AMARILLO, TX – Up until about 10 years ago, the DME industry was almost exclusively a fee-for-service (“FFS”) industry. The supplier would sell a product, take assignment, and bill Medicare. The concept of “managed care” did not enter the supplier’s lexicon.

Fast forward to today: (i) approximately 47% of Medicare beneficiaries are covered by Medicare Advantage Plans (“MAPs”) and (ii) approximately 70% of Medicaid patients are covered by Medicaid Managed Care Plans (“MMCPs”). These percentages are increasing.

MAPs and MMCPs were established by Congress in 1997. Federal laws governing Managed Care Organizations (“MCOs”) are voluminous. Most of the laws focus on rights of beneficiaries. There is little federal guidance on the rights of DME suppliers and other providers. Essentially, Congress and CMS have said to MCOs: “Take care of the patients and work with providers/suppliers…and we do not want to have to deal with problems.”

Fortunately, we are beginning to see some federal governmental movement in addressing problems that have arisen in the MAP space.

On April 27, 2022, the Office of Inspector General (“OIG”) issued a report addressing problems arising out of MCO activities (“Report”). The focus of the Report are the actions of MCOs to (i) reject prior authorizations and (ii) make it difficult for physicians to obtain prior authorizations. The Report points out that such actions cause harm to patients. The Report focuses on physicians and does not address the types of problems being faced by DME suppliers. But the Report opens the door for additional scrutiny of MCOs.

On August 1, 2022, CMS issued a formal Request for Information related to various aspects of the Medicare Advantage Program. AAHomecare’s Payor Relations Council (“PRC”) spent many hours (i) researching issues faced by DME suppliers as they work with MAPs and (ii) preparing and submitting a five page letter to CMS that (i) details the problems arising out of MAP actions and (ii) offers corrective steps. In its letter, AAHomecare’s PRC focused on the following:

Need for Improved Oversight of MAPs

It is the observation of many DME suppliers that CMS exercises very little oversight of MAPs, thereby allowing MAPs to make decisions that negatively impact beneficiaries and suppliers. AAHomecare believes it is important that CMS ensure that DME suppliers serving MAP beneficiaries have access to a grievance and appeals process that includes the opportunity to escalate concerns to CMS.

AAHomecare further points out that CMS should provide clear guidance to MAPs that they must have coverage and documentation requirements that are no more restrictive than those of Medicare FFS.

According to AAHomecare, CMS should require that MAPs (i) publish policies and procedures that DME suppliers are required to follow and (ii) be no more restrictive than Medicare clinical/medical, operational, billing, Advance Beneficiary Notice (“ABN”), and payment policies. For example, MAPs should be required to publish their policies and procedures regarding prior approval, claims filing, medical policies, documentation requirements, rental caps, billing and pricing modifiers, and coverage requirements to ensure they are not more stringent than Medicare FFS.

By law, MAPs are required to establish payment rates that ensure beneficiary access to care.  AAHomecare believes that MAPs should be required to demonstrate to CMS that they have completed “access to care” analyses for access to DME items and services, particularly where there are a limited number of DME suppliers in a particular geographic area. These analyses should be conducted by product category (e.g., respiratory, mobility) because many DME suppliers do not provide all items of DME. AAHomecare suggests that MAPs be required to publicize how they determine that a provider network is adequate to ensure beneficiary access to care. In addition, MAPs must periodically reevaluate network adequacy due to changes in the product categories that suppliers offer. Access to care analyses should also include ensuring that where a single HCPCS code encompasses a wide diversity in product quality and efficacy, MAP payment rates are sufficient to ensure access to all medically necessary products covered under such code.

According to AAHomecare, CMS should designate a central contact/ombudsman with the authority and responsibility to oversee MAP compliance with access to care and other requirements. This CMS contact should ensure that adequate recourse is available to DME suppliers when a MAP may be out of compliance with (i) its contract with the supplier and/or (ii) its contract with CMS. MAPs should not be allowed to terminate contracts with DME suppliers when the suppliers seek such recourse.

