Medicare Program; Methodology for Adjusting Payment Amounts for Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Using Information From Competitive Bidding Programs, 10754-10760 [2014-04031]
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Federal Register / Vol. 79, No. 38 / Wednesday, February 26, 2014 / Proposed Rules
Today’s proposed rule also includes
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(Violation Categories and Other
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‘‘National Primary Drinking Water
Regulation: Minor Corrections to the
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Gina McCarthy,
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[FR Doc. 2014–04171 Filed 2–25–14; 8:45 am]
BILLING CODE 6560–50–P
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DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Part 414
[CMS–1460–ANPRM]
RIN 0938–AS05
Medicare Program; Methodology for
Adjusting Payment Amounts for
Certain Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies
(DMEPOS) Using Information From
Competitive Bidding Programs
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Advance notice of proposed
rulemaking (ANPRM).
AGENCY:
This advance notice of
proposed rulemaking (ANPRM) solicits
public comments on different
methodologies we may consider using
with regard to applying information
from the durable medical equipment,
prosthetics, orthotics, and supplies
(DMEPOS) competitive bidding
programs to adjust Medicare fee
schedule payment amounts or other
Medicare payment amounts for
DMEPOS items and services furnished
in areas that are not included in these
competitive bidding programs. In
addition, we are also requesting
comments on a different matter
regarding ideas for potentially changing
the payment methodologies used under
the competitive bidding programs for
certain durable medical equipment and
enteral nutrition.
DATES: To be assured consideration,
comments must be received at one of
the addresses provided below, no later
than 5 p.m. on March 28, 2014.
Customer Service Information:
Individuals interested in obtaining
information from the Centers for
Medicare & Medicaid Services
concerning current Medicare payment
policies may call 1–800–MEDICARE
(633–4227) or visit the Centers for
Medicare & Medicaid Web site (https://
www.cms.gov) or (https://
www.medicare.gov).
SUMMARY:
In commenting, please refer
to file code CMS–1460–ANPRM.
Because of staff and resource
limitations, we cannot accept comments
by facsimile (FAX) transmission.
You may submit comments in one of
four ways (please choose only one of the
ways listed):
1. Electronically. You may submit
electronic comments on this regulation
ADDRESSES:
PO 00000
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to https://www.regulations.gov. Follow
the ‘‘Submit a comment’’ instructions.
2. By regular mail. You may mail
written comments to the following
address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–1460–ANPRM, P.O. Box 8010,
Baltimore, MD 21244–8010.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address ONLY: Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, Attention: CMS–1460–
ANPRM, Mail Stop C4–26–05, 7500
Security Boulevard, Baltimore, MD
21244–1850.
4. By hand or courier. Alternatively,
you may deliver (by hand or courier)
your written comments ONLY to the
following addresses prior to the close of
the comment period:
a. For delivery in Washington, DC—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Room 445–G, Hubert
H. Humphrey Building, 200
Independence Avenue SW.,
Washington, DC 20201
(Because access to the interior of the
Hubert H. Humphrey Building is not
readily available to persons without
Federal government identification,
commenters are encouraged to leave
their comments in the CMS drop slots
located in the main lobby of the
building. A stamp-in clock is available
for persons wishing to retain a proof of
filing by stamping in and retaining an
extra copy of the comments being filed.)
b. For delivery in Baltimore, MD—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your
comments to the Baltimore address, call
telephone number (410) 786–9994 in
advance to schedule your arrival with
one of our staff members.
Comments erroneously mailed to the
addresses indicated as appropriate for
hand or courier delivery may be delayed
and received after the comment period.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Anita Greenberg, (410) 786–4601.
Karen Jacobs, (410) 786–2173.
Christopher Molling, (410) 786–6399.
Hafsa Vahora, (410) 786–7899.
SUPPLEMENTARY INFORMATION: Inspection
of Public Comments: All comments
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received before the close of the
comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post all comments
received before the close of the
comment period on the following Web
site as soon as possible after they have
been received: https://
www.regulations.gov. Follow the search
instructions on that Web site to view
public comments.
Comments received timely will also
be available for public inspection as
they are received, generally beginning
approximately 3 weeks after publication
of a document, at the headquarters of
the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday
through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an
appointment to view public comments,
phone 1–800–743–3951.
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I. Background
A. Adjustments to DMEPOS Fee
Schedule Amounts
Medicare pays for most DMEPOS
furnished after January 1, 1989,
pursuant to fee schedule methodologies
set forth in sections 1834 and 1842 of
the Social Security Act (the Act).
Specifically, sections 1834(a)(1)(A) and
(B), and 1834(h)(1)(A) and (B) of the Act
provide that Medicare payment for these
items is equal to 80 percent of the lesser
of the actual charge for the item or the
fee schedule amount for the item. This
payment methodology is set forth at 42
CFR part 414, Subpart D of our
regulations. Section 1834(h)(1)(A) of the
Act governs payment for prosthetic
devices and orthotics and prosthetics,
while sections 1834(a)(2) through (a)(5)
and 1834(a)(7) of the Act set forth
separate payment categories of durable
medical equipment (DME) and describe
how the fee schedule for each of the
following categories is established:
Inexpensive or other routinely
purchased items; Items requiring
frequent and substantial servicing;
Customized items; Oxygen and oxygen
equipment; and Other items of DME.
Section 1842(s) of the Act, and 42 CFR
part 414, Subpart C of the regulations,
govern payment on a fee schedule basis
for parenteral and enteral (PEN)
nutrients, equipment and supplies.
Section 1847 of the Act establishes a
Medicare DMEPOS Competitive Bidding
Program (‘‘Competitive Bidding
Program’’). Under the Competitive
Bidding Program, Medicare sets
payment amounts for selected DMEPOS
items and services furnished to
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beneficiaries in competitive bidding
areas (CBAs) based on bids submitted by
qualified suppliers and accepted by
Medicare. For competitively bid items,
these new payment amounts, referred to
as ‘‘single payment amounts,’’ replace
the fee schedule payment amounts.
Section 1847(b)(5) of the Act provides
that Medicare payment for these
competitively bid items and services is
made on an assignment-related basis
equal to 80 percent of the applicable
single payment amount, less any unmet
Part B deductible. The fee schedule
methodologies continue to set payment
amounts for noncompetitively bid
DMEPOS items and services.
For DME covered items furnished or
after January 1, 2011, sections
1834(a)(1)(F)(ii) and (iii) of the Act
authorizes the Secretary to use (and
beginning January 1, 2016, requires use
of) payment information under the
competitive bidding program to adjust
the fee schedule amounts for covered
items of DME in all non-competitive
bidding areas, and beginning January 1,
2016, continue to make such
adjustments to the fee schedule amounts
as additional covered items are phased
in or information is updated as new
contracts are awarded. Similarly,
section 1834(h)(1)(H)(ii) of the Act
authorizes the Secretary to use payment
information under the competitive
bidding program to adjust the fee
schedule amounts for off-the-shelf
(OTS) orthotics in all non-competitive
bidding areas beginning January 1, 2011.
Finally, section 1842(s)(3)(B) of the Act
provides authority to use payment
information under the competitive
bidding program to adjust payment
amounts otherwise applicable for
enteral nutrients, supplies, and
equipment in areas where competitive
bidding programs are not established for
these items and services.
Section 1834(a)(1)(G) of the Act
requires that the methodology used in
applying sections 1834(a)(1)(F)(ii) and
1834(h)(1)(H)(ii) of the Act be
promulgated through notice and
comment rulemaking. Section
1834(a)(1)(G) of the Act also requires
that we ‘‘consider the costs of items and
services in areas in which such
provisions [sections 1834(a)(1)(F)(ii) and
1834(h)(1)(H)(ii)] would be applied
compared to the payment rates for such
items and services in competitive
acquisition areas.’’
The statute requires that the DMEPOS
fee schedule amounts be based on
average allowed charges from a base
period, increased by annual covered
item update factors set forth in the
statute. The average allowed charges are
average payments made in various areas
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10755
of the country under the previous
reasonable change payment
methodology that based Medicare
payments on supplier charges. The rules
pertaining to the calculation of
reasonable charges are located at 42 CFR
part 405, Subpart E of our regulations.
