WASHINGTON, DC – Last Thursday (Nov 1, 2018), CMS posted its final rule that establishes payment policies and rates for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), starting Jan 1, 2019. The final rule includes the same positive provisions as CMS had in its July 2018 proposed rule. While the rule is literally hundreds of pages, here’s what you need to know right now.
Competitive Bid Areas (CBAs): CMS is suspending the competitive bid program (CBP) starting Jan 1, 2019. At that point, any Medicare DMEPOS supplier will be able to provide items to beneficiaries in those “former” bid areas. During this gap (which will likely last for two years through 2020), beneficiaries may receive DMEPOS items from any Medicare enrolled DME supplier until new contracts are awarded under the next round of the CBP. Pricing during this gap period in the bid areas will be the current single payment amounts (SPAs) in effect now in the CBAs plus a consumer price index (CPI) increase.
Non-Competitive Bid Areas: Payment In rural and non-contiguous areas will be at the current higher 50/50 blended payment rates that started June 1, 2018 as provided for in CMS’ May 11, 2018 Interim Final Rule, through December 31, 2020. In the remaining non-CBAs, the payment rates will be at the current lower 100% adjusted fee schedules that are based upon bid rates. These rates will be updated in 2020 with a small inflation index.
Competitive Bid Program Reforms
Lead Item Pricing: CMS will use “lead item pricing” in the next round of bidding. This means that bidders will submit a bid for the item in each product category with the highest total national Medicare allowed charges the previous year. All other items in the product category will be priced off that lead item, based on the relative payment levels reflected in the 2015 Medicare fee schedules (prior to competitive bid-based pricing). The product categories are not yet public. The bid ceiling will be the 2015 unadjusted (higher) fee schedules. CMS is asking for public comments on including additional items in the bid program: ventilators, off-the-shelf back braces, and off-the-shelf knee braces—all of which CMS plans to phase-in in the next round of competitive bidding.
Maximum Winning Bid: CMS will establish the single payment amount (SPA) for the lead item in each product category in a CBA based upon the maximum (highest) bid amount by suppliers in the winning range. This is the same method as using clearing price, where no bidder will get paid less than its bid.
CMS will start bidder education early in 2019 and will be issuing sub-regulatory guidance on a number of details that are not included in the regulation.
Surety Bonds: CMS will be implementing the new surety bond requirement with the next round of bidding. Bidders will be required to obtain a $50,000 surety bond for each competitive bid area for which they plan to submit bids. The surety bond company will vet potential bidders to make sure they have the financial capability to serve that bid area. This should result in fewer inexperienced bidders and bidders being more financially qualified.
New Oxygen Payment Policies: CMS will create a new class for portable liquid oxygen equipment by splitting the existing class of portable gaseous and portable liquid oxygen. CMS will increase the payment amount for the new portable liquid oxygen class so that it is the same as the OGPE (oxygen generating portable equipment) rate.
CMS will add a liquid high-flow oxygen contents class for prescribed flow rates of greater than 4 liters per minute. The payment rate for this class will be increased by 50% compared to portable oxygen. CMS will change the way that it calculates budget neutrality. Under the new methodology, rather than applying the offset to payment for stationary equipment and oxygen contents only, CMS will apply the offset to all oxygen and oxygen equipment classes and HCPCS codes beginning on January 1, 2019.
CMS example of impact of new budget neutrality method and additional oxygen payment classes:
It will be important to stay close and stay educated as more details and important implementation information becomes available.
Cara C. Bachenheimer heads the Government Affairs Practice at Brown & Fortunato.
