Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

CMS has announced the dates for the 2010 Healthcare Common Procedure Coding System (HCPCS) public meetings, at which the agency will discuss its preliminary coding and payment determinations for all new public requests for revisions to the HCPCS. On May 4-5, CMS will review applications for codes for Drugs/Biologicals/Radiopharmaceuticals/Radiologic Imaging Agents; the May 25-26 sessions will review applications for Supplies; on May 27 CMS will focus on Orthotics and Prosthetics codes; and the June 8 session will review Durable Medical Equipment and Accessories coding applications. Draft agendas, including CMS' preliminary decision, will be posted on the HCPCS website at least 4 weeks before each meeting. 

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CMS has posted new "Telemarketing FAQs" to supplement the OIG's recent revisions to its Special Fraud Alert on Telemarketing by Durable Medical Equipment Suppliers.  Among other things, the FAQs address circumstances under which DME suppliers can contact a beneficiary based on the receipt of a physician’s order.  For a more information, see our discussion on our sister blog, Life Sciences Legal Update.

 

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Today CMS announced that it is delaying until January 3, 2011 its controversial policy under which it will institute edits to deny Medicare claims for Part B items and services if the physician or non-physician practitioner who ordered the item or service does not have a current enrollment record. CMS considers a current enrollment record to be one that is in the Medicare Provider Enrollment, Chain and Ownership System (PECOS) and also contains the physician/non-physician practitioner's National Provider Identifier (NPI). The delay in the policy from April 5, 2010 until January 3, 2011 is intended to "give physicians and non-physician practitioners who order items or services for Medicare beneficiaries or who refer Medicare beneficiaries to other Medicare providers or suppliers sufficient time to enroll in Medicare or take the action necessary to establish a current enrollment record in Medicare" before the claims edits go into effect.

 

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As previously reported, CMS is requiring Medicare physicians and non-physician practitioners who refer Medicare beneficiaries to other Medicare providers or suppliers to update their enrollment records in the Medicare Provider Enrollment, Chain and Ownership System (PECOS). As of April 5, 2010, new claims edit processes could lead to rejected claims for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) and other Part B items if the ordering physician has not updated his/her enrollment records. To enable providers and suppliers to ensure that a referring physician is enrolled in PECOS, CMS has posted a file containing the National Provider Identifier (NPI) and the name of all physicians and non-physician practitioners who are eligible to order and refer in the Medicare program and who have current Medicare enrollment records. The file will be updated periodically. Background information on the PECOS enrollment requirement is available here. 

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CMS has rescinded its controversial DMEPOS "consignment closet" transmittal, which would have prohibited certain arrangements where an enrolled DMEPOS supplier maintains inventory at a practice location which is not owned by the enrolled DMEPOS supplier, but rather, owned by a physician or other health care professional for the purpose of distribution. Specifically CMS states in a revised version of the document  that it is rescinding the September 1, 2009 transmittal, which was scheduled to go into effect March 1. 2010, "to consider other implementation dates."

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On February 17, 2010, CMS is hosting a Special Open Door Forum (ODF) to discuss Medicare provider enrollment issues.  Topics expected to be covered include:  Internet-based Provider Enrollment, Chain and Ownership System (PECOS) for physicians, non-physician practitioners, and provider and supplier organizations; provider and supplier reporting responsibilities; Medicare ordering and referring issues; and revalidation efforts.

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CMS has released the agenda for its February 23, 2010 Program Advisory and Oversight Committee (PAOC) meeting.  Topics to be covered include:  a bidding status update; review of the DBIdS system performance; an accreditation update; supplier and beneficiary educational plans; contract supplier oversight and monitoring; a tentative timeline for Round 2; and a discussion of the subdivision of the NYC, Los Angeles, and Chicago metropolitan statistical areas for bidding purposes.   The agency expects to begin registration for the meeting early next week.  CMS also posted its first DMEPOS competitive bidding "program preview" document at the "DMEPOS Toolkit" web page.  The document reviews the program basics, highlights the "proven results" of the DMEPOS bidding demonstration program, and discusses the agency's implementation plans.  CMS also released a MLN Matters article covering the same materials. 

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On January 15, 2010, CMS issued a transmittal on “Various OIG Reports that have Medical Review Implications.”  The transmittal instructs Medicare contractors to take steps to strengthen program safeguards to prevent improper payment in areas identified by the HHS Office of Inspector General (OIG). Specifically, reports highlighted by CMS address negative pressure wound therapy pumps, ambulance transportation for skilled nursing facility residents, pressure reducing support surfaces, and hospice services. CMS instructs contractors to use the information contained in the OIG reports and follow the processes and procedures already in the Medicare Program Integrity Manual concerning data analysis, contractor strategies, and the progressive corrective action process.

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The HHS Office of Inspector General (OIG) has issued a report entitled “Review of Medicare Payments for Selected Durable Medical Equipment Claims With the KX Modifier for Calendar Year 2006." According to the OIG, the KX modifier – which indicates that the supplier has the required documentation on file -- was not effective in ensuring that suppliers that submitted claims to Palmetto GBA in 2006 actually had the required supporting documentation on file. Based on a sample of 100 items, the OIG extrapolates that Palmetto GBA paid approximately $127 million to suppliers who did not have the required documentation on file for services in 2006. The OIG attributes these errors to ineffective edits that determined only whether the KX modifier was on the claim, but not whether the documentation actually was on file. The OIG made a series of recommendations to recover inappropriate payments and improve the effectiveness of the KX modifier.

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On January 13, 2010, the OIG released an update to its March 2003 Special Fraud Alert on Telemarketing by Durable Medical Equipment Suppliers. The Special Fraud Alert focuses on section 1834(a)(17) of the Social Security Act, which prohibits suppliers of DME, except under limited circumstances, from making unsolicited telephone calls to Medicare beneficiaries regarding the furnishing of a covered item. It also highlights the OIG's concerns about possible telemarketing practices by DME suppliers through the use of independent marketing firms. In the updated version of the Alert, the OIG adds that it "has also been made aware of instances when DME suppliers, notwithstanding the clear statutory prohibition, contact Medicare beneficiaries by telephone based solely on treating physicians’ preliminary written or verbal orders prescribing DME for the beneficiaries." According to the OIG, the "physician’s preliminary written or verbal order is not a substitute for the requisite written consent of a Medicare beneficiary."  

