Don’t Be Surprised

The Centers for Medicare and Medicaid Services posted its 2011 Proposed Medicare Physician Payment Rule (Medicare Program; Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for CY 2011) online June 25. This proposed rule contains a number of provisions related to DME and oxygen. (Note that this is a proposed rule. Public comments were due by Aug. 24, and a final rule will be issued this fall. If finalized, the changes will be effective Jan. 1, 2011.)

Following are the key areas of interest related to the home medical equipment industry.

21 Additional Bid Areas

Implementing Congress’ mandate in the Patient Protection and Affordable Care Act (PPACA) to expand Round 2 of the DME competitive bid program, CMS is proposing the following 21 areas be added to the 70 areas it announced in January 2008. Round 2 is scheduled to be implemented in January 2013, with bidding to begin in the spring of 2011.

• Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
• Washington-Arlington-Alexandria, DC-VA-MD-WV
• Boston-Cambridge-Quincy, MA-NH
• Phoenix-Mesa-Scottsdale, AZ
• Seattle-Tacoma-Bellevue, WA
• St. Louis, MO-IL
• Baltimore-Towson, MD
• Portland-Vancouver-Beaverton, OR-WA
• Providence-New Bedford-Fall River, RI-MA
• Buffalo-Niagara Falls, NY
• Rochester, NY
• Tucson, AZ
• Honolulu, HI
• Albany-Schenectady-Troy, NY
• Worcester, MA
• Oxnard-Thousand Oaks-Ventura, CA
• Springfield, MA
• Bradenton-Sarasota-Venice, FL
• Poughkeepsie-Newburgh-Middletown, NY
• Stockton, CA
• Boise City-Nampa, ID

Subdivision of Large MSAs

CMS wants to subdivide New York, Chicago and Los Angeles into smaller bid areas. The New York MSA would be divided into five separate bid areas, Chicago into four bid areas and Los Angeles MSA into two bid areas.

National Competitive Bid Program for Mail-Order Diabetic Supplies

CMS is proposing to establish a national mail-order competitive bid program that would take place after 2010 to award contracts to furnish replacement diabetic testing supplies across the nation. The agency notes that its decision to proceed with a national mail-order competition after 2010 does not prevent CMS from phasing in competitions for non-mail order diabetic supplies or from conducting competitions for diabetic supplies in general in the future.

CMS states that currently, based on claims data from FY 2009, over 62 percent of beneficiaries receive their replacement diabetic testing supplies from mail-order suppliers. (None of these proposals would apply to Round 1 of the bid program currently underway.)

CMS is proposing three requirements related to a national mail-order bid:

1. A new definition for what constitutes mail order that would appear to include anything other than what a beneficiary/caregiver picks up at the local retail pharmacy. CMS proposes to define that term as a program where contracts are awarded to suppliers for the furnishing of mail-order items across the nation. (Beneficiaries would still have the choice of obtaining at local retail pharmacies.) CMS states: “We are proposing to define ‘mail order item’ … to mean any item (for example, diabetic testing supplies) shipped or delivered to the beneficiary’s home, regardless of the method of delivery. We are also proposing to define ‘non-mail order item’ as any item (for example, diabetic testing supplies) that a beneficiary or caregiver picks up in person at a local pharmacy or supplier storefront. Therefore, the only items excluded from the mail order definition and mail order competition would be those that a beneficiary or caregiver picks up in person at a local pharmacy or other local supplier storefront.”
2. A rule that would require contract suppliers to provide, at a minimum, 50 percent of all of the different types of diabetic testing products on the market by brand and model name. CMS is implementing this requirement, which was in the 2008 Medicare Improvements for Patients and Providers Act (MIPPA). Before 2011, the Office of Inspector General will conduct a study to determine products on the market and their relative share; and
3. A prohibition against influencing and incentivizing beneficiaries to switch their brand of monitor and testing supplies. CMS believes this requirement is essential if the agency is to enforce the “50 percent rule” above.

Reconsideration of Payment Rules In Bid Program for Oxygen and Capped Rental Items

Under current CMS competitive bidding rules, contract suppliers will get a minimum of 10 months of rental payments for oxygen beneficiaries, and a minimum of 13 months of rental for capped rental items. Given the fact that the underlying competitive bid regulation was issued when the law required beneficiaries to retain ownership of the equipment after the 36th month of rental, CMS is reconsidering the minimum 10 months of rental payments for oxygen.

