Subscribe to Guest Blog RSS Feed

Guest Blog

Kathy Lester
Executive director of the Council for Quality Respiratory Care

As we head into the final stretch of bidding for Round 2021 of competitive bidding, suppliers across the country are realizing just how different the program is now compared to the past.

One question I hear a lot is: How does capacity and demand influence the payment rate that CMS sets? Since this is one of the most technical—but important!—pieces of the competitive bidding program, I’m here to break it down and help you feel more confident when you go to submit your bid.

In short, the capacity you submit in your bid can have major impacts to the competitive and noncompetitive rates for Round 2021, so it is critical to get it right. To understand how this all works, let’s explore the impact of capacity and demand in how CMS sets rates.

Why do capacity and demand matter?

Capacity is a critical component of each bidder’s bid because CMS uses it to determine the “maximum winning bid,” which is essentially the clearing price for the lead item. At the same time, CMS also uses beneficiary demand to determine the winning bid. These two numbers influence the final rate just as much as the bid you submit.  CMS then uses the maximum winning bid to set the single payment amount (SPA). Then the SPA essentially becomes the basis for the rate in non-CBAs and the SPA plus 10 % is essentially the rate for the non-CBAs defined as rural.

For bidders, thinking about cost is not enough. You must also think about your capacity. The greater your capacity, the greater role your bid amount will have in the process of setting the final SPA. When bidding, overestimating your capacity has the potential to influence payment amounts based on inaccurate information. It is the bidder’s responsibility to get the capacity number right.

In addition, beneficiary demand plays a critical role in setting SPA rates. For each lead item, CMS determines beneficiary demand based on the historic beneficiary utilization of each lead item and will increase that historical utilization by estimating the projected increase in the number of beneficiaries in the CBA and the projected increase in the utilization of the lead item in the CBA.

How does CMS define capacity?

There are two components of capacity. The first is historical capacity, using the most recent 12 months of claims data to show what your capacity was during the last year. The second part is estimated future capacity, which is the “number of lead item units that (a supplier) believe(s it) can furnish in the competitive bidding area (CBA) in one calendar year.” Unlike previous years, CMS no longer requires expansion plans from bidders.

Note that CMS will undertake a ramp up revenue review to determine if a bidder has sufficient funds to furnish the number of lead-item units it estimated for future capacity. To do so, CMS will multiply the bidders’ projected growth by the preliminary SPA then divide that number by the bidder’s actual revenue to create a percentage. If CMS finds that the bidder overestimated capacity, then CMS will reduce the capacity and additional bidders are needed.

Because capacity is used to set the SPA, CMS will then use bidders’ capacities to determine where the bidders’ capacities equal demand, starting with the lowest bid amount working up. The greater a bidder’s capacity, the fewer suppliers will be needed to establish the maximum winning bid, which will lead to a lower SPA.

How does CMS adjust bidders’ capacity?

After bids are submitted, CMS will review each bidder’s capacity amounts and may alter them. The process works like this: First, each bidder defines its estimated capacity in the bid it submits. If the bidder meets the financial threshold set by CMS, then CMS will use the greater of the bidder’s estimated capacity or historical capacity. To ensure competition between at least five bidders in each CBA for each product category, CMS will cap the bidders’ capacity at 20% of demand.

In some instances, CMS may adjust a bidder’s estimated capacity down. If a bidder has no experience in the product category or CBA, CMS will adjust the capacity down to zero. If a bidder demonstrates experience in the product category and the CBA, CMS will use the highest capacity amount (historic or estimated future capacity). And if the bidder has experience providing the product category but not in the CBA, CMS will use a formula to adjust and discount the estimated capacity.

If a bidder’s capacity is lowered and CMS determines demand for the CBA/product category has not been met, then additional bidders will be added until the capacity is meant, which will increase the SPA.

Conclusion

As you can see, capacity and demand are critical to setting rates in competitive and noncompetitive bid areas. Ultimately, it is up to bidders to ensure that all information about their capacity is accurate.

To learn more about this important process, visit the CBIC website or the industry’s education website, which also offers useful explanations, tutorials, bid calculators and more.

Kathy Lester is executive director of the Council for Quality Respiratory Care.

Don Clayback
executive director of NCART

You probably can feel it in the air. You’re sensing that this is not just any ordinary day and you’re right. Since it’s Monday, we’ll help explain that feeling. Today, Aug. 19, is the first day of National CRT Awareness Week.  

National CRT Awareness Week is being held to increase awareness of what Complex Rehab Technology (CRT) is, the important role it plays in the health and independence of children and adults with disabilities, and the need for Congress to pass pending legislation to protect CRT access.  

