CMS Releases (CMS-1738-F) Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Final Rule

Published in Government Relations on December 22, 2021

Long-awaited with keen interest by industry stakeholders, CMS released on December 21, 2021 its final rule (CMS-1738-F) relative to post-pandemic DMEPOS fee schedule adjustments, in addition to making certain benefit category and payment determinations for new items, classification of adjunctive continuous glucose monitors as DME under Medicare Part B and finalized certain DME payment provisions that were included in two interim final rules (CMS-1687-F and CMS-5531-F).

However, the main focus and concerns to DME suppliers, were, arguably, the final methodology of fee schedule payment “adjustment” amounts for DME furnished in rural, non-competitive bidding areas (non-CBAs) and CBAs on or after April 1, 2021 or the date immediately following the duration of the public health emergency period (PHE), or whichever was later. 

More than 100 industry comments were received by the agency. 

Background:  On October 27, 2020, CMS issued a proposed rule with the purpose to establish methodologies for adjusting the fee schedule amounts noted above. Under this proposal, CMS would continue paying suppliers higher rates for furnishing items and services in rural (and non-contiguous areas, i.e. Alaska and Hawaii with the exception of metropolitan Honolulu) as compared to items and services furnished in other areas, informed by stakeholder input indicating higher costs in these areas, greater travel distances and costs in certain non-CBAs compared to CBAs.  CMS acknowledged “the unique logistical challenges and costs of furnishing items to beneficiaries in the non-contiguous areas, significantly lower volume of items furnished in these areas versus CBAs, and concerns about financial incentives for suppliers in surrounding urban areas to continue including outlying rural areas in their service areas.” Previous feedback from industry stakeholders expressed concern regarding beneficiary access to items and services furnished in rural and remote areas.  For items that were included in Round 2021, but were removed from Round 2021 of the program, the agency also considered whether to simply extend application of the current fee schedule adjustment rules for non-CBAs and for CBAs and former CBAs until new single payment amounts (SPAs) were calculated for the items once competitive bidding of the items has been resumed.

The Final Rule DMEPOS Fee Schedule Adjustments

  • CMS will continue paying suppliers the 50/50 blend[1] of adjusted and unadjusted fee schedule rates for furnishing items and services in rural and non-contiguous areas. The agency commented “these rates were informed by stakeholder input”, as noted above.  “CMS will continue to monitor payments in rural and non-contiguous areas and all non-CBAs, as well as health outcomes, assignment rates, and other information, and may also consider our payment methodologies toward DMEPOS items and services furnished in rural and non-contiguous areas and non-CBAs in the context of any future changes to the DMEPOS CBP.”
     
  • The CARES Act required the calculation of new, higher fee schedule amounts for certain items furnished in non-rural contiguous non-CBAs based on a blend of 75 percent of the adjusted fee schedule amount and 25 percent of the unadjusted fee schedule amount for the duration of the PHE.  However, this Final Rule does not extend the “75/25” blend after the pandemic is declared over[2].  “For contiguous, non-rural areas, CMS will be paying suppliers 100 percent of the adjusted fee schedule rates using information from the DMEPOS CBP. For the former CBAs, CMS will be paying the single payment amounts (SPAs) established during DMEPOS CBP updated by an inflation adjustment factor on an annual basis” …effectively these areas will revert to the previous Regional Single Payment Amount (RSPA)[3]
     
  • For 2022, “this final rule does not change these already existing payment methodologies” in former CBAs…effectively allowing no increase in payment (ostensibly until the next round of bidding), with the exception of a 5 percent inflation update.  (The non-CBA blended fees will receive between 5.1% - the unadjusted fee update, and 5.4% - the adjusted fee update).

Other Final Rule Issues (abridged)

  • The agency is finalizing conforming technical changes to the regulations text to exclude infusion drugs from the DMEPOS CBP.
     