Under this general methodology, several
factors were taken into consideration in
determining the reasonable charge for
an item. Each supplier’s ‘‘customary
charge’’ for an item, or the 50th
percentile of charges for an item over a
12-month period, was one factor used in
determining the reasonable charge. The
‘‘prevailing charge’’ in a local area or
locality, or the 75th percentile of
suppliers’ customary charges for the
item in the locality, was also used in
determining the reasonable charge. For
parenteral and enteral nutrition (PEN)
items and services only, the ‘‘lowest
charge level’’ (LCL) was also taken into
consideration and was based on the
25th percentile of all charges for an item
in a locality. For the purpose of
calculating the LCL and prevailing
charges, a ‘‘locality’’ is defined at
§ 405.505 and ‘‘may be a State
(including the District of Columbia, a
territory, or a Commonwealth), a
political or economic subdivision of a
State, or a group of States’’. The
regulation at § 405.505 further specifies
that the locality ‘‘should include a cross
section of the population with respect to
economic and other characteristics.’’ In
accordance with regulations at
§ 405.509, effective for items furnished
on or after October 1, 1985, an
additional factor, the ‘‘inflation-indexed
charge’’ or IIC, was added to the factors
taken into consideration in determining
the reasonable charge for an item. The
IIC is equal to the lowest of the
customary or prevailing charge from the
previous year updated by an inflation
adjustment factor was also used in
determining the reasonable charge for
an item. To summarize, the reasonable
charges for each item that were used to
calculate the fee schedule amounts are
equal to the lower of:
• The supplier’s actual charge on the
claim;
• The supplier’s customary charge for
the item;
• The prevailing charge in the locality
for the item;
• The LCL in the locality for the item,
if applicable; or
• The IIC.
Under the reasonable charge payment
methodology, it is understood that
suppliers took all of their costs of
furnishing various DMEPOS items and
services in various localities throughout
the nation into account in setting the
prices they charges for covered items
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Federal Register / Vol. 79, No. 38 / Wednesday, February 26, 2014 / Proposed Rules
and services. Under § 414.104, the fee
schedule amounts for enteral nutrients,
supplies, and equipment are national
fee schedule amounts based on the
lesser of the reasonable charge from
1995 or the reasonable charge that
would have been used in determining
payment for 2002, updated by the
covered item update factors. Under
§ 414.228, the fee schedule amounts for
OTS orthotics are regional fee schedule
amounts based on the weighted average
of the statewide average allowed charges
for items furnished from July 1, 1986
through June 30, 1987, updated by the
covered item update factors. The
regional fee schedule amounts are
limited by a national fee schedule
ceiling and floor. Under § 414.220 and
§ 414.222, the fee schedule amounts for
inexpensive or routinely purchased
DME and DME requiring frequent and
substantial servicing are statewide fee
schedule amounts based on the average
allowed charges for items furnished
from July 1, 1986 through June 30, 1987,
updated by the covered item update
factors, and limited by a national fee
schedule ceiling and floor. Under
§ 414.226, the fee schedule amounts for
oxygen and oxygen equipment are
statewide fee schedule amounts based
on the average allowed charges for items
furnished from January 1, 1986 through
December 31, 1986, updated by the
covered item update factors, and limited
by a national fee schedule ceiling and
floor. Under § 414.229, the fee schedule
amounts for capped rental DME are
statewide fee schedule amounts based
on the average allowed charges for items
furnished from July 1, 1986 through
December 31, 1986, updated by the
covered item update factors, and limited
by a national fee schedule ceiling and
floor.
DMEPOS competitive bidding pricing
information is collected using current
market prices represented by bids
submitted by suppliers for furnishing
items and services in certain
competitive bidding areas (CBAs). In
accordance with section 1847(a)(1)(B)
and (D) of the Act, during Rounds 1 and
2 of the phase in of the competitive
bidding programs, the CBAs have been
either entire Metropolitan Statistical
Areas (MSAs), MSAs excluding areas
with low population density that are not
competitive, or, in the case of New
York, Los Angeles, and Chicago, MSAs
subdivided into two or more CBAs. In
accordance with sections
1834(a)(1)(F)(i), 1834(h)(1)(H)(i), and
1842(s)(3)(A) of the Act, the competitive
bidding prices, then, replace the fee
schedule amounts in those MSAs.
Currently, the program is active in 100
MSAs and 109 CBAs. The 109 CBAs
where competitive bidding has been
phased in include a wide range of
different size urban areas and
surrounding counties. They include one
CBA (Honolulu, HI) that is not within
the contiguous Unites States and CBAs
that range in population size from
approximately 300 thousand to 10
million (see Table 1). There are 7 CBAs
with a population of less than 500,000,
41 CBAs with a population of more than
500,000, but less than 1 million, 27
CBAs with a population of more than 1
million, but less than 2 million, 19
CBAs with a population of 2 to 4
million, and 14 CBAs with a population
of over 4 million.
TABLE 1—CBA POPULATION SIZE
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CBA
Population
Los Angeles County, CA .....................................................................................................................................................................
New York Metro—West Long Island, NY ............................................................................................................................................
Dallas-Fort Worth-Arlington, TX ..........................................................................................................................................................
Chicago Metro—Central, IL .................................................................................................................................................................
Philadelphia-Camden-Wilmington, PA–NJ–DE–MD ............................................................................................................................
Houston-Sugar Land-Baytown, TX ......................................................................................................................................................
Miami-Fort Lauderdale-Pompano Beach, FL ......................................................................................................................................
Washington-Arlington-Alexandria, DC–VA–MD–WV ...........................................................................................................................
Atlanta-Sandy Springs-Marietta, GA ...................................................................................................................................................
Boston-Cambridge-Quincy, MA–NH ....................................................................................................................................................
Detroit-Warren-Livonia, MI ...................................................................................................................................................................
Phoenix-Mesa-Scottsdale, AZ .............................................................................................................................................................
San Francisco-Oakland-Fremont, CA .................................................................................................................................................
Riverside-San Bernardino-Ontario, CA ...............................................................................................................................................
Seattle-Tacoma-Bellevue, WA .............................................................................................................................................................
New York Metro—North New Jersey, NJ ............................................................................................................................................
Minneapolis-St. Paul-Bloomington, MN–WI ........................................................................................................................................
San Diego-Carlsbad-San Marcos, CA .................................................................................................................................................
New York Metro—Bronx, Manhattan, NY ...........................................................................................................................................
Orange County, CA .............................................................................................................................................................................
New York Metro—South New Jersey, NJ ...........................................................................................................................................
St. Louis, MO–IL ..................................................................................................................................................................................
Tampa-St. Petersburg-Clearwater, FL ................................................................................................................................................
Baltimore-Towson, MD ........................................................................................................................................................................
Denver-Aurora, CO ..............................................................................................................................................................................
Pittsburgh, PA ......................................................................................................................................................................................
Portland-Vancouver-Beaverton, OR–WA ............................................................................................................................................
Cincinnati-Middletown, OH–KY–IN ......................................................................................................................................................
Sacramento—Arden-Arcade—Roseville, CA ......................................................................................................................................
Cleveland-Elyria-Mentor, OH ...............................................................................................................................................................
Orlando-Kissimmee, FL .......................................................................................................................................................................
San Antonio, TX ..................................................................................................................................................................................
Kansas City, MO–KS ...........................................................................................................................................................................
Las Vegas-Paradise, NV .....................................................................................................................................................................
San Jose-Sunnyvale-Santa Clara, CA ................................................................................................................................................
Columbus, OH .....................................................................................................................................................................................
Charlotte-Gastonia-Concord, NC–SC ..................................................................................................................................................
Indianapolis-Carmel, IN .......................................................................................................................................................................
Austin-Round Rock, TX .......................................................................................................................................................................
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9,862,049
6,688,637
6,447,615
6,225,192
5,968,252
5,867,489
5,547,051
5,476,241
5,475,213
4,588,680
4,403,437
4,364,094
4,317,853
4,143,113
3,407,848
3,390,339
3,269,814
3,053,793
3,026,698
3,010,759
2,977,504
2,828,990
2,747,272
2,690,886
2,552,195
2,354,957
2,241,841
2,171,896
2,127,355
2,091,286
2,082,421
2,072,128
2,067,585
1,902,834
1,839,700
1,801,848
1,745,524
1,743,658
1,705,075
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10757
TABLE 1—CBA POPULATION SIZE—Continued
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CBA
Population
Virginia Beach-Norfolk-Newport News, VA–NC ..................................................................................................................................
Providence-New Bedford-Fall River, RI–MA .......................................................................................................................................
Nashville-Davidson—Murfreesboro—Franklin, TN ..............................................................................................................................
Milwaukee-Waukesha-West Allis, WI ..................................................................................................................................................
New York Metro—Suffolk County, NY ................................................................................................................................................
Chicago Metro—South, IL ...................................................................................................................................................................
New York Metro—North New York, NY ..............................................................................................................................................
Jacksonville, FL ...................................................................................................................................................................................
Memphis, TN–MS–AR .........................................................................................................................................................................
Louisville/Jefferson County, KY–IN .....................................................................................................................................................
Richmond, VA ......................................................................................................................................................................................
Oklahoma City, OK ..............................................................................................................................................................................
Hartford-West Hartford-East Hartford, CT ...........................................................................................................................................