The focus of the week is to spread the CRT message. That CRT consists of medically necessary and individually configured manual and power wheelchairs, seating and positioning systems, and other adaptive equipment. That this specialized equipment is critical to people with significant disabilities to help manage their unique medical needs and to maximize their function, independence and access to the community. And that the proper provision and use of CRT reduces medical complications, clinical interventions, hospitalizations, institutionalizations, as well as the need for long-term care and support.

The good news is that everyone can take part. Many organizations already have their plans in place and we’re looking for others to join in. Here are some ideas for how to get involved either this week or as we move through the rest of the month:

  • Invite everyone in your organization to visit www.protectmymobility.org and send emails to Congress (or make phone calls). Include your customers, patients and others.
  • Use social media to tag your members of Congress in a post asking them to co-sponsor and pass our CRT bills.
  • Create a video of yourself or a group explaining the importance of CRT and asking others to visit www.protectmymobility.org. Be creative and share on social media.
  • Schedule a meeting with your members in their district offices and bring along other constituents to share their perspectives on CRT access.
  • If appropriate, invite your members or their staff to visit your facility so they can see how unique CRT is for themselves.


This is a key time for CRT advocates to be taking action as Congress is in recess and your members are back in your home districts. Once Members return to the Capitol in September they'll be discussing and voting on important legislation.

We want our CRT bills to be included in those conversations:

Protect Complex Rehab Wheelchairs – This is the first of our two legislative initiatives. H.R. 2293, introduced by Reps. John Larson, D-Conn., and Lee Zeldin, R-N.Y., and S. 1223, introduced by Sens. Bob Casey, D-Pa., and Rob Portman, R-Ohio, will halt inappropriate Medicare payment cuts for critical components of complex rehab manual wheelchairs and permanently exclude them from the competitive bidding program.

Create CRT Separate Benefit Category – This second legislative initiative represents needed comprehensive change. H.R. 2408, introduced by Reps. Jim Sensenbrenner, R-Wis., and Brian Higgins, D-N.Y., will establish a separate benefit category for CRT within the Medicare program to allow better access and safeguards through proper segregation and improvements in coverage, coding and supplier standards.

National CRT Awareness Week is a great opportunity to help spread the CRT message and encourage others to get involved. Use the email links, phone call guides, and other background information at www.protectmymobility.org and add your own ideas. Thanks for letting your members of Congress know their constituents at home want them to pass pending CRT legislation to protect important access for people with disabilities.

Don Clayback is executive director of NCART. Reach him at dclayback@ncart.us or 716-839-9728.

Topic:


Attention to detail is everything.
 
History is full of examples when overlooking small details led to much larger problems. From the leaning tower of Pisa, which was built on soft ground causing it to tilt, to a missing key that prevented the Titanic’s lookouts from getting binoculars to spot icebergs in the water, careful planning is critical.
 
So when it comes to Round 2021 of the Medicare Competitive Bidding Program (CBP), which opened for bidding in mid-July, bidders must pay close attention to cross their Ts and dot their Is.
 
The new bidding process is much improved from the CBP of the past. But being so different, it is vital that all suppliers who plan to submit a bid understand the new changes. As you examine how you might bid based on lead-item pricing, the clearing price rate setting, and new higher bid ceilings—among other important changes—don’t forget about the Process for Reviewing Covered Documents. 
 
To have your “covered documents” reviewed by the CBIC for completeness, bidders must submit those documents through the Connexion platform by the covered document review date deadline of Aug. 19. A covered document “means a financial, tax, or other document required to be submitted by a bidder as part of an original bid submission under a competitive acquisition program to meet the required financial standards.” For Round 2021 of the CBP, these are the tax return extract, income statement, balance sheet, statement of cash flow, and credit report with numerical credit score or rating.
 
With so many details that you need to cover, it might be easy to forget to upload one or more required financial documents into the Connexion platform. But just as even the best laid plans can fall apart due to one missing piece, so can your bid if you fail to submit all of the required financial documents that the CMS requires. The covered document review process will provide you peace of mind, knowing that your financial document submission is complete and properly submitted through the Connexion platform. Bidders should therefore make every effort to take advantage of this process.
 
Bidders who upload their covered financial documents in the Connexion platform before Aug. 19 are included in the Covered Document Review Process (CDRP). During this process, CMS will determine if any of your required financial documents are missing and will alert you within 90 days so that you may upload them. After the bid window closes on Sept. 18, only the covered documents identified and requested in a written notification from the CBIC as a result of the covered document review date (CDRD) process will be considered. Therefore, the Covered Document Review Process is a great opportunity for you to keep your Round 2021 bid on track. While the CDRP does not determine if your required financial documents are accurate, acceptable, complete, or in accordance with RFB instructions, many suppliers will find it quite useful to ensuring they submit every required piece of information.
 
