As part of the CY 2014 Medicare end stage renal disease prospective payment system proposed rule, CMS is proposing updates to three Medicare durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) policies:

• 3-Year Minimum Lifetime Requirement (MLR) — CMS previously issued regulations providing that, effective for items classified as DME after January 1, 2012, the item must have an expected life of at least 3 years to be considered “durable.” The proposed rule would clarify treatment of “grandfathered items” classified as DME on or before January 1, 2012. CMS states that it will not reopen those prior decisions and reclassify the equipment in light of the new 3-year standard since it “recognizes that the healthcare industry and beneficiaries have come to rely on items that have qualified as DME on or prior to January 1, 2012, regardless of whether those items met the 3-year MLR.” Under the proposed rule, if a grandfathered product is modified (e.g., upgraded, refined, or reengineered) after January 1, 2012, the item would still be classified as DME as a grandfathered item unless the modified product has an expected life that is shorter than that of the original product; in such a case, CMS would consider the item, as modified, to be a new item that is subject to the 3-year MLR. In other words, if the modified product has a shorter expected life than the original product, the product essentially loses its grandfathered status. For example, an item covered prior to January 1, 2012 has a life of at least 2 years. If that item subsequently is modified such that it no longer lasts 2 years, the item would be considered “new” (not grandfathered) and it would be subject to the 3-year MLR. Since the new (modified) product lasts less than 2 years (not at least 3), it would not meet the definition of DME and could not be covered or be billed under Medicare using the code that described the item before it was modified.
• Reclassification of Routinely-Purchased DME. The proposed rule would clarify the definition of routinely purchased equipment at §414.220(a)(2) to address inconsistencies in how CMS has classified certain expensive items as routinely purchased, rather than capped rental. CMS also proposes reclassifying as capped rental items about 80 DME and DME accessory HCPCS codes added after 1989 that are currently classified as routinely purchased (the majority of codes relate to manual wheelchairs and wheelchair accessories). The proposed effective dates for the reclassifications would be: (1) January 1, 2014, for items not included in DMEPOS competitive bidding; (2) July 1, 2016, for items furnished in all areas of the country if the item is included in a Round 2 competitive bidding program (CBP) and not a Round 1 Recompete CBP and for items included in a Round 1 Recompete CBP but furnished in an area other than one of the 9 Round 1 Recompete areas; and (3) January 1, 2017, for items included in a Round 1 Recompete CBP and furnished in one of the nine Round 1 Recompete areas.
• Fee schedules for Splints, Casts, and Certain IOLs. CMS proposes implementing on a budget-neutral basis Medicare fee schedules for splints and casts, and intraocular lenses inserted in a physician’s office, effective for services furnished on or after January 1, 2014.

CMS also proposes certain technical amendments to DMEPOS payment regulations. CMS will publish the rule in the Federal Register on July 8, 2013, and comments will be accepted until August 30, 2013.