The Centers for Medicare and Medicaid Services (CMS) released its Advance Notice of Proposed Rulemaking on Feb. 26, 2014, and it’s safe to say that no one anticipated CMS would be proposing to scrap the current Medicare payment methodology and replace it with a bundled payment system for future rounds of competitive bidding. CMS also included what we were expecting—the first step in CMS’s implementation of its authority to apply bid rates in areas beyond those included in Rounds 1 and 2, or to conduct bidding programs in these rural areas. Unexpected was CMS’s use of the Advance NPRM, an unusual step that federal agencies take prior to issuing a proposed rule. The next stage in the rulemaking process is that CMS will issue a proposed rule, take more public comments and publish a final rule later this year. On the expansion of the bidding program or application of bid rates to areas beyond Rounds 1 and 2, CMS asked for public comments on “several aspects that it would consider in developing a methodology to adjust DMEPOS fee schedule amounts or other payment amounts in non-competitive areas based on DMEPOS competitive bidding payment information.” CMS asked whether costs vary by geography, market size, population or distance covered, and whether there should be a different or interim methodology for items such as transcutaneous electrical nerve stimulation (TENS) that have only been included in the most recent Round 1 recompete. CMS did not identify any particular methodology it might eventually employ. On the unexpected bundling proposal, CMS provided very little information on how it would develop such a methodology for items in competitive bidding in future bidding rounds. In its press release, CMS states, “CMS is seeking comments on whether it should consider simplifying the payment rules under competitive bidding programs…by making one monthly payment to the supplier for all related items and services needed each month. The monthly payments would continue as long as medical necessity for the covered items continued and the supplier would be responsible for furnishing all items and services needed each month.” CMS also asks, “Are lump sum purchases and capped rental payment rules for DME and enteral nutrition equipment still needed? Are there reasons beneficiaries need to own expensive DME or enteral nutrition equipment? Would there be any negative impacts associated with continuous bundled monthly payments for enteral nutrients, supplies and equipment or for certain DME?” This proposed bundling payment system raises more questions than it answers. It is unclear how many related items would be included in the bundle. Would CMS limit the bundle to a single item and related accessories, such as a particular wheelchair and accessories, or would it bundle a larger bundle of DME items, such as manual and power wheelchairs, into a single payment amount? Regardless of the scope of what would be bundled, the proposal raises questions about coding, coverage and documentation. Would suppliers bill a code bundle or bill codes separately? What data does CMS have for suppliers to understand beneficiary utilization of various items included in a bundle during a period of medical need in order to be able to submit an informed bid? Presumably, CMS will provide further details in its proposed rule. One of the more interesting aspects of the proposal is that CMS proposes to pay a continuous monthly bundled rate throughout the period of medial need—there would be no rental cap, and the supplier would retain ownership of the item once medical need ends. Another interesting facet of CMS’s proposal to bundle payments for DME under competitive bidding is its tacit acknowledgement that the current bidding program has resulted in problems for beneficiaries to access repair services, for wheelchairs and other beneficiary-owned items. One of CMS’s stated objectives is that payment for repairs, maintenance and servicing would be included in the bundled payment. CMS states this would eliminate the need for beneficiaries to worry about access to these services. For more than six months, industry representatives have been trying to work with CMS to fix the issue of beneficiary access to repairs, yet CMS has continually denied that there is any problem and hence no need to change current policy. More details will likely unfold in the next few months.