We urge every supplier who plans to bid to submit all of their required documents early so that they can take advantage of this opportunity.

For more information, visit the CBIC website or the industry's education website.
 
Cara Bachenheimer leads the Government Affairs Practice at Brown & Fortunato and Kim Brummett is Vice President of Regulatory Affairs at the American Association for Homecare.

Nick Macmillan
Nick Macmillan is director of market access and strategy for Ventec Life Systems

What is a multi-function ventilator?

CMS defines a multi-function ventilator as a single device that integrates a ventilator, portable oxygen concentrator, cough stimulator, suction and nebulizer, which traditionally requires a separate piece of equipment for each therapy. VOCSN is the only device that integrates all five therapies and qualifies as a multi-function ventilator.

Who is eligible for a multi-function ventilator?

Any new ventilator user that qualifues for a ventilator and at least one of the four additional functions of the device (oxygen, cough, suction, nebulizer) is eligible for VOCSN. Specifically, current ventilator users that meet one of the equipment rental schedules below are eligible for VOCSN:

  • Ventilator users that have used cough, suction, and nebulizer for less than 13 months, meaning title of the capped rental item has not transferred to the patient.
  • Ventilator users that have used oxygen therapy for less than 36 months, meaning title has not transferred to the patient.
  • Ventilator users that own one of the rental items (or reached the 36-month cap for oxygen) but have exceeded the reasonable useful life of five years and are eligible for a new device.


How does this ventilator code differ from existing HCPCS codes for invasive and non-invasive ventilators?

E0467 provides a higher monthly reimbursement rate than E0465 (invasive) and E0466 (non-invasive) and can be applied to patients using the multi-function ventilator for invasive, non-invasive, and/or mouthpiece ventilation.  

What are the benefits of billing E0467?

DME providers can bill a single code that is uncapped and no longer need to track different rental schedules for the different devices that transfer ownership after 13 or 36 months. For example, a DME in Arkansas billing multiple codes for a patient using a traditional ventilator, portable suction pump, and nebulizer would see an increase in reimbursement of $3,222.15 after the first 12 months and an increase of $10,988.26 after 36 months when billing a single code for a multi-function ventilator under E0467.

What payers are covering the VOCSN multi-function ventilator?

VOCSN is billable under HCPCS E0467 as a multi-function ventilator and reimbursable under the Medicare fee schedule. TRICARE uses the same Medicare reimbursement rates established by CMS. Adoption of E0467 for reimbursement by private payors and Medicaid is rapidly expanding and new payers are added weekly. Generally, both Medicaid and commercial payers follow the E0467 reimbursement guidance to pay approximately 20% more than their current ventilator reimbursement.

Can you bill for a second purpose ventilator?

Billing for a secondary multi-function ventilator also follows the same eligibility guidance that requires medical necessity for the secondary multi-function ventilator to serve a different medical purpose that is determined by the beneficiary’s medical needs (i.e. a beneficiary who is confined to a wheelchair and requires a ventilator mounted on the wheelchair for use during the day and needs another ventilator of the same type for use while in bed).

Is E0467 subject to competitive bidding?

Even though VOCSN can provide invasive, non-invasive, and mouthpiece ventilation, E0467 is not subject to the competitive bidding process.

For more information, join an upcoming webinar on August 14.  

Nick Macmillan is director of market access and strategy for Ventec Life Systems.

Doug Westerdahl
president and CEO of Monroe Wheelchair

In today’s world, navigating the insurance industry can be difficult. It can be especially hard for those with complex disabilities. This group of people depends on complex rehab technology (CRT) to live an independent life. CRT is used by people with complex medical needs and includes equipment like individually configured wheelchairs, custom seating systems, adaptive bathing equipment and gait trainers.

Currently, Medicaid does not have concrete guidelines to protect CRT in New York State. There is no guarantee that individuals with complex disabilities will have appropriate access to the items and services that they require. The Governor has a chance to do what is needed by signing the A7492/S5741 bill into law to preserve the independence, improve the quality of life, and reduce the health care costs of New Yorkers across the state who depend on it. 

I am the owner of Monroe Wheelchair, a complex rehab technology supplier based out of Rochester with branches in Albany and Syracuse. I’ve been in this business for 40 years and am proud to say we have grown to a company of 92 employees providing equipment and supporting services to more than 15,000 people with disabilities across the state. A large portion of what our company provides is CRT. 

The process to provide CRT is meticulous and labor intensive. A specially trained and credentialled assistive technology professional (ATP), is needed to work with each of our CRT customers. Their role is to ensure that medically appropriate equipment is built from the ground up to support each individual’s unique physical and functional needs. 

