Competitive Bidding and Bundling Final Rule

As expected, Medicare published the “End Stage Renal Disease Prospective Payment System, Quality Improvement Program, and Durable Medical Equipment (DME) Prosthetics Orthotics and Supplies” final rule on Oct. 31, and followed with the official Federal Register publication on Nov. 6. The rule affects not only DME providers that plan on bidding in the Round 2 Recompete, but also providers nationwide due to the application of payment rates set by competitive bidding in noncompetitive bid areas. The main provisions of the final rule:

• National payment rates will be calculated based on regional competitive-bid single payment amounts (SPAs) and applied in noncompetitive bid areas. Ceiling and floor prices will be established based on the SPAs of the regional competitive bid areas (CBAs) and will be phased in during a six-month period beginning Jan. 1, 2016. Ceiling pricing will be given to areas that are considered by CMS to be rural.
• A rural area will be defined as a zip code that has more than 50 percent of its geographic area outside of a metropolitan area or a zip code with a low population-density area that was excluded from a competitive bidding area. The payment amount will be 110 percent of the average of the SPAs of all the areas where CB is implemented.
• In no more than 12 (new) CBAs, standard power wheelchairs and CPAP devices will be paid as both continuous rentals and as bundled payments. There will be a monthly all-inclusive payment, encompassing maintenance and repairs, made to the provider for as long as the beneficiary has a medical need for the product. CMS announced neither the specific geographic area and product codes included in the bundles nor how and when the information regarding the specific details of the bundling pilot program will be available. CMS decided not to move forward with bundling for oxygen, standard manual wheelchairs, enteral nutrition, RADs and hospital beds at this point. We anticipate additional guidance later this year.
• Payment amounts will be adjusted for accessories used with different base equipment. Medicare will use a weighted average of the SPAs from the CB program and product categories in adjusting the payment amounts for the item’s HCPCS code. At press time, this was a significant concern due to some CB-included accessory codes that are also provided on complex rehab wheelchair bases, which were excluded by law from competitive bidding. The industry is seeking clarification from Medicare as to the provision’s applicability and reminding them that CRT wheelchair bases and related accessories are exempt from the program. The change would be phased in beginning Jan. 1, 2016.
• Payments will be adjusted for enteral infusion pumps and standard power wheelchairs. In situations where an SPA for a lower-level product exceeds that of a higher-level product, the lower-level product payment amount would be equal to the higher-level product.

At press time, CMS had yet to publish the time line for the Round 2 Recompete and the Request for Bid information that is expected to provide answers to the many questions that remain. We know that the Round 2 Recompete contracts need to be implemented July 1, 2016, in order to provide a seamless program in the Round 2 areas where contracts expire June 30, 2016. In addition, support continues to build for HR 4920 within Congress, and we have been told by the key committees that if the House passes a Medicare bill this year, it will be in there. Passage of HR 4920 this year would certainly give the industry a positive shot in the arm and help improve the Medicare bidding program prior to its start next year.