recompete

On July 15, 2014, the Centers for Medicare & Medicaid Services (CMS) announced its plans to recompete the supplier contracts awarded in Round 2 of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program and the National Mail-Order diabetic testing supplies competition, as it is required by statute to do at least every three years.  The current contract period expires June 30, 2016; the new contracts will begin on July 1, 2016.  For the recompete, CMS is making changes to both the composition of the product categories (including adding new products) and the number of competitive bidding areas (CBAs).

The product categories to be included in the Round 2 Recompete are as follows:

  • Enteral Nutrients, Equipment and Supplies
  • General Home Equipment and Related Supplies and Accessories
    • includes hospital beds and related accessories, group 1 and 2 support surfaces, commode chairs, patient lifts, and seat lifts
  • Nebulizers and Related Supplies
  • Negative Pressure Wound Therapy (NPWT) Pumps and Related Supplies and Accessories
  • Respiratory Equipment and Related Supplies and Accessories
    • includes oxygen, oxygen equipment, and supplies; continuous positive airway pressure (CPAP) devices and respiratory assist devices (RADs) and related supplies and accessories
  • Standard Mobility Equipment and Related Accessories
    • includes walkers, standard power and manual wheelchairs, scooters, and related accessories
  • Transcutaneous Electrical Nerve Stimulation (TENS) Devices and Supplies

This configuration reflects the following changes:  the current Oxygen and CPAP Devices/Respiratory Assist Devices product categories were combined into a single product category; the current Walkers and Wheelchairs/Scooters categories were combined into a single product category; a new General Home Equipment category was created, including the previous Hospital Beds and Support Surfaces categories in addition to new products; and a new TENS devices product category was added.  Suppliers can bid on one or more product categories, but they must bid on all specified HCPCS codes within the category.  A list of the specific items in each product category is available on the Competitive Bidding Implementation Contractor (CBIC) website.

 

CMS is conducting the Round 2 Recompete in the same geographic areas that were included in Round 2.  Because of changes to the metropolitan statistical areas and boundary changes to ensure that no CBA is included in more than one state, however, there will be 117 CBAs in the Round 2 Recompete (compared to 100 in the current competition).  A list of the ZIP codes included in each CBA is also available on the CBIC website.

 

CMS will also be conducting the National Mail-Order Recompete for diabetic testing supplies concurrently with the Round 2 Recompete.  The competition will include all parts of the United States, including the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa.

 

CMS has announced the following general timeline for the Round 2 Recompete/National Mail Order Recompete:

 

July 15, 2014

  • CMS begins “pre-bidding supplier awareness program”

Fall 2014

  • CMS announces bidding schedule
  • CMS begins bidder education program
  • Bidder registration period to obtain user ID and passwords begins

Winter 2015

  • Bidding begins

Suppliers considering bidding should prepare now, including ensuring that their enrollment files at the National Supplier Clearinghouse are current, and that they are accredited and hold all necessary state licenses for any products for which they will bid.  For more information about the DMEPOS bidding program, see our previous postings at http://www.healthindustrywashingtonwatch.com/tags/dmepos-competitive-bidding/.

CMS Proposes Major Changes to Medicare DMEPOS Payment/Coverage Policy Inside/Outside of Competitive Bidding Areas

On July 2, 2014, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that would make a series of significant changes to Medicare coverage and payment policies for durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS). Notably, the proposed rule would establish a methodology for adjusting Medicare DMEPOS fee schedule payment amounts across the country using information from the Medicare DMEPOS Competitive Bidding Program (CBP) – which CMS estimates would cut Medicare DMEPOS reimbursement by more than $7 billion in FYs 2016 through 2020. The proposed rule also would: test the use of bundled monthly payment amounts for DME and enteral nutrition under the CBP; modify CBP change of ownership (CHOW) and termination of contract rules; clarify qualifications for providing custom fitting services for orthotics; and revise Medicare hearing aid coverage policy. These provisions, which were part of a broader proposed rule that would also update the Medicare end-stage renal disease prospective payment system for 2015, are summarized in our Client Alert.

