CMS Issues Proposed Rule to Implement Medicare Competitive Bidding Program & Other Payment Reforms for Durable Medical Equipment, Prosthetics, Orthotics, & Supplies

RS
Reed Smith

Contributor

The Centers for Medicare & Medicaid Services (“CMS”) has published its long-awaited proposed rule to implement the Medicare durable medical equipment (“DME”), prosthetics, orthotics, and supplies (“DMEPOS”) competitive bidding program (“Proposed Rule”).
United States Food, Drugs, Healthcare, Life Sciences
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TABLE OF CONTENTS

I. INTRODUCTION.

II. STATUTORY BACKGROUND

III. PROPOSED COMPETITIVE BIDDING RULE

A. Implementation Contractor

B. Requirement to Obtain Competitively Bid Items from a Contract Supplier

C. Payment Basis

1. Grandfathering Suppliers

2. Adjusting Payments for Inflation

3. Authority to Adjust Payments in Other Areas

D. Competitive Bidding Areas

1. MSA Selection

2. Establishing Competitive Bidding Areas

3. Mail Order Competitive Bidding

E. Criteria for Item Selection

F. Submission of Bids under the Competitive Bidding Program

1. Entities Furnishing DME

2. Product Categories for Bidding Purposes

3. Bidding Requirements

G. Conditions for Awarding Contracts

1. Quality Standards, Accreditation, Eligibility, and Financial Standards

2. Market Capacity

3. Composite Bids

4. Bid Selection/Determining the Pivotal Bid

5. Assurance of Savings and Multiple Contractors

H. Determining Single Payment Amounts for Individuals Items

1. Setting Single Payment Amounts

2. Rebates

I. Other Contracting Provision

J. Change in Ownership

K. Physician Authorization/Clinical Efficiency and Value

L. Revisions to HCPCS Codes during a Bidding Cycle

M. Other Provisions Related to Competitive Bidding

IV. OTHER PROVISIONS

A. Payment for New Technology/"Gap Filling" Reform

B. Home Dialysis Supplies and Equipment

C. Covered Item Update for Class III DME for 2007 and 2008

D. Low Vision Aids and Therapeutic Shoes

V. CONCLUSION

I. Introduction

The Centers for Medicare & Medicaid Services ("CMS") has published its long-awaited proposed rule to implement the Medicare durable medical equipment ("DME"), prosthetics, orthotics, and supplies ("DMEPOS") competitive bidding program ("Proposed Rule").1 CMS will accept comments on the Proposed Rule until June 30, 2006.

Under the proposed competitive bidding program, which was mandated by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("MMA"), suppliers would be required to go through a bidding process and meet certain program standards in order to supply selected items to Medicare beneficiaries within the competitive bidding area. Suppliers would bid on all specified codes within a designated product category (e.g., oxygen, power wheelchairs), and their bids for each item would be aggregated into a composite bid for the category. CMS would select the lowest composite bids for each product category with enough capacity to meet expected demand in the area. Winning suppliers would be reimbursed a single payment amount for each item equal to the median of the winning suppliers’ bids for selected items in the area, rather than the Medicare fee schedule amounts.

Although the Proposed Rule outlines the broad framework of the competitive bidding program, key elements of the program have not yet been announced. For instance, CMS intends to phase in geographically, as required by the MMA, beginning in October 2007 in 10 of the largest metropolitan statistical areas ("MSAs"). However, the Proposed Rule does not specify which MSAs would be included in the initial round under the complex criteria CMS intends to employ (although the agency is proposing to exclude New York City, Los Angeles, and Chicago from the first round of bidding). CMS also proposes to phase in competitive bidding by product category, focusing initially on groups of DMEPOS items with high cost and volume or largest savings potential. Yet again, CMS does not include the specific products that would be included in the initial phase of bidding or even the broader product categories to be adopted. Likewise, while CMS repeatedly references new DMEPOS supplier quality standards that are designed to protect beneficiaries in the new competitive bidding framework,2 the final quality standards have not been released to date.