Chicago Metro—North, IL–WI .............................................................................................................................................................
New Orleans-Metairie-Kenner, LA .......................................................................................................................................................
Birmingham-Hoover, AL ......................................................................................................................................................................
Salt Lake City, UT ...............................................................................................................................................................................
Raleigh-Cary, NC .................................................................................................................................................................................
Buffalo-Niagara Falls, NY ....................................................................................................................................................................
Rochester, NY .....................................................................................................................................................................................
Tucson, AZ ..........................................................................................................................................................................................
Tulsa, OK .............................................................................................................................................................................................
Fresno, CA ...........................................................................................................................................................................................
Honolulu, HI .........................................................................................................................................................................................
Bridgeport-Stamford-Norwalk, CT .......................................................................................................................................................
Albuquerque, NM .................................................................................................................................................................................
Albany-Schenectady-Troy, NY ............................................................................................................................................................
Omaha-Council Bluffs, NE–IA .............................................................................................................................................................
New Haven-Milford, CT .......................................................................................................................................................................
Dayton, OH ..........................................................................................................................................................................................
Allentown-Bethlehem-Easton, PA–NJ .................................................................................................................................................
Bakersfield, CA ....................................................................................................................................................................................
Worcester, MA .....................................................................................................................................................................................
Oxnard-Thousand Oaks-Ventura, CA .................................................................................................................................................
Baton Rouge, LA .................................................................................................................................................................................
Grand Rapids-Wyoming, MI ................................................................................................................................................................
El Paso, TX ..........................................................................................................................................................................................
Columbia, SC .......................................................................................................................................................................................
McAllen-Edinburg-Mission, TX ............................................................................................................................................................
Greensboro-High Point, NC .................................................................................................................................................................
Chicago Metro—Indiana, IN ................................................................................................................................................................
Akron, OH ............................................................................................................................................................................................
Knoxville, TN ........................................................................................................................................................................................
Springfield, MA ....................................................................................................................................................................................
Bradenton-Sarasota-Venice, FL ..........................................................................................................................................................
Little Rock-North Little Rock-Conway, AR ..........................................................................................................................................
Poughkeepsie-Newburgh-Middletown, NY ..........................................................................................................................................
Stockton, CA ........................................................................................................................................................................................
Toledo, OH ..........................................................................................................................................................................................
Charleston-North Charleston-Summerville, SC ...................................................................................................................................
Syracuse, NY .......................................................................................................................................................................................
Greenville-Mauldin-Easley, SC ............................................................................................................................................................
Colorado Springs, CO .........................................................................................................................................................................
Wichita, KS ..........................................................................................................................................................................................
Boise City-Nampa, ID ..........................................................................................................................................................................
Cape Coral-Fort Myers, FL ..................................................................................................................................................................
Lakeland-Winter Haven, FL .................................................................................................................................................................
Youngstown-Warren-Boardman, OH–PA ............................................................................................................................................
Scranton—Wilkes-Barre, PA ...............................................................................................................................................................
Jackson, MS ........................................................................................................................................................................................
Augusta-Richmond County, GA–SC ...................................................................................................................................................
Palm Bay-Melbourne-Titusville, FL ......................................................................................................................................................
Chattanooga, TN–GA ..........................................................................................................................................................................
Deltona-Daytona Beach-Ormond Beach, FL .......................................................................................................................................
Visalia-Porterville, CA ..........................................................................................................................................................................
Flint, MI ................................................................................................................................................................................................
Asheville, NC .......................................................................................................................................................................................
Beaumont-Port Arthur, TX ...................................................................................................................................................................
Ocala, FL .............................................................................................................................................................................................
Huntington-Ashland, WV–KY–OH .......................................................................................................................................................
Source: U.S. Census Bureau, Population Division, 2009 Population Estimates.
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1,674,498
1,600,642
1,582,264
1,559,667
1,512,224
1,446,415
1,351,732
1,328,144
1,304,926
1,258,577
1,238,187
1,227,278
1,195,998
1,195,559
1,189,981
1,131,070
1,130,293
1,125,827
1,123,804
1,035,566
1,020,200
929,015
915,267
907,574
901,208
857,903
857,592
849,517
848,006
835,063
816,012
807,407
803,701
802,983
786,947
778,009
751,296
744,730
741,152
714,765
702,458
699,935
699,247
698,903
688,126
685,488
677,094
674,860
672,220
659,191
646,084
639,617
626,227
612,683
606,376
586,908
583,403
562,963
549,454
540,866
539,154
536,357
524,303
495,890
429,668
424,043
412,672
378,477
328,547
285,624
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Under section 1847(a)(1)(D)(iii) of the
Act, competitions occurring before 2015
for items and services other than
national mail order for diabetic
supplies, may not include rural areas or
MSAs with a population of less than
250,000. Therefore, at this time, we do
not have competitive bidding pricing
information from rural areas or smaller
MSAs. As required by section
1834(a)(1)(G) of the Act, we must
specify by regulation the methodology
to be used for adjusting fee schedule
amounts using competitive bidding
information.
B. Changes to the Payment
Methodologies and Rules for Durable
Medical Equipment and Enteral
Nutrition Furnished Under Competitive
Bidding Programs
Section 1847 of the Act provides CMS
with flexibility and discretion with
regard to the payment rules for items
furnished under competitive bidding
programs. We are considering proposing
new payment rules for DME and enteral
nutrients, supplies, and equipment
furnished under competitive bidding
programs and request public comments
on the issue before we decide whether
to conduct notice and comment
rulemaking. We believe that bundling
payment for all items and services
associated with furnishing enteral
nutrition or DME into one monthly
payment based on supplier bids for
furnishing all items needed for a month
would greatly simplify the program,
improve beneficiary access to quality
items and services, and contribute to
greater savings associated with
implementation of the DMEPOS
competitive bidding program.
The current Medicare payment rules
and payment classes for DME mandated
by section 1834(a) of the Act were
implemented in 1989, and, depending
on the item or payment class the item
falls under, generally allow payment on
a lump sum purchase basis, a capped
rental basis, or a continuous monthly
rental basis where the monthly
payments are not capped and continue
for as long as medical necessity and Part
B coverage continues. The continuous
monthly rental payment amounts
include payment for all necessary
maintenance and servicing of the
equipment and replacement of all
essential accessories, whereas payment
on a purchase or capped rental basis
results in the need to process and pay
separately for numerous items that are
not DME but are related to furnishing
DME, such as repair of equipment or
replacement of supplies and accessories
used with patient-owned equipment. In
the case of enteral nutrition, there are
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separate billing codes for categories of
nutrients, three different daily supply
allowances, feeding tubes, and enteral
nutrition infusion pumps and IV poles.
The current payment rules that apply
to fee schedule DMEPOS items and
competitive bid items were developed
in the 1980s to reduce expenditures and
prevent prolonged rental payments for
certain DME and enteral infusion
pumps. However, now that Medicare
allowed amounts can be established
under the competitive bidding program
based on supplier bids to account for
the average costs of furnishing all
covered items and services, we believe
it may be appropriate to modify the
Medicare payment structure for certain
DME and enteral nutrition under the
competitive bidding program by
requesting a single bid for furnishing all
related items and services needed on a
monthly basis (that is, rented
equipment, replacement of supplies and
accessories, repair or rented equipment,
etc.). Bids from suppliers could then be
used to establish a monthly payment for
the equipment and all related items and
services. We believe that capping rentals
and paying for purchase of equipment
may no longer be necessary to achieve
savings for these items and services.
Suppliers could bid and be awarded
contracts for meeting all of the
beneficiary’s needs for each month of
service, including rental and servicing
of necessary equipment as well as the
ongoing replacement of supplies and
accessories used in conjunction with the
equipment and any repairs needed for
the equipment. Such an approach could
reduce excessive payments for
furnishing necessary accessories and
items, provided the continuous monthly
rental payment amounts were
reasonable for all the monthly items and
services that would be furnished. In
submitting bids under the competitive
bidding programs, suppliers would take
a number of things into account to
develop bids for these monthly items
and services, such as the costs of all
items and services needed by the
beneficiary during each rental month,
the typical duration of need by
Medicare beneficiaries for the rented
items, and the money the supplier saves
by replacing inventory less frequently if
the title to the equipment remains with
the supplier and is not transferred to the
beneficiary after the capped rental
period. We believe these changes could
have a number of positive effects on
suppliers. The suppliers would no
longer have to worry about counting
rental months to determine when they
might be losing title to certain items in
their inventory. These changes could
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also benefit patients who would no
longer have to arrange for repair of
patient-owned equipment or worry
about servicing patient-owned
equipment for which a manufacturer no
longer makes replacement parts
available. We believe that suppliers
would have an incentive to furnish
more durable and dependable
equipment to reduce the number of
service calls they make. If a beneficiary
owns equipment that needs to be
serviced, they are responsible for
locating a supplier and making
arrangements for the servicing, and the
beneficiary incurs a separate charge for
the service. By contrast, if a beneficiary
is renting equipment, and the rented
equipment needs to be serviced, the
beneficiary would simply call the
supplier of the rented equipment and
the supplier would be responsible for
servicing the equipment at no additional
charge. From a program standpoint, the
payment rules for capped rental items
are complicated and onerous to
administer. The program must keep
track of separate payment, coverage,
medical necessity, and other rules for
hundreds of related codes for
replacement supplies and accessories
used with the base equipment as well as
labor and parts associated with
repairing patient-owned equipment. In
addition, claims processing systems
must count rental months and
contractors must identify when
legitimate breaks in continuous use
occur and can result in the start of new
capped rental periods. This leads to
costly and complicated claims
processing systems and edits for
processing millions of claims for these
items and services.