CMS is also soliciting public comments on whether or not the current rules should be changed to reduce the number of payments the contract supplier would receive for capped rental items. The agency also plans to solicit advice from the Program Advisory and Oversight Committee (PAOC) on this subject at a future meeting.

Proposed Appeals Process for Contracts Terminated under the Competitive Bid Program

CMS is proposing to set up a new appeals process for contracts terminated under the competitive bid program. The proposed rule would establish policies and procedures relating to CMS’ determination of a breach of contract and the appeals process for contract suppliers that are considered to be in breach of contract.

CMS is proposing a process for review and reconsideration before the contract is actually terminated. This appeals process would be in addition to, and would not replace, existing CMS regulations regarding other appeals mechanisms.

Addition of Off-the-Shelf Orthotics to Bid Program Exemption if Furnished by Physician

Currently, certain items are exempt from the competitive bid program if they are furnished by a physician or other practitioner if they are provided to their own patients as part of their professional service.

The current exemption is limited to crutches, canes, walkers, folding manual wheelchairs, blood glucose monitors and infusion pumps. In this proposal, CMS would expand this exemption from the competitive bidding program to certain off-the-shelf orthotics when they are provided by physicians or other practitioners (as defined by the HHS Secretary) if furnished to their own patients as part of their professional service.

(MIPPA extended the same exemption to hospitals. Therefore, crutches, canes, walkers, folding manual wheelchairs, blood glucose monitors and infusion pumps — when furnished by hospitals to the hospital’s own patients during an admission or on the date of discharge — are not be subject to the competitive bid program.)

Changes to Payment Rules for Oxygen

CMS is proposing to revise the payment rules for oxygen and oxygen equipment to address situations where beneficiaries relocate outside the service area of a supplier during the 36-month rental payment cap period for the oxygen equipment. CMS explains that Medicare “beneficiaries are experiencing great difficulties in finding suppliers willing to furnish oxygen equipment in situations where only a few months are left in the 36-month rental payment period at the time they relocate.”

As a result, CMS would revise the regulation to require the supplier that furnishes the oxygen equipment and receives payment for month 18 or later to either furnish the equipment for the remainder of the 36-month rental payment period or, in the case where the beneficiary has relocated outside the service area of the supplier, make arrangements for furnishing the oxygen equipment with another supplier for the remainder of the 36-month rental payment period.

The supplier that is required to furnish the equipment on the basis of this requirement must also furnish the equipment after the 36-month rental payment period.

CMS further explains that this proposal would allow either a new supplier in the beneficiary’s new service area ,or a supplier in the old service area, to receive at least half of the 36 monthly payments allowed for under the current statutory payment rule for oxygen equipment.

“We believe this approach would be fair to suppliers in either scenario since the same minimum number of payments applies,” CMS states.

According to CMS, only 38 percent of beneficiaries are still on oxygen by the 18th month, and “relocation between the 18th to the 36th month is not a common occurrence. Such relocation happens with less than 0.5 percent of the beneficiaries using oxygen equipment. In addition, between the 32nd and 35th month, relocation happens with the beneficiaries in about 0.06 percent of the time on average.”

CMS is implementing the provision in the new health care law that eliminates the first-month purchase option for standard (Group 2) power wheelchairs.

Payment for these items will be 15 percent of the purchase price in months one through three, and 6 percent of purchase price in months four through 13. This change will apply to Group 2 power wheelchairs furnished on or after Jan. 1, 2011.

Elimination of First-Month Purchase Option for Standard Power Wheelchairs

The elimination of the first-month purchase option will not apply to these items if they are furnished as part of Round 1 of the competitive bid program in the initial nine metropolitan areas.

Read more Washington Wit & Wisdom columns. View more competitive bidding stories.

A specialist in health care legislation, regulations and government relations, Cara C. Bachenheimer is vice president, government relations, for Invacare Corp., Elyria, Ohio. Bachenheimer previously worked at the law firm of Epstein, Becker & Green in Washington, D.C., and at the American Association for Homecare and the Health Industry Distributors Association. You can reach her at 440/329-6226 or [email protected].