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The OIG has issued a report entitled “Medicare Part B Services During Non-Part A Nursing Home Stays: Enteral Nutrient Pricing.” The OIG found that Medicare's fee schedule amounts for nutrients provided during non-Part A stays in 2006 exceeded prices available to nursing home suppliers and other purchasers by more than 50%. Consequently, the OIG recommends that CMS adjust Medicare fee schedule amounts for enteral nutrients to more accurately reflect supplier prices. CMS agreed with this recommendation. The agency also cited the resumption of the competitive bidding program and consideration of adjustment of the Medicare fee schedule for enteral nutrients, once sufficient data is available from the bidding process, as opportunities to address enteral pricing concerns.

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CMS is requiring Medicare physicians and non-physician practitioners who refer Medicare beneficiaries to other Medicare providers or suppliers to update their enrollment records in the Medicare Provider Enrollment, Chain and Ownership System (PECOS). CMS had previously announced that new claims edit processes could lead to rejected DMEPOS and other Part B claims if the ordering physician has not updated his/her enrollment records, effective January 4, 2010. CMS is now delaying the implementation of the claims edits until April 5, 2010, to give physicians and non-physician practitioners sufficient time to establish a current Medicare enrollment record. 

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CMS has released the 2010 Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedule.  According to a CMS transmittal explaining the 2010 DMEPOS fee schedule update, the DMEPOS fee schedule amounts are being updated for 2010 by the percentage increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending June 2009. Since the change in the CPI-U for this period is negative (-1.41%), the percentage increase in the CPI-U used to update the DMEPOS fee schedule amounts for 2010 is 0 percent.

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CMS is instituting new requirements to ensure that the ordering/referring provider on a DMEPOS claim is enrolled in Medicare and has a valid National Provider Identifier on record. Effective January 4, 2010, this could lead to rejected DMEPOS claims if the ordering physician has not updated his/her enrollment records. 

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CMS has officially opened the bidding window for the Round 1 Rebid of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program, and bids are due by December 21, 2009.  By way of background, under competitive bidding, only suppliers who are successful bidders will be eligible to furnish certain categories of DMEPOS to Medicare beneficiaries in certain geographic areas (with very limited exceptions). Successful bidders will be paid based on the median of the winning suppliers’ bids for each of the selected items in the region, rather than the Medicare fee schedule or supplier bid amount. All suppliers interested in submitting bids must register with CMS’s contractor by November 4, 2009; suppliers that do not register cannot bid and are not eligible for contracts. The deadline for submitting hardcopy financial documents for the “covered document review” process, under which CMS will notify suppliers of any missing financial documents, is November 21, 2009 (note that CMS will not provide information to bidders on whether submitted documents are acceptable, accurate or meet applicable requirements).  For detailed instructions and guidance related to submitting bids, see the Competitive Bidding Implementation Contractor (CBIC) website; other background information regarding the DMEPOS competitive bidding program is available here.

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On October 13, 2009, President Obama signed into law H.R. 3663, which delays from October 1, 2009, to January 1, 2010 the requirement for pharmacies that supply Medicare durable medical equipment to meet certain accreditation requirements. Note that the legislation does not affect the accreditation requirement for pharmacies to qualify to bid in a Medicare DME, prosthetics, orthotics, and supplies (DMEPOS) competitive acquisition area. The National Supplier Clearinghouse (NSC) has issued guidance on the application of the new pharmacy accreditation policy, clarifying that this extension pertains only to pharmacies supplying DME; entities registered with the NSC as DME suppliers with a pharmacist on staff do not qualify for the extension. Moreover, pharmacies that were not accredited prior to the October deadline are not subject to the revocation of Medicare billing privileges. Any pharmacy that wishes to withdraw a previously-submitted voluntary termination request must submit a letter to the NSC by October 23, 2009.  

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CMS recently announced that it is on track to open the 60-day bid window for the Medicare DMEPOS competitive bidding program on October 21, 2009. CMS expects to officially open the bid window through a listserv/e-mail message. In the meantime, CMS’s Competitive Bidding Implementation Contractor (CBIC) continues to post guidance documents, frequently-asked questions, bidding information charts, and other educational resources related to competitive bidding on its web site.

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The National Supplier Clearinghouse reports that CMS has clarified the Medicare surety bond and accreditation exemptions for optometrists.  Specifically, optometrists who own their own optical shop and furnish only cataract glasses and cataract lenses are currently exempt from the requirements concerning bonding and accreditation. This applies even if there is an optician at the optical shop.

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The OIG has issued a report on “Power Wheelchairs in the Medicare Program:  Supplier Acquisition Costs and Services.”  According to the OIG, Medicare paid almost four times the average amount paid by suppliers to acquire standard power wheelchairs during the first half of 2007.  Specifically, Medicare paid suppliers an average of $2,970 beyond the suppliers' acquisition cost to perform an average of five services and cover general supplier business costs.  Medicare paid almost two times the average supplier acquisition cost for complex rehabilitation power wheelchair packages during this period, with Medicare paying suppliers an average of $5,627 beyond the suppliers' acquisition cost to perform an average of seven services and cover general business costs.  The OIG recommends that CMS determine whether Medicare's standard and complex rehabilitation power wheelchair fee schedule amounts should be adjusted by using information from competitive bidding, seeking legislation to ensure that fee schedule amounts are reasonable, or by using its inherent reasonableness authority.  CMS concurred with the OIG’s recommendation, although it noted that it is not likely to use its inherent reasonableness authority until the results of the supplier bids for power wheelchairs under the competitive bidding program have been assessed.

