Rule2021-27763
Medicare Program; Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Policy Issues, and Level II of the Healthcare Common Procedure Coding System (HCPCS); DME Interim Pricing in the CARES Act; Durable Medical Equipment Fee Schedule Adjustments To Resume the Transitional 50/50 Blended Rates To Provide Relief in Rural Areas and Non-Contiguous Areas
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 28, 2021
Effective
February 28, 2022
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final rule establishes methodologies for adjusting the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedule amounts using information from the Medicare DMEPOS competitive bidding program (CBP) for items furnished on or after the effective date specified in the DATES section of this final rule, or the date immediately following the duration of the emergency period described in the Social Security Act (the Act), whichever is later. This final rule also establishes procedures for making benefit category and payment determinations for new items and services that are durable medical equipment (DME), prosthetic devices, orthotics and prosthetics, therapeutic shoes and inserts, surgical dressings, or splints, casts, and other devices used for reductions of fractures and dislocations under Medicare Part B. In addition, this rule classifies continuous glucose monitors (CGMs) as DME under Medicare Part B. Lastly, this final rule finalizes certain DME fee schedule-related provisions that were included in two interim final rules with comment period (IFC) that CMS issued on May 11, 2018, and May 8, 2020.
Full Text
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[Federal Register Volume 86, Number 246 (Tuesday, December 28, 2021)]
[Rules and Regulations]
[Pages 73860-73911]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-27763]
[[Page 73859]]
Vol. 86
Tuesday,
No. 246
December 28, 2021
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 414
Medicare Program; Durable Medical Equipment, Prosthetics, Orthotics,
and Supplies Policy Issues, and Level II of the Healthcare Common
Procedure Coding System; DME Interim Pricing in the CARES Act; Durable
Medical Equipment Fee Schedule Adjustments To Resume the Transitional
50/50 Blended Rates To Provide Relief in Rural Areas and Non-Contiguous
Areas; Final Rule
Federal Register / Vol. 86 , No. 246 / Tuesday, December 28, 2021 /
Rules and Regulations
[[Page 73860]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 414
[CMS-1738-F, CMS-1687-F, and CMS-5531-F]
RINs 0938-AU17, 0938-AT21, and 0938-AU32
Medicare Program; Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) Policy Issues, and Level II of the
Healthcare Common Procedure Coding System (HCPCS); DME Interim Pricing
in the CARES Act; Durable Medical Equipment Fee Schedule Adjustments To
Resume the Transitional 50/50 Blended Rates To Provide Relief in Rural
Areas and Non-Contiguous Areas
AGENCY: Centers for Medicare & Medicaid Services (CMS), Health and
Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule establishes methodologies for adjusting the
Medicare durable medical equipment, prosthetics, orthotics, and
supplies (DMEPOS) fee schedule amounts using information from the
Medicare DMEPOS competitive bidding program (CBP) for items furnished
on or after the effective date specified in the DATES section of this
final rule, or the date immediately following the duration of the
emergency period described in the Social Security Act (the Act),
whichever is later. This final rule also establishes procedures for
making benefit category and payment determinations for new items and
services that are durable medical equipment (DME), prosthetic devices,
orthotics and prosthetics, therapeutic shoes and inserts, surgical
dressings, or splints, casts, and other devices used for reductions of
fractures and dislocations under Medicare Part B. In addition, this
rule classifies continuous glucose monitors (CGMs) as DME under
Medicare Part B. Lastly, this final rule finalizes certain DME fee
schedule-related provisions that were included in two interim final
rules with comment period (IFC) that CMS issued on May 11, 2018, and
May 8, 2020.
DATES: These regulations are effective on February 28, 2022.
FOR FURTHER INFORMATION CONTACT: Alexander Ullman, 410-786-9671 or
<a href="/cdn-cgi/l/email-protection#da9e979f8a95899ab9b7a9f4b2b2a9f4bdb5ac"><span class="__cf_email__" data-cfemail="1f5b525a4f504c5f7c726c3177776c31787069">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. Purpose
This final rule makes changes related to: The Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) fee schedule
amounts to ensure access to items and services in rural areas;
procedures for making benefit category and payment determinations for
new items and services that are DME, prosthetic devices, orthotics and
prosthetics, therapeutic shoes and inserts, surgical dressings, or
splints, casts, and other devices used for reductions of fractures and
dislocations to prevent delays in coverage of new items and services;
and classification of CGMs under the Part B benefit for DME to
establish the benefit category for these items. Finally, we are
finalizing provisions included in two interim final rules with comment
period (IFC) that CMS issued on May 11, 2018, and May 8, 2020.
1. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Fee Schedule Adjustments
The purpose of this provision is to establish the methodologies for
adjusting the fee schedule payment amounts for DMEPOS items and
services furnished in non-competitive bidding areas (non-CBAs) on or
after the effective date specified in the DATES section of this final
rule, or the date immediately following the duration of the emergency
period described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-
5(g)(1)(B)), whichever is later. The emergency period we are referring
to is the Public Health Emergency (PHE) for coronavirus disease 2019
(COVID-19). We refer readers to section III.A.6. of this rule for
details regarding the DMEPOS fee schedule changes CMS has already made
as a result of the PHE for COVID-19.
2. DMEPOS Fee Schedule Adjustments for Items and Services Furnished in
Rural Areas From June 2018 Through December 2018 and Exclusion of
Infusion Drugs From the DMEPOS CBP
The purpose of this section is to finalize and address comments
received on the May 11, 2018 IFC (83 FR 21912) titled ``Medicare
Program; Durable Medical Equipment Fee Schedule Adjustments to Resume
the Transitional 50/50 Blended Rates to Provide Relief in Rural Areas
and Non-Contiguous Areas'' (hereinafter referred to as the ``May 2018
IFC'').
3. Benefit Category and Payment Determinations for DME, Prosthetic
Devices, Orthotics and Prosthetics, Therapeutic Shoes and Inserts,
Surgical Dressings, or Splints, Casts, and Other Devices Used for
Reductions of Fractures and Dislocations
The purpose of this section of the final rule is to establish
procedures for making benefit category and payment determinations for
new items and services that are DME, prosthetic devices, orthotics and
prosthetics, therapeutic shoes and inserts, surgical dressings, or
splints, casts, and other devices used for reductions of fractures and
dislocations that permit public consultation through public meetings.
Section 531(b) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554)
requires the Secretary to establish procedures for coding and payment
determinations for new DME under Part B of title XVIII of the Act that
permit public consultation in a manner consistent with the procedures
established for implementing coding modifications for ICD-9-CM (which
has since been replaced with ICD-10-CM as of October 1, 2015). We
decided to expand these procedures to address all new external HCPCS
level II code requests in 2005. We are finalizing procedures for making
benefit category determinations and payment determinations for new
items and services that are DME, prosthetic devices, orthotics and
prosthetics, therapeutic shoes and inserts, surgical dressings, or
splints, casts, and other devices used for reductions of fractures and
dislocations. Consistent with our current practices, the procedures
will incorporate public consultation on these determinations.
The determination of whether or not an item or service falls under
a Medicare benefit category, such as the Medicare Part B benefit
category for DME, is a necessary step in determining whether an item
may be covered under the Medicare program and, if applicable, what
statutory and regulatory payment rules apply to the items and services.
If the item is excluded from coverage by the Act or does not fall
within the scope of a defined benefit category, the item cannot be
covered under Medicare. On the other hand, if the item is not excluded
from coverage by the Act and is found to fall within a benefit
category, we need to determine what payment rules would apply to the
item if other statutory criteria for coverage of the item are met, such
as the reasonable and necessary criteria under section 1862(a)(1)(A) of
the Act.
[[Page 73861]]
Therefore, the procedures that we are finalizing for use in
determining if items and services fall under the Medicare Part B
benefit categories for DME, prosthetic devices, orthotics, and
prosthetics, surgical dressings, splints, casts and other devices for
the reduction of fractures or dislocations, or therapeutic shoes and
inserts continue our longstanding practice of establishing coverage and
payment for new items and services soon after they are identified
through the HCPCS code application process, promote transparency, and
prevent delays in access to new technologies.
4. Classification and Payment for Continuous Glucose Monitors Under
Medicare Part B
The purpose of this section of this final rule is to address
classification and payment for CGMs under the Medicare Part B benefit
for DME.