OIG Reports Assess Impact of Mail-Order Competitive Bidding on Diabetes Test Strips Market Concentration

The OIG has issued two reports on Medicare market share of mail-order diabetes test strips – one examining the market share before the start of Medicare mail-order competitive bidding in July 1, 2013 and a second report examining the three-month period after competitive bidding went into effect. By way of background, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) prohibited CMS from awarding competitive bidding program contracts for mail order diabetes test strips to suppliers that do not demonstrate that their bid covers at least 50%, by volume, of all types of mail order diabetes test strips. MIPPA also requires the OIG to complete a study to determine market shares of diabetes test strips in the competitive bidding program.

In a report entitled “Medicare Market Shares of Mail Order Diabetes Test Strips Immediately Prior to the National Mail Order Program,” the OIG provides a baseline for the 3-month period of April to June 2013. Based on a sample of 1,210 claims, the OIG concluded that 152 suppliers submitted at least 62 types of mail order diabetes test strips during this period, with two types of diabetes test strips accounting for approximately 34% of the Medicare mail order market share, four types accounting for 51%, and 10 types accounting for 75%.

In a second report, “Medicare Market Share of Mail Order Diabetes Test Strips from July–September 2013,” the OIG examined a sample of 1,210 Medicare claims in the first three-months of mail-order competitive bidding. According to the OIG, 22 suppliers submitted at least 43 types of mail order diabetes test strips in this period, but two types of diabetes test strips accounted for approximately 45% of the Medicare mail order market share, three types of diabetes test strips accounted for 59% of the market share, and 10 types accounted for 90%. The OIG did not make recommendations in the report, but noted that CMS may choose to consider these data when determining whether subsequent rounds of suppliers’ mail order diabetes test strip bids comply with the MIPPA 50% requirement.

CMS Call on Medicare DMEPOS, Ambulance Prior Authorization Initiatives (June 17)

CMS is hosting a Special Open Door Forum on June 17, 2014 to provide an overview regarding new Medicare prior authorization initiatives impacting durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) suppliers and ambulance suppliers. Specifically, the call will cover the Medicare Expanded Prior Authorization Demonstration for Power Mobility Devices (PMDs) Demonstration, the Hyperbaric Oxygen and Repetitive Scheduled Non-Emergent Ambulance Transport prior authorization models, and a recent proposed rule to require prior authorization for certain DMEPOS

Is anybody home? Medicare contractors on the prowl for DMEPOS supplier violations of posted business hours and other physical facility standards.

This post was written by Paul W. Pitts, Carol C. LoepereElizabeth Carder-Thompson, and Nancy Sheliga.

Medicare suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) should be on the alert for enhanced Medicare supplier standard compliance monitoring by CMS, the National Supplier Clearinghouse (NSC), and their agents. Recently, these entities have taken draconian actions to revoke the enrollment of a number of suppliers who failed to be present during indicated hours of operation. Recent Administrative Law Judge (ALJ) decisions have upheld such revocations for technical violation of the Medicare supplier standard, even in the face of extenuating circumstances, reinforcing the need for suppliers to review their practices and policies to ensure full compliance.

Medicare supplier standard number 7 requires suppliers to appropriately maintain their physical facilities, including being accessible and staffed during posted hours of operation, maintaining a permanent visible sign in plain view, and posting hours of operation. In addition, supplier standard 7 requires the supplier’s business location to be accessible to the public, Medicare beneficiaries, CMS, NSC, and their agents (although there is an exception for “closed door” businesses, such as a pharmacy or supplier providing services only to beneficiaries residing in a nursing home, under certain circumstances).

Since compliance with all Medicare supplier standards is a condition of Medicare participation, suppliers must be present during published business hours or face revocation of their supplier number. This includes having staff present during lunch, unless the posted hours of operation specifically exclude certain lunch hours, and during holidays unless otherwise posted. We have observed a trend in deficiencies relating to supplier standard 7 being found during CMS and/or NSC supplier site visits resulting in supplier number revocations. For instance, suppliers have been found in violation when staff are out to lunch during a site visit or when an inspector uses the wrong set of elevators in a multi-use office building and is therefore unable to find the supplier’s office.