The process begins with collecting medical documentation to be reviewed to determine necessity, and all functional mobility evaluations must be conducted by clinicians. Demo equipment must be tested, authorizations obtained, and each component must be coded, ordered, pieced together, delivered and billed correctly. The entire process can take anywhere from 60-120 days and is a far cry from providing standard durable medical equipment where someone could walk into the store with a prescription from their doctor and leave 30 minutes later with their new equipment.

Insurance coverage for CRT has changed over the years, making it increasingly challenging to continue offering this service to our community. Reduced reimbursements, budget cuts, changes in policy or coverage, and archaic coding systems are additional hurdles that threaten how and what my company is able to provide, while still offering excellent service and keeping our doors open. 

I want to see this specialized equipment protected and defended because I understand its importance. This bill has been passed by the New York State Legislature and it would protect individuals with complex needs without adding additional cost to the state or its taxpayers. All that is needed now is the signature of the governor.  To me, my employees, the clinicians we work with, and the people with disabilities that we serve, signing this bill into law is a no-brainer. Our collective hope is that Gov. Cuomo feels the same way. 

You can help us fight for this needed bill. Tell Gov, Cuomo why it matters to you by visiting www.protectCRT.org.

Andrea Stark
reimbursement consultant, MiraVista

With CMS launching a new mandatory prior authorization program for group 2 support surfaces in July, suppliers are understandably concerned about accommodating patients with immediate needs for pressure support, particularly upon hospital discharge.

Discharge planners typically start care coordination when the doctor signs the order to go home. Suppliers point out that the authorization process takes time. Suppliers must gather supporting documentation from multiple sources, and contractors will scrutinize requests before approving them.

Unlike many other conditions requiring home medical equipment, those treated with group 2 support surfaces rarely develop overnight or go unnoticed by admitting clinicians. To avoid delays in delivery and extended hospital stays, coordination among hospitals and suppliers must begin at admission for beneficiaries in need of pressure support.

Patients qualify for group 2 support surfaces via three pathways:

  • Multiple stage II ulcers on the trunk or pelvis, with evidence of prior treatment for at least a month using a Group 1 support surface and a comprehensive ulcer treatment program.
  • Large or multiple stage III or IV ulcers on the trunk or pelvis.
  • Surgical procedure for a myocutaneous flap or skin graft.


Suppliers should:

  • Develop standard procedures to obtain prior authorizations.
  • Educate hospital staff about the new mandatory prior authorization program.
  • Request contact upon admission when ulcers or other qualifying conditions are present.


Though there is no published guidance at this time, authorizations should remain effective between one and six months after approval.

Bob Dylan probably didn’t have durable medical equipment (DME) in mind when he sang “The times they are a-Changin.” But that memorable refrain could easily apply to Medicare’s DME competitive bidding program (CBP), which will implement a brand new process for bidding this June.
 
With big changes to the competitive bidding program fast approaching, it is vital for medical equipment providers and suppliers to understand how the new process works so they can prepare to place bids that promote both maximum patient access and industry sustainability.
 
What’s changed

It is well known that the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) requires Medicare to replace the current fee schedule payment methodology for selected DMEPOS items with a competitive bid process. In early March, the CMS announced plans to consolidate the competitive bidding areas (CBAs) included in the Round 2 Re-compete and Round 1 2017 DMEPOS CBP into a single round of competition named “Round 2021.”
 
Key changes include:

  • Use of the “clearing price” to set rates: The single payment amount (SPA) for a lead item will be equal to the maximum bid submitted for that item by bidders whose lead item bids for the product category are equal to or below the pivotal bid for that product category in a CBA.
  • Lead-item pricing: To allow for the use of what is essentially a “clearing price” methodology, suppliers will submit a single bid for a lead item in the product category. The SPA will be calculated for that lead item in the CBA based on the highest amount bid within the winning bids. The SPAs for non-lead items will be based on the relative difference in the fee schedule amounts for the lead and non-lead items.
  • Bid surety bonds: Bidders must obtain a $50,000 bid surety bond for each CBA for which they submit a bid.
  • Use of SPAs to set rates in non-CBAs: CMS also uses the SPAs to set the rates in non-CBAs that are not rural but will set the rural non-CBA rates at what is essentially the SPA plus 10% in rural areas. This means the bids for CBAs will have a direct impact on the rates in non-CBAs.

 
Resources

To help providers get up to speed, a group of industry leaders collaborated to launch an online educational resource: www.dmecbpeducation.com. The website—the product of a collaboration between the American Association for Homecare, the Council for Quality Respiratory Care, the Healthcare Nutrition Council and the VGM Group—serves as a complementary resource to the Competitive Bidding Implementation Contractor (CBIC) website.
 