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CMS has delayed until March 1, 2010, the implementation date of a controversial new policy on "Compliance Standards for Consignment Closets and Stock and Bill Arrangements." By way of background, under a policy adopted last month, CMS is defining and prohibiting certain arrangements where an enrolled supplier of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) maintains inventory at a practice location which is not owned by the enrolled DMEPOS supplier, but rather, owned by a physician, non-physician practitioner or other health care professional for the purpose of distribution (commonly referred to as a “consignment closet” or “stock and bill” arrangement). The original implementation date for the policy was September 8, 2009. 

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Medicare-enrolled DMEPOS suppliers are required to submit a valid surety bond to the NSC by October 2, 2009 to obtain/maintain Medicare billing privileges (subject to certain exceptions). The National Supplier Clearinghouse has released a lengthy list of responses to frequently-asked questions about the surety bond requirement.
 

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On August 17, 2009, CMS opened registration to all suppliers interested in participating in the Round 1 Rebid of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. 

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CMS issued a Program Integrity Manual transmittal on August 7, 2009 on "Compliance Standards for Consignment Closets and Stock and Bill Arrangements." Through the transmittal, CMS is defining and prohibiting certain arrangements where an enrolled DMEPOS supplier maintains inventory at a practice location which is not owned by the enrolled DMEPOS supplier, but rather, owned by a physician, non-physician practitioner or other health care professional for the purpose of distribution (commonly referred to as a “consignment closet” or “stock and bill” arrangement). In addition, the transmittal instructs providers that use of consignment closets and/or stock and bill arrangements must be in compliance with current standards. The transmittal is effective September 8, 2009.

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The OIG has issued a report entitled “Part B Services During Non-Part A Nursing Home Stays: Durable Medical Equipment.” The OIG found that $30 million was inappropriately allowed for DME during non-Part A skilled nursing facility stays in 2006, most of which were also certified by Medicaid. Also, the OIG found that nearly $11.9 million more was inappropriately allowed by Part B during Medicaid nursing facility stays and distinct-part nursing home stays providing primarily skilled care. The OIG recommends that CMS take a number of steps to prevent inappropriate payments.

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A new OIG report concludes that 86% of group 2 support surface claims for the first half of 2007 did not meet Medicare coverage criteria, resulting in an estimated $33 million in inappropriate payments. The OIG recommends that CMS take a series of steps to prevent improper payments for these products, including additional prepayment and postpayment medical reviews.

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CMS has announced a series of events to help suppliers prepare for the upcoming Medicare DMEPOS competitive bidding program. Specifically, CMS and its DMEPOS competitive bidding contractor will host sessions on:  How to Register to Access the Bidding System (Aug. 19); Learn the Rules to Submit a Bid Successfully (Sept. 2); What You Need to Know Before Submitting Your Bid (Sept. 16); Financial Documentation Plus Small Supplier Considerations (Sept. 22); How a Bid is Evaluated (Sept.29); Bid Submission Process (Oct. 7); and Open Calls (Oct. 14 and Nov. 4).   Information on accessing the calls and registering for updates is available here. 

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On August 3, 2009, CMS announced the detailed  timeline for the Medicare DMEPOS competitive bidding program Round One Rebid.   Key dates include the following:  registration for bidding opens August 17, 2009; the bid window opens October 21, 2009 and closes December 21, 2009; the "covered document review date" (deadline to submit financial documents) is November 21, 2009; CMS announces single payment amounts and begins the contracting process in June 2010; CMS announces contract suppliers in September 2010; and the new program begins January 1, 2011.  (Note that certain of these documents are target dates and are subject to change.)  A variety of background documents, including bidding forms and registration FAQs are available on the Competitive Bidding Implementation Contractor (CBIC) web site. 
 

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The HHS Office of Inspector General (OIG) has issued a report entitled "Miscoded Claims for Power Wheelchairs in the Medicare Program." According to the OIG, 7% of Medicare standard rehabilitation power wheelchair claims and 23% of complex rehabilitation power wheelchair claims from the first half of 2007 were miscoded because the supplier used procedure codes that did not match the wheelchairs' model information. The OIG believes suppliers may need additional education on power wheelchair coding, and CMS can improve its review of power wheelchair claims.

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On July 9, 2009, CMS is holding meetings to discuss preliminary determinations on public requests for HCPCS codes for negative pressure wound therapy (NPWT) devices.  CMS has tentatively decided not to establish new coding for NPWT systems/components, citing a technology assessment  that found that the available evidence does not support significant therapeutic distinction of a NPWT system or component of a system.

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The White House has proposed $313 billion in new Medicare and Medicaid cuts over 10 years, in addition to the provisions included in the Administration's proposed FY 2010 budget. Among other things, the Administration is endorsing: incorporating productivity adjustments into Medicare payment updates; reducing hospital subsidies for treating the uninsured as coverage increases; paying "better" prices for Medicare Part D drugs (including reducing reimbursement for beneficiaries dually eligible for Medicare and Medicaid); increasing the equipment utilization factor for advanced imaging from 50 percent to 95 percent; adopting MedPAC’s recommendations for 2010 payments to skilled nursing facilities, inpatient rehabilitation facilities, and long-term care hospitals; and cutting waste, fraud, and abuse (including prepayment review for physicians in high-risk areas or those that order a high volume of high-risk services such as durable medical equipment, home health, and home infusion services).

The following chart summarizes the Obama Administration's health reform financing proposals released to date:

Source	Health Care Reserve Fund ($ in billions)
	10 years
FY 2010 Budget -  Medicare and Medicaid Savings -  Revenues	$635 $309 $326
Additional Medicare and Medicaid Savings -  Incorporate productivity adjustments into Medicare payment      updates -  Reduce hospital subsidies for treating the uninsured as       coverage increases -  Pay better prices for Medicare Part D drugs -  Other	$313 $110  $106  $75 $22
Total	$948

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CMS has posted the July quarterly update for the 2009 Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) fee schedule.

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The May 2009 National Supplier Clearinghouse (NSC) newsletter includes DMEPOS supplier accreditation and surety bond information (including a chart comparing the different exemptions for the two requirements), a review of the supplier appeals process, and the requirements for completing the revised CMS-855S enrollment application, among other things.

