AMARILLO, TX – For over a year, the DME industry has been waiting for direction from CMS regarding the next round of competitive bidding (CB) scheduled for Jan 1, 2019. At the same time, the industry has been aware that CMS was considering substantive changes to the CB program. Well, the DME industry finally received direction from CMS…and it can only be thought of as being positive.

On July 11, 2018, CMS released a lengthy proposed rule that addresses CB and the current fee schedule. According to the proposed rule:

Changes to the CB Program

CMS is “proposing to revise the DMEPOS CB program by implementing lead item pricing based on maximum winning bid amounts.” According to CMS “lead pricing would greatly reduce the complexity of the bidding process and the burden on suppliers since they would no longer have to submit bids for numerous items in a product category. For some product categories, there are hundreds of items, and many suppliers submit bids for multiple product categories and in multiple CBAs.

“The more bids a supplier has to submit, the more time it takes to complete the bidding process and the greater the risk for keying errors, which have disqualified bidders in the past, reducing the level of competition and opportunity for savings under the program. Lead item pricing would also eliminate the need for item weights and calculation of composite bids based on item weights. This would greatly eliminate the burden for suppliers since they would no longer have to submit bids for each individual item in a product category.”

CMS is further “proposing to revise the definition of bid to mean an offer to furnish an item or items for a particular price and time period that includes…any services that are directly related to the furnishing of the item or items.” CMS is “proposing to revise the definition of composite bid to mean the bid submitted by the supplier for the lead item in the product category.”

CMS is “proposing to revise the definition of lead item to mean the item in a product category with multiple items with the highest total nationwide Medicare allowed charges of any item in the product category prior to each competition.”

According to CMS, “currently, the supplier’s bid amounts for multiple items in the product category are weighted and summed to generate the supplier’s composite bid for that product category. Under lead item pricing, the supplier’s bid amount for the lead item is the composite bid. In addition, the bids for the lead items would be used to determine the SPAs for the rest of the items in the product category.” CMS notes “that the supplier’s bid for the lead item would…be the ‘composite bid’ for the purpose of implementing the statutory and regulatory bid surety bond requirement.”

Changes to the Fee Schedule

Round Two Recompete and Round One 2017 contracts terminate on Dec 31, 2018. Beginning Jan 1, 2019, Medicare beneficiaries may receive DME from any Medicare enrolled DME suppliers until new CB contracts are awarded under the next round of bidding. As of today, CMS has not released a timeframe for implementation of the next round. CMS is “proposing transitional fee schedule adjustments for DMEPOS items and services furnished on or after Jan 1, 2019 in areas that are currently CBAs and in areas that are currently not CBAs.”

The “rule proposes three different fee schedule adjustment methodologies depending on the area in which the items and services are furnished: (1) one fee schedule adjustment methodology for DME items and services furnished on or after Jan 1, 2019, in areas that are currently CBAs, in the event of a gap in the CBP; (2) another fee schedule adjustment methodology for items and services furnished from Jan 1, 2019, through Dec 31, 2020, in areas that are currently not CBAs, are not rural areas, and are located in the contiguous United States (U.S.); and (3) another fee schedule adjustment methodology for items and services furnished from Jan 1, 2019, through Dec 31, 2020, in areas that are currently not CBAs and are either rural areas or non-contiguous areas.”

A number of DME suppliers have entered into common ownership arrangements that allow a non-CB contract supplier to be added to the CB contract of a CB contract supplier. If such a common ownership arrangement terminates on Dec 31, 2018, then when the next bidding round begins the former commonly-owned suppliers can submit bids on their own.

Oxygen

CMS is “proposing to establish new, separate payment classes for portable liquid oxygen contents…[and] to establish a new methodology for ensuring that all new payment classes for oxygen and oxygen equipment are budget neutral….” CMS will use its “authority…to add separate payment classes for portable gaseous oxygen equipment only and portable liquid oxygen equipment only. Instead of having one class for portable oxygen equipment only (gaseous and liquid tanks), [CMS proposes] splitting this class into two classes and increasing the add-on amount for portable liquid oxygen equipment.” CMS proposes “establishing the initial add-on amounts for portable liquid oxygen equipment so that they are equal to the add-on amounts for OGPE, thus reducing the incentive to furnish OGPE over portable liquid oxygen equipment. The add-on payment amounts would be adjusted in the future based on pricing information from the DMEPOS CBP.”