5. DME Interim Pricing in the CARES Act
The purpose of this section is to finalize and address comments
received on the ``DME Interim Pricing in the CARES Act'' section of the
May 8, 2020 IFC (85 FR 27550) titled ``Medicare and Medicaid Programs,
Basic Health Program, and Exchanges; Additional Policy and Regulatory
Revisions in Response to the COVID-19 Public Health Emergency and Delay
of Certain Reporting Requirements for the Skilled Nursing Facility
Quality Reporting Program'' (hereinafter referred to as the ``May 2020
COVID-19 IFC''). This provision revised Sec. 414.210 to provide
temporarily increased DME fee schedule amounts in certain areas, as
required by section 3712 of the Coronavirus Aid, Relief, and Economic
Security Act (CARES Act) (Pub. L. 116-136, March 27, 2020).
B. Summary of the Major Provisions
1. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Fee Schedule Adjustments
This rule revises Sec. 414.210(g)(2) and (9) to establish the fee
schedule adjustment methodologies for items and services furnished on
or after the effective date specified in the DATES section of this
final rule, or the date immediately following the duration of the
emergency period described in section 1135(g)(1)(B) of the Act (42
U.S.C. 1320b-5(g)(1)(B)), whichever is later, in non-CBAs.
2. DMEPOS Fee Schedule Adjustments for Items and Services Furnished in
Rural Areas From June 2018 Through December 2018 and Exclusion of
Infusion Drugs From the DMEPOS CBP
This rule finalizes the following provisions of the May 2018 IFC
(83 FR 21912):
<bullet> Transition Period for Phase in of Adjustments to Fee
Schedule Amounts: We are finalizing the amendments to Sec.
414.210(g)(9)(i) to reflect the extension of the transition period to
December 31, 2016 for phasing in adjustments to the fee schedule
amounts for certain DME and enteral nutrition, as required by section
16007(a) of the 21st Century Cures Act (Cures Act). In addition, we are
finalizing the changes to Sec. 414.210(g)(9)(iii), which resumed the
fee schedule adjustment transition period in rural areas and non-
contiguous areas effective June 1, 2018 so that the fee schedule
amounts for certain items and services furnished in rural and non-
contiguous areas from June 1, 2018 through December 31, 2018 were based
on a 50/50 blend of adjusted and unadjusted rates. We are also
finalizing changes to Sec. 414.210(g)(9)(ii): For items and services
furnished with dates of service from January 1, 2017 to May 31, 2018,
and on or after January 1, 2019, the fee schedule amount for the area
is equal to 100 percent of the adjusted payment amount. We solicited
comments on the resumption of the transition period for the phase in of
fee schedule adjustments.
<bullet> Technical Change Excluding DME Infusion Drugs from the
DMEPOS CBP: Section 5004(b) of the Cures Act amends section
1847(a)(2)(A) of the Act to exclude drugs and biologicals described in
section 1842(o)(1)(D) of the Act from the DMEPOS CBP. We are finalizing
changes to 42 CFR 414.402 to reflect the exclusion of infusion drugs
from the DMEPOS CBP.
3. Benefit Category and Payment Determinations for DME, Prosthetic
Devices, Orthotics and Prosthetics, Therapeutic Shoes and Inserts,
Surgical Dressings, or Splints, Casts, and Other Devices Used for
Reductions of Fractures and Dislocations
These provisions establish procedures for making benefit category
and payment determinations for items and services that are DME,
prosthetic devices, orthotics and prosthetics, therapeutic shoes and
inserts, surgical dressings, or splints, casts, and other devices used
for reductions of fractures and dislocations for which a HCPCS Level II
code has been requested. Specifically, the purpose of the procedure
would be to determine whether the product for which a HCPCS code has
been requested meets the Medicare definition of DME, a prosthetic
device, an orthotic or prosthetic, a surgical dressing, splint, cast,
or other device used for reducing fractures or dislocations, or a
therapeutic shoe or insert and is not otherwise excluded under Title
XVIII of the Act, to determine how payment for the item of service
would be made, and to obtain public consultation on these
determinations.
4. Classification and Payment for Continuous Glucose Monitors Under
Medicare Part B
This provision classifies adjunctive CGMs as DME, and addresses
comments received in response to the proposed rule. Additional
determinations regarding whether a CGM is covered in accordance with
section 1862(a)(1)(A) of the Act will be made by DME MACs using the
local coverage determination (LCD) process or during the Medicare
claim-by-claim review process.
