United States: Two-Year Break In Store For Medicare DMEPOS Competitive Bidding Program, But CMS Gears Up For 2021 Restart With Expanded Product Categories And New Rules

The Centers for Medicare & Medicaid Services has confirmed that it expects to have a "temporary gap" in the durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program (CBP) during calendar years 2010-2020. As a result, beginning January 1, 2019, Medicare beneficiaries may receive DMEPOS items from any Medicare-enrolled supplier until such time as new CBP contracts go into effect. When competitive bidding resumes, it will be under new program rules, as discussed below. Furthermore, CMS has announced that it intends to include in the next round of the CBP the following new product categories: ventilators, off-the-shelf back braces, and off-the-shelf knee braces. CMS has posted the specific HCPCS codes it intends to subject to bidding within these new product categories, and the agency will accept comments on these codes through December 3, 2018.

Future Competitive Bidding Program Rules. In a final rule scheduled to be published on November 14, 2018, CMS adopted a number of "market-oriented reforms" and technical policy changes for future rounds of competitive bidding. According to CMS, the new rules will simplify the bidding process, preserve beneficiary access to items and services, and make the DMEPOS CBP more sustainable.

Of particular note, CMS has finalized its proposed "lead item pricing" methodology. Rather than bid on each item/HCPCS code in a product category for each competitive bidding area (CBA), suppliers will submit a single bid for the item in the product category designated by CMS to have the highest total nationwide Medicare allowed charges. CMS will calculate a single payment amount (SPA) for that lead item in the CBA based on the highest amount bid within the winning bids, rather than the median of winning bids. Thus under this methodology, suppliers in the winning range will be paid at least what they bid for the lead item, which CMS expects "will have a positive economic impact on bidding suppliers."

Under the final rule, the SPAs for non-lead items will be based on the relative difference in the fee schedule amounts for the lead and non-lead items (prior to fee schedule adjustments based on CBP pricing). CMS provides an example of a non-lead item such as a wheelchair battery with an average 2015 fee schedule amount of $107.25, and a lead item (Group 2, captains chair power wheelchair) with an average 2015 fee schedule amount of $578.51. The ratio for these items would be computed by dividing $107.25 by $578.51 to get 0.18539. If the maximum winning bid/SPA for the power wheelchair (lead item) is $433.88, the SPA for the wheelchair battery (non-lead item) would be computed by multiplying $433.88 by 0.18539 to generate an SPA of $80.44.

Fee Schedule Updates. In the Final Rule, CMS adopted without change its three proposed methodologies for updating the DMEPOS fee schedule, depending on the geographic area in which the items and services were furnished:

  1. Items and services furnished on or after January 1, 2019, in areas that are currently CBAs, in the event of a gap in the CBP CMS will adjust fee schedule amounts based on the SPAs in effect on the last day before CBP contract periods ended, increased by the projected percentage change in the Consumer Price Index for all Urban Consumers (CPI–U) for the 12-month period on the date after the contract periods ended. If the gap in the CBP lasts for more than 12 months, fee schedule amounts will be increased annually based on the projected CPI-U change. However, payment for non-mail order diabetic testing supplies will continue at the current SPA rates until new rates are established under the national mail order program (i.e., they will not be updated for inflation).
  2. Items and services furnished in 2019 or 2020 in areas that are currently not CBAs, that are rural areas or not located in the contiguous U.S. CMS will extend through December 31, 2020 its current methodology that bases fee schedule amounts on a blend of 50% of rates that are adjusted based on CBP pricing information and 50% of unadjusted amounts.
  3. Items and services furnished in 2019 or 2020 in non-CBAs that are not rural or non-contiguous areas – Fee schedule amounts will equal 100% of the adjusted payment amount.

Other DMEPOS Policies. The final rule adds separate payment classes, on a budget-neutral basis, for portable gaseous oxygen equipment, portable liquid oxygen equipment, and high flow portable liquid oxygen contents. Furthermore, the rule establishes payment rules for multi-functioning ventilators, and it establishes rules for including the Northern Mariana Islands in future rounds of competitive bidding. CMS also reports on feedback it received in response to its solicitation of comments on potential future changes to its longstanding "gap-fill" process for establishing fees for new items of DMEPOS.

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

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