In addition to the direct impact the regulation would have on DMEPOS suppliers and beneficiaries in the competitive bidding areas, the Proposed Rule also could result in Medicare payment changes beyond the competitive bidding program. First, CMS is proposing to use pricing information it obtains through the bidding process to adjust payments outside of bidding areas. Moreover, CMS is proposing significant revisions to the longstanding "gap fill" methodology for calculating Medicare fee schedule amounts for new DMEPOS items provided under the traditional Medicare DMEPOS fee schedule. Under the Proposed Rule, CMS or its contractors could base Medicare reimbursement amounts for new DMEPOS products on functional assessments, price comparisons, and medical benefits assessments. Furthermore, CMS proposes allowing this new methodology to be used to adjust prices that were previously established using the gap-filling methodology if CMS believes the resulting payment amounts do not reflect the cost of furnishing the item.

The following is an overview of the major features of the Proposed Rule. We would be pleased to provide you with additional information on any aspect of the proposal.

II. Statutory Background

The Balanced Budget Act of 1997 ("BBA") authorized the Secretary of Health and Human Services ("Secretary") to implement up to five Part B competitive bidding demonstration projects. CMS used this authority to establish three DMEPOS competitive bidding projects, two in Polk County, Florida, and one in the San Antonio, Texas area. Under these projects, only suppliers that met the demonstration’s quality standards and submitted competitive bids could serve Medicare beneficiaries using selected products in the demonstration areas – usually at rates significantly below the Medicare fee schedule amounts.

Building on the BBA provision, the MMA added a new requirement for the Secretary to implement competitive acquisition programs for DMEPOS beginning in 2007. Products to be included could include: (1) DME (including DME used with infusion and drugs, other than inhalation drugs) and supplies used in conjunction with DME; (2) enteral nutrients, equipment, and supplies; and (3) off-theshelf orthotics. The MMA excludes from competitive acquisition inhalation drugs; parenteral nutrients, equipment, and supplies; and Class III devices.3 Moreover, the Secretary is authorized to exempt rural areas and areas with low population density in urban areas (unless there is a significant national market through mail order for particular items), and items and services unlikely to result in significant savings.

The Secretary is directed to establish competitive acquisition areas, which may differ for different items and services. Competitive acquisition will be phased in, applying to 10 of the largest MSAs in 2007, 80 MSAs in 2009, and additional MSAs thereafter. The Secretary may phase in competitive acquisition programs first among the highest cost and highest volume items and services or those that have the largest savings potential.

For each competitive acquisition area, the Secretary must solicit bids by suppliers to supply certain covered items. Only successful bidders may supply the covered items in the acquisition area, and they will be reimbursed for such items at the bid amount. Beneficiary liability for items under the demonstration will be limited to 20 percent of the applicable contract award price. The Secretary must ensure that small suppliers have the opportunity to be considered for participation under the program. In determining the categories for bids, the Secretary may consider the clinical efficiency and value of specific items within codes, including whether some items have a greater therapeutic advantage to individuals.

In order to be awarded a contract, bidding entities must meet new quality standards for suppliers, along with financial standards specified by the Secretary.4 Total amounts paid under the contracts are expected to be less than would be paid otherwise, and beneficiary access to multiple suppliers must be maintained. The Secretary may limit the number of contractors in a competitive acquisition area to the number needed to meet projected demand. Any contract awarded must be open for competitive bidding at least every three years.

The Secretary is authorized, but not required, to allow physicians to prescribe a particular brand or mode of delivery of an item or service if the use of the particular item or service would avoid an adverse medical outcome. This could not affect the amount of payment otherwise applicable.