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On May 20, 2009, CMS issued an updated educational article on DMEPOS supplier accreditation requirements to provide information for suppliers who choose not to become accredited. CMS notes that a DMEPOS supplier’s Medicare Part B billing privileges will be revoked on or after October 1, 2009 if the supplier fails to obtain accreditation or a voluntary termination has not been received by the National Supplier Clearinghouse by September 30, 2009. If a supplier chooses not to become accredited, they must submit an amended CMS 855S to prevent revocation and subsequent exclusion from the Medicare program. For pharmacies that choose not to become accredited but wish to remain a DMEPOS supplier to continue to bill Medicare for drugs and biologicals only, an amended CMS 855S must be completed, reflecting which drugs and biologicals the pharmacy will provide to beneficiaries.

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Today Senate Finance Committee Chairman Max Baucus and Ranking Member Chuck Grassley released a policy paper setting forth options for financing health reform. This is the third and final set of policy options for discussion before the Finance Committee marks up legislation in June. The Finance Committee has scheduled a member "walk through" to discuss the financing policy options on May 20, 2009. The financing options include, among other things: adjusting annual market basket updates and imposing “productivity adjustments” for various Medicare fee-for-service providers; a variety of payment changes impacting hospitals and home health agencies; Part B payment reforms (targeting potentially-overvalued Part B services and utilization of advanced diagnostic imaging services); improvements to promote payment accuracy for durable medical equipment; a variety of reforms pertaining to Medicaid drug rebates; policy options to reduce inappropriate spending variations across and within geographic areas; revisions to beneficiary cost-sharing obligations, including Part D means testing; and a variety of tax code changes involving the exclusion for employer-provided health coverage, changes to the itemized deduction for medical expenses, and excise tax provisions affecting alcohol and sugar-sweetened beverages.  The Finance Committee will accept comments on the health reform financing options through May 26, 2009.

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On June 1, 2009, the Practicing Physicians Advisory Council (PPAC) is holding its quarterly meeting to discuss certain proposed changes in regulations and manual instructions related to physicians' services. Agenda topics include value-based purchasing, Recovery Audit Contractors (RAC), IPPS issues, DMEPOS surety bond, and various Medicare Part C and D issues. Registration is required. 

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CMS has released the 2011 HCPCS update application form and instructions. To be considered for inclusion in the year 2011 HCPCS update, completed recommendation packets must be received by the close of business on Monday, January 4, 2010.

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According to a new OIG review, Medicare spent an average of five times more per beneficiary on inhalation drugs in South Florida compared to the rest of the country, with the greatest spending differences attributable to the more expensive brand name drugs levalbuterol and budesonide. In addition, three-fourths of South Florida beneficiaries receiving budesonide frequently exceeded coverage guidelines set forth in local coverage policy. The OIG recommends that CMS ensure that its contractors are enforcing the coverage guidelines for inhalation drugs, eliminate Medicare’s vulnerability to potentially fraudulent or excessive inhalation drug claims in South Florida, and review and act on cases where the DME supplier appears to be fraudulently billing Medicare for inhalation drugs.

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CMS has announced that it is exempting podiatrists from the DMEPOS accreditation requirement, even though they are not specifically listed as an exempt provider under the statute. CMS notes, however, that pedorthists are not exempt from the accreditation requirement at this time. 

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CMS has published a final rule correcting a technical error in its January 2, 2009 final rule implementing surety bond requirements for certain Medicare suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). In a related development, CMS has updated the Medicare Program Integrity Manual to incorporate regulatory requirements that certain DMEPOS suppliers obtain a surety bond as a prerequisite for enrolling and maintaining one’s enrollment in the Medicare program.  

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CMS recently released an updated version of the CMS-855S enrollment application to be used by DMEPOS suppliers for initial enrollment, reactivations, reenrollments and to report changes of information. Among other things, the revised application includes new sections for reporting surety bond information, designating accreditation-exempt drugs and pharmaceuticals, and reporting business hours of operation. The new form should be used immediately and must be used beginning June 1, 2009. 

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The OIG has released a report entitled "Comparison of Prices for Negative Pressure Wound Therapy Pumps," which asserts that Medicare is overpaying for NPWT pumps. Among other things, the OIG found Medicare reimbursement for NPWT pumps is more than four times the average price paid by suppliers, which makes pumps “vulnerable to fraud, waste, and abuse." The OIG recommends that CMS use its inherent reasonableness authority to reduce the reimbursement amount for NPWT pumps and include pumps in DMEPOS competitive bidding. CMS also should educate suppliers of new pump models on the importance of communication with beneficiaries' treating clinicians and follow up on potentially-inappropriate claims. CMS generally concurred with the recommendations.

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On March 17, 2009, CMS will hold a Special Open Door Forum to discuss the implementation of surety bond requirements for certain DMEPOS suppliers.  During this call, CMS staff will discuss:

• Key provisions of the January 2, 2009 Final Rule,
• Exemptions to the surety bond requirement,
• Implementation dates,
• The definition of a final adverse action, and
• Elevated surety bond amounts.

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The OIG has issued a report entitled “Medicare Payments in 2007 for Medical Equipment and Supply Claims with Invalid or Inactive Referring Physician Identifiers.” The OIG reports that Medicare allowed almost $34 million in 2007 for medical equipment and supply claims with physician identification numbers that had never been issued or had been deactivated by CMS, including $5 million for claims with dates of service after the referring physicians had died. The OIG recommends that CMS take a number of steps to promote the accurate and appropriate use of physician identifiers, and CMS concurred with the recommendations.

