CMS Update on the Nationwide Expansion Competitive Bidding

Posted on in HME Government Issues

If you don’t know the general background of Nationwide Expansion of Competitive Bidding, read this article first. - Nationwide Expansion of Competitive Bidding - Mark Higley’s Background and Commentary CMSUpdateBackground: In November 2014, CMS issued Final Rule 1614-F, which contains provisions relating to the DME competitive bidding program and how CMS plans to roll out competitive bid pricing in non-bid areas. While providers in these areas will not be required to submit bids, CMS will use single payment amounts from other nearby CBAs to set the rates for these non-bid areas, including rural areas. Medicare states in the final rule that regional single payment amounts will be set for eight regions originally used for economic analysis purposes by the Bureau of Economic Analysis in the Commerce Department. The RSPA would be calculated using the average of all the SPAs for an item from all CBAs that are fully or partially located in each region. These adjusted payment amounts would be equal to the RSPA but not less than 90 percent and not more than 110 percent (referred to as the national ceiling and floor respectively) of the average of the RSPAs established for all states. Any RSPA above the national ceiling would be adjusted down; any RSPA below the national floor would be adjusted up. For rural areas, pricing will be set at the ceiling or the RSPA, whichever is higher. The new regional pricing will be phased in beginning Jan. 1, 2016. Payment rates for all affected items will be set at 50 percent of the adjusted fee schedule amount versus the current rate. Beginning July 1, 2016, the rates are reduced to 100 percent of the adjusted fee schedule amount. Future rounds of bidding would use these adjusted rates as the new bid-limit ceiling. A subsequent December 2014 FAQ document indicates that, beginning in 2016, Medicare also intends to apply CB rates for standard wheelchair accessories to reduce payment amounts for complex rehab wheelchair accessories, which were specifically exempt by Congress from being included in the CB program. AAHomecare, VGM and many other stakeholders are currently reviewing and attempting to mitigate this application. Additional areas of concern and potential confusion exist. For example, there are many HCPC codes that are unique to one bidding program, but not another. Some codes (in addition to the complex wheelchair accessories) are no longer bid. Some codes are currently bid, but will be discontinued in future rounds. Questions have arisen as to what amount the non-bid areas of the United States will be reimbursed for these items. Accordingly, AAHomecare requested that CMS offer guidance as to the agency’s intention with regard to reimbursement parameters for several of these scenarios. For any item that was in a competitive bidding program, but is no longer in any current competitive bidding program, the fee schedule amounts will be adjusted based on 110 percent of the average of the SPAs from the previous competitive bidding programs, updated by the CPI-U update factors. Definitions: “Fee schedule amounts” are applicable to Medicare FFS (fee for service, or traditional Medicare) beneficiaries whose permanent address lies outside of a competitive bid area. “SPAs, or single payment amounts” are the reimbursement allowed under the competitive bidding programs; the existing DMEPOS fee schedule payment amounts have been replaced with these single payment amounts for Medicare FFS beneficiaries whose permanent address lies within a CBA. “CPI-U update” is the fee schedule adjustment that takes place each calendar year by the increase in the Consumer Price Index-Urban All Item for the 12-month period ending the preceding Sept. 30. By way of example, in the Round 1 rebid there were several complex wheelchair accessories (such as the E2329 head control interface); this item, and several other complex wheelchair accessories are not currently bid. The fee schedule for these will be 110 percent of the average single payment amounts from the previous Round 1 rebid areas. Note: The above example is a complex rehab accessory. CMS excluded complex manual wheelchairs and implemented a similar policy for accessories used with these wheelchairs. As a result, complex rehab wheelchairs and related accessories have to date been paid at the established fee schedule amounts in bid and non-bid areas. As noted above, the industry continues to work with several members of Congress to exert political pressure on CMS to rescind this 110 percent average SPA policy. However, there are several other HCPC codes that will fall under this reimbursement scenario (including some standard power wheelchair and scooter codes (e.g. K0807) that are no longer bid). Until the point if (or when) these items are included in future competitive bidding programs, the adjusted fee schedule amounts will be updated on an annual basis each January by the CPI-U update factors. The adjusted fee schedule amounts are national amounts that are used to pay claims in all areas. CMS is now calling this the “R110 methodology,” with “R” standing for “retired SPAs.” For any item that is currently in the “Round 1 recompete” program (currently consisting of nine competitive bid areas; final rule CMS-1614F dubs these areas as “10 or fewer competitive bidding programs”) the fee schedule amounts will be adjusted based on 110 percent of the average of the SPAs from the current competitive bidding programs. By way of example, the A4221 (Supplies For Maintenance Of Drug Infusion Catheter) was bid in the Round 1 recompete under the External Infusion Pump category, but not in Round 2 or Round 2 recompete. The fee schedule for the remainder of the country, will be 100 percent of the average single payment amounts of the nine Round 1 recompete areas. The adjusted fee schedule amounts are not updated on an annual basis each January by the CPI-U update factors, but would be updated as new SPAs are established. The adjusted fee schedule amounts are national amounts that are used to pay claims in all areas. CMS is calling this the “C110 methodology”, with “C” standing for current SPAs. If additional SPAs are established for these items in additional competitive bidding programs so that the number of programs/SPAs exceeds 10, then the fee schedule update methodology would switch over to the RSPA method. Important Note: Items could go back and forth from one method to another depending on their status under the competitive bidding programs. For example, TENs and nebulizers will go from C110 to RSPA in July 2016, and external infusion pumps will go from C110 to R110 in January 2017. For additional “FAQs” and CMS guidance relative to the authority to apply bid rates in non-bid areas starting in January 2016 go to For an estimate of the 2016 regional single payment amounts per region, go to