III. Proposed Competitive Bidding Rule

A. Implementation Contractor

In the Proposed Rule, CMS proposes designating one or more "competitive bidding implementation contractors," or "CBICs" to implement the competitive bidding program.5 The CBICs would share duties with the current DME regional carriers ("DMERCs") in the bidding regions. Specifically, CMS expects that the CBICs would prepare the request for bids ("RFB"), perform bid evaluations, select qualified suppliers, and set single payment amounts for all competitive bidding areas. The CBICs also would be charged with educating the DMERCs on the bidding process and procedures, and assisting CMS and the DMERCs in monitoring program effectiveness, access, and quality. The DMERCs would continue to process claims, provide outreach and education to beneficiaries and suppliers in their regions, apply the single payment amounts set by the CBICs for each competitive bidding area, and continue to be responsible for complaints related to claims processing.

B. Requirement to Obtain Competitively Bid Items from a Contract Supplier

CMS is proposing that Medicare beneficiaries who maintain their permanent residence in a competitive bidding area ("CBA") would be required to obtain competitively bid items from a contract supplier for that area, subject to the following two exceptions:

  • A beneficiary could obtain an item from a supplier or a noncontract supplier in accordance with the competitive bidding program grandfathering provisions described below, and

  • A beneficiary who is outside of the CBA where he or she maintains a permanent residence could obtain an item from a supplier with a valid Medicare supplier number if he or she is either in another CBA that does not include the item in its program or is in an area that is not a CBA. On the other hand, if the beneficiary is in another CBA where the item is included in competitive bidding, the beneficiary must obtain the item from a contract supplier. In either case, payment to the supplier would be based on the single payment amount for the item in the CBA area where the beneficiary maintains a permanent residence, and the claims jurisdiction would be based on the beneficiary’s permanent residence.

Unless one of the exceptions discussed above applies, Medicare would not pay for the item. Likewise, if a noncontract supplier located in a CBA furnishes an item included in the competitive bidding program for that area to a beneficiary who maintains a permanent residence in that area, the beneficiary would have no financial liability to the noncontract supplier unless the grandfathering exception applies.6

CMS also notes that if a beneficiary is not visiting another area, but is merely receiving competitively bid items from a supplier located outside but near the boundary of the CBA, the proposed travel status exemption would not apply. CMS intends to monitor implementation of this program "to ensure that this type of abuse or circumvention of the competitive bidding process and requirements to obtain items from a contract supplier does not occur."

C. Payment Basis

Payment to contract suppliers in CBAs would be based on the single payment amount for the item in the CBA where the beneficiary maintains a permanent residence.7 Implementation of competitive bidding would not preclude the use of an advance beneficiary notice, as provided by the MMA.

1. Grandfathering Suppliers

The Proposed Rule would implement the statutory requirement to allow a "grandfathering" process for rented DME and oxygen and oxygen equipment (but not enteral products) when these items are included under a competitive bidding program. The process would apply to suppliers that began furnishing the items to beneficiaries who maintain a permanent residence in an area prior to the implementation of the competitive bidding program. Beneficiaries would have a choice of whether to continue renting the item from the grandfathered supplier or a contract supplier (unless the grandfathered supplier is not willing to continue furnishing the item).

Suppliers who agree to be grandfathered suppliers for a specific item must agree to be a grandfathered supplier for all beneficiaries who request to continue to use their service for that item. For items requiring frequent and substantial servicing as well as oxygen and oxygen equipment, the grandfathered supplier could continue to furnish these items to beneficiaries in accordance with existing rental agreements or supply arrangements, except the grandfathered supplier would be paid the single competitive bidding payment amounts. For capped rental items and inexpensive or routinely purchased items furnished on a rental basis, the grandfathered supplier could continue furnishing the items in accordance with existing rental agreements and continue to be paid under the applicable fee schedule. CMS also is proposing specific provisions for the continuation of rental agreements for suppliers that lose their contract status in a subsequent competitive bidding program in the same area.

Accessories and supplies used in conjunction with an item furnished under the grandfathering process also could be furnished by the grandfathered supplier, subject to specific payment rules. For supplies used with oxygen or oxygen equipment or items that require frequent and substantial servicing, payment would be based on the single payment amount established under competitive bidding. For accessories and supplies used in conjunction with capped rental and inexpensive or routinely purchased items, the payment amount generally would be based on the fee schedule amounts in effect prior to competitive bidding (with special provisions for payment to contract suppliers that lose their contract status).