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On February 27, 2009, CMS published a notice announcing the dates for the 2009 Healthcare Common Procedure Coding System (HCPCS) public meetings to discuss CMS’s preliminary coding and payment determinations for public requests for revisions to the HCPCS, including dates to consider new drug code requests.  The meeting dates are as follows: 

April 28, 2009: Drugs/Biologicals/Radiopharmaceuticals/Radiologic Imaging Agents (CMS notes that the April 29 date is tentative and may not be needed)

May 12 - 13, 2009: Supplies and Other Items

May 27, 2009: Orthotics and Prosthetics

May 28, 2009: Durable Medical Equipment (DME) and Accessories

July 9, 2009: DME and Accessories, including Negative Pressure Wound Therapy (NPWT) devices.

The notice outlines deadlines for primary speakers and other attendees. Draft agendas, including a summary of each request and CMS’s preliminary decision, will be posted on the CMS website at least 4 weeks before each meeting.

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On January 2, 2009, the Centers for Medicare & Medicaid Services (CMS) published a final rule imposing surety bond requirements on certain Medicare suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). Specifically, suppliers generally will be required to post a $50,000 surety bond from an authorized surety, unless (1) the supplier is a high-risk supplier, in which case the bond amount will be increased, or (2) the supplier qualifies for an exemption from the surety bond requirement. A separate surety bond will required for each NPI obtained for DMEPOS billing purposes. With regard to high-risk suppliers, CMS requires an elevated surety bond amount of $50,000 per occurrence of an adverse legal action (e.g., revocation of Medicare billing number; suspension of a health care license by a state licensing authority; revocation or suspension of accreditation; felony conviction; or federal or state health care program exclusion or debarment) within the 10 years preceding enrollment, revalidation, or reenrollment. CMS has adopted exceptions to the surety bond requirement for physicians and nonphysician practitioners (NPPs) furnishing the items to their own patients as part of their professional service. Likewise, CMS has created an exception for the provision of orthotics, prosthetics, and supplies by (1) state-licensed orthotic and prosthetic personnel and (2) state-licensed physical and occupational therapists providing such items to their own patients. This exception is limited to personnel and therapists operating in private practice; medical supply companies employing such personnel or therapists do not qualify for this exception. An exception also applies to suppliers operated by a federal, state, local, or tribal government agency if the supplier has provided CMS with a comparable surety bond under state law. Despite requests by commenters, CMS did not establish exceptions for pharmacies or for nursing facilities that bill for Medicare DMEPOS services provided to their own residents. A supplier must submit the surety bond with its initial Medicare enrollment application or with its revalidation or reenrollment application. In addition, DMEPOS suppliers must submit a surety bond when a change of ownership occurs or when seeking to enroll a new location (unless the DMEPOS supplier is a sole proprietorship). The rule is effective March 3, 2009. Existing suppliers must comply with the surety bond requirement 9 months after enactment (October 2, 2009), while new enrolling suppliers or suppliers seeking to change ownership after the effective date must meet this requirement 120 days after the effective date (May 4, 2009).

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December 29, 2008, CMS announced that it has revoked the billing privileges of more than 1,100 medical equipment suppliers in south Florida and the Los Angeles area as part of its DMEPOS High-Risk Suppliers Demonstration. In addition, CMS has suspended payments to a number of home health agencies (HHAs) in the Miami-Dade, Florida area. To further address waste, fraud, and abuse, CMS is implementing extensive pre- and post-payment review of claims submitted by ordering/referring physicians; validating claims submitted by physicians who order a high number of certain items or services by sending follow-up letters to these physicians; verifying the relationship between physicians who order a large number of home health services and the beneficiaries for whom they ordered those services; and identifying and visiting high risk beneficiaries to ensure they are appropriately receiving the services for which Medicare is being billed. 

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On Thursday, January 8, 2009, CMS is hosting a conference call open door forum to review the accreditation requirements for DMEPOS suppliers, including pharmacies, that need to meet the September 30, 2009 DMEPOS supplier accreditation deadline.

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On December 10, 2008, CMS provided further guidance on accreditation requirements for suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) under the Medicare for Patients and Providers Act of 2008 (MIPPA). MIPPA exempts certain eligible professionals from the general September 30, 2009 accreditation deadline if unless CMS determines that the quality standards are specifically designed to apply to such professionals and persons. The eligible professionals to whom this exemption applies include physicians, physical therapists, occupational therapists, qualified speech-language pathologists, physician assistants, and nurse practitioners. Also as authorized by MIPPA, CMS has specified that certain “other persons” – specifically orthotists, prosthetists, opticians, and audiologists – are exempt from the general accreditation requirements. CMS will issue rules in 2009 on how the quality standards apply to these eligible professionals and other persons. CMS also has clarified that individuals not included in this exemption list, such as pedorthotists, mastectomy fitters, orthopaedic fitters/ technicians or athletic trainers applying for Medicare enrollment in order to bill for Medicare Part B services are not exempt from meeting the September 30, 2009 deadline for DMEPOS accreditation. 

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The OIG has issued an “early alert memo” on “Payments to Medicare Suppliers and Home Health Agencies Associated With ‘Currently Not Collectible’ Overpayments.” The OIG’s review of a small sample of Texas DMEPOS suppliers with outstanding Medicare debt (e.g., unreturned Medicare overpayments) found that a majority of suppliers were associated with other Medicare suppliers or home health agencies, and that complete ownership/management information was not always provided in public records. According to the OIG, the results suggest that individuals associated with Medicare debt could inappropriately receive Medicare payments by omitting owner/manager information on their enrollment applications and working through other DMEPOS suppliers and HHAs. Because this initial review examined a small number of suppliers using a limited set of issue questions, OIG intends to conduct follow-up work regarding the vulnerabilities raised in this memorandum.

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CMS has released the 2009 Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedule. The update reflects payment changes mandated by the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008. Specifically, MIPPA reduces the nationwide fee schedule amount of most items included in Round 1 of the DMEPOS competitive bidding program by 9.5% for 2009 (six oxygen codes included in Round 1 will receive a 0% update rather than the 9.5% reduction). Non-competitive bid items will receive a 5.0% update for 2009. 

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CMS has released the 2009 update of the Healthcare Common Procedure Coding System (HCPCS) code set.