Multi-Function Ventilators

CMS proposes “to establish new rules to address payment for certain ventilators that are subject to the payment rules at section 1834(a)(3) of the Act but also perform the functions of other items of durable medical equipment (DME) that are subject to payment rules other than those at section 1834(a)(3) of the Act.” CMS proposes “to establish the monthly rental fee schedule amounts for a multi-function ventilator based on the existing monthly rental fee schedule amounts for ventilators plus payment for the average cost of the additional functions…a single monthly rental fee schedule amount shall be paid to encompass the base ventilator item and its additional functional components….”

Northern Mariana Islands

CMS intends “to include the Northern Mariana Islands under national mail order competitive bidding programs that become effective on or after January 1, 2019….”

Conclusion

As noted above, these are positive developments for the DME industry. It is noteworthy that CMS is acknowledging flaws in the CB program. In a July 12, 2018 HME News article, CMS Administrator Seema Verma is quoted as saying: “The current structure doesn’t produce the best prices for patients and doesn’t drive optimal performance by contractors, and it’s simply not sustainable in the long term… In developing today’s rule, we worked with experts to leverage market principles that would support competition when contracts are re-competed under the revised bid program.”

Jeff Baird will present the following webinars:

Webinar Sponsored by PAMS

Home Sleep Testing and the CPAP Supplier: What is Proper and What is Improper

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.
Wednesday, July 18, 2018

2:00 pm – 3:30 pm EASTERN TIME

Awareness about obstructive sleep apnea today is similar to awareness of diabetes 20 years ago. Most physicians (not just pulmonologists) are aware that OSA leads to many health problems. The opportunity for the DME supplier is to be able to sell the CPAP to the patient as well as the supplies (mask, tubing and filter) on a regular basis thereafter. In the past, testing for OSA occurred primarily in “brick and mortar” sleep labs where the patient would spend the night. Over the last several years, testing for OSA has increasingly shifted to home sleep testing. This is more cost-effective and patient friendly. Recognizing that abuse can occur if the DME supplier has any connection with the HST, CMS has essentially said that a CPAP supplier can have nothing to do with a HST. As to whether commercial insurers impose similar restrictions is on an insurer-by-insurer basis. This program will discuss the restrictions that CMS has placed on DME suppliers, the consequences if the supplier does not adhere to the restrictions, and the type of relationship that the DME supplier can have with the HST entity. Lastly, this program will discuss whether the restrictions apply to a CPAP supplier that is owned by a hospital that also conducts the HSTs.

Learning Objectives:

• Understand the restrictions that CMS places on the type of relationship a CPAP supplier can have with a home sleep test.
• Learn the legally acceptable involvement that a CPAP supplier can have with a home sleep test.
• Understand the relationship that a hospital owned CPAP supplier can have with a home sleep test conducted by the hospital’s sleep lab.
• Recognize how the views of commercial insurers differ from the views of CMS regarding the relationship between a CPAP supplier and a home sleep test.

Register now for “Home Sleep Testing and the CPAP Supplier:  What is Proper and What is Improper” on Wednesday, July 18, 2018, 2:00-3:30 pm ET, with Jeffrey S. Baird, Esq., of  Brown & Fortunato, PC.

FEES:  Member: $59.00; Non-Member:  $89.00 

AAHOMECARE’S EDUCATIONAL WEBINAR

Proper vs Improper Telehealth Arrangements

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.

Tuesday, July 24, 2018

2:30-3:30 p.m. EASTERN TIME

As the 78 million Baby Boomers continue to age and retire, the demand for health care will increase exponentially. The challenge is that this demand will run up against the fact that there is limited money to pay for health care. As a result, third party payers and health care providers are searching for ways to provide health care more cost effectively. One of these ways is telehealth. Utilization of remote patient monitoring and video conferencing can allow the DME supplier to maintain real time communication with its patients and their caregivers…thereby eliminating the need for the supplier to send an employee to the patient’s residence. When a physician has a telehealth encounter with a patient, and if the encounter results in an order being transmitted to the DME supplier, then this is a faster way for the supplier to receive and process orders. All of this is the “wave of the future.” However, as is often the case, the “devil is in the details.” This webinar will discuss the legal parameters within which the DME supplier can use telehealth/video conferencing to monitor patients and communicate with their caregivers. The webinar will also focus on when, in the eyes of CMS, a physician order received by a DME supplier (resulting from a telehealth encounter between the patient and the physician) is valid…and when it will be rejected by CMS.

Register for Proper vs Improper Telehealth Arrangements on Tuesday, July 24, 2018, 2:30-3:30 p.m. ET, with Jeffrey S. Baird, Esq., of  Brown & Fortunato, PC.

FEES:  Member: $99.00; Non-Member: $129.00

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or [email protected].