Summary of CMS Proposed Medicare Physician Payment Rule, DME/Oxygen Provisions
THE FOLLOWING RELEASE IS COURTESY OF INVACARE CORP.
The Centers for Medicare and Medicaid Services (CMS) posted on line on June 25, 2010 its calendar year (CY) 2011 Proposed Medicare Physician Payment Rule ("Medicare Program; Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for CY 2011"). This proposed rule contains a number of provisions related to durable medical equipment (DME) and oxygen.Note that this is a proposed rule. Public comments will be due 60 days from publication in the Federal Register (likely this week), and a final rule will be issued in late October/early November, for an effective date of January 1, 2011.
Following are the key areas of interest related to the home medical equipment industry, details follow:
-
Announcement of the 21 additional areas that will be included in Round 2 of the DME bid program;
A proposed national bid program for mail order diabetic supplies;
Possible reconsideration of the special payment rules for oxygen and capped rental items under the bid program;
A proposed appeals process for contractors whose contracts are terminated under the bid program;
A proposal to move up to month 18 the responsibility for oxygen providers to continue furnishing oxygen through month 36 (to address problems of traveling beneficiaries in months 18-36), and;
- Implementation of the elimination of the first month purchase option for standard power wheelchairs, contained in the new health reform law.
Competitive Bid Program Provisions
1. 21 Additional Bid Areas
CMS is proposing the following 21 additional metropolitan areas to be included in Round 2 of the bid program.Round 2 is scheduled to be implemented January 2013 with bidding to being in the Spring of 2011. The initial 70 areas to be included in Round 2 were announced in January 2008.(CMS provided the total population of the proposed additional 21 areas as well.)
MSA Population
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 5,968,252
Washington-Arlington-Alexandria, DC-VA-MD-WV 5,476,241
Boston-Cambridge-Quincy, MA-NH 4,588,680
Phoenix-Mesa-Scottsdale, AZ 4,364,094
Seattle-Tacoma-Bellevue, WA 3,407,848
St. Louis, MO-IL 2,828,990
Baltimore-Towson, MD 2,690,886
Portland-Vancouver-Beaverton, OR-WA 2,241,841
Providence-New Bedford-Fall River, RI-MA 1,600,642
Buffalo-Niagara Falls, NY 1,123,804
Rochester, NY 1,035,566
Tucson, AZ 1,020,200
Honolulu, HI 907,574
Albany-Schenectady-Troy, NY 857,592
Worcester, MA 803,701
Oxnard-Thousand Oaks-Ventura, CA 802,983
Springfield, MA 698,903
Bradenton-Sarasota-Venice, FL 688,126
Poughkeepsie-Newburgh-Middletown, NY 677,094
Stockton, CA 674,860
Boise City-Nampa, ID 606,376
2. Subdivision of Large MSAs
Consistent with CMS' March 17, 2010 announcement at the PAOC (Program Advisory and Oversight Committee) meeting that it would subdivide certain large metropolitan areas in Round 2 into several smaller areas, CMS proposes to subdivide the New York, Chicago and Los Angeles MSAs into smaller bid areas. The New York area is proposed to be divided into five separate bid areas; the Chicago area into four separate bid areas; and the Los Angeles area into two separate bid areas.
3. Proposed National Competitive Bid Program for Mail Order Diabetic Supplies
42 C.F.R § 414.402
CMS is proposing to establish a national mail order competitive bid program that would take place after 2010 to award contracts to suppliers to furnish replacement diabetic testing supplies across the nation. CMS notes that its decision to proceed with a national mail order competition after 2010 does not prevent CMS from phasing in competitions for non-mail order diabetic supplies or from conducting competitions for diabetic supplies in general in the future. CMS states that currently based on claims data from fiscal year 2009 over 62 percent of beneficiaries receive their replacement diabetic testing supplies from mail order suppliers. (None of these proposals would apply to Round 1 of the bid program currently underway.)
CMS is proposing three requirements related to a national mail order bid:
(1) A new definition for what constitutes mail order - which would appear to include anything other than when beneficiary/caregiver picks up at local retail pharmacy. CMS proposes to define that term as a program where contracts are awarded to suppliers for the furnishing of mail order items across the nation. (Beneficiaries would still have choice of obtaining at local retail pharmacies) CMS states: "We are proposing to define "mail order item" ... to mean any item (for example, diabetic testing supplies) shipped or delivered to the beneficiary's home, regardless of the method of delivery. We are also proposing to define "non-mail order item" as any item (for example, diabetic testing supplies) that a beneficiary or caregiver picks up in person at a local pharmacy or supplier storefront. Therefore, the only items excluded from the mail order definition and mail order competition would be those that a beneficiary or caregiver picks up in person at a local pharmacy or other local supplier storefront."