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The OIG has issued a report entitled "South Florida Durable Medical Equipment Suppliers: Results of Appeals." The OIG followed up on a previous review that had led to the revocation of Medicare billing privileges for 491 suppliers that failed to meet Medicare supplier standards. The OIG found that nearly half of the revoked suppliers appealed the revocations, and billing privileges were restored for 91% of these suppliers. The OIG found that two-thirds of the suppliers whose billing privileges were reinstated subsequently had their privileges revoked again or inactivated, and some individuals connected to reinstated suppliers have been indicted. The OIG recommended that CMS strengthen the appeal process by developing criteria regarding the types of evidence required for hearing officers to reinstate suppliers' billing privileges; CMS agreed to consider establishing such guidelines.

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On October 30, 2008, the Centers for Medicare & Medicaid Services (CMS) released the text of its final rule updating the Medicare physician fee schedule (MPFS) for calendar year (CY) 2009.  As required under the “Medicare Improvements for Patients and Providers Act of 2008” (MIPPA), the rule increases physician payments by 1.1% in 2009, rather than the 5.4% cut CMS anticipated would result from the Sustainable Growth Rate (SGR) formula when it issued the July 7, 2008 proposed rule. Note that MIPPA did not amend the underlying SGR formula or modify payments for years after 2009; the Congressional Budget Office estimates that physician payment rates will be cut by 21% in 2010 unless Congress takes further action. In addition to making changes to physician payment rates, the sweeping rule includes many other policy changes, include the following.

• CMS has adopted changes to the antimarkup rule for diagnostic tests billed by an ordering physician. In the proposed rule, CMS had offered two alternative approaches to reforming the anti-markup rules. Under the first approach, the anti-markup provision would apply if the professional component (PC) or technical component (TC) of a diagnostic test is ordered by a billing physician and is either: (i) purchased from an outside supplier, or (ii) performed or supervised by a physician who does not share a practice with the billing physician or physician organization. A supervising or interpreting physician could "share" a practice as an employee or contractor of the single physician or physician group billing the test; otherwise the anti-markup restriction would apply. Under the second alternative approach, CMS would maintain the current regulatory text that applies the anti-markup provisions to the technical and professional components of diagnostic tests performed outside the “office of the billing physician or other supplier,” but CMS would more broadly define the “office of the billing physician or other supplier” to include space in which diagnostic testing is performed provided that it is located in the same building in which the billing physician or other supplier regularly furnishes patient care. In the final rule, CMS provides that a billing physician or other supplier can avoid application of the anti-markup provisions by meeting either alternative 1 or, on a case-by-case basis, the “site-of-service” approach of alternative 2, both of which were subject to certain modification in the final rule. Specifically, under alternative 1, a performing physician "shares a practice" with the billing physician group if he or she provides at least 75% of his or her professional services through the billing physician group-- even if the physician works for one or more billing physician groups or other health care entities. There are no restrictions on the location where the services can be performed under alternative 1. If the performing physician does not meet the 75% test, the billing physician may avoid the anti-markup rule if the performing physician is an owner, employee or independent contractor and the services are performed in the billing physician’s office. The “office” means any medical office space (regardless of the number of locations) in which the ordering physician regularly furnishes patient care and includes space where the billing physician furnishes diagnostic testing if the space is located in the same building where the ordering physician regularly furnishes patient care. 
• CMS did not adopt its proposal to require any physician or nonphysician practitioners organization furnishing diagnostic testing services (except diagnostic mammography services) to enroll as an independent diagnostic testing facility (IDTF) and meet most IDTF performance standards. Instead, CMS cites a MIPPA provision requiring accreditation of entities furnishing certain advanced diagnostic testing procedures by January 1, 2012. CMS states that it may reconsider finalizing the IDTF standard in a future rulemaking. CMS did, however, adopt its proposal to require entities providing mobile diagnostic testing services to enroll in Medicare, comply with IDTF performance standards and bill Medicare directly for their services (although CMS is not requiring mobile testing entities to bill directly for the services they furnish when such services are furnished “under arrangement” with hospitals). 
• CMS did not finalize in the rule its proposed exception to the physician self-referral rule that would have protected remuneration provided by a hospital to physicians on its medical staff under incentive payment or shared savings programs under certain conditions. Instead, in order to finalize the exception(s) CMS is reopening the comment period and soliciting detailed information on 55 specific questions related to such issues as the definition of key terms, safeguards against patient or program abuses, and various aspects of program design. 
• The final rule expands the quality measures that eligible professionals may report to qualify for incentive payments under the Physician Quality Reporting Initiative in 2009thatequal to 2% of their total Medicare allowed charges.  It also provides new PQRI reporting periods and provides for certain PQRI data to be submitted via clinical registries. In addition, as authorized by MIPPA, physicians and other eligible professionals who use a qualified electronic prescribing (e-prescribing) system to transmit prescriptions to pharmacies and submit required information on the claim may earn an incentive payment of 2% of their total Medicare allowed charges during 2009 (in addition to any PQRI incentive payment). 
• In the final rule, CMS is refining relative value units (RVUs), continuing the transition to a new “bottom up” methodology for practice expense RVUs, and applying the budget neutrality adjustment factor to the overall conversion factor (rather than applying the adjustment only to the physician work RVUs).
• CMS is codifying changes to the Part B drug average sales price payment methodology resulting from the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) that went into effect April 1, 2008, including the use of a volume-weighted methodology and revised payment rules for certain inhalation drugs. CMS had proposed several changes to the competitive acquisition program (CAP), which offers physicians the option to acquire certain injectable and infused Part B drugs from an approved CAP vendor rather than buying and billing the drugs directly. On September 10, 2008, CMS announced it was postponing the 2009 CAP indefinitely. In light of this postponement, CMS is not adopting changes in the CAP at this time, but the agency continues to solicit public feedback on a range of CAP issues.
• The final rule updates the End Stage Renal Disease (ESRD) facility wage index, implements a MIPPA provision providing a 1% increase to the ESRD composite rate and establishing a site-neutral base composite rate for hospital-based and independent dialysis facilities, and provides no update to the drug add-on payment.
• CMS has adopted a series of enrollment and documentation-related changes. Currently, newly enrolled physicians and non-physician practitioners may retroactively bill Medicare for up to 27 months prior to the effective date of their enrollment. The new enrollment rules will significantly limit retroactive billing by physicians and non-physician practitioners to no more than 30 days prior to the effective date of enrollment. In addition, the rule requires physicians and nonphysician practitioners to report to their carrier any changes of ownership, adverse legal actions, or change in practice location within 30 days (versus the current 90 days) or face revocation of Medicare billing privileges and the recoupment of Medicare payments from the date of the reportable change. Physicians and non-physician practitioners are barred from billing for services furnished after certain adverse actions. The final rule also requires providers and suppliers to maintain ordering and referring documentation (including the referring physician’s National Provider Identifier) for 7 years (rather than the proposed 10 years) years from the date of service, and it requires physicians and nonphysician practitioners to maintain written ordering and referring documentation for 7 years (rather than 10 years) from the date of service. CMS also clarifies the effective date of Medicare billing privileges.
• The final rule implements a MIPPA provision related to Medicare coverage of oxygen equipment. Specifically, MIPPA repeals a requirement that a supplier of oxygen equipment transfer title of the equipment to the beneficiary at the end of a 36-month rental period. Medicare payment for oxygen equipment will continue to be capped at 36 months (although payment will continue to be made for the oxygen contents). MIPPA requires the supplier that furnishes oxygen equipment during the 36-month rental period continue to furnish the equipment after the rental period ends for any period of medical need for the remainder of the “reasonable useful lifetime” of the equipment, even if the beneficiary moves out of the supplier’s normal service area. In addition, if a break in medical need occurs following the 36-month rental period, the supplier must resume furnishing the oxygen equipment when the beneficiary once again has a medical need for the oxygen equipment.  While MIPPA authorizes CMS to make maintenance and servicing payments for non-routine maintenance and servicing of supplier-owned oxygen equipment, CMS has determined that it is not reasonable and necessary to make such payments. However, for CY 2009 only, CMS will make payments when the supplier performs a routine maintenance and servicing visit (but not replacement parts) for oxygen concentrators and transfilling equipment following each period of continuous use of 6 months after the 36-month rental period ends. CMS welcomes comments on this issue, especially regarding whether these payments should continue past CY 2009.
• The final rule includes numerous other policy and payment changes, including provisions to address: potentially misvalued services; an expansion of the procedures subject to the multiple imaging procedure payment reduction; updates to the telehealth policy; potential refinements to geographic practice cost indices; revisions to the conditions of participation and other requirements affecting comprehensive outpatient rehabilitation facilities; changes to rehabilitation agency requirements, including provisions related to extension locations and emergency care; a prohibition on payment to suppliers of a continuous positive air pressure device when the supplier or its affiliate is directly or indirectly the provider of the sleep test that is used to diagnose a Medicare beneficiary with obstructive sleep apnea (although in the final rule CMS provides an exception for attended facility-based polysomnography); a new payment methodology for therapeutic shoes; and codification of other MIPPA self-implementing provisions, including an extension of the therapy cap exceptions process and changes to payments for clinical laboratory and ambulance services, among others. 