The current payment rules that allow
separate payment for supplies and
accessories used with DME in addition
to the payment for the DME itself also
significantly complicate the competitive
bidding process as special
grandfathering payment rules must be
implemented, item weights and
composite bids must be developed,
hundreds or thousands of bid amounts
must be entered, and, in turn, thousands
of bids and bid amounts must be
evaluated and screened and single
payment amounts established. In the
case of beneficiary-owned wheelchairs,
the rules regarding when one of the
hundreds of accessories or component
must be furnished by a contract supplier
or non-contract supplier based on
whether the base wheelchair is
competitively bid or whether the service
constitutes a repair of the base
wheelchair are extremely complicated.
A simple, straightforward payment
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system could significantly reduce
billing and payment errors.
Under competitive bidding programs
established in accordance with section
1847(a) of the Act, we believe CMS has
discretion to implement different
payment rules for the items and services
subject to competitive bidding,
including certain DME and enteral
nutrition. Suppliers compete for
contracts based on bids representing
their costs for furnishing the DME item
or enteral nutrition. Regardless of
whether suppliers compete based on
submitting one bid for furnishing, for
example, continuous positive airway
pressure (CPAP) devices and all related
supplies, accessories, and services
needed for one month versus separate,
piecemeal bids for the various
individual items, contracts are offered to
the suppliers that meet all program
requirements and offer the best value in
terms of bids submitted. In addition,
contract suppliers are responsible for
furnishing what the beneficiary needs
and this does not change based on how
the items are billed and paid for under
Medicare. The supplier costs generally
do not change based on the method of
payment used. Therefore, competitive
bidding provides a means to simplify
and streamline complicated payment
rules, resulting in a more efficient
program.
By simplifying the payment rules for
certain DME and enteral nutrition under
the Competitive Bidding Program, the
process of competitive bidding could be
greatly simplified. For example,
suppliers could submit one bid that
reflects the costs of furnishing the DME
and supplies, accessories, and
maintenance and servicing costs
associated with furnishing the DME.
Under competitive bidding, bid limits
for the DME could be developed based
on average monthly expenditures per
beneficiary in an area for the bundle of
items and services related to furnishing
the DME (for example, CPAP device
rental, masks, tubing, humidifier,
maintenance and servicing). Similarly,
bid limits for enteral nutrition could be
developed based on average monthly
expenditures per beneficiary in an area
for the bundle of items and services
related to furnishing enteral nutrition
(nutrients, supplies, rental of infusion
pumps and IV poles, and maintenance
and servicing of equipment). These are
some possibilities we are exploring with
regard to modifications that could be
made to current payment rules and
methodologies under the CBP in future
rulemaking. Whether we would proceed
with proposing this would depend on
several factors, including issues such as
administrative burden and feasibility, as
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well as other potential issues raised in
the public comments we receive.
II. Questions for Generating Public
Comments
A. Methodology for Adjusting Medicare
Payment Amounts for DMEPOS Items
and Services Based on Information
From Competitive Bidding Programs
We are aware that there continues to
be a range of aspects to consider in the
development of the methodology used
to adjust fee schedule amounts for
DMEPOS using information from the
competitive bidding programs. Again,
we are required by section 1834(a)(1)(G)
of the Act, to specify by regulation the
methodology to be used for adjusting fee
schedule amounts using competitive
bidding information. However, prior to
proposing the methodology, we are
soliciting public comments on a variety
of topics for CMS to consider. We are
interested in receiving comments on
several aspects that we would consider
in developing a methodology to adjust
DMEPOS fee schedule amounts or other
payment amounts in non-competitive
areas based on DMEPOS competitive
bidding payment information. We are
soliciting comments on the following
list of questions to assist us in
developing potential proposals
regarding the methodology for adjusting
Medicare payment amounts for
DMEPOS items and services based on
information from competitive bidding
programs.
• Do the costs of furnishing various
DMEPOS items and services vary based
on the geographic area in which they are
furnished? If so, how should the bidding
information obtained from programs
established in different regions of the
nation be grouped together for the
purpose of adjusting current Medicare
payment amounts? Should bidding
information from programs established
in certain regions of the country be used
to adjust the payment amounts that
currently apply to those regions? Are
there certain areas of the country that
have unique costs and how should those
costs be considered? Is there valid and
reliable information that can be used to
measure the relative costs of furnishing
items and services in these unique
areas?
• Do the costs of furnishing various
DMEPOS items and services vary based
on the size of the market served in terms
of population and/or distance covered
or other logistical or demographic
reasons? Section 1847(a)(1)(D)(iii) of the
Act prohibits establishing competitive
bidding programs in MSAs with a
population of less than 250,000 or in
areas outside MSAs prior to 2015. Given
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10759
the mandate to use information on the
payment determined under competitive
bidding programs to adjust payment
amounts in areas that are not
competitive bidding areas by no later
than January 1, 2016, what alternative
information, if any, should we rely on
to determine the relative costs of
furnishing items and services in these
areas compared to areas where
competitive bidding programs have
already been implemented?
• How should any future adjustments
or payment methodology treat payment
amounts for items that have not been
included in all competitive bidding
programs (for example, items such as
transcutaneous electrical nerve
stimulation (TENS) devices that have
only been phased into the nine Round
1 areas thus far)?
• Should competitive bidding
programs be established in all areas of
the country for a few high volume items
in order to gather information regarding
the costs of furnishing DMEPOS items,
in general, in different areas of the
country (for example, rural areas as well
as urban areas)?
• For payment adjustments or
competitive bidding programs in rural
areas, what factors should be used in
determining a competitive service area
in terms of Medicare revenue available
and logistical costs of serving the area?
Are there ways to determine which rural
counties should be served by which
suppliers?
• What additional factors should be
considered and why?
B. Changes to the Payment
Methodologies and Rules for Durable
Medical Equipment and Enteral
Nutrition Furnished Under Competitive
Bidding Programs
We are requesting comments on
testing or phasing in bundled payments
under competitive bidding programs
whereby suppliers would submit one
bundled bid for the delivery of all
enteral nutrients, supplies, and
equipment needed for one month by a
beneficiary as well as one bundled bid
for furnishing certain DME, including
all related supplies, accessories, and
services on a monthly basis. Under such
an approach, monthly rental payments
for DME or enteral nutrition equipment
would no longer reach a cap, while
separate payment for supplies,
accessories, enteral nutrients, or
maintenance and servicing would no
longer be made. Suppliers would retain
title to all equipment regardless of
length of need and beneficiaries would
be able to switch from supplier to
supplier on a monthly basis. The
monthly payments for DME and enteral
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nutrition would continue for as long as
medical necessity and Part B coverage
continues and the bid limits would be
based on the average monthly costs per
beneficiary for the bundle of items and
services. We are soliciting comments on
the following list of questions regarding
proposals we may make to change the
payment rules and other rules for DME
and enteral nutrition under the
DMEPOS competitive bidding program.
• Are lump sum purchases and
capped rental payment rules for DME
and enteral nutrition equipment that
were implemented to prevent prolonged
rental payments still needed now that
monthly payment amounts can be
established under competitive bidding
programs for furnishing everything the
beneficiary needs each month related to
the covered DME item or enteral
nutrition?
• Are there reasons why beneficiaries
need to own expensive DME or enteral
nutrition equipment rather than use
such equipment as needed on a
continuous monthly basis?
• Would there be any negative
impacts associated with continuous
bundled monthly payments for enteral
nutrients, supplies, and equipment or
for certain DME? If so, please explain.
• Certain DME items such as speech
generating devices and specialized
wheelchairs may be adjusted or
personalized to address individual
patient needs. Would payment on a
bundled, continuous rental basis
adversely impact access to these items
and services? If so, please provide a
detailed explanation regarding how this
method of payment would create a
negative impact on access to these items
and services or other items and services
currently subject to competitive
bidding.