Recent ALJ decisions have upheld revocation of various DMEPOS suppliers’ billing privileges in similar situations. In one case, the supplier appealed the decision, noting that the days the surveyor attempted to visit the site were Christian and Jewish holidays. The ALJ, however, ruled that the timing of religious holidays was irrelevant because the supplier’s signage failed to notify the public that the business was closed for religious holidays (Lubell v CMS, Docket No. C-14-380, Decision No. CR3192, April 7, 2014). In another case, the supplier appealed the decision, arguing that its door was locked for the protection of its single staff member and that the staff member may not have noticed the inspector knocking due to being on lunch break. The ALJ upheld this revocation as well, noting that the office’s posted hours of operation did not indicate that the office would be closed for lunch. In that decision, the ALJ further ruled that the business was not accessible because the supplier’s locked-door approach represented an inappropriate restriction on access and indicated that a supplier may not close, even temporarily, during its posted hours of operation (Southeastern Orthotics and Prosthetics, Inc. v CMS, Docket No. C-14-315, Decision No. CR3208, April 23, 2014). In both of these cases, the ALJs held that retroactive revocations are not permitted under supplier standard 7, despite attempts by regulators to revoke the suppliers’ enrollments retroactive to the day of their second unsuccessful attempts to visit the sites.

As a reminder, suppliers must comply with all 30 supplier standards set out in 42 CFR § 424.57, an abbreviated version of which can be found on the NSC website. Given that Medicare authorities have been emphasizing supplier standard 7, we strongly encourage suppliers to ensure that their hours are posted, their offices are open to the public, and their staff are prepared for unannounced site visits at all times during posted business hours. Suppliers also should ensure that their address on file with the NSC is up to date and specific as to suite, room, and floor. In addition, we recommend that suppliers regularly review and update their Medicare 855S enrollment application whenever any changes to its content occur. Changes to a Medicare DMEPOS supplier’s enrollment information are due 30 days after they take place.

CMS Proposes Medicare Prior Authorization Process for DMEPOS Subject to "Unnecessary Utilization"

CMS has just released a proposed rule that would require Medicare prior authorization (PA) for certain Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) items that the agency characterizes as “frequently subject to unnecessary utilization.“ As part of the rulemaking, CMS has developed a “Master List” of initial items that it considers to meet this standard based on being (1) identified in a GAO or HHS OIG national report published in 2007 or later as having a high rate of fraud or unnecessary utilization; or (2) listed in the 2011 or later Comprehensive Error Rate Testing (CERT) program's Annual Medicare FFS Improper Payment Rate Report DME Service Specific Overpayment Rate Appendix. CMS also proposes limiting the items on the Master List to those with an average purchase fee of at least $1,000 or an average rental fee schedule of at least $100 to allow CMS to focus on items with the largest potential savings for the Medicare Trust Fund. CMS proposes that the Master List will be “self-updating” annually, and that items generally will remain on the list for 10 years. Note, however, that presence on the Master List would not automatically require prior authorization. CMS would limit the PA requirement to a subset of items (called the “Required Prior Authorization List") “to balance minimizing provider and supplier burden with our need to protect the Trust Funds." CMS would publish the Required Prior Authorization List in the Federal Register with 60-day notice before implementation. CMS also proposes that the PA program could be implemented nationally or locally. The proposed rule does not announce the first items on the Required Prior Authorization List. Instead, CMS is seeking public comment on the number of items that should be selected initially and in the future, and the frequency with which CMS should select items.

The proposed PA process would not create new clinical documentation requirements for the selected DMEPOS items. Instead, the same information necessary now to support Medicare payment for the item would be submitted to the contractor, but before the item could be furnished to the beneficiary and before the claim could be submitted for payment. Upon receipt of a PA request, CMS or its contractors would determine whether the item complies with applicable coverage, coding, and payment rules, and then communicate a decision that provisionally affirms or non-affirms the request. CMS or its contractors would “make reasonable efforts” to provide a decision within 10 days of receipt of all applicable information, unless this timeline could “seriously jeopardize the life or health of the beneficiary,” in which case the target review period would be 2 business days.