CMS has released the advanced text of the rule, and the official version is scheduled to be published in the Federal Register on November 19, 2008.  CMS is accepting comments on a limited number of provisions until December 29, 2008, including the exception for incentive payment and shared savings programs; certain MIPPA provisions, interim RVUs and pricing information for selected codes; and physician self-referral designated health services codes.

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CMS has released updated final quality standards for Medicare suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). The new version, dated October 2008, includes a number of changes from the August 14, 2006 version, including: requirements that the supplier furnish appropriate quality equipment and services; expanded documentation requirements; additional protections related to infection control; protections against adulterated and counterfeit equipment; and a variety of revisions to the product-specific quality standards. Also with regard to suppliers, CMS is seeking final regulatory clearance from the White House Office of Management and Budget for its final Medicare DMEPOS supplier standard and security bond requirements. The text of the rules is not available at this time, but they could be published in the Federal Register in the near future.

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On October 6, 2008, CMS announced expanded efforts to combat Medicare DMEPOS and home health fraud and abuse, including targeted reviews of home health agencies (HHAs) in Florida and greater scrutiny of DMEPOS suppliers in Florida, California, Texas, Illinois, Michigan, North Carolina, and New York. In particular, CMS will be reviewing DMEPOS items with high expenditures and high growth rates, such as oxygen supplies and equipment, power mobility devices/power wheelchairs, and diabetic test strips. Targeted steps will include:

• Closer reviews of new DMEPOS suppliers’ applications, including background checks to ensure that owners and managers have not been suspended by Medicare;
• Unannounced site visits of suppliers and HHAs;
• Extensive pre- and post-payment review of claims submitted by suppliers, HHAs, and ordering or referring physicians;
• Validation of claims submitted by physicians with high-volumes of orders for certain items or services, and verification of the relationship between such physicians and the beneficiaries for whom they ordered these services; and
• Interviews with high-risk beneficiaries to ensure they are appropriately receiving ordered items and services.

In addition, CMS has announced that it has awarded contracts to four permanent Recovery Audit Contractors (RACs) to review all Medicare Part A and B paid claims to identify Medicare overpayments and underpayments. The RACs will be paid on a contingency fee basis on both the overpayments and underpayments they find. The nationwide RAC program follows a three-year demonstration program in six states that collected over $900 million in overpayments and returned nearly $38 million in underpayments. Finally, CMS is consolidating the Medicare’s program safeguard contractors (PSCs) and the Medicare Drug Integrity Contractors (MEDICs) with new Zone Program Integrity Contractors (ZPICs), which eventually will be responsible for ensuring the integrity of all Medicare-related claims. 

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On October 14, 2008, CMS is hosting a conference at CMS headquarters in Baltimore for non-accredited suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS)   At the event, CMS will provide technical guidance on how to comply with the DMEPOS quality standards.