Suppliers and prospective bidders nationwide can use the website’s powerful calculators to estimate how lead item pricing may impact costs and compare them to an approximation of how the SPAs compare to the current 2019 Medicare rates. The calculator will also show how a bid would affect the rates in non-CBAs if it became the SPA. Moreover, the website will also serve as a platform for webinars and events intended to educate prospective bidders about the CBP in the lead-up to the bidding round.
 
Since bidding is no longer business as usual, all providers who plan to compete should visit www.dmecbpeducation.com and the CBIC website to learn more about how these changes will impact them. And with the bidding period set to launch in June, time is of the essence.
 
So, DME providers, get ready. As Bob Dylan famously sang, “If your time to you / Is worth savin' / Then you better start swimmin' […] for the times, they are a-changin’.”
 
Cara Bachenheimer is Head of the Government Affairs Practice at Brown & Fortunato and General Counsel for the American Association for Homecare. Mark J. Higley is Vice President of Regulatory Affairs for VGM Group, Inc. Robert Rankin is Executive Director of the Healthcare Nutrition Council. Dan Starck is Chair of the Council for Quality Respiratory Care.

Several million Americans rely on Medicare as their main source of health insurance coverage, particularly those over the age of 65. Through Medicare, several options are available for how medical bills for things like prescriptions, exams, tests and medical equipment are paid for by the federal government or the individual insured under the plan. When it comes to durable medical equipment, such as blood sugar monitors, canes, wheelchairs and nebulizers, individuals covered under a Medicare plan often work with special suppliers to get the items they need to remain healthy.

Individuals or companies that work as durable medical equipment suppliers must meet specific requirements to comply with Medicare laws and regulations. One of these requirements, a durable medical equipment surety bond, relates to the prevention of fraud against patients. Here’s what you need to know as a durable medical equipment supplier and your surety bond requirements.

What is a durable medical equipment surety bond?

A durable medical equipment surety bond is a federal surety bond required under CMS. Any supplier of durable medical equipment, including orthotics, supplies, and prosthetics, must have a bond for each location in which they utilize Medicare billing. The purpose of this surety bond is to reduce fraudulent billing of Medicare, protecting the system as well as its patients.

When a supplier has a durable medical equipment surety bond, a claim against a billing practice is submitted to the bond or surety company to help cover financial losses or other damages. The bond helps create a foundation of legitimacy for suppliers while safeguarding the Medicare system from erroneous charges or billing over time.

How much is required?

The surety bond requirement for durable medical equipment suppliers went into effect on a federal level in 2009, as published in the Federal Register. The amount of the bond is no less than $50,000 per location where billing to Medicare takes place. Each supplier is required to have this amount of a surety bond to ensure it complies with the law.

Some medical equipment suppliers are exempt from the surety bond requirement, however. Those that are government-owned, state-licensed personnel operating private practices with custom orders, and some physicians and non-physician providers are not required to have the same federal surety bond.

How to get it and cost

Securing a durable medical equipment surety bond for your supplier business is not a difficult task. However, it does require you to work with a reputable surety agency that understands the requirements set forth for suppliers that bill through Medicare. Each surety agency will have its own process for getting a surety bond, but they all begin with an application that includes details about the business, the amount of the bond, the state in which the business operates, and your credit history.

Surety agencies look into your financial track record because the bond itself is a form of extended credit. If you have less than ideal credit, you can still get a durable medical equipment bond, but the cost of that bond may be higher. Regardless of your financial history, a durable medical equipment surety bond is priced as a percentage of the total bond amount, so the expense is often minimal to suppliers.

Getting a surety bond for your durable medical equipment supplier business is a crucial component of operating legally. The process is simple, but it is necessary to understand this requirement before working with Medicare patients to meet their medical equipment needs.

Eric Weisbrot is the chief marketing officer of JW Surety Bonds.

Imagine you are having a problem with your car. You need it looked at, so you take your car to an expert to get it checked out at and diagnosed. You know you have problems with your car, but you want someone else to assess your car’s problems.

The mechanic looks at your car and he is immediately puzzled. There are so many oddball problems with your car. The expert wants to know how this car came about. You tell him: “At one time this car ran great, but over the years, so many changes have been made to this vehicle, it now has a lot of peculiar issues. The vehicle just doesn’t do what it used to do.” You reveal to the expert that you got this car at CMS Auto. “Ah, yes!” the expert says. “I know this vehicle very well.” The expert grabs the published service bulletins and begins to read them to you.