2. Adjusting Payments for Inflation

CMS could award a competitive bidding contract for a term of up to three years. To facilitate bidding on multi-year contracts, CMS proposes applying an annual inflation amount to the single payment amount established under competitive bidding. Specifically, the single payment amount would be increased by the percentage increase in the consumer price index for urban consumers ("CPI-U") beginning with the second year of a contract.

3. Authority to Adjust Payments in Other Areas

Effective January 1, 2009, the MMA authorizes CMS to use payment information determined under competitive bidding to adjust fee schedule payments for items that are not in a CBA. CMS proposes to use this authority, but the agency has not yet developed a detailed methodology for such a process. CMS invites comments on a methodology for making such adjustment, including specific comments on: the threshold amount or level of savings that the Medicare program must realize before making such an adjustment; whether adjustments would be on a local, regional, or national basis; and whether adjustments of payment amounts in other areas would be based on a certain percentage of the single payment amount from the bidding areas.

Given the potential for this provision to have a widespread impact on Medicare payment amounts, interested parties should consider providing CMS with suggestions for reasonable parameters and procedural safeguards for such payment adjustments, potentially along the lines of the requirements for CMS’s use of its inherent reasonableness authority.8

D.Competitive Bidding Areas

1. MSA Selection

CMS is proposing to implement the MMA’s timeframe to phase in the competitive bidding program geographically as follows:

  • 10 of the largest MSAs in 2007 (CMS states that it intends to implement the competitive bidding program October 1, 2007);.

  • 80 of the largest MSAs in 2009; and

  • Additional areas after 2009.

CMS proposes to use the following steps in selecting the MSAs for 2007:

  1. Identify the top 50 MSAs in terms of general population;

  2. Focus on the 25 MSAs from step one with the greatest total of DMEPOS allowed charges;

  3. Score the MSAs from step two based on combined rankings of DMEPOS allowed charges per beneficiary and suppliers per beneficiary, with lower scores indicating a greater potential for savings if programs are implemented in those areas.

  4. Exclude the three largest MSAs in terms of population (New York, Los Angeles, Chicago) and any MSA that crosses DMERC boundaries.

  5. Select the lowest scoring MSA from each DMERC region.

  6. Select the next six lowest scoring MSAs regardless of DMERC region, but not more than two MSAs from one state.

  7. Break ties in scores using DMEPOS allowed charges, selecting MSAs with higher total

  8. DMEPOS allowed charges.

CMS intends to use the most recent data available at the time it selects the 10 MSAs, and hence has not yet announced where the initial bidding would take place. CMS does point out, however, that the top MSAs based on data for 2003 (excluding New York, Los Angeles, and Chicago) are: Miami, Houston, Dallas, Riverside (CA), San Antonio, Charlotte, Orlando, San Juan, Atlanta, Tampa, Kansas City, Pittsburgh, Virginia Beach, St. Louis, San Francisco, Cincinnati, Cleveland, Detroit, Baltimore, Philadelphia, Washington DC, and Boston. The Proposed Rule discusses alternative methodologies CMS had considered to select the initial MSAs, along with its plans for selecting MSAs for the 2009 round of bidding. CMS solicits comments on other options for MSA selection.

2. Establishing Competitive Bidding Areas

The Proposed Rule discusses how CMS would exercise its authority to exempt from competitive bidding rural areas and areas with low population density within urban areas that are not competitive, unless there is a significant national market through mail order for a particular item. CMS proposes to consider the following factors to determine that an area is not competitive: low utilization of items in terms of number of items and/or allowed charges for DMEPOS in the area relative to other similar geographic areas; low number of suppliers of DMEPOS items subject to competitive bidding serving the area relative to other similar geographic areas; and/or low number of Medicare fee-for-service beneficiaries in the area relative to other similar geographic areas. CMS invites comments on this proposal.

