WASHINGTON, DC – The release of the new ESRD and DMEPOS Proposed Rule is significant for several reasons. First off, the proposed rule gives rural suppliers sustainedreimbursement rate relief through 2020. The rule also incorporates competitive bidding program reforms championed by AAHomecare and other HME stakeholders that should lead to better results in the next bidding round.
However, the new regulations fall short for our industry in a few important areas – and while I plan to use the bulk of today’s column to let you know about our plans to address these shortcomings, I want to briefly highlight the positive news first.
A Change in Thinking From CMS
The new rule will put $1.3 billion more into rural providers’ budgets, according to CMS (see page 19 of the full rule for details). After two decades of reductions to the HME benefit (which we’verecounted here), including staggering cuts stemming from MIPPA and the bidding program over the last 10 years, this is a welcome and long-overdue change of course from the Agency.
But perhaps more importantly, CMS is recognizing that the use of median bid pricing threatened the ongoing viability of the bidding program, and that basing payment amounts on the maximum winning bid would enhance the long-term sustainability of the program (see p. 189-191 in the rule).
The ESRD/DMEPOS Rule represents the strongest example of CMS taking into account HME industry concerns about the bidding program and associated reimbursement rates in a major rule that I can recall. It’s clear that the HME community has earned considerable credibility at HHS and CMS and that the leadership at these Agencies realize that providers and the patients we serve are threatened by unsustainable Medicare reimbursement policy.
Moving Forward on Non-Bid Area and Oxygen Relief
The ESRD/DMEPOS Rule fails to provide relief for those non-CBA providers who are not located in rural or non-contiguous (i.e. Alaska & Hawaii) areas, with CMS citing a lack of claims data that would indicate HME patients are having adverse health outcomes in these areas under the lower rates in effect since July 2016 and also taking issue with assertions that travel and delivery costs in non-CBA areas are higher than in CBAs. Surprisingly, they assert the non-rural, non-CBA “travel distances and costs for these areas are lower than the travel distances and costs for CBAs.”
While CMS is not providing relief for this non-bid cohort, they note that they will continue to monitor this area closely and ask for “specific comments on the issue of whether the 50/50 blended rates should apply to these areas as well.” We believe a strong response on this issue from HME stakeholder groups and providers in these non-bid areas in the comment period is especially important.
The rule also proposes changes to address circa-2006 budget neutrality requirements, taking the offset that was once limited to stationary oxygen and applying it across all oxygen equipment classes starting in January 2019. While this would have the effect of providing some relief on stationary oxygen, it merely shifts the effects of this outdated provision elsewhere. In addition, CMS is proposing payment rates for liquid oxygen that don’t come close to covering the high costs of furnishing that equipment.
For the budget neutrality cuts, it is increasingly evident that we’ll have to push to get that addressed on Capitol Hill. We plan to push back on the liquid oxygen changes in our comments and are coordinating with leaders in the respiratory community, including clinician groups, to address this issue.
The Opportunity Ahead
While the relief and bidding reforms in the ESRD/DMEPOS Rule are substantial, I am also excited by what appears to be a new approach to dealing with HME issues from CMS and HHS. I believe this change is taking place on account of both the new leadership at the Agencies as well as the strong and united advocacy efforts from the HME community over the last few years. The work that so many of you have put into educating and engaging Capitol Hill on these issues has had a tremendous impact on the process; I never would have expected as much Congressional outreach to CMS, HHS, and OMB on our issues as we have seen from 2016 forward.
We are in the initial stages of developing our comments on the new rule and will be sharing more detailed recommendations for the rest of the HME sector to use in your comments, which are due by Sept. 10. We’ll also share our plans to help maintain Congressional interest on these issues.
We’ve come a long way to get some significant relief for HME in this new rule – and I look forward to working with you to build on this success for the rest of the year.
See our AAHomecare’s summary on the HME provisions in the ESRD/DMEPOS Proposed Rule, as well as a summary that was prepared by Foley Hoag.
Tom Ryan is president and CEO of the American Association for Homecare.