First of all, there’s a bulletin about the tires. It says here, “Even though all four of the vehicle’s tires appear to be flat, they are only flat on one side. Most all the tires appear to be mostly round. There is no need to replace the tires.”

The next bulletin is about a loud noise coming from the motor. It says, “In the event a loud noise is heard coming from the motor, the recommended fix is to turn up the radio; once the radio is turned up, the engine noise goes away.” There is no need to repair the engine.

Another bulletin addresses multiple warning lights illuminated on the dashboard. It recommends “disconnecting the lights or covering the lights with electrical tape so drivers will not see the warning lights.” No need for repair.

As funny as this story sounds, it is not far from fiction in regard to CMS’s response to the DME competitive bidding program and the woes providers have faced for a few years now and in the newly released ESRD Final Rule. As providers, we keep saying this vehicle (competitive bidding and the rates that are applied to most of the country) is broken down and needs major repair. CMS continues to say nothing is wrong—after all, the tires are only flat on one side.

Auction theory expert Peter Cramton said it was “a never before seen” bidding process. It makes little sense and creates several adverse incentives that, ultimately, impose unnecessary costs on patients, Medicare and DME providers. Are we really saving money?

The Medicare bidding process is hurting patients, according to a new study from the Pacific Research Institute, a public policy think tank based in California.

“The current Medicare bidding process, while well-intentioned, hurts patients by denying them access to medically-necessary supplies and equipment,” Wayne Winegarden, MD, senior fellow in business and economics at Pacific Research Institute and author of the study, said in a statement. “The process has led to diabetes patients not receiving testing supplies and COPD patients not receiving home oxygen when needed.” This is from an outside expert.

In the markets where CMS implemented the CBP, the NMQF study found that there were 42 additional deaths and twice as many hospitalizations as in unaffected markets. Clearly, the NMQF study found that CMS’s report (the one that said everything was fine) was incorrect. CMS wants us to cover these warning lights with duct tape, but it’s not going to work!
Even with all this research that showed the CBP was harmful to beneficiaries with diabetes, CMS implemented the program nationally for mail-order supplies and supplies obtained from retail channels. This move eliminated more than 98% of suppliers that provide mail-order diabetes supplies. Do we want more small businesses to close? DME companies are closing all over the country.

Information obtained through the Freedom of Information Act retrieved by DME industry advocates from data.medicare.gov shows the estimated number of DME suppliers and locations have dropped by nearly 38% nationwide. As I have stated before, I believe that number to be much higher due to the number of suppliers who chose to sell out to larger companies.

CMS clearly admits there are problems with the current CBA and current reimbursement rates, when they issued a final rule that updates payment policies and rates under the ESRD Prospective Payment System (PPS). The rule also included changes in the current CBP. These changes do not address the immediate need for a rate increase.

AAHomecare President and CEO Tom Ryan deemed the Final Rule a net positive that reforms future rounds of the bid program and offers relief to rural providers. He also noted that it reflects recognition on CMS’s part that the bid program has problems and a willingness to work with the HME industry to fix it. However, the work isn’t done, he said.

The final rule does not contain two provisions that both HME stakeholders and many members of Congress supported and urged CMS to add to the final rule: The broader application of the 50-50 blended rate relief to all non-bid areas and retroactively applying Consumer Price Index (CPI) adjustments in CBAs based on the increase in the CPI from 2013 through 2018. How does CMS ignore Congress?

The current CBP contracts will end on Dec. 31st, after which any Medicare credentialed DME provider may provide DME for Medicare beneficiaries. The idea of contracts means that contracted providers would have potentially more patients to provide for, thus improving their margins. On Jan. 1, 2019, the potential pool of Medicare beneficiaries will have to be spread among many providers at razor thin or even negative margins.

On one hand, CMS admits there are problems with the CBP; on the other hand, CMS failed to address the immediate problems with the current rates that are unsustainable per many industry experts and Congress. I believe many DME companies are hanging on by a thread, hoping the changes the industry was looking for would be contained in the ESRD Final Rule. The final rule leaves me scratching my head wondering why CMS is allowing pricing generated under this clearly flawed program to stay in effect. Congress clearly sees the issue with the current system and has requested rates for DME to be increased. I fear many more DME companies will close their doors if relief is not provided now.

The question prevalent on the minds of many DME providers is this: Industry experts, outside experts, DME providers and even Congress agree the current rates are unsustainable; why is CMS taking so long to address obvious problems? Currently, CMS’s plan is to take the next two years to fix the CBP issues that may or may not address the current rates? Our industry clearly needs to get the attention of Congress to pass legislation that force changes. Asking and suggesting is not enough.