CMS believes it is authorized to define a CBA to be concurrent with an MSA boundary, larger than an MSA, or smaller than an MSA. Thus, CMS could consider extending the boundaries of a CBA beyond the MSA’s boundaries if the area is part of the normal service area or market for suppliers who also serve the MSA market in certain circumstances.

3. Mail Order Competitive Bidding

CMS proposes to allow mail order suppliers to submit bids to furnish items during the 2007 and 2009 competitive bidding phases for beneficiaries who elect to use a mail order supplier. Moreover, CMS proposes implementing nationwide or regional competitive bidding for mail order suppliers effective January 1, 2010. CMS is soliciting comments on the types of items that would be suitable for a mail order competitive bidding program. In addition, CMS is considering mandating mail order replacement of all supplies such as blood glucose test strips and lancets, and seeks comments on "whether the service of furnishing replacement test strips, lancets or other supplies can easily, effectively, and conveniently be performed by national mail order suppliers."

E. Criteria for Item Selection

As provided under the MMA, the following items are subject to competitive bidding: (1) DME (including DME used with infusion and drugs, other than inhalation drugs) and supplies used in conjunction with DME, but excluding class III devices9; (2) enteral nutrients, equipment, and supplies; and (3) off-the-shelf orthotics.10

CMS is proposing to phase in only those items of DMEPOS that it determines are among the highest cost and highest volume items during each phase of the competitive bidding program. When determining an item’s potential savings as a result of competitive bidding, CMS would consider the following factors: annual Medicare DMEPOS allowed charges; annual growth in expenditures; number of suppliers; savings in the DMEPOS demonstrations; and reports and studies. However, items with high allowed charges or rapidly increasing allowed charges would be CMS’s highest priority in selecting items for bidding.

To facilitate bidding, CMS is establishing "product categories" consisting of related products, and suppliers would submit a separate bid for each item within a defined category. CMS intends to include a "core" set of product categories in each CBA, while other product categories could be tested in a limited number of CBAs in order to determine their suitability for competitive bidding.

CMS does not identify the product categories it proposes to use in the initial phase of competitive bidding. For purposes of illustration, CMS references 64 DMERC "policy groups" identified by the Statistical Analysis DMERC ("SADMERC"), which are sets of Healthcare Common Procedure Coding System ("HCPCS") codes that describe related items under a DMERC medical review policy. For example, the "oxygen and supplies" policy group consists of approximately 20 HCPCS codes. CMS emphasizes, however, that competitive bidding product categories could be a subset of items from a policy group or a combination of items from different policy groups. Moreover, CMS would not include items in a product category if they are rarely used or billed to the program, or if inclusion of those items is unlikely to result in program savings. Product categories could differ from one CBA to another and in different rounds of bidding in the same CBA.

CMS estimates that approximately 10 product categories would be selected for the first round of competitive bidding, and as many as 7 or 8 would be among the 10 largest in terms of allowed charges. The remaining 2 or 3 product categories are expected to come from the top 20 product groups ranked by allowed charges. The following table illustrates the top 20 policy groups based on 2003 Medicare allowed charges for the items within each policy group that CMS could choose to include in competitive bidding, although CMS cautions that this ranking should not be interpreted as signifying which product categories will be selected for competitive bidding:

F. Submission of Bids under the Competitive Bidding Program

CMS intends to provide many of the details regarding the bidding program in the RFB in the particular CBA. Note that on May 5, 2006, CMS published a notice11 announcing that it is seeking White House Office of Management and Budget ("OMB") clearance of a number of the forms it will be using in connection with the DMEPOS competitive bidding RFB. As part of this clearance request, CMS has released: the application form (which requires the bidding supplier to provide general information about the characteristics of its company, as well as financial information); the bidding sheet, (on which the supplier provides specific information about the prices it bids for specific product items and other product-category specific information); bank reference; a quarterly report; and a beneficiary survey.12

1. Entities Furnishing DME

In order for a supplier to receive payment for competitively-bid items in a CBA, the supplier must have submitted a bid to furnish those particular items and must have been awarded a contract to do so by CMS (subject to limited exceptions for grandfathered suppliers and for beneficiaries traveling out of their areas). The Proposed Rule also states that providers that furnish Part B items and are located in the CBA must submit bids in order to furnish competitively-bid items in the CBA. Providers that are not awarded contracts must use a contract supplier to furnish these items to the beneficiaries to whom they provide services.