• If payment on a capped rental, rentto-own basis or lump sum purchase
basis is maintained for certain items
under the competitive bidding program,
should a requirement be added to the
regulations specifying that the supplier
that transfers title to the equipment to
the beneficiary is responsible for all
maintenance and servicing of the
beneficiary-owned equipment for the
remainder of the equipment’s
reasonable useful lifetime with no
additional payment for these services?
The cost of such a mandatory supplier
warranty would be factored into the
bids submitted by the suppliers and the
payment amounts established based on
the bids for the items. If such a
requirement was established, should the
term maintenance and servicing be
defined to include all necessary
maintenance, servicing and repairs that
are currently paid for separately under
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the Medicare program in addition to any
additional adjustments or
personalization of the equipment that
may be needed once title transfers to the
patient? We believe these requirements
may be necessary to safeguard the
beneficiary and access to necessary
services related to beneficiary-owned
DME.
• Would payment on a bundled,
continuous rental basis for certain items
adversely impact the beneficiary’s
ability to direct their own care, follow
a plan of care outlined by a physician,
nurse practitioner or other medical
provider (for example, occupational,
physical or speech therapist), or provide
for appropriate care transitions? If so,
please explain.
• What are the advantages or
disadvantages for beneficiaries and
suppliers of bundled bidding and
payments for enteral nutrients, supplies,
and equipment or DME?
• Should competitive bidding
programs utilizing bundled payments be
established throughout the entire United
States so that all beneficiaries are
included under programs where
suppliers have an obligation to furnish
covered items and all related items and
services?
• Is a continuous bundled monthly
payment used by commercial payers or
State Medicaid programs for enteral
nutrients, supplies, and DME and do
these approaches inform this potential
new payment arrangement for Medicare.
Dated: January 31, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare &
Medicaid Services.
Approved: February 4, 2014.
Kathleen Sebelius,
Secretary, Department of Health and Human
Services.
[FR Doc. 2014–04031 Filed 2–24–14; 4:15 pm]
BILLING CODE 4120–01–P
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DEPARTMENT OF HOMELAND
SECURITY
6 CFR Chapter I
8 CFR Chapter I
19 CFR Chapter I
33 CFR Chapter I
44 CFR Chapter I
46 CFR Chapters I and III
49 CFR Chapter XII
[Docket No. DHS–2014–0006]
Retrospective Review of Existing
Regulations; Request for Public Input
AGENCY:
Office of the General Counsel,
DHS.
Notice and request for
comments.
ACTION:
The Department of Homeland
Security (Department or DHS) is seeking
comments from the public on specific
existing significant DHS rules that the
Department should consider as
candidates for modification,
streamlining, expansion, or repeal.
These efforts will help DHS ensure that
its regulations contain necessary,
properly tailored, and up-to-date
requirements that effectively achieve
regulatory objectives without imposing
unwarranted costs.
DHS is seeking this input pursuant to
the process identified in DHS’s Final
Plan for the Retrospective Review of
Existing Regulations. According to the
Final Plan, DHS will initiate its
retrospective review process, on a threeyear cycle, by seeking input from the
public. The most helpful input will
identify specific regulations and include
actionable data supporting the
nomination of specific regulations for
retrospective review.
DATES: Written comments are requested
on or before March 28, 2014. Late-filed
comments will be considered to the
extent practicable.
ADDRESSES: You may submit comments,
identified by docket number DHS–
2014–0006, through the
Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
FOR FURTHER INFORMATION CONTACT:
Charlotte Skey, Senior Regulatory
Economist, Office of the General
Counsel, U.S. Department of Homeland
Security. Email: Regulatory.Review@
dhs.gov.
SUMMARY:
SUPPLEMENTARY INFORMATION:
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]]>Agencies
[Federal Register Volume 79, Number 38 (Wednesday, February 26, 2014)]
[Proposed Rules]
[Pages 10754-10760]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-04031]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 414
[CMS-1460-ANPRM]
RIN 0938-AS05
Medicare Program; Methodology for Adjusting Payment Amounts for
Certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Using Information From Competitive Bidding Programs
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Advance notice of proposed rulemaking (ANPRM).
-----------------------------------------------------------------------
SUMMARY: This advance notice of proposed rulemaking (ANPRM) solicits
public comments on different methodologies we may consider using with
regard to applying information from the durable medical equipment,
prosthetics, orthotics, and supplies (DMEPOS) competitive bidding
programs to adjust Medicare fee schedule payment amounts or other
Medicare payment amounts for DMEPOS items and services furnished in
areas that are not included in these competitive bidding programs. In
addition, we are also requesting comments on a different matter
regarding ideas for potentially changing the payment methodologies used
under the competitive bidding programs for certain durable medical
equipment and enteral nutrition.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on March 28, 2014.
Customer Service Information: Individuals interested in obtaining
information from the Centers for Medicare & Medicaid Services
concerning current Medicare payment policies may call 1-800-MEDICARE
(633-4227) or visit the Centers for Medicare & Medicaid Web site
(https://www.cms.gov) or (https://www.medicare.gov).
ADDRESSES: In commenting, please refer to file code CMS-1460-ANPRM.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to https://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1460-ANPRM, P.O. Box 8010,
Baltimore, MD 21244-8010.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1460-ANPRM,
Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments ONLY to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC-- Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD-- Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Anita Greenberg, (410) 786-4601.
Karen Jacobs, (410) 786-2173.
Christopher Molling, (410) 786-6399.
Hafsa Vahora, (410) 786-7899.
SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
[[Page 10755]]
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following Web site as soon as possible after they have been
received: https://www.regulations.gov. Follow the search instructions on
that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Background
A. Adjustments to DMEPOS Fee Schedule Amounts
Medicare pays for most DMEPOS furnished after January 1, 1989,
pursuant to fee schedule methodologies set forth in sections 1834 and
1842 of the Social Security Act (the Act). Specifically, sections
1834(a)(1)(A) and (B), and 1834(h)(1)(A) and (B) of the Act provide
that Medicare payment for these items is equal to 80 percent of the
lesser of the actual charge for the item or the fee schedule amount for
the item. This payment methodology is set forth at 42 CFR part 414,
Subpart D of our regulations. Section 1834(h)(1)(A) of the Act governs
payment for prosthetic devices and orthotics and prosthetics, while
sections 1834(a)(2) through (a)(5) and 1834(a)(7) of the Act set forth
separate payment categories of durable medical equipment (DME) and
describe how the fee schedule for each of the following categories is
established: Inexpensive or other routinely purchased items; Items
requiring frequent and substantial servicing; Customized items; Oxygen
and oxygen equipment; and Other items of DME. Section 1842(s) of the
Act, and 42 CFR part 414, Subpart C of the regulations, govern payment
on a fee schedule basis for parenteral and enteral (PEN) nutrients,
equipment and supplies.
Section 1847 of the Act establishes a Medicare DMEPOS Competitive
Bidding Program (``Competitive Bidding Program''). Under the
Competitive Bidding Program, Medicare sets payment amounts for selected
DMEPOS items and services furnished to beneficiaries in competitive
bidding areas (CBAs) based on bids submitted by qualified suppliers and
accepted by Medicare. For competitively bid items, these new payment
amounts, referred to as ``single payment amounts,'' replace the fee
schedule payment amounts. Section 1847(b)(5) of the Act provides that
Medicare payment for these competitively bid items and services is made
on an assignment-related basis equal to 80 percent of the applicable
single payment amount, less any unmet Part B deductible. The fee
schedule methodologies continue to set payment amounts for
noncompetitively bid DMEPOS items and services.
For DME covered items furnished or after January 1, 2011, sections
1834(a)(1)(F)(ii) and (iii) of the Act authorizes the Secretary to use
(and beginning January 1, 2016, requires use of) payment information
under the competitive bidding program to adjust the fee schedule
amounts for covered items of DME in all non-competitive bidding areas,
and beginning January 1, 2016, continue to make such adjustments to the
fee schedule amounts as additional covered items are phased in or
information is updated as new contracts are awarded. Similarly, section
1834(h)(1)(H)(ii) of the Act authorizes the Secretary to use payment
information under the competitive bidding program to adjust the fee
schedule amounts for off-the-shelf (OTS) orthotics in all non-
competitive bidding areas beginning January 1, 2011. Finally, section
1842(s)(3)(B) of the Act provides authority to use payment information
under the competitive bidding program to adjust payment amounts
otherwise applicable for enteral nutrients, supplies, and equipment in
areas where competitive bidding programs are not established for these
items and services.
