Updates by Reed Smith on U.S. legislative & regulatory developments affecting the health care industry
CMS is adding six types of lower limb prosthetics to the list of equipment subject to Medicare prior authorization (PA) requirements, and extending certain current PA requirements. Specifically, CMS is requiring PA as a condition of Medicare payment for the following items on the basis of their being “frequently subject to unnecessary utilization”:
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The Centers for Medicare & Medicaid Services (CMS) has adopted — with limited changes — its controversial plan to rewrite Medicare pricing rules for new items of durable medical equipment (DME), prosthetics, orthotics and supplies (DMEPOS) as part of its annual DMEPOS policy update for calendar year (CY) 2020. The rule also makes minor changes to DMEPOS competitive bidding program (CBP) rules, streamlines certain requirements for ordering DMEPOS items, and makes other related policy changes. The rule is effective January 1, 2020.
CMS currently uses an arcane “gap-fill” process to establish rates for new DMEPOS items. In short, if pricing is not available for the item in the statutory “base year” (1986 or 1987, depending on the item), CMS considers current fees for comparable items, supplier prices, manufacturer’s suggested retail prices (MSRPs), or wholesale prices. That amount is then subject to a series of deflation adjustments and statutory updates to achieve the new Medicare rate. CMS’s reliance on the pricing of existing products has been a point of contention when a manufacturer does not believe any items currently on the market are comparable to the innovative technology. At the same time, CMS does not believe that MSRPs “represent accurate pricing from actual retail markets.”
To “improve … transparency and predictability,” CMS is adopting a new framework for setting fees for new DMEPOS items (i.e., new Healthcare Common Procedure Coding System (HCPCS) codes that do not have a fee schedule pricing history). As it proposed, CMS will first seek to use existing fee schedule amounts for DMEPOS that it determines to be “comparable” based on the following five components and attributes (the new product does not need to be comparable within each category, and there is no prioritization of the categories):
Continue Reading CMS Updates Medicare DMEPOS Policies, Including Overhaul of Pricing Framework for New HCPCS Codes
The Centers for Medicare & Medicaid Services (CMS) is planning a potentially-significant overhaul of Medicare pricing rules for new items of durable medical equipment (DME), prosthetics, orthotics and supplies (DMEPOS) as part of its proposed annual DMEPOS policy update for calendar year (CY) 2020. The proposed rule also includes DMEPOS competitive bidding program (CBP) updates and proposals to streamline requirements for ordering DMEPOS items.
Under a decades-old policy, CMS uses a highly imprecise “gap-fill” process to establish fees for new items of DMEPOS for which charges in the statutory “base year” are unavailable. In such cases, CMS and its contractors use fees for comparable items, supplier prices, manufacturer’s suggested retail prices, or wholesale prices plus a markup to approximate current pricing. To remove the impact of inflation, CMS next “deflates” the prices back to the base year period (1986 or 1987 depending on the item – well before the time the item was available or likely even invented). CMS then applies the annual covered item update factors specified in the statute to establish current rates.
CMS notes that it has “heard frequently from manufacturers that do not agree that their newly developed DMEPOS item is comparable to older technology DMEPOS items and services.” Nevertheless, CMS contends that there are benefits to identifying and basing rates on comparable items, including avoiding providing a competitive advantage to manufacturers of new items. To improve transparency and predictability in the sources of data and selection of comparable items and services for gap-fill purposes, however, CMS proposes to codify a framework for establishing fees for new DMEPOS items (i.e., new Healthcare Common Procedure Coding System (HCPCS) codes) that do not have a fee schedule pricing history).