The proposed rule also discusses, among other things: the process for updating the Master List; liability for an item on the Required Prior Authorization List if authorization is submitted and denied, the opportunity for unlimited PA resubmissions, and applicability to competitive bidding areas. The rule also would add a contractor's decision regarding prior authorization of coverage of DMEPOS items to the list of actions that are not initial determinations and therefore not appealable.  The official version will be published on May 28, 2014. CMS will accept comments on the proposed rule until July 28, 2014.

In a related development, CMS has announced that it is expanding its current demonstration for prior authorization for power mobility devices to 12 additional states. CMS also will launch two payment model demonstrations to test prior authorization for hyperbaric oxygen therapy and repetitive scheduled non-emergent ambulance transport; information from these models will inform future CMS policy decisions on the use of prior authorization.

CMS to Implement Fingerprint-Based Background Checks for High-Risk Providers and Suppliers in 2014

Fingerprint-based background checks intended to “detect bad actors” enrolled or attempting to enroll in federal health programs

This post was authored by Elizabeth Carder-Thompson and Debra McCurdy.

More than three years after publication of final regulations to implement Affordable Care Act (ACA) provisions that strengthen provider and supplier enrollment screening provisions under federal health care programs, the Centers for Medicare & Medicaid Services (CMS) has selected a Fingerprint-Based Background Check Contractor (FBBC) and intends to phase in fingerprint-based background checks beginning in 2014.

 

By way of background, CMS published a final rule on February 2, 2011 pursuant to Section 640 of the ACA, which required the Department of Health and Human Services to establish procedures for screening providers and suppliers participating in federal health care programs (specifically, Medicare, Medicaid, and the Children’s Health Insurance Program).  Among other things, the final rule applies various screening tools, including unannounced site visits, background checks, and fingerprinting, based on the level of risk associated with different provider and supplier types.  CMS established three levels of risk – limited, moderate, and high – and every provider and supplier category is assigned to one of these three levels.  Individuals who maintain a 5 percent or greater direct or indirect ownership interest in a provider or supplier in the high risk category -- including newly-enrolling home health agencies (HHAs) and newly-enrolling durable medical equipment, orthotics, prosthetics, and supplies (DMEPOS) suppliers -- are subject to a fingerprint-based criminal history report check of the Federal Bureau of Investigations (FBI) Integrated Automated Fingerprint Identification System. 

 

While the final rule was effective March 25, 2011, as mandated by the ACA, CMS delayed the effective date of the fingerprint-based criminal history record check provision until after additional subregulatory guidance was issued.   CMS awarded a $4.19 million FBBC contract to Accurate Biometrics, Inc. in March 2014, a significant step in the implementation process.  Following this award, CMS issued a provider update announcing that it intends to phase in the fingerprint-based background check implementation beginning in 2014Not all providers and suppliers in the "high" level of risk category will initially be a part of the fingerprint-based background check requirement, but eventually the fingerprint-based background check will be completed on all individuals with a 5 percent or greater ownership interest in a provider or supplier that falls under the high-risk category.

 

Providers and suppliers subject to the fingerprint requirements will receive a notification letter from their Medicare Administrative Contractor (MAC), and applicable individuals will have 30 days from the date of the notification letter to be fingerprinted at one of at least three locations identified by the FBBC (individuals will incur the cost of having their fingerprints taken). After fingerprinting is complete, the fingerprints will be forwarded to the FBI, which will compile the background history and share results with the FBBC within 24 hours of receipt. The FBBC will assess the data and provide a "fitness recommendation" to CMS indicating whether the criminal history record information contains enrollment violations or otherwise fails to meet requirements or guidelines established by CMS for enrollment of a Medicare provider or supplier; CMS will then make the final determination about the provider or supplier. CMS will notify providers and suppliers if the assessment of the fingerprint-based background check results in the denial of an enrollment application or revocation of existing Medicare billing privileges. The CMS guidance also provides information on standards for securing the data under the review process.

