CMS Releases Competitive Bid Fee Schedule Amounts for July 1

WASHINGTON, D.C. (June 24, 2016)—The Centers for Medicare & Medicaid Services (CMS) announces the release of the July 2016 Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) fee schedule amounts. The fee schedule amounts are available here.

The DMEPOS and Parenteral and Enteral Nutrition (PEN) public use files contain the 2016 fee schedule amounts for certain items that were adjusted based on information from the DMEPOS Competitive Bidding Program in accordance with sections 1834(a)(1)(F) and 1842(s)(3)(B) of the Social Security Act. The initial phase-in of these adjustments began on January 1, 2016.

DMEPOS Competitive Bidding Program
Section 302(b) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) established requirements for a new competitive bidding program for certain DMEPOS items and services. The statute requires that “single payment amounts” replace the current Medicare DMEPOS fee schedule payment amounts for selected DMEPOS items in certain areas of the country. The single payment amounts are determined by using bids submitted by DMEPOS suppliers. The program is intended to set more appropriate DMEPOS payment amounts, which will reduce beneficiary out-of-pocket expenses and save the Medicare program money while ensuring beneficiary access to quality items and services.

There are currently competitive bidding programs in 99 Metropolitan Statistical Areas (MSAs) throughout the United States, including Honolulu, Hawaii. DMEPOS items and services that are included under the competitive bidding program thus far include:

• Oxygen, oxygen equipment and supplies
• Continuous positive airway pressure (CPAP) devices and respiratory assist devices (RADs) and related supplies and accessories
• Hospital beds, commode chairs, patient lifts and seat lifts
• Infusion pumps
• Support surfaces or pressure reducing mattresses and overlays
• Enteral nutrients, supplies and equipment
• Nebulizers and related supplies
• Negative Pressure Wound Therapy (NPWT) Pumps and Related Supplies and Accessories
• Standard Mobility Equipment and Related Accessories, including walkers, standard power and manual wheelchairs, scooters and related accessories
• Group 2 complex rehabilitative power wheelchairs
• Transcutaneous electrical nerve stimulation (TENS) devices and supplies

In addition, a national mail order program has been implemented for replacement of diabetic testing supplies such as test strips and lancets used with home blood glucose monitors. The single payment amounts established under this program are also used to set the fee schedule amounts for these diabetic testing supplies when they are picked up at local pharmacies.

For information on DMEPOS Competitive Bidding, click here.

Payment for DMEPOS in Non-Competitive Bidding Areas
Section 1834(a)(1)(F)(ii) of the Social Security Act requires that the payment determined under the competitive bidding program be used to adjust the fee schedule amounts that would otherwise be used in making payment for DMEPOS furnished outside of the competitive bidding areas (CBAs) for these items. These adjustments must be made for items furnished on or after January 1, 2016. Similarly, section 1842(s)(3)(B) of the Social Security Act provides discretion to use information on the payment determined under the competitive bidding programs to adjust the fee schedule amounts that would otherwise be used in making payment for enteral nutrients, supplies and equipment furnished outside of the CBAs for these items.

Two changes to the DMEPOS fee schedule amounts are being implemented July 1:

Phase in of DMEPOS Fee Schedule Adjustments—The adjustments to the DMEPOS fee schedule rates were phased in starting on January 1, 2016 so that the fee schedule amounts in all areas were based on a 50/50 blend of current rates and adjusted rates. This allowed a six-month transition period where health outcomes and access to these items and services could be closely monitored. The fully adjusted rates are being phased in July 1.

Use of Updated Information from the DMEPOS Competitive Bidding Program—Section 1834(a)(1)(F)(iii) of the Social Security Act specifies that adjustments to the fee schedule amounts for DME must continue to be made as additional items are added to the competitive bidding program, or as competitive bidding contracts are recompeted, the latter of which occurs every three or more years. The July 1, 2016 adjusted DMEPOS fee schedule amounts have been revised to factor in new pricing information from the Round 2 Recompete and National Mail Order Recompete programs.

The general methodologies for adjusting the fee schedule amounts are described below and discussed in more detail in the November 6, 2014 final rule at 79 FR 66120 (Medicare Program; End-Stage Renal Disease Prospective Payment System, Quality Incentive Program and Durable Medical Equipment, Prosthetics, Orthotics and Supplies; Final Rule):

1. Adjusted Fee Schedule Amounts for Areas within the Contiguous United States For most DMEPOS items furnished in the contiguous United States, the adjustments to the fee schedule amounts are made in different regions of the country based on information from competitive bidding programs conducted in each region. The amount of variation in the regionally adjusted rates is limited by a national ceiling equal to 110 percent of the average of the regionally adjusted rates and a national floor equal to 90 percent of the average of the regionally adjusted rates.