(2) A rule that would require contract suppliers to provide at a minimum 50 percent of all of the different types of diabetic testing products on the market by brand and model name. CMS is implementing this requirement that was in the 2008 MIPPA law. Before 2011, the Office of Inspector General will conduct a study to determine products on market and their relative share; and
(3) A proposed prohibition against influencing and incentivizing beneficiaries to switch their brand of monitor and testing supplies. CMS states: "We are proposing to prohibit suppliers awarded contracts for diabetic testing supplies from influencing or incentivizing the beneficiary in any way to switch the brand of glucose monitor and testing supplies they are currently using." CMS believes this requirement is essential if they are to enforce the "50 percent rule" above.
4. Reconsideration of Payment Rules in Bid Program for Oxygen and Capped Rental Items
Under current CMS competitive bidding rules, contract (winning) suppliers will get a minimum of 10 months of rental payments for oxygen beneficiaries, and a minimum of 13 months of rental for capped rental items. Given the fact that the underlying competitive bid regulation was issued when the law required beneficiaries to retain ownership of the equipment after the 36th month of rental, CMS is reconsidering the minimum 10 months of rental payments for oxygen. CMS is also soliciting public comments on whether or not the current rules should be changed to reduce the number of payments the contract supplier would receive in for capped rental items. CMS also plans to solicit advice from the PAOC on this subject at a future committee meeting.
5. Proposed New Appeals Process for Contracts Terminated under the Competitive Bid Program 42 CFR § 414.423
CMS is proposing to a new administrative appeals process for contracts terminated under the bid program. CMS is proposing to a new appeals process for contracts terminated under the competitive bid program. The proposed rule would establish policies and procedures relating to CMS' determinations of a breach of contract and the appeals process for contract suppliers that are considered to be in breach of contract. CMS is proposing a process for review and reconsideration before the contract is actually terminated. The proposed appeals process would be in addition to, and would not replace, existing CMS regulations regarding other appeals mechanisms.
6. Addition of Off-the-Shelf Orthotics to Bid Program Exemption if Furnished by Physician - 42 CFR § 414.404
Currently, certain items are exempt from the competitive bid program is they are furnished by a physician or other practitioner if they are provided to their own patients as part of their professional service. The current exemption is limited to crutches, canes, walkers, folding manual wheelchairs, blood glucose monitors, and infusion pumps. In this proposal, CMS proposes to expand this exemptions from the competitive bidding program to certain off-the-shelf orthotics when they are provided by physicians or other practitioners (as defined by the Secretary) if furnished to their own patients as part of their professional service.
(The 2008 Medicare Improvements for Patients and Providers Act extended the same exemption to hospitals - therefore, crutches, canes, walkers, folding manual wheelchairs, blood glucose monitors, and infusion pumps, when furnished by hospitals to the hospital's own patients during an admission or on the date of discharge are not be subject to the competitive bid program.)
Proposed Changes to Payment Rules for Oxygen and Oxygen Equipment
42 CFR §414.226
CMS is proposing to revise the payment rules for oxygen and oxygen equipment to address situations where beneficiaries relocate outside the service area of a supplier during the 36-month rental payment cap period for the oxygen equipment. CMS explains that Medicare "beneficiaries are experiencing great difficulties in finding suppliers willing to furnish oxygen equipment in situations where only a few months are left in the 36-month rental payment period at the time they relocate." As a result, CMS is proposing to revise the regulation to require the supplier that furnishes the oxygen equipment and receives payment for month 18 or later to either furnish the equipment for the remainder of the 36-month rental payment period or, in the case where the beneficiary has relocated outside the service area of the supplier, make arrangements for furnishing the oxygen equipment with another supplier for the remainder of the 36-month rental payment period. The supplier that is required to furnish the equipment on the basis of this requirement must also furnish the equipment after the 36-month rental payment period.
CMS further explains that this proposal would allow either a new supplier in the beneficiary's new service area or a supplier in the old service area to receive at least half of the 36 monthly payments allowed for under the current statutory payment rule for oxygen equipment. "We believe this approach would be fair to suppliers in either scenario since the same minimum number of payments applies," states CMS.
According to CMS, only 38 percent of the beneficiaries are still on oxygen by the 18th month, and that "relocation between the 18th to the 36th month is not a common occurrence. Such relocation happens with less than 0.5 percent of the beneficiaries using oxygen equipment. In addition, between the 32nd and 35th month, relocation happens with the beneficiaries in about 0.06 percent of the time on average."
Elimination of First Month Purchase Option for Standard Power Wheelchairs 42 CFR § 414.229
CMS is implementing the provision in the new health care law (Patient Protection and Affordable Care Act, PPACA) that eliminates the first month purchase option for standard (Group 2) power wheelchairs. Payment for these items will be 15% of purchase price in months one through three, and 6% of purchase price in months four through 13. This will apply to Group 2 power wheelchairs furnished on or after January 1, 2011.