CMS is proposing special rules for the furnishing of DMEPOS items by physicians and skilled nursing facilities ("SNFs"). With regard to physicians, CMS proposes to require that physicians that are also DMEPOS suppliers must submit bids and be awarded contracts in order to furnish items included in the competitive biding program, although they would not be required to furnish these items to beneficiaries who are not their patients if they choose not to function as commercial suppliers. If a physician does not become a contract supplier, the physician must use a contract supplier to furnish competitively bid items. CMS points out that "[p]hysicians who choose to participate in the competitive bidding process must ensure that their arrangements for referring for and furnishing DMEPOS items under a competitive bidding program comply with the physician self-referral law as well as any other Federal or State law or regulation governing billing or claims submission."

Likewise, CMS anticipates that SNFs could bid to provide certain Part B DMEPOS items to Medicare beneficiaries,13 but CMS states that a SNF would not be required to furnish competitively bid items to beneficiaries outside of the SNF if it elects not to furnish as a commercial supplier. Note that CMS does not discuss further the many differences between furnishing DMEPOS in the home and SNF settings and whether items furnished to beneficiaries in the SNF setting are appropriate for inclusion in competitive bidding. Inclusion of SNFs in competitive bidding could be complicated by, among other things, the different clinical condition of the patients in the SNF setting, CMS’s proposed exemption of SNFs from certain of the proposed supplier quality standards, and the different costs of furnishing DMEPOS in the SNF setting versus the home care setting that could distort the establishment of single bid prices. Likewise, CMS does not address the potential problems a SNF that is not a winning bidder could have in coordinating the care of its beneficiaries if it loses control over who could supply its residents. Indeed, while CMS included enteral products in the first round of the Polk County competitive bidding demonstration, CMS chose not to include enteral in subsequent rounds because most enteral are provided in the nursing home setting.14

2. Product Categories for Bidding Purposes

As noted above, CMS proposes to conduct bidding for items that are grouped into product categories, such as Breast Prosthesis, Dialysis Equipment and Supplies, Oxygen, and Power Wheelchairs. Suppliers would be required to submit a separate bid for all items, identified by HCPCS code, that CMS specifies in the product category. According to CMS’s draft bid sheets, the bidder would be required to specify the model(s) to be provided within the HCPCS code. The submitted bid must include all costs related to the furnishing of each item such as delivery, set-up, training, and proper maintenance for rental items (separate maintenance and servicing payments are available only for rented enteral nutrition equipment). Additional details about the items to be included in the product categories for bidding purposes would be detailed in the RFB. Suppliers would be allowed to bid only for the product categories they seek to furnish to enable suppliers to specialize in one or a few product categories.

CMS expects the use of product categories would minimize disruptions for beneficiaries, since they would be able to receive all of their related products from one supplier, and would facilitate the participation of small suppliers in competitive bidding. Moreover, the use of product categories could help drive prices down even further, CMS observes, since "a supplier may be able to furnish a bundle of items at a lower cost than it can produce each individual item."

3. Bidding Requirements

CMS generally would follow current rules regarding whether a rental or purchase payment would be made for a competitively bid item and whether other requirements would apply to the furnishing of that item, with certain exceptions.

  • Inexpensive or Other Routinely Purchased DME Items. For inexpensive or other routinely purchased DME, CMS is proposing that bids be submitted only for the furnishing of new items in this category. Based on accepted bids, CMS would calculate a single payment amount for used items based on 75 percent of the payment amount for new items, and would calculate a single payment amount for the rental of these items based on 10 percent of the payment for new items. CMS would not establish a purchase option for new items in this category for purposes of competitive bidding.

  • Items Requiring Frequent and Substantial Servicing. CMS proposes that bids be submitted for the monthly rental of items in this payment category except for continuous passive motion exercise devices, for which bids would be submitted on a daily rental basis. Payment would be made on a rental basis.