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The Centers for Medicare & Medicaid Services (CMS) has posted a fact sheet on the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) accreditation provisions of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), including the provisions related to exemption of certain providers from the accreditation requirements. MIPPA section 154(b) exempts certain professionals from the accreditation requirement unless CMS determines the quality standards are specifically designed to apply to such professionals. Under this provision, CMS is exempting the following professionals: physicians; physical therapists; occupational therapists; qualified speech-language pathologists; physician assistants; nurse practitioners; clinical nurse specialists; certified registered nurse anesthetists; certified nurse-midwives; clinical social workers; clinical psychologists; registered dietitians; nutritional professionals; orthotists; prosthetists; opticians; and audiologists. In addition, MIPPA mandates that all existing non-exempt DMEPOS suppliers be accredited as meeting DMEPOS quality standards by September 30, 2009 (new suppliers have been required to be accredited before applying for enrollment since March 1, 2008). To ensure time for accreditation organizations to process the applications, CMS is directing suppliers to submit a complete accreditation application to an approved accreditation organization by January 31, 2009.  On October 14, 2008, CMS is hosting an on-site conference at CMS headquarters in Baltimore for non-accredited DMEPOS suppliers to provide technical guidance on how to comply with the DMEPOS quality standards.   In a related development, CMS announced on a September 3, 2008 Open Door Forum that it intends to issue a proposed rule next year establishing new supplier standards for Medicare providers of orthotics and prosthetics.

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A new OIG report raises questions about the effectiveness of CMS’s Comprehensive Error Rate Testing (CERT) program, along with the validity of CMS estimates of improper Medicare payments for durable medical equipment (DME).   Based on the CERT contractor's medical review, CMS had reported that the FY 2006 DME error rate was 7.5 percent, or about $700 million in improper payments. However, the OIG’s independent contractor’s reviews of beneficiaries’ medical records found errors in Medicare DME claims that CERT contractor had not identified and concluded that the estimated error rate for the FY 2006 CERT DME sample was actually 28.9 percent. The OIG attributes these review discrepancies to the CERT contractor’s reliance on clinical inference rather than additional medical records available from health care providers, CMS’s inconsistent policies regarding proof-of-delivery documentation, physicians’ lack of understanding of documentation requirements, and CMS’s lack of procedures for obtaining information on high-risk DME items from beneficiaries. The OIG recommends that CMS: (1) require the CERT contractor to review all available supplier documentation, (2) establish a written policy to address the appropriate use of clinical inference, (3) require the CERT contractor to review all medical records necessary to determine compliance with medical necessity requirements, (4) document oral guidance that conflicts with written policies, (5) instruct its Medicare contractors to provide additional documentation training to physicians, and (6) require the CERT contractor to contact beneficiaries named on high-risk claims to help determine whether the beneficiaries received the items and the items were medically necessary. CMS generally agreed with the OIG’s findings and recommendations. 

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On September 3, 2008, CMS is hosting a Special Open Door Forum to provide guidance to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) providers on the supplier accreditation provisions in the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).  MIPPA states that eligible professionals and other persons are exempt from meeting the September 30, 2009 accreditation deadline until CMS determines that the quality standards are specifically designed to apply to such professionals and other persons.  MIPPA also states that CMS may exempt such professionals and persons from the quality standards based on their licensing, accreditation or other mandatory quality requirements that may apply.  The call will take place from 2 pm-3:30 pm Eastern Daylight Time. To participate, dial: 1-800-837-1935 and Reference Conference ID: 61231070. 

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On July 15, 2008, CMS is hosting a DMEPOS Accreditation 101 Audio Conference/Q&A Session, focusing on accreditation issues for new suppliers. Preregistration is required. The presentation materials are posted here.

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CMS has scheduled a June 16, 2008 meeting of the Program Advisory and Oversight Committee (PAOC) in Pikesville, Maryland. The registration deadline is June 12.

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CMS has released the names of the 325 suppliers that have signed contracts to participate in round one of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program. Effective July 1, 2008, Medicare beneficiaries in 10 geographic regions will be required to obtain certain types of DMEPOS from one of these contract suppliers (with very limited exceptions). In connection with implementation of round one, CMS has issued new Medicare manual provisions to reflect competitive bidding payment policies, and it has announced special transition rules for certain power mobility devices.  In addition, CMS has posted sample letters for non-contract suppliers to use to notify beneficiaries whether or not they have elected to become a grandfathered supplier.   Finally, CMS has issued revised accreditation deadlines for round two of the competitive bidding program, which is expected to go into effect in 70 areas next year. Suppliers in these regions must be accredited or have applied for accreditation by July 21, 2008 (instead of May 14, 2008), and they must be accredited by January 14, 2009 (instead of October 31, 2008). For more information on accreditation, click here.

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On January 25, 2008, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule that would expand the enrollment requirements that suppliers of DME, prosthetics, orthotics, and supplies (DMEPOS) must meet to establish and maintain Medicare billing privileges. Most notably, the rule would prohibit DMEPOS suppliers from sharing a practice location with another Medicare supplier, including a physician group or another DMEPOS supplier, although CMS is soliciting comments on whether it should establish an exception for physicians and nonphysician practitioners in certain circumstances.

CMS also is proposing several new standards, including requirements that suppliers: be open to the public at least 30 hours per week (except for certain suppliers of custom-made or -fitted orthotics and prosthetics); obtain oxygen from a state-licensed oxygen supplier in states that license oxygen suppliers; and not have an Internal Revenue Service or state taxing authority tax delinquency. In addition, the rule would clarify a number of existing requirements, including: clarifying that the DMEPOS supplier itself must be licensed to provide licensed services (i.e., it cannot contract with another individual or entity to provide the licensed service); establishing additional physical facility standards that suppliers must meet and specifying that “closed door” businesses (i.e., pharmacies/suppliers providing services only to beneficiaries residing in a nursing home) must comply with these standards; and excluding the use of cell phones and pagers for receiving public calls during business hours. CMS is accepting comments on the proposed rule until March 25, 2008. 

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