Application of Bid Rates

In November 2014, CMS issued Final Rule 1614-F, which contains provisions relating to the DME competitive bidding (CB) program and how CMS plans to roll out competitive bid pricing in non-bid areas. A subsequent December 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. Not that long ago, many providers believed they were unaffected by the program because it was originally rolled out in only nine competitive bidding areas (CBAs). The industry warned that the program would have ripple effects, and it certainly has led to significant changes and consolidation within the industry. Even after the implementation of Round 2, the program did not directly affect a good number of providers. Now, we are all affected by CB and need to be unified in our message to policymakers to secure better outcomes prior to implementation of the new rates in January 2016.

Bid Rates in Non-Bid Areas

One of the provisions in the final rule outlines how Medicare will apply competitive bidding rates in non-competitive bid areas. While providers in these areas will not be required to submit bids, CMS will use single payment amounts (SPAs) 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 (RSPAs) 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.

Bid Rates on Complex Rehab Items

While Medicare has the authority to roll out the competitive bid pricing in non-bid areas, they do not have the authority to roll out the pricing for exempt items. CMS published a FAQ that indicates they intend to apply CB pricing information obtained through bids on standard wheelchair accessories to reduce payments on complex rehab items. Such application of bid pricing goes against the statutory language in the Medicare Improvements for Patients and Providers Act of 2008, which specifically exempted wheelchair accessories from CB when used on a complex rehab wheelchair base. For the last six years, Medicare has paid for these items at the traditional fee schedule amount when provided on a complex rehab wheelchair base due to the specific language in the law exempting these items from CB. Complex rehab wheelchairs are customized to address specific medical needs of people with high-level disabilities. This specialized equipment is provided through a clinical team and requires extensive evaluation, configuration, fitting, adjustment and programming to meet an individual’s needs as outlined by their physician. NCART and other complex rehab stakeholders are already working with CMS and legislators to rescind the policy change so these items, when placed on a complex rehab base wheelchair, are paid at the traditional Medicare fee schedule. At press time, Congress was circulating a “Dear Colleague” letter to express concerns with CMS’s plan. AAHomecare is also working with industry stakeholders to advance a proposal that would significantly limit the application of bid rates in non-bid 
areas. Your direct outreach to legislators and participation in the grassroots 
efforts on these issues will be key to their successes.