Section 1834(a)(1)(G) of the Act requires that the methodology used
in applying sections 1834(a)(1)(F)(ii) and 1834(h)(1)(H)(ii) of the Act
be promulgated through notice and comment rulemaking. Section
1834(a)(1)(G) of the Act also requires that we ``consider the costs of
items and services in areas in which such provisions [sections
1834(a)(1)(F)(ii) and 1834(h)(1)(H)(ii)] would be applied compared to
the payment rates for such items and services in competitive
acquisition areas.''
The statute requires that the DMEPOS fee schedule amounts be based
on average allowed charges from a base period, increased by annual
covered item update factors set forth in the statute. The average
allowed charges are average payments made in various areas of the
country under the previous reasonable change payment methodology that
based Medicare payments on supplier charges. The rules pertaining to
the calculation of reasonable charges are located at 42 CFR part 405,
Subpart E of our regulations. Under this general methodology, several
factors were taken into consideration in determining the reasonable
charge for an item. Each supplier's ``customary charge'' for an item,
or the 50th percentile of charges for an item over a 12-month period,
was one factor used in determining the reasonable charge. The
``prevailing charge'' in a local area or locality, or the 75th
percentile of suppliers' customary charges for the item in the
locality, was also used in determining the reasonable charge. For
parenteral and enteral nutrition (PEN) items and services only, the
``lowest charge level'' (LCL) was also taken into consideration and was
based on the 25th percentile of all charges for an item in a locality.
For the purpose of calculating the LCL and prevailing charges, a
``locality'' is defined at Sec. 405.505 and ``may be a State
(including the District of Columbia, a territory, or a Commonwealth), a
political or economic subdivision of a State, or a group of States''.
The regulation at Sec. 405.505 further specifies that the locality
``should include a cross section of the population with respect to
economic and other characteristics.'' In accordance with regulations at
Sec. 405.509, effective for items furnished on or after October 1,
1985, an additional factor, the ``inflation-indexed charge'' or IIC,
was added to the factors taken into consideration in determining the
reasonable charge for an item. The IIC is equal to the lowest of the
customary or prevailing charge from the previous year updated by an
inflation adjustment factor was also used in determining the reasonable
charge for an item. To summarize, the reasonable charges for each item
that were used to calculate the fee schedule amounts are equal to the
lower of:
The supplier's actual charge on the claim;
The supplier's customary charge for the item;
The prevailing charge in the locality for the item;
The LCL in the locality for the item, if applicable; or
The IIC.
Under the reasonable charge payment methodology, it is understood
that suppliers took all of their costs of furnishing various DMEPOS
items and services in various localities throughout the nation into
account in setting the prices they charges for covered items
[[Page 10756]]
and services. Under Sec. 414.104, the fee schedule amounts for enteral
nutrients, supplies, and equipment are national fee schedule amounts
based on the lesser of the reasonable charge from 1995 or the
reasonable charge that would have been used in determining payment for
2002, updated by the covered item update factors. Under Sec. 414.228,
the fee schedule amounts for OTS orthotics are regional fee schedule
amounts based on the weighted average of the statewide average allowed
charges for items furnished from July 1, 1986 through June 30, 1987,
updated by the covered item update factors. The regional fee schedule
amounts are limited by a national fee schedule ceiling and floor. Under
Sec. 414.220 and Sec. 414.222, the fee schedule amounts for
inexpensive or routinely purchased DME and DME requiring frequent and
substantial servicing are statewide fee schedule amounts based on the
average allowed charges for items furnished from July 1, 1986 through
June 30, 1987, updated by the covered item update factors, and limited
by a national fee schedule ceiling and floor. Under Sec. 414.226, the
fee schedule amounts for oxygen and oxygen equipment are statewide fee
schedule amounts based on the average allowed charges for items
furnished from January 1, 1986 through December 31, 1986, updated by
the covered item update factors, and limited by a national fee schedule
ceiling and floor. Under Sec. 414.229, the fee schedule amounts for
capped rental DME are statewide fee schedule amounts based on the
average allowed charges for items furnished from July 1, 1986 through
December 31, 1986, updated by the covered item update factors, and
limited by a national fee schedule ceiling and floor.
DMEPOS competitive bidding pricing information is collected using
current market prices represented by bids submitted by suppliers for
furnishing items and services in certain competitive bidding areas
(CBAs). In accordance with section 1847(a)(1)(B) and (D) of the Act,
during Rounds 1 and 2 of the phase in of the competitive bidding
programs, the CBAs have been either entire Metropolitan Statistical
Areas (MSAs), MSAs excluding areas with low population density that are
not competitive, or, in the case of New York, Los Angeles, and Chicago,
MSAs subdivided into two or more CBAs. In accordance with sections
1834(a)(1)(F)(i), 1834(h)(1)(H)(i), and 1842(s)(3)(A) of the Act, the
competitive bidding prices, then, replace the fee schedule amounts in
those MSAs. Currently, the program is active in 100 MSAs and 109 CBAs.
The 109 CBAs where competitive bidding has been phased in include a
wide range of different size urban areas and surrounding counties. They
include one CBA (Honolulu, HI) that is not within the contiguous Unites
States and CBAs that range in population size from approximately 300
thousand to 10 million (see Table 1). There are 7 CBAs with a
population of less than 500,000, 41 CBAs with a population of more than
500,000, but less than 1 million, 27 CBAs with a population of more
than 1 million, but less than 2 million, 19 CBAs with a population of 2
to 4 million, and 14 CBAs with a population of over 4 million.
Table 1--CBA Population Size
------------------------------------------------------------------------
CBA Population
------------------------------------------------------------------------
Los Angeles County, CA.................................. 9,862,049
New York Metro--West Long Island, NY.................... 6,688,637
Dallas-Fort Worth-Arlington, TX......................... 6,447,615
Chicago Metro--Central, IL.............................. 6,225,192
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD............. 5,968,252
Houston-Sugar Land-Baytown, TX.......................... 5,867,489
Miami-Fort Lauderdale-Pompano Beach, FL................. 5,547,051
Washington-Arlington-Alexandria, DC-VA-MD-WV............ 5,476,241
Atlanta-Sandy Springs-Marietta, GA...................... 5,475,213
Boston-Cambridge-Quincy, MA-NH.......................... 4,588,680
Detroit-Warren-Livonia, MI.............................. 4,403,437
Phoenix-Mesa-Scottsdale, AZ............................. 4,364,094
San Francisco-Oakland-Fremont, CA....................... 4,317,853
Riverside-San Bernardino-Ontario, CA.................... 4,143,113
Seattle-Tacoma-Bellevue, WA............................. 3,407,848
New York Metro--North New Jersey, NJ.................... 3,390,339
Minneapolis-St. Paul-Bloomington, MN-WI................. 3,269,814
San Diego-Carlsbad-San Marcos, CA....................... 3,053,793
New York Metro--Bronx, Manhattan, NY.................... 3,026,698
Orange County, CA....................................... 3,010,759
New York Metro--South New Jersey, NJ.................... 2,977,504
St. Louis, MO-IL........................................ 2,828,990
Tampa-St. Petersburg-Clearwater, FL..................... 2,747,272
Baltimore-Towson, MD.................................... 2,690,886
Denver-Aurora, CO....................................... 2,552,195
Pittsburgh, PA.......................................... 2,354,957
Portland-Vancouver-Beaverton, OR-WA..................... 2,241,841
Cincinnati-Middletown, OH-KY-IN......................... 2,171,896
Sacramento--Arden-Arcade--Roseville, CA................. 2,127,355
Cleveland-Elyria-Mentor, OH............................. 2,091,286
Orlando-Kissimmee, FL................................... 2,082,421
San Antonio, TX......................................... 2,072,128
Kansas City, MO-KS...................................... 2,067,585
Las Vegas-Paradise, NV.................................. 1,902,834
San Jose-Sunnyvale-Santa Clara, CA...................... 1,839,700
Columbus, OH............................................ 1,801,848
Charlotte-Gastonia-Concord, NC-SC....................... 1,745,524
Indianapolis-Carmel, IN................................. 1,743,658
Austin-Round Rock, TX................................... 1,705,075
[[Page 10757]]
Virginia Beach-Norfolk-Newport News, VA-NC.............. 1,674,498
Providence-New Bedford-Fall River, RI-MA................ 1,600,642
Nashville-Davidson--Murfreesboro--Franklin, TN.......... 1,582,264
Milwaukee-Waukesha-West Allis, WI....................... 1,559,667
New York Metro--Suffolk County, NY...................... 1,512,224
Chicago Metro--South, IL................................ 1,446,415
New York Metro--North New York, NY...................... 1,351,732
Jacksonville, FL........................................ 1,328,144
Memphis, TN-MS-AR....................................... 1,304,926
Louisville/Jefferson County, KY-IN...................... 1,258,577
Richmond, VA............................................ 1,238,187
Oklahoma City, OK....................................... 1,227,278
Hartford-West Hartford-East Hartford, CT................ 1,195,998
Chicago Metro--North, IL-WI............................. 1,195,559
New Orleans-Metairie-Kenner, LA......................... 1,189,981
Birmingham-Hoover, AL................................... 1,131,070
Salt Lake City, UT...................................... 1,130,293
Raleigh-Cary, NC........................................ 1,125,827
Buffalo-Niagara Falls, NY............................... 1,123,804
Rochester, NY........................................... 1,035,566
Tucson, AZ.............................................. 1,020,200
Tulsa, OK............................................... 929,015