DME suppliers are concerned about aggressive marketing tactics that many MAPs employ to persuade beneficiaries to enroll with their plan. CMS should oversee MAPs’ marketing programs to ensure they are not misleading or false. AAHomecare points out that it is the experience of its members that many beneficiaries do not fully comprehend their decision to enroll in a MAP … many believe they still have access to their FFS benefits.

AAHomecare suggests that CMS require MAPs to develop and publish DME supplier-specific (i) dashboards and (ii) reported data metrics. For example, MAPS should be required to publish statistics related to (i) prior authorization (percent approved/denied); (ii) number of days between the dates that claims are submitted and paid; (iii) appeal statistics; (iv) denial rates; and (v) reasons claims are denied. In its comments letter, AAHomecare offers to work with CMS to develop dashboard metrics.

Access to Care
According to AAHomecare, CMS should require MAPs to establish clear network adequacy criteria by DME product category and geographic area to ensure there is real patient choice. As an example, AAHomecare observes that some DME suppliers only provide respiratory items and services while others only provide CRT items and services.  There should be multiple DME suppliers providing the same product category in a geographic area. CMS and/or the MAPs should establish metrics to determine when network adequacy has been met for each product category in the DME space. AAHomecare points out that CMS currently has established time and distance requirements for many other provider types (e.g., hospitals, skilled nursing facilities, physicians and home health agencies). AAHomecare offers to work with CMS to develop metrics that ensure access to care.

AAHomecare suggests that CMS ensure there is a clear channel within CMS for DME suppliers to escalate concerns when access issues are identified.

CMS should ensure that MAPs establish and maintain a “same and similar” portal for DME suppliers to verify if a MAP enrollee is eligible for a specific DME items. This is consistent with traditional Medicare practices and will enable suppliers to ensure a beneficiary has not recently received a similar DME item.

AAHomecare points out that its members have grave concerns about certain vertical integration arrangements that are becoming increasingly common in the market. When a payor owns all or an interest in a DME supplier, it creates a conflict of interest. The MAP acquires larger market share and has higher costs. This, in turn, creates access to care issues.

Prior Authorization (“PA”)

In its comments letter, AAHomecare makes the following recommendations:

• MAPs should only have PA requirements for DME items and services when the Medicare FFS program requires PA.
• MAPs should eliminate PA processes for complex rehab technology service repair claims because these PA processes result in unreasonable delays when the consumer has a need to obtain repair services.
• When a MAP utilizes PAs, the MAP should have electronic “real time” processes to ensure timely access.
• CMS should require MAPs to have an electronic “real time” PA system for DME items. The PA system should meet the following criteria:
• PA decisions should be completed and communicated to the DME supplier, the ordering physician, and the beneficiary within 24 hours or sooner.
• A PA request for equipment needed on an emergency basis, as determined by the ordering physician, should be “fast tracked” and decided within two or fewer hours.
• Communication between DME suppliers and MAPs should be electronic from end-to-end, easily accessible by suppliers and free of charge.
• An affirmative PA for a DME item should be conclusive with respect to the medical necessity and payment for that item.
• An affirmative PA for a DME item should be conclusive with respect to the medical necessity for all of the options, supplies, and accessories (submitted at the same time as the underlying item) that will be used with the item.
• An affirmative PA for a DME item should be conclusive with respect to the medical necessity for (i) resupply items (e.g., for any product category that has an ongoing resupply of medical supplies) and (ii) repairs to the item.
• Because a PA is specific to the beneficiary, if the beneficiary moves or changes suppliers, he/she should not need a new PA for the item.
• The PA length should be consistent with the length of need ordered by the physician.

Conclusion
Several years ago, AAHomecare recognized the impact that managed care will have on DME suppliers. And so AAHomecare formed the PRC, headed by Laura Williard and David Chandler. The PRC is comprised of committed stakeholders in the DME industry. The council focuses on identifying and addressing issues arising out of MAPs and MMCPs. The journey will be challenging, but it is a positive sign that CMS is recognizing the problems in the managed care space and is soliciting input on how to resolve the problems.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. 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].