5. DME Interim Pricing in the CARES Act
This section finalizes and addresses comments received on the May
2020 COVID-19 IFC section titled ``DME Interim Pricing in the CARES
Act''. Specifically, this section finalizes the following policies that
were included in the May 2020 COVID-19 IFC:
<bullet> We made conforming changes to Sec. 414.210(g)(9),
consistent with section 3712(a) and (b) of the CARES Act, omitting the
language in section 3712(b) of the CARES Act that references an
effective date that is 30 days after the date of enactment of the law.
<bullet> We revised Sec. 414.210(g)(9)(iii), which describes the
50/50 fee schedule adjustment blend for items and services furnished in
rural and non-contiguous areas, to address dates of service from June
1, 2018 through December 31, 2020 or through the duration of the
emergency period described in section 1135(g)(1)(B) of the Act (42
U.S.C. 1320b-5(g)(1)(B)), whichever is later.
<bullet> We added Sec. 414.210(g)(9)(v) which states that, for
items and services furnished in areas other than rural or noncontiguous
areas with dates of service from March 6, 2020, through the remainder
of the duration of the emergency period described in section
1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)), based on the fee
schedule amount for the area is equal to 75 percent of the adjusted
payment amount established under ``this section'' (by which we mean
Sec. 414.210(g)(1) through (8)), and 25 percent of the
[[Page 73862]]
unadjusted fee schedule amount. For items and services furnished in
areas other than rural or noncontiguous areas with dates of service
from the expiration date of the emergency period described in section
1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)) through December
31, 2020, based on the fee schedule amount for the area is equal to 100
percent of the adjusted payment amount established under Sec.
414.210(g)(1) through (8) (referred to as ``this section'' in the
regulation text).
<bullet> In addition, we revised Sec. 414.210(g)(9)(iv) to specify
for items and services furnished in areas other than rural and
noncontiguous areas with dates of service from June 1, 2018 through
March 5, 2020, based on the fee schedule amount for the area is equal
to 100 percent of the adjusted payment amount established under Sec.
414.210(g)(1) through (8) (``this section'' in the regulation text).
C. Summary of Cost and Benefits
1. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Fee Schedule Adjustments
We estimate that the DMEPOS fee schedule adjustment methodologies
established in this final rule will increase payments an estimated $4.6
billion from the Federal Government to DMEPOS suppliers from CY 2022 to
CY 2026 (for the purposes of this estimate, it is assumed the PHE ends
on April 16, 2022, which is a necessary assumption for accounting
purposes and is not intended to signal when the PHE will end). In CY
2022, we estimate that Medicare payments will increase about $200
million due to this provision of the final rule. Note, the Medicaid
impact of this policy is explained later in this final rule.
2. DMEPOS Fee Schedule Adjustments for Items and Services Furnished in
Rural Areas From June 2018 Through December 2018 and Exclusion of
Infusion Drugs From the DMEPOS CBP
This provision resumed the blended adjusted fee schedule amounts
during the transition period for certain DMEPOS items and services that
were furnished in rural and non-contiguous areas not subject to the CBP
beginning June 1, 2018 and ending December 31, 2018. There is no impact
assumed against the baseline, which is explained in the regulatory
impact analysis section (RIA) later in this final rule, as the period
during which these fee schedule adjustments were in effect has passed.
The goal of the May 2018 IFC was to preserve beneficiary access to
DME items and services in rural and non-contiguous areas not subject to
the CBP during a transition period in which we would continue to study
the impact of the change in payment rates on access to items and
services in these areas. We believe that resuming the fee schedule
adjustment transition period in rural and non-contiguous areas promoted
stability in the DMEPOS market in these areas, and enabled us to work
with stakeholders to preserve beneficiary access to DMEPOS.
3. Benefit Category and Payment Determinations for DME, Prosthetic
Devices, Orthotics and Prosthetics, Therapeutic Shoes and Inserts,
Surgical Dressings, or Splints, Casts, and Other Devices Used for
Reductions of Fractures and Dislocations
We are finalizing a process for making benefit category and payment
determinations for items and services that are DME, prosthetic devices,
orthotics and prosthetics, therapeutic shoes and inserts, surgical
dressings, or splints, casts, and other devices used for reductions of
fractures and dislocations. This policy is assumed to have an
indeterminable fiscal impact due to the unique considerations given to
establishing payment for specific items.
4. Classification and Payment for Continuous Glucose Monitors Under
Medicare Part B
We are finalizing a policy that classifies adjunctive CGMs as DME.