 

This announcement marks the latest steps in seemingly ever-escalating CMS efforts to clamp down on fraud and abuse in the Medicare and Medicaid programs. While the initial targets of the fingerprint-based background requirements are new DMEPOS suppliers and HHAs, the policy also will apply to those who are elevated to the high risk category in accordance with enrollment screening regulations, which could include providers/suppliers coming back into the Medicare fee-for-service program after a moratorium is lifted, or providers which have been subject to a payment suspension, exclusion, or revocation. It is likely that some "owners" of entities, such principals of investment firms with financial interests in providers and suppliers, will balk at the whole idea of being fingerprinted. Moreover, the pending fingerprint process will doubtless provide even more opportunities for administrative missteps, and erroneous and time-consuming supplier/provider number revocations.

Older Entries

April 8, 2014 — OIG, GAO Reports Examine Round 1 Rebid of the Medicare DMEPOS Competitive Bidding Program

March 20, 2014 — OIG Highlights Diabetic Test Strip Cost, Compliance Concerns

March 19, 2014 — DME MACs Warn Doctors About DMEPOS Supplier "Marketing Schemes"

March 5, 2014 — Obama Administration Proposes FY 2015 Budget with Medicare, Medicaid Savings Provisions

March 3, 2014 — CMS Takes First Steps to Cut Medicare DMEPOS Fees Based on Competitive Bidding Prices

January 30, 2014 — Advisory Panel Recommends Access Standards for Medical Diagnostic Equipment

December 12, 2013 — CMS Releases 2014 Medicare DMEPOS Fee Schedule

December 10, 2013 — CMS Finalizes 2014 ESRD PPS Rates; Phases in ESRD Drug Utilization Cut

December 3, 2013 — CMS Adopts Changes to Medicare Payment, Coverage Rules for DMEPOS

November 14, 2013 — CMS Announces Medicare DMEPOS Bidding Round 1 Recompete Contract Suppliers

November 12, 2013 — CMS "Phase 2" Ordering/Referral Denial Edits to Go Live on Jan. 6, 2014

October 31, 2013 — CMS Expects Delay in Release of 2014 HCPCS Update and Final Coding Decisions

October 30, 2013 — CMS Warns of Delay in Final CY 2014 Medicare Rules

October 7, 2013 — Medicare Rates to Fall by Average of 37% under DMEPOS Competitive Bidding "Round 1 Recompete" Contracts

September 16, 2013 — OIG Focuses on Improper Medicare Diabetes Test Strip Payments

September 16, 2013 — OIG Reports Point States to Potential Medicaid DMEPOS Savings

September 10, 2013 — No CMS DME Face-to-Face Rule Enforcement Before 2014

August 27, 2013 — CMS Updates Off-The-Shelf (OTS) Orthotics Listing for 2014

August 27, 2013 — CMS Call on Draft Electronic Clinical Template for Lower Limb Prostheses (Sept. 11)

August 12, 2013 — CMS Revises Medicare National Coverage Determination Process, Eases Path to Discontinue Outdated Coverage Policies

July 29, 2013 — CMS Proposed Rule Calls for 9.4% Cut in CY 2014 ESRD PPS Rates

July 5, 2013 — CMS Proposes Updates to DMEPOS Payment, Coverage Rules

June 28, 2013 — CMS Delays DME Face-to-Face Requirement until Oct. 1, 2013

June 11, 2013 — OIG Identifies Vulnerabilities with Part B Claims with "G" Modifiers

June 11, 2013 — Health Policy Hearings

June 6, 2013 — CMS Call on Suggested Electronic Clinical Template for Lower Limb Prostheses (June 13)