The DME industry, Congress and industry experts agree this vehicle (competitive bidding) is broken down and needs major repairs. CMS continues to say nothing is wrong; after all, the tires are only flat on one side.

Jonathan Temple is the owner of OxyMed in Birmingham, Ala.

By Andrea Stark
reimbursement consultant, MiraVista, LLC

In the recent ESRD Proposed Rule, CMS conveyed their intent to freeze reimbursement in Competitive Bid Areas (CBAs) using the single payment amounts (SPAs) when the program ends on Dec. 31/2018.* CBAs encompass the most populous areas of the country and have the greatest impact on Medicare spend dollars.** In recent conversations with industry legal experts, MiraVista put forth three central questions:

  • Does CMS have the authority to freeze SPAs without contracts?
  • If not SPAs, then what is the reimbursement rate?
  • Is the CMS proposal good or bad for suppliers?


Does CMS have the authority to freeze SPAs without contracts?

CMS sets SPAs by ranking bonafide bids, determining a minimum number of suppliers to meet capacity for an area, and identifying the median bid price from this narrowed list. After CMS calculates the SPA, they offer contracts to suppliers. Upon receipt of the contract, suppliers have the right to accept or refuse the contracts, which become binding to both parties upon acceptance.

Per existing regulations, if CMS allows these contracts to expire, then no supplier can furnish competitive bid products. 42 CFR 414.408 establishes payment rules for competitive bid programs. §414.408(e)(1) states “Except as provided in paragraph (e)(2) of this section, all items that are included in a competitive bidding program must be furnished by a contract supplier for that program.” The four exceptions in (e)(2) relate to grandfathering, Medicare as a secondary payer, beneficiaries outside a CBA, and physician/hospital type exemptions, which do not apply to CMS’s proposal. Furthermore, §414.408(e)(3)(i) states unless an approved exception applies, “Medicare will not make payment for an item furnished in violation of paragraph (e)(1) of this section.” Together, these two citations put CMS in violation of the regulation if they make payment to non-contracted suppliers.

The regulations do not have a specific section dedicated to routine contract expiration. 42 CFR 414.423, however, addresses the appeals process for breach of a DMEPOS competitive bidding program contract, and it contains an applicable section “effect of contract termination.” If contracts expire, we believe the provisions of the termination clause apply in §414.423(l)(2)(i), “All locations included in the contract can no longer furnish competitive bid items to beneficiaries within a CBA and the supplier cannot be reimbursed by Medicare for these items after the effective date of the termination.”

Based on the above regulations, if a competitive bidding program cannot be administered without contracts, then CMS has two choices:

  • Extend contracts, or
  • Acknowledge the competitive bidding program is no longer in effect.


CMS did not even suggest contract extensions in the proposed rule. Without contracts, however, the regulations do not permit CMS to make payments to any supplier for competitively bid products in a competitive bidding area.

If CMS chooses to negotiate an extension with contracted suppliers, they could maintain compliance with the regulations.

Alternatively, if CMS acknowledges a lapse in the competitive bid programs in these areas, then CMS cannot use the payment rules for competitive bid programs located at 42 CFR 414.408. 42 CFR 414.408(b) states, “The single payment amount calculated for each item under each competitive bidding program is paid for the duration of the competitive bidding program and will not be adjusted by any update factor.” §414.408 only governs payment rules under a competitive bidding program.

If not SPAs, then what is the reimbursement rate?

§414.408 does not apply if the competitive bid program is not in effect. Instead, the general payment rules (using traditional fee schedules for rural and non-rural areas) at 42 CFR 414.210 must govern. There is already precedent for reinstatement of general payment rules during gaps between competitive bid programs. In July 2008, CMS awarded Round 1 contracts and then terminated them two weeks later. The CBIC website summarizes the timeline as follows:

“The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) required the competition for the first phase of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program to occur in 10 areas in 2007. Round 1 of the program was implemented in 2008 for two weeks until the contracts were terminated by subsequent law. The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) temporarily delayed the original Round program, terminated the contracts that were in effect, and made other limited changes. As required by MIPPA, the Centers for Medicare & Medicaid Services (CMS) conducted the supplier competition again in 2009, referring to it as the Round 1 Rebid.”

MIPPA created a gap between competitions from July 15, 2008, until January 1, 2011, when the Round 1 Rebid SPAs took effect. During the two-and-a-half-year period, the general payment rules and prevailing DME fee schedule reasserted itself over the briefly contracted SPAs. If CMS does not perpetuate the contracting process beyond Dec. 31, 2018, contract expiration should invoke another gap.

Based on our preliminary research, current regulations do not permit CMS to administer competitions without contracted suppliers. If the programs end and the general payment rules take precedent, CMS will have to recalculate rates for the traditional fee schedule because of the lapse in competitions.