Fresno, CA.............................................. 915,267
Honolulu, HI............................................ 907,574
Bridgeport-Stamford-Norwalk, CT......................... 901,208
Albuquerque, NM......................................... 857,903
Albany-Schenectady-Troy, NY............................. 857,592
Omaha-Council Bluffs, NE-IA............................. 849,517
New Haven-Milford, CT................................... 848,006
Dayton, OH.............................................. 835,063
Allentown-Bethlehem-Easton, PA-NJ....................... 816,012
Bakersfield, CA......................................... 807,407
Worcester, MA........................................... 803,701
Oxnard-Thousand Oaks-Ventura, CA........................ 802,983
Baton Rouge, LA......................................... 786,947
Grand Rapids-Wyoming, MI................................ 778,009
El Paso, TX............................................. 751,296
Columbia, SC............................................ 744,730
McAllen-Edinburg-Mission, TX............................ 741,152
Greensboro-High Point, NC............................... 714,765
Chicago Metro--Indiana, IN.............................. 702,458
Akron, OH............................................... 699,935
Knoxville, TN........................................... 699,247
Springfield, MA......................................... 698,903
Bradenton-Sarasota-Venice, FL........................... 688,126
Little Rock-North Little Rock-Conway, AR................ 685,488
Poughkeepsie-Newburgh-Middletown, NY.................... 677,094
Stockton, CA............................................ 674,860
Toledo, OH.............................................. 672,220
Charleston-North Charleston-Summerville, SC............. 659,191
Syracuse, NY............................................ 646,084
Greenville-Mauldin-Easley, SC........................... 639,617
Colorado Springs, CO.................................... 626,227
Wichita, KS............................................. 612,683
Boise City-Nampa, ID.................................... 606,376
Cape Coral-Fort Myers, FL............................... 586,908
Lakeland-Winter Haven, FL............................... 583,403
Youngstown-Warren-Boardman, OH-PA....................... 562,963
Scranton--Wilkes-Barre, PA.............................. 549,454
Jackson, MS............................................. 540,866
Augusta-Richmond County, GA-SC.......................... 539,154
Palm Bay-Melbourne-Titusville, FL....................... 536,357
Chattanooga, TN-GA...................................... 524,303
Deltona-Daytona Beach-Ormond Beach, FL.................. 495,890
Visalia-Porterville, CA................................. 429,668
Flint, MI............................................... 424,043
Asheville, NC........................................... 412,672
Beaumont-Port Arthur, TX................................ 378,477
Ocala, FL............................................... 328,547
Huntington-Ashland, WV-KY-OH............................ 285,624
------------------------------------------------------------------------
Source: U.S. Census Bureau, Population Division, 2009 Population
Estimates.
[[Page 10758]]
Under section 1847(a)(1)(D)(iii) of the Act, competitions occurring
before 2015 for items and services other than national mail order for
diabetic supplies, may not include rural areas or MSAs with a
population of less than 250,000. Therefore, at this time, we do not
have competitive bidding pricing information from rural areas or
smaller MSAs. As required by section 1834(a)(1)(G) of the Act, we must
specify by regulation the methodology to be used for adjusting fee
schedule amounts using competitive bidding information.
B. Changes to the Payment Methodologies and Rules for Durable Medical
Equipment and Enteral Nutrition Furnished Under Competitive Bidding
Programs
Section 1847 of the Act provides CMS with flexibility and
discretion with regard to the payment rules for items furnished under
competitive bidding programs. We are considering proposing new payment
rules for DME and enteral nutrients, supplies, and equipment furnished
under competitive bidding programs and request public comments on the
issue before we decide whether to conduct notice and comment
rulemaking. We believe that bundling payment for all items and services
associated with furnishing enteral nutrition or DME into one monthly
payment based on supplier bids for furnishing all items needed for a
month would greatly simplify the program, improve beneficiary access to
quality items and services, and contribute to greater savings
associated with implementation of the DMEPOS competitive bidding
program.
The current Medicare payment rules and payment classes for DME
mandated by section 1834(a) of the Act were implemented in 1989, and,
depending on the item or payment class the item falls under, generally
allow payment on a lump sum purchase basis, a capped rental basis, or a
continuous monthly rental basis where the monthly payments are not
capped and continue for as long as medical necessity and Part B
coverage continues. The continuous monthly rental payment amounts
include payment for all necessary maintenance and servicing of the
equipment and replacement of all essential accessories, whereas payment
on a purchase or capped rental basis results in the need to process and
pay separately for numerous items that are not DME but are related to
furnishing DME, such as repair of equipment or replacement of supplies
and accessories used with patient-owned equipment. In the case of
enteral nutrition, there are separate billing codes for categories of
nutrients, three different daily supply allowances, feeding tubes, and
enteral nutrition infusion pumps and IV poles.
The current payment rules that apply to fee schedule DMEPOS items
and competitive bid items were developed in the 1980s to reduce
expenditures and prevent prolonged rental payments for certain DME and
enteral infusion pumps. However, now that Medicare allowed amounts can
be established under the competitive bidding program based on supplier
bids to account for the average costs of furnishing all covered items
and services, we believe it may be appropriate to modify the Medicare
payment structure for certain DME and enteral nutrition under the
competitive bidding program by requesting a single bid for furnishing
all related items and services needed on a monthly basis (that is,
rented equipment, replacement of supplies and accessories, repair or
rented equipment, etc.). Bids from suppliers could then be used to
establish a monthly payment for the equipment and all related items and
services. We believe that capping rentals and paying for purchase of
equipment may no longer be necessary to achieve savings for these items
and services. Suppliers could bid and be awarded contracts for meeting
all of the beneficiary's needs for each month of service, including
rental and servicing of necessary equipment as well as the ongoing
replacement of supplies and accessories used in conjunction with the
equipment and any repairs needed for the equipment. Such an approach
could reduce excessive payments for furnishing necessary accessories
and items, provided the continuous monthly rental payment amounts were
reasonable for all the monthly items and services that would be
furnished. In submitting bids under the competitive bidding programs,
suppliers would take a number of things into account to develop bids
for these monthly items and services, such as the costs of all items
and services needed by the beneficiary during each rental month, the
typical duration of need by Medicare beneficiaries for the rented
items, and the money the supplier saves by replacing inventory less
frequently if the title to the equipment remains with the supplier and
is not transferred to the beneficiary after the capped rental period.
We believe these changes could have a number of positive effects on
suppliers. The suppliers would no longer have to worry about counting
rental months to determine when they might be losing title to certain
items in their inventory. These changes could also benefit patients who
would no longer have to arrange for repair of patient-owned equipment
or worry about servicing patient-owned equipment for which a
manufacturer no longer makes replacement parts available. We believe
that suppliers would have an incentive to furnish more durable and
dependable equipment to reduce the number of service calls they make.
If a beneficiary owns equipment that needs to be serviced, they are
responsible for locating a supplier and making arrangements for the
servicing, and the beneficiary incurs a separate charge for the
service. By contrast, if a beneficiary is renting equipment, and the
rented equipment needs to be serviced, the beneficiary would simply
call the supplier of the rented equipment and the supplier would be
responsible for servicing the equipment at no additional charge. From a
program standpoint, the payment rules for capped rental items are
complicated and onerous to administer. The program must keep track of
separate payment, coverage, medical necessity, and other rules for
hundreds of related codes for replacement supplies and accessories used
with the base equipment as well as labor and parts associated with
repairing patient-owned equipment. In addition, claims processing
systems must count rental months and contractors must identify when
legitimate breaks in continuous use occur and can result in the start
of new capped rental periods. This leads to costly and complicated
claims processing systems and edits for processing millions of claims
for these items and services.
The current payment rules that allow separate payment for supplies
and accessories used with DME in addition to the payment for the DME
itself also significantly complicate the competitive bidding process as
special grandfathering payment rules must be implemented, item weights
and composite bids must be developed, hundreds or thousands of bid
amounts must be entered, and, in turn, thousands of bids and bid
amounts must be evaluated and screened and single payment amounts
established. In the case of beneficiary-owned wheelchairs, the rules
regarding when one of the hundreds of accessories or component must be
furnished by a contract supplier or non-contract supplier based on
whether the base wheelchair is competitively bid or whether the service
constitutes a repair of the base wheelchair are extremely complicated.