Based on concerns raised by the public regarding the possible impact on access to DMEPOS items and services in rural areas of the country, the following rule was established:
Special Rule for Rural Areas—For an item or service included in ten or more competitive bidding programs, a special rule was established for adjusting fee schedule amounts used in making payment for the item or service in areas within the contiguous United States that are defined as “rural” areas. For the purpose of implementing this rule, a rural area is defined as a geographic area represented by a postal zip code if at least 50 percent of the total area included in the zip code is outside any MSA. In addition, a rural area includes a geographic area represented by a postal zip code that is a low population density area excluded from a competitive bidding area. For example, using authority in the statute, low population density areas in much of the eastern section of the Riverside-San Bernardino-Ontario MSA in California were excluded from the CBA established for that MSA, and these areas are defined as rural areas for the purpose of implementing this rule.

For these rural areas, in no case is a fee schedule amount for any DMEPOS item furnished in the area reduced below the national ceiling amount mentioned above. For example, the regionally adjusted rate for 2016 for oxygen and oxygen equipment for the region that includes the states of California, Nevada, Oregon and Washington, is limited by the national floor amount mentioned above. For all areas in these states that meet the definition of a rural area, the adjusted fee schedule amount for oxygen and oxygen equipment furnished in these areas will be set based on the national ceiling amount rather than the national floor amount, which is a 20 percent difference.

2. Adjusted Fee Schedule Amounts for Areas Outside the Contiguous United States Fee schedule amounts for areas outside the contiguous United States (i.e., noncontiguous areas such as Alaska, Hawaii and Puerto Rico) are adjusted so that they are equal to the higher of the average of the single payment amounts for CBAs outside the contiguous United States (currently only applicable Honolulu, Hawaii) or the national ceiling amount.
3. Adjusted Fee Schedule Amounts for Items Included in Ten or Fewer Areas Fee schedule amounts for DMEPOS items included in ten or fewer CBAs are adjusted so that they are equal to 110 percent of the average of the single payment amounts from the ten or fewer CBAs. The average of the single payment amounts will be a straight average and will not be weighted (e.g., based on the volume of items furnished in each of the competitive bidding areas). Items subject to this methodology as of January 2016 include commode chairs, nebulizers, infusion pumps, patient lifts, seat lifts, TENS devices, Group 2 complex rehabilitative power wheelchairs and certain wheelchair accessories. For these items, this methodology applies to non-contiguous and contiguous areas.

Examples of New Payment Rates for July
The table below lists average 2015 fees and average 2016 fees for the contiguous United States (both for urban areas and rural areas) for select items with the percentage change from 2015 to 2016:

Below are examples of average savings based on payments using the rates effective July 2016 for three commonly used rental items: an oxygen concentrator (E1390), a hospital bed (E0260) and a powered pressure-reducing air mattress (E0277).

Oxygen Concentrator Payments for Six Months—Under the 2015 fee schedule, the supplier is paid $1,086, on average, for furnishing an oxygen concentrator for 6 months, of which the beneficiary pays $217 in coinsurance payments. Beginning July 1, 2016, the supplier will be paid $472 for furnishing the concentrator in urban areas under the fee schedule and $520 for furnishing the concentrator in rural areas under the fee schedule. The beneficiary’s coinsurance will drop from $217 to $94 in the urban areas and from $217 to $104 in the rural areas.

Hospital Bed Payments for Six Months—Under the 2015 fee schedule, the supplier is paid $705, on average, for furnishing a hospital bed for 6 months, of which the beneficiary pays $141 in coinsurance payments. Beginning July 1, 2016, the supplier will be paid $318 for furnishing the bed in urban areas under the fee schedule and $349 for furnishing the bed in rural areas under the fee schedule. The beneficiary’s coinsurance will drop from $141 to $64 in the urban areas and from $161 to $70 in the rural areas.

Powered Mattress Payments for Six Months—Under the 2015 fee schedule, the supplier is paid $3,478 on average, for furnishing a powered mattress for 6 months, of which the beneficiary pays $696 in coinsurance payments. Beginning July 1, 2016, the supplier will be paid $1,002 for furnishing the mattress and pump in urban areas under the fee schedule and $1,084 for furnishing the mattress and pump in rural areas under the fee schedule. The beneficiary’s coinsurance will drop from $696 to $200 in the urban areas and from $696 to $217 in the rural areas.

Monitoring the Impact of the Adjustments to the Fee Schedule Amounts
CMS has been closely monitoring claims and health outcomes data to verify that beneficiary access to quality items and services in Non-Competitive Bidding (NCB) areas continues under the adjusted fee schedule amounts. The data released thus far from 2016 indicate that suppliers are continuing to accept assignment of almost every claim, accepting the revised rates established in January 2016 as payment in full for furnishing the items and supplies. Health outcomes data has also been posted and shows no negative impact as a result of the revised rates established in January 2016.

CMS will continue to monitor assignment rates and health outcomes data following the phase in of the fully adjusted fee schedule amounts for July 2016.

Visit cms.gov for more information.