CMS’ proposal is complex. In general, under the proposal, CMS would first seek to use existing fee schedule amounts for DMEPOS that it determines to be “comparable” based on one or more of the following “components and attributes”:
Comparable Item Analysis (Any combination of, but not limited to, the categories below for a device or its subcomponents)
| Components | Attributes |
| Physical Components | Aesthetics, Design, Customized vs. Standard, Material, Portable, Size, Temperature Range/ Tolerance, Weight. |
| Mechanical Components | Automated vs. Manual, Brittleness, Ductility, Durability, Elasticity, Fatigue, Flexibility, Hardness, Load Capacity, Flow-Control, Permeability, Strength. |
| Electrical Components | Capacitance, Conductivity, Dielectric Constant, Frequency, Generator, Impedance, Piezo-electric, Power, Power Source, Resistance. |
| Function and Intended | Function, Intended Use. |
| Additional Attributes and Features | ‘‘Smart’’, Alarms, Constraints, Device Limitations, Disposable Parts, Features, Invasive vs. Non-Invasive |
If CMS determines that there are no items with existing fee schedule amounts considered comparable to the new item, CMS would establish the fee schedule amount based on either:
Continue Reading CMS Proposes Medicare DMEPOS Policy Updates, Including New Methodology for Pricing New Codes
The Centers for Medicare & Medicaid Services (CMS) is expanding the types of durable medical equipment (DME), prosthetic, orthotics, supplies (DMEPOS) that are subject to Medicare prior authorization requirements on the basis of being “frequently subject to unnecessary utilization.” Specifically, CMS announced that it is adding to the Required Prior Authorization List:
Separately, CMS announced that it is adding the following items to its “Master List of Items Frequently Subject to Unnecessary Utilization”:
Continue Reading CMS Expands DMEPOS Items Subject to Prior Authorization Due to “Unnecessary Utilization”
CMS is considering implementing a Medicare home health claims review demonstration project intended to help identify, prevent, and prosecute Medicare fraud, waste, and abuse and reduce Medicare appeals. Under this initiative, CMS would offer home health agencies (HHAs) in the demonstration area the choice of demonstrating their compliance with Medicare home health policies through 100%…
CMS is adding 31 power mobility device Healthcare Common Procedure Coding System (HCPCS) codes to the list of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items that require prior authorization as a condition of Medicare payment. All of the new codes are currently included in the Medicare Prior Authorization for Power Mobility Devices (PMDs)…
CMS is removing the Medicare prior authorization (PA) requirement for several types of medical equipment because the items no longer meet the standard set forth in a 2015 final rule. Under these regulations, CMS requires PA for certain items of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) that the agency characterizes as “frequently…
CMS is extending for another year the Medicare prior authorization program for repetitive, scheduled non-emergent ambulance transport services rendered by ambulance providers in selected states. As previously reported, CMS began testing the three-year Medicare prior authorization model in New Jersey, Pennsylvania, and South Carolina on December 1, 2014. The agency extended the model to…
CMS has announced that it is “pausing” its Pre-Claim Review demonstration in Illinois for at least 30 days, effective April 1, 2017, and it is not expanding the demonstration to Florida in April as previously planned. During this pause period, Medicare contractors will not accept additional pre-claim review requests; instead, home health claims will be…
Beginning in March 2017, CMS is phasing in new Medicare prior authorization (PA) requirements for two types of power wheelchairs under a policy adopted in a final rule issued late in 2015. As previously reported, CMS finalized regulations to require Medicare PA for certain durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) items that the agency characterizes as “frequently subject to unnecessary utilization.” CMS issued a “Master List” of equipment that could potentially be subject to this requirement, but the agency did not announce the specific selected items.
In a notice to be published December 22, 2016, CMS has announced the first two codes that will be subject to the new PA requirement:
Continue Reading CMS Announces New Medicare Prior Authorization Requirements for Two Types of Power Wheelchairs
The Centers for Medicare & Medicaid Services (CMS) has issued a final rule to require Medicare prior authorization (PA) for certain durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) items that the agency characterizes as “frequently subject to unnecessary utilization.” Notably, however, key policy decisions — including the items that will initially be subject to PA and final timeframes for review of PA requests – still have not been announced. The final rule, published December 30, 2015, specifies a “Master List” of 135 items that will potentially be subject to PA because the item has been (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) DME and/or DMEPOS Service Specific Reports, The Master List is further limited to those items with an average purchase fee of at least $1,000 or an average rental fee schedule of at least $100 (adjusted annually for inflation). The Master List will be “self-updating” annually and published in the Federal Register. Items generally will remain on the list for 10 years. The initial Master List is set forth in table 5 of the final rule.
Continue Reading CMS Finalizes New Medicare Prior Authorization Rules for DMEPOS Subject to “Unnecessary Utilization,” But Policy Questions Remain
As previously reported, CMS announced in November 2014 that it would test a Medicare prior authorization process for repetitive scheduled nonemergent ambulance transport services in New Jersey, Pennsylvania, and South Carolina. The three-year model began on December 1, 2014. As mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), CMS is…
CMS has scheduled a series of provider calls in February and March on the following topics:
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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…
In light of government reports finding high utilization and potential improper Medicare payments associated with repetitive scheduled nonemergent ambulance transports, CMS will test a prior authorization model program for these services in New Jersey, Pennsylvania, and South Carolina. CMS defines repetitive ambulance service as medically necessary ambulance transportation that is furnished in 3 round trips…