  • This final rule establishes procedures for making benefit category determinations and payment determinations for new DMEPOS, therapeutic shoes and inserts, surgical dressings, or splints, casts, and other devices used for reductions of fractures and dislocations under Medicare Part B that permit public consultation through public meetings.
     
  • The final rule classifies adjunctive continuous glucose monitors (CGMs) under the Medicare Part B benefit for DME. However, CMS is not finalizing the proposed categories of supplies and accessories and fee schedule amounts for three types of CGM systems.
     
  • CMS is not finalizing its proposals regarding (1) the submission and evaluation of Healthcare Common Procedure Coding System (HCPCS) Level II code applications and (2) the proposed revision to our interpretation of the “appropriate for use in the home” requirement in the definition of DME as it applies to certain external infusion pumps.
     
  • Please review the CMS Fact Sheet and the Federal Register  (pdf) to access the entire document. 

The Final Rule fee schedule provisions are effective at end of the PHE.  Additional analysis and commentary will follow from VGM.  Questions or comments, please contact Mark Higley, Vice-President Regulatory Affairs, at mark.higley@vgm.com or 319.504.9515

Analysis and commentary from John Gallagher

Now with the DMEPOS Final Rule finally out, and the fact that the Final Rule has not deviated that much from the CMS Proposed Rule… The Industry can move forward with our Champions - Rep. Cathy McMorris-Rodgers (R-WA), Rep. Markwayne Mullin (R-OK) and Rep. Paul Tonko (D-NY) on Energy & Commerce to bring forth legislative language to address;

  • Legislation that will provide additional relief to HME providers particularly those that service patients outside of competitive bidding areas in Non-Rural Areas -  by extending the Cares Act 75/25 Blend at least through the next round of CBP in 2023/24.
     
  • Legislation to extend the Non-Rural Blended Rate – 75/25 to those of Competitive Bidding Areas (CBA).  Just because a beneficiaries zip code is in Boise or any other Competitive Bid Area, they should not be subjected to access issues due to no relief with a blended rate.
     
  • Legislation that will correct/improve the competitive bidding program.  Currently, the next round of Competitive Bid is unlikely until at least 2024 - if then.  In the meantime Providers are stuck with Competitive Bid Rates from 2016. With supply Chain / inflationary issues those rates are unattainable until CMS figures out what they plan to do.  CMS has failed with the Competitive Bidding Program on three different bids.  Congress needs to step in and direct CMS with a workable Competitive Bidding Auction system that works. The industry / VGM has been working on just such an alternative auction with Dr. Ken Brown and the Economics Department at Missouri State University.

Moving into 2022, the Government Relations and Regulatory team will continue to fight for accessibility and fair reimbursement for quality goods and services. We hope you will join us.

Cheers to a productive 2022!  

John E. Gallagher
Vice President
VGM Government Relations and Regulatory Affairs


[1] Section 3712(a) of the CARES Act extended the current adjusted fee schedule methodology that pays for certain items furnished in rural and non-contiguous non-CBAs based on a 50/50 blend of adjusted and unadjusted fee schedule amounts through December 31, 2020 or through the duration of the PHE, whichever was later.

[2] Section 3712(b) of the CARES Act mandates that the fee schedule amounts for these same items furnished in all other non-competitive bidding areas be based on a 75/25 blend of adjusted and unadjusted fee schedule amounts through the duration of the PHE.

[3] Section 1834(a)(1)(F) of the Social Security Act requires the CMS to adjust fee schedule amounts for DME after January 1, 2016, in areas where CBPs are not in place for these items based on information from the CBPs.

The adjustments to the fee schedule amounts for most items furnished in the contiguous United States are based on the average of single payment amounts from CBPs located within the geographic region of the country where the State is located. The contiguous United States is divided into eight geographic regions based on the eight regions established by the Federal Bureau of Economic Analysis (BEA) for the purpose of conducting economic analyses. These regional single payment amounts (RSPAs) are then limited by a national floor and a national ceiling based on 90 percent and 110 percent of the average of the RSPAs.


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