  • Oxygen and Oxygen Equipment. If CMS includes oxygen and oxygen equipment in competitive bidding, the agency would calculate single payment amounts based on separate bids submitted and accepted for the furnishing on a monthly basis of each category of oxygen and oxygen equipment services (e.g., stationary oxygen equipment and oxygen contents, portable oxygen equipment only, stationary and portable oxygen contents only, and portable oxygen contents only).

  • Capped Rental Items. CMS proposes that bids for "purchase" amounts be submitted for the furnishing of new items in this category. Based on these bids, a single payment amount for purchase of a new item would be calculated for each item to determine the lump sum purchase of a new power wheelchair and to calculate the single payment amounts for the rental of all items in this category. If a beneficiary elects to purchase a used power wheelchair, the single payment amount for the lump sum purchase would be 75 percent of the payment for a new wheelchair. For items furnished on a rental basis, the single payment amount for rental of the item for months 1 through 3 would be based on 10 percent of the single payment amount for purchase of the item, and for months 4 through 13 would be based on 7.5 percent of the single payment amount (after which title transfers to the beneficiary). CMS proposes to make separate payment for reasonable and necessary maintenance and servicing of capped rental items only for beneficiary-owned DME. Payment for maintenance and servicing of rented DME would be included in the single payment amount for rental of the item. CMS also proposes that the lump sum purchase option for power wheelchairs be retained under the competitive bidding program.

  • Enteral Nutrition Equipment and Supplies. Enteral nutrition equipment is currently paid on a purchase or rental basis. While Medicare reimbursement policy for rented enteral equipment is similar to the capped rental rules, payment may be made for 15 months and enteral equipment is not subject to the 25 percent reduction in payment for the forth rental month and after. Under the Proposed Rule, however, CMS is proposing to adopt a payment reduction for enteral equipment rental payments after the third month. Specifically, CMS proposes that bids be submitted for the purchase of new items in this category. Based on accepted bids, CMS would calculate a single payment amount for rented items for months 1 through 3 based on 10 percent of the single payment amount for new items, with the rental payment reduced to 7.5 percent for rented items for months 4 through 15. For purchased enteral nutrition equipment, the single payment amount for new enteral nutrition equipment would be based on the bids submitted and accepted for new enteral nutrition equipment, and the payment for used equipment would be based on 75 percent of the single payment amount for the purchase of new equipment. CMS also states that based on the bids for new items, it "would calculate a single payment amount for purchase of enteral nutrients and supplies." Although this language could be read to indicate CMS is contemplating a bundled payment for both nutrients and supplies, the proposed regulatory text appears to indicate that CMS would establish a single payment amount for purchase of enteral nutrients and a separate single payment amount for supplies. This presumably will be clarified in the final rule.

  • Maintenance and Servicing of Enteral Nutrition Equipment. CMS proposes to establish the maintenance and service payments for enteral nutrition equipment so that they are equal to 5 percent of the single payment amounts for the purchase of new enteral nutrition equipment. CMS also proposes that the contract supplier to which payment is made in month 15 for furnishing enteral nutrition equipment on a rental basis must continue to furnish, maintain and service the pump for as long as the equipment is medically necessary.

  • Supplies Used in Conjunction with DME. CMS would calculate single payment amounts for the purchase of supplies necessary for the effective use of DME, including drugs (other than inhalation drugs) based on the bids submitted and accepted for these items.

  • Orthotics. CMS proposes that bids be submitted for the purchase of off-the-shelf orthotics, and CMS would calculate single payment amounts for these items on a purchase basis.

To view the second part of this article, please click on the link below.

This article is presented for informational purposes only and is not intended to constitute legal advice.

CMS Issues Proposed Rule to Implement Medicare Competitive Bidding Program & Other Payment Reforms for Durable Medical Equipment, Prosthetics, Orthotics, & Supplies

United States Food, Drugs, Healthcare, Life Sciences

Contributor

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