A simple, straightforward payment
[[Page 10759]]
system could significantly reduce billing and payment errors.
Under competitive bidding programs established in accordance with
section 1847(a) of the Act, we believe CMS has discretion to implement
different payment rules for the items and services subject to
competitive bidding, including certain DME and enteral nutrition.
Suppliers compete for contracts based on bids representing their costs
for furnishing the DME item or enteral nutrition. Regardless of whether
suppliers compete based on submitting one bid for furnishing, for
example, continuous positive airway pressure (CPAP) devices and all
related supplies, accessories, and services needed for one month versus
separate, piecemeal bids for the various individual items, contracts
are offered to the suppliers that meet all program requirements and
offer the best value in terms of bids submitted. In addition, contract
suppliers are responsible for furnishing what the beneficiary needs and
this does not change based on how the items are billed and paid for
under Medicare. The supplier costs generally do not change based on the
method of payment used. Therefore, competitive bidding provides a means
to simplify and streamline complicated payment rules, resulting in a
more efficient program.
By simplifying the payment rules for certain DME and enteral
nutrition under the Competitive Bidding Program, the process of
competitive bidding could be greatly simplified. For example, suppliers
could submit one bid that reflects the costs of furnishing the DME and
supplies, accessories, and maintenance and servicing costs associated
with furnishing the DME. Under competitive bidding, bid limits for the
DME could be developed based on average monthly expenditures per
beneficiary in an area for the bundle of items and services related to
furnishing the DME (for example, CPAP device rental, masks, tubing,
humidifier, maintenance and servicing). Similarly, bid limits for
enteral nutrition could be developed based on average monthly
expenditures per beneficiary in an area for the bundle of items and
services related to furnishing enteral nutrition (nutrients, supplies,
rental of infusion pumps and IV poles, and maintenance and servicing of
equipment). These are some possibilities we are exploring with regard
to modifications that could be made to current payment rules and
methodologies under the CBP in future rulemaking. Whether we would
proceed with proposing this would depend on several factors, including
issues such as administrative burden and feasibility, as well as other
potential issues raised in the public comments we receive.
II. Questions for Generating Public Comments
A. Methodology for Adjusting Medicare Payment Amounts for DMEPOS Items
and Services Based on Information From Competitive Bidding Programs
We are aware that there continues to be a range of aspects to
consider in the development of the methodology used to adjust fee
schedule amounts for DMEPOS using information from the competitive
bidding programs. Again, we are required by section 1834(a)(1)(G) of
the Act, to specify by regulation the methodology to be used for
adjusting fee schedule amounts using competitive bidding information.
However, prior to proposing the methodology, we are soliciting public
comments on a variety of topics for CMS to consider. We are interested
in receiving comments on several aspects that we would consider in
developing a methodology to adjust DMEPOS fee schedule amounts or other
payment amounts in non-competitive areas based on DMEPOS competitive
bidding payment information. We are soliciting comments on the
following list of questions to assist us in developing potential
proposals regarding the methodology for adjusting Medicare payment
amounts for DMEPOS items and services based on information from
competitive bidding programs.
Do the costs of furnishing various DMEPOS items and
services vary based on the geographic area in which they are furnished?
If so, how should the bidding information obtained from programs
established in different regions of the nation be grouped together for
the purpose of adjusting current Medicare payment amounts? Should
bidding information from programs established in certain regions of the
country be used to adjust the payment amounts that currently apply to
those regions? Are there certain areas of the country that have unique
costs and how should those costs be considered? Is there valid and
reliable information that can be used to measure the relative costs of
furnishing items and services in these unique areas?
Do the costs of furnishing various DMEPOS items and
services vary based on the size of the market served in terms of
population and/or distance covered or other logistical or demographic
reasons? Section 1847(a)(1)(D)(iii) of the Act prohibits establishing
competitive bidding programs in MSAs with a population of less than
250,000 or in areas outside MSAs prior to 2015. Given the mandate to
use information on the payment determined under competitive bidding
programs to adjust payment amounts in areas that are not competitive
bidding areas by no later than January 1, 2016, what alternative
information, if any, should we rely on to determine the relative costs
of furnishing items and services in these areas compared to areas where
competitive bidding programs have already been implemented?
How should any future adjustments or payment methodology
treat payment amounts for items that have not been included in all
competitive bidding programs (for example, items such as transcutaneous
electrical nerve stimulation (TENS) devices that have only been phased
into the nine Round 1 areas thus far)?
Should competitive bidding programs be established in all
areas of the country for a few high volume items in order to gather
information regarding the costs of furnishing DMEPOS items, in general,
in different areas of the country (for example, rural areas as well as
urban areas)?
For payment adjustments or competitive bidding programs in
rural areas, what factors should be used in determining a competitive
service area in terms of Medicare revenue available and logistical
costs of serving the area? Are there ways to determine which rural
counties should be served by which suppliers?
What additional factors should be considered and why?
B. Changes to the Payment Methodologies and Rules for Durable Medical
Equipment and Enteral Nutrition Furnished Under Competitive Bidding
Programs
We are requesting comments on testing or phasing in bundled
payments under competitive bidding programs whereby suppliers would
submit one bundled bid for the delivery of all enteral nutrients,
supplies, and equipment needed for one month by a beneficiary as well
as one bundled bid for furnishing certain DME, including all related
supplies, accessories, and services on a monthly basis. Under such an
approach, monthly rental payments for DME or enteral nutrition
equipment would no longer reach a cap, while separate payment for
supplies, accessories, enteral nutrients, or maintenance and servicing
would no longer be made. Suppliers would retain title to all equipment
regardless of length of need and beneficiaries would be able to switch
from supplier to supplier on a monthly basis. The monthly payments for
DME and enteral
[[Page 10760]]
nutrition would continue for as long as medical necessity and Part B
coverage continues and the bid limits would be based on the average
monthly costs per beneficiary for the bundle of items and services. We
are soliciting comments on the following list of questions regarding
proposals we may make to change the payment rules and other rules for
DME and enteral nutrition under the DMEPOS competitive bidding program.
Are lump sum purchases and capped rental payment rules for
DME and enteral nutrition equipment that were implemented to prevent
prolonged rental payments still needed now that monthly payment amounts
can be established under competitive bidding programs for furnishing
everything the beneficiary needs each month related to the covered DME
item or enteral nutrition?
Are there reasons why beneficiaries need to own expensive
DME or enteral nutrition equipment rather than use such equipment as
needed on a continuous monthly basis?
Would there be any negative impacts associated with
continuous bundled monthly payments for enteral nutrients, supplies,
and equipment or for certain DME? If so, please explain.
Certain DME items such as speech generating devices and
specialized wheelchairs may be adjusted or personalized to address
individual patient needs. Would payment on a bundled, continuous rental
basis adversely impact access to these items and services? If so,
please provide a detailed explanation regarding how this method of
payment would create a negative impact on access to these items and
services or other items and services currently subject to competitive
bidding.
If payment on a capped rental, rent-to-own basis or lump
sum purchase basis is maintained for certain items under the
competitive bidding program, should a requirement be added to the
regulations specifying that the supplier that transfers title to the
equipment to the beneficiary is responsible for all maintenance and
servicing of the beneficiary-owned equipment for the remainder of the
equipment's reasonable useful lifetime with no additional payment for
these services? The cost of such a mandatory supplier warranty would be
factored into the bids submitted by the suppliers and the payment
amounts established based on the bids for the items. If such a
requirement was established, should the term maintenance and servicing
be defined to include all necessary maintenance, servicing and repairs
that are currently paid for separately under the Medicare program in
addition to any additional adjustments or personalization of the
equipment that may be needed once title transfers to the patient? We
believe these requirements may be necessary to safeguard the
beneficiary and access to necessary services related to beneficiary-
owned DME.
Would payment on a bundled, continuous rental basis for
certain items adversely impact the beneficiary's ability to direct
their own care, follow a plan of care outlined by a physician, nurse
practitioner or other medical provider (for example, occupational,
physical or speech therapist), or provide for appropriate care
transitions? If so, please explain.
What are the advantages or disadvantages for beneficiaries
and suppliers of bundled bidding and payments for enteral nutrients,
supplies, and equipment or DME?
Should competitive bidding programs utilizing bundled
payments be established throughout the entire United States so that all
beneficiaries are included under programs where suppliers have an
obligation to furnish covered items and all related items and services?
Is a continuous bundled monthly payment used by commercial
payers or State Medicaid programs for enteral nutrients, supplies, and
DME and do these approaches inform this potential new payment
arrangement for Medicare.
Dated: January 31, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: February 4, 2014.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2014-04031 Filed 2-24-14; 4:15 pm]
BILLING CODE 4120-01-P