May 10, 2013 — Congressional Health Policy Hearings & Markups

April 30, 2013 — CMS Delays Phase 2 Ordering and Referring Denial Edits

April 16, 2013 — CMS Announces "Winners" of Medicare DMEPOS Competitive Bidding Round 2/National Mail Order Competition

April 16, 2013 — OIG Calls Medicare Supplier Surety Bonds "Underutilized" CMS Tool

April 10, 2013 — Obama Administration's Proposed FY 2014 Budget Includes $401 Billion in Health Program Savings

March 13, 2013 — CMS Issues First Guidance on Sequestration Impact on Medicare

March 13, 2013 — CMS Requests Comments on New Forms to Disclose Competitive Bidding Contract Supplier Ownership Changes

March 13, 2013 — Implementation of Medicare Ordering/Referring Provider Edits (March 20 Call)

March 13, 2013 — CMS Plans to Include DME Infusion Drugs in Competitive Bidding in Response to OIG Findings

March 12, 2013 — 2013 Medicare Participation Enrollment Period for DMEPOS Suppliers Extended until April 15, 2013

February 18, 2013 — CMS Announces Dates for 2013 HCPCS Public Meetings

January 31, 2013 — CMS Slashes Medicare Reimbursement under Round 2 of the Medicare DMEPOS Competitive Bidding Program/National Mail Order Competition for Diabetic Testing Supplies

January 29, 2013 — CMS Issues Revised CMS-855S, 855O Medicare Enrollment Applications

January 14, 2013 — OIG Calls for Cuts in Medicare Rates for Back Orthoses

January 14, 2013 — OIG Finds DMEPOS Competitive Bidding Not Spurring Suppliers to Solicit Specific Brands/Modes of Delivery

January 4, 2013 — Fiscal Cliff Deal Includes Medicare Cuts and Other Health Policy Changes

December 17, 2012 — CMS Posts 2013 Medicare DMEPOS Fee Schedule

November 29, 2012 — CMS Announces 8.5% Medicare Error Rate in 2012; Majority of Medicare DME Claims in Error.

November 16, 2012 — CMS Finalizes OPPS, ASC Rates and Policies for 2013

November 16, 2012 — CMS Issues Final 2013 Medicare Physician Fee Schedule Rule, Including Other Part B Policy Updates

November 14, 2012 — CMS Adopts Face-to-Face Encounter Requirement for Medicare DME Orders

November 14, 2012 — OIG Reviews Impact of DMEPOS Bidding Program on Billing for Diabetes Test Strips (DTS)

October 16, 2012 — CMS Accepting Bids for the Round 1 Recompete of the DMEPOS Competitive Bidding Program

October 16, 2012 — GAO Spotlights Top Provider Types for Criminal/Civil Health Fraud

October 16, 2012 — OIG Issues FY 2013 Work Plan

October 15, 2012 — OIG Calls on CMS to Implement Safeguards for the Medicare Prosthetics/Orthotics Benefit

September 27, 2012 — Congressional Health Policy Hearings

September 27, 2012 — OIG Finds Lax CMS Healthcare Integrity and Protection Data Bank Reporting

September 24, 2012 — CMS Call on Medicare Prior Authorization for Power Mobility Devices Demonstration (Sept. 26)

August 17, 2012 — CMS Announces Timeline for Medicare DMEPOS Competitive Bidding Round 1 Recompete

August 17, 2012 — Sept. 1, 2012 Start Date for Power Mobility Device Demonstration

July 25, 2012 — CMS Call on Prior Authorization for Power Mobility Devices Demonstration (July 27)

July 19, 2012 — CMS Proposes Update to 2013 Medicare Physician Rates, Other Part B Policies

July 19, 2012 — CMS Proposes Face-to-Face Encounter Requirement for Medicare DME Orders

June 27, 2012 — OIG Faults DME MAC Review of High Utilization Claims for Diabetic Testing Supplies

June 26, 2012 — CMS Officially Announces Potential Inherent Reasonableness Payment Adjustment for Medicare Retail Diabetic Testing Supplies; Meeting Set for July 23