The Patient Protection and Affordable Care Act incorporated new pricing methodology to 42 CFR 414.210 that averages SPAs across eight geographical regions. This methodology is referred to as national pricing. Specifically, §414.210(g)(4) requires payment adjustments for items and services included in competitive bidding programs that are no longer in effect:

“In the case where adjustments to fee schedule amounts are made using any of the methodologies described, if the adjustments are based solely on single payment amounts from competitive bidding programs that are no longer in effect, the single payment amounts are updated before being used to adjust the fee schedule amounts. The single payment amounts are updated based on the percentage change in the Consumer Price Index for all Urban Consumers (CPI-U) from the mid-point of the last year the single payment amounts were in effect to the month ending 6 months prior to the date the initial fee schedule reductions go into effect. Following the initial adjustments to the fee schedule amounts, if the adjustments continue to be based solely on single payment amounts from competitive bidding programs that are no longer in effect, the single payment amounts used to reduce the fee schedule amounts are updated every 12 months using the percentage change in the CPI-U for the 12-month period ending 6 months prior to the date the updated payment adjustments would go into effect.”

The above provision requires CMS to periodically readjust and increase the national fee schedule after adding in a CPI increase to historical SPAs. This process continues until a new competition takes effect.

National pricing created a bifurcated DMEPOS fee schedule with one set of rates for rural and non-contiguous areas, and another set of rates for urban (aka non-rural) areas. The national rates in rural and non-contiguous areas are presently enjoying a 50/50 blended rate increase through Dec. 31, 2018, due to the Interim Final Rule (CMS-1687-IFC) advanced by CMS. The ESRD Proposed Rule suggested a 24-month extension of this reprieve through Dec. 31, 2020.

The ESRD Proposed Rule is also soliciting comments on whether CMS should extend similar rate reprieve to urban areas. CMS’s proposal to create a new SPA-based fee schedule for former bid areas would exclude these areas from potential rate adjustments.

Is the CMS proposal good or bad for suppliers?

This is a great question with no easy answer.

On the surface, many beleaguered suppliers are simply relieved at the prospect of CMS advancing much needed reform. Nonetheless, freezing the SPAs not only ignores existing regulations but also the mounting effects of a flawed bidding program.

Proceeding without contracts is likely to exacerbate access problems in bid areas. The industry warned CMS of an excessive number of contracted offers to companies without a local presence. When contracts expire, so does the obligation to service bid areas under penalty of contract breach. If rates do not support profitable service in these most populous areas, CMS will unwittingly escalate access deterioration. There will be nothing to hold non-contracted suppliers, or draw new suppliers, to these dense and unprofitable markets.

On the other hand, if CMS temporarily ends the bid program and engages the general payment rules it will be a mixed bag for many suppliers. There are 130 bid areas and thousands of HCPCS-SPA combinations impacted by this alternative. National pricing averages these thousands of individual SPAs across 8 regional geographic areas. This process results in both net increases and decreases to individual SPAs. SPAs for stationary oxygen, however, are most negatively impacted due the budget neutrality reductions (aka double-dip cuts) imposed after the regional averages are calculated. In all but two bid areas (Honolulu, HI and Chester, SC), suppliers would see a rate decrease for stationary oxygen pricing compared to current SPAs.***

We expect CMS to publish a final ESRD rule in the coming weeks, but at the time of print, CMS had not posted the document. With the final rule, we expect CMS to finalize significant contracting reform that will apply pivotal bids over median bids. This single change should deliver sustainable rates in future competitions and to the national fee schedule. Until these changes take effect, current reimbursement rates remain flawed and unsustainable.

Andrea Stark is a reimbursement consultant for MiraVista. Reach her at andrea@miravistallc.com.

Article Footnotes:
* CMS also suggested an immaterial, single-year consumer price index (CPI) increase for inflation in these bid areas. To put the CPI increase into perspective, the 2018 inflation factor increased fees by about 1.1%. This is a very small increase. As such, at each reference to the CMS proposal to freeze the SPAs, we do not specifically call out the CPI increase proposal due to the immateriality of the increase.
** CBAs cover the 110 largest metropolitan statistical areas within the country. According to census data, approximately two-thirds of the US population reside in these areas. MiraVista requested specific Medicare beneficiary and utilization data from the Competitive Bidding and Implementation Contractor, but was advised this data is not publicly available without a Freedom of Information Act (FOIA) request.
*** E1390 SPA averaged $76 across all CBAs with a low of $70 and high of $90. National Pricing averages $70 across the same geographic areas with a low of $65 and high of $121.

Pages