May 18, 2016

Published by Inside Health Policy

CMS: Lower Pay For DME In Non-Competitively Bid Areas 'More Than Adequate'

By Michelle M. Stein

CMS says monitoring data show the first round of cuts to durable medical equipment suppliers in rural and non-competitively bid areas isn't hurting beneficiaries' access to DME even as suppliers are pushing lawmakers to halt the second round of cuts scheduled to go into effect in July.

The agency was required to adjust fee schedule amounts for non-competitive bid areas by Jan. 1. The agency decided to phase in changes to the DME fee schedule rates during the first half of 2016 so that the fee schedule amounts in all areas would be based on a 50/50 blend of current rates and adjusted rates. CMS says it has been monitoring the DME claims using the same system used in competitive bid areas, though some stakeholders have raised concerns with how CMS has monitored access to DME under that bidding system.

“The monitoring data posted today shows that suppliers in all areas where the adjusted DMEPOS fee schedule rates have been implemented have continued to accept these adjusted rates as payment in full, suggesting that the adjusted fee schedule rates continue to be more than adequate in covering the costs of furnishing the DMEPOS items in all areas,” CMS states in a fact sheet released Tuesday (May 17).

Suppliers in non-competitive bid areas are not required to accept Medicare pay as payment in full, and CMS says this means that if an adjusted fee schedule amount isn't sufficient to cover the costs of providing DME to a beneficiary a supplier can decide to collect extra money from that beneficiary. But the agency says that the rate of suppliers opting to do so hasn't changed since the new payment amounts went into effect.

“Overall, there was no change in the rate of assignment for the first four months in 2016 (99.88 percent) compared to the first four months in 2015 (99.87 percent),” the fact sheet says. But Tom Ryan, president and CEO of the American Association for Homecare, said the effects of the cuts -- and any subsequent changes to suppliers' behavior -- might not yet be showing up in data. AAHomecare had pushed for relief from the January cuts to be included in a 2015 end-of-the-year spending deal, but that policy didn't make it into the package.

The Council for Quality Respiratory Care also says the data don't reflect the full impact of Medicare cuts on DME.

“Four months is not sufficient time to assess the impact of such a substantial cut, let alone enough time to fully evaluate whether the full cuts -- which could be 50 percent or more over last year’s rates -- should be implemented July 1. The CQRC warns that at least 15 months of data is necessary to assess the true impact of the cut,” the council says in a statement. The council also notes that the data don't look at beneficiaries' outcomes or use of more expensive services.

Another round of cuts is expected go into affect July 1, and AAHomecare has been pushing to delay those cuts as well.

Reps. Tom Price (R-GA), Dave Loebsack (D-IA) and Peter Welch (D-VT) recently introduced a bill to delay the cuts in non-bid areas by 15 months, pushing them back from July to October 2017. Sens. John Thune (R-SD) and Heidi Heitkamp (D-ND) introduced a similar bill in the Senate in March. Both bills would also limit future competitive bids to a ceiling of fee schedule rates that were in effect in January 2015, and require CMS to take into account travel costs, volume, clearing price and information on the number of providers serving a bid area as part of rate setting in January 2019 and later years. The bills would further require CMS to monitor and report on access issues and health outcomes for beneficiaries that use DME, and provide monthly updates on the agency's website.

The Senate bill would pay for the delay and other provisions by moving up implementation of a provision to limit federal Medicaid payments for DME to Medicare rates decided by competitive bidding from January 2019, when it is currently set to go into effect, to Oct. 1, 2018. The House bill, however, included a placeholder pay-for to give House and Senate committees an opportunity to consider alternative approaches, according to an AAHomecare summary of the bill.

Dan Stark, chairman of CQRC, says that if the second round of cuts in July is not stopped, beneficiaries may be hurt.

“Given the current blended rate, providers have not asked patients to bear the brunt of the cuts by trying to recoup the full cost of providing services. Instead, we have tried to work with lawmakers to extend the phase-in, stabilize the competitive bidding program, and find ways to reduce the cost of providing services to Medicare beneficiaries,” Stark says. “Put simply, we have tried to protect the beneficiaries as much as possible, but if the full cuts take effect July 1, the vast majority of providers will no longer be able to do so.”

To learn more, visit and follow CQRC on Twitter at @TheCQRC.

Click here to see the original article on the Inside Health Policy website.

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