June 13, 2012 — CMS Call on Prior Authorization for Power Mobility Devices (PMD) Demonstration (June 28)

May 23, 2012 — CMS Examining Inherent Reasonableness Payment Adjustment for Medicare Retail Diabetic Testing Supplies; Meeting Scheduled for July 23

May 14, 2012 — CMS Proposes Revisions to DMEPOS Supplier Application

May 8, 2012 — CMS Finalizes Changes in Medicare/Medicaid Provider and Supplier Enrollment, Ordering, Documentation Requirements

April 23, 2012 — CMS Finalizes Rules Allowing Medicare Advantage Plans to Restrict DME Brands and Manufacturers

April 23, 2012 — DMEPOS Bidding "Recompete" Subjects New Products to Competitive Bidding, Expands Product Categories

April 23, 2012 — OIG Concludes Modifier Failed to Block Inappropriate DME Claims

April 23, 2012 — CMS Call on Power Mobility Device Prior Authorization Demonstration (May 3)

April 23, 2012 — CMS Posts Draft Electronic Clinical Template for Documenting Power Mobility Device (PMD) Encounters

March 12, 2012 — CMS Finalizes Revisions to Medicare DMEPOS Supplier Standards

February 28, 2012 — Maximum Medicaid RAC Contingency Fees for DME Overpayments

February 28, 2012 — CMS Updates Data on DMEPOS Competitive Bidding Program Health Outcomes

February 24, 2012 — CMS 2012 Public Meetings on HCPCS Applications

February 22, 2012 — CMS Call on Prior Authorization for Power Mobility Devices Demonstration (Feb. 23)

February 13, 2012 — CMS Announces New Start Date for Recovery Audit Prepayment Review, Power Mobility Device Demonstrations

February 13, 2012 — DMEPOS Competitive Bidding Open, State Licensure Deadline Extended

February 13, 2012 — CMS Seeks Comments on List of Off-the-Shelf Orthotics Codes

January 25, 2012 — CMS Establishes Procedures for Claims Against DMEPOS Surety Bonds

January 5, 2012 — CMS Delays Recovery Audit Prepayment Review, Power Mobility Device Prior Authorization Demonstrations

January 5, 2012 — OIG Examines Program Integrity Issues with New DMEPOS Suppliers

December 9, 2011 — CMS Launches Round 2 of DMEPOS Competitive Bidding Program; Registration Underway

November 30, 2011 — New CMS Demonstration Programs Target Medicare Improper Payments

November 29, 2011 — CMS Hosts Orlando Symposium on Empowering Minorities (Dec. 14-16)

November 15, 2011 — CMS Posts 2012 Medicare DMEPOS Fee Schedule Files

November 14, 2011 — CMS Updates End-Stage Renal Disease (ESRD) PPS for 2012

November 14, 2011 — CMS Adopts DME Minimum Lifetime Standard, Finalizes DMEPOS Competitive Bidding Interim Final Rule

November 14, 2011 — OIG Highlights Medicaid Rebate Program, Indian Health Services (IHS) Issues

November 14, 2011 — CMS Transmittal on 2012 Update to DMEPOS Fee Schedule

October 14, 2011 — CMS Proposes Changes To Medicare Part D/Medicare Advantage Rules

October 14, 2011 — CMS Proposal Would Allow MA Plans to Restrict Coverage of DME Brands/Manufacturers

October 14, 2011 — Mandatory Use of Revised ABN Set for January 1, 2012

October 14, 2011 — CMS Updates Delivery Timeframes for DMEPOS Refills

October 14, 2011 — Updated Resources for DMEPOS Competitive Bidding

September 29, 2011 — CMS Seeks Comments on Potential Medicare Coverage Determination Topics

September 29, 2011 — OIG Report on DMEPOS Surety Bonds

September 1, 2011 — Preparing for Round 2 of the DMEPOS Competitive Bidding Program

September 1, 2011 — OIG Reviews Questionable Billing for Lower Limb Prostheses

August 31, 2011 — CMS Seeks Applicants for ACA Bundled Payment Initiative