In addition, we are addressing comments on the proposed rule. This
classification is assumed to have no fiscal impact when considered
against the baseline, which is further explained in the regulatory
impact analysis (RIA) section of this final rule.
5. DME Interim Pricing in the CARES Act
This section finalizes the temporary increase to certain DME
payment rates from March 6, 2020 through the remainder of the duration
of the emergency period (PHE) for COVID-19, in accordance with section
3712 of the CARES Act. Section 3712 of the CARES Act increases Medicare
expenditures and beneficiary cost-sharing by increasing Medicare
payment rates for certain DMEPOS items furnished in non-rural and
contiguous non-competitively bid areas.
The increase is a result of paying a blend of 75 percent of the
fully adjusted payment rates and 25 percent of the unadjusted payment
rates and is estimated to increase affected DME fee schedule amounts by
33 percent, on average. This provision will have a negligible fiscal
impact if the emergency period for COVID-19 ends by April 2022.
II. Rulemaking Overview
In the May 11, 2018 Federal Register (83 FR 21912), we published an
interim final rule with comment period (IFC) titled ``Medicare Program;
Durable Medical Equipment Fee Schedule Adjustments to Resume the
Transitional 50/50 Blended Rates to Provide Relief in Rural Areas and
Non-Contiguous Areas''. In the May 8, 2020 Federal Register (85 FR
27550), we published an IFC titled ``Medicare and Medicaid Programs,
Basic Health Program, and Exchanges; Additional Policy and Regulatory
Revisions in Response to the COVID-19 Public Health Emergency and Delay
of Certain Reporting Requirements for the Skilled Nursing Facility
Quality Reporting Program'' (hereinafter referred to as the May 2020
COVID-19 IFC). Subsequently in the November 4, 2020 Federal Register
(85 FR 70358), we published a proposed rule titled ``Medicare Program;
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Policy Issues and Level II of the Healthcare Common Procedure
Coding System (HCPCS)'' (hereinafter referred to as the November 2020
proposed rule).
We received 331 (208 on the May 2018 IFC, 6 on the May 2020 COVID-
19 IFC, and 117 on the November 2020 proposed rule) timely pieces of
correspondence containing multiple comments on the provisions of the
previously mentioned IFCs and proposed rule. Comments were submitted by
DMEPOS suppliers, manufacturers, trade associations, beneficiaries, the
Medicare Payment Advisory Commission (MedPAC), law firms, and
healthcare providers.
The provisions that we are finalizing in this final rule range from
minor clarifications to more significant modifications based on the
comments received. Summaries of the public comments received and our
responses to those public comments are set forth in the various
sections of this final rule under the appropriate headings. We also
note that some of the public comments received for the provisions
addressed in this final rule were outside of the scope of the
previously mentioned IFCs and proposed rule and as such, those out-of-
scope public comments are not addressed in this final rule.
Additionally, we will not be finalizing three provisions of the
November 2020 proposed rule in this final rule. The provision titled
``Exclusion of Complex Rehabilitative Manual Wheelchairs and Certain
Other Manual Wheelchairs From the CBP'' was finalized in the FY
[[Page 73863]]
2022 Inpatient Rehabilitation Facility (IRF) final rule published on
August 4, 2021 (86 FR 42362). Secondly, after further consideration, we
will not be finalizing the proposed provisions titled ``Healthcare
Common Procedure Coding System (HCPCS) Level II Code Application
Process'' and ``Expanded Classification of External Infusion Pumps as
DME.''
We are not finalizing any of the ``Healthcare Common Procedure
Coding System (HCPCS) Level II Code Application Process'' proposals. We
intend to continue to evaluate our processes, particularly as CMS and
stakeholders continue to gain experience with the more frequent coding
cycles.
We received 34 public comments on the HCPCS proposals. The public
comments raised concerns about the HCPCS proposals. With regard to our
proposed HCPCS Level II code application cycles, application
resubmission, and reevaluation policies, commenters opposed the
proposal for CMS to potentially delay a preliminary or final decision
without placing a limit on the number of cycles a decision could be
delayed.
Commenters also opposed our proposal to allow only two
resubmissions of a code application for reevaluation for the same item
or service particularly if new information is provided with the
resubmission. While commenters mostly supported the proposals to codify
more frequent coding cycles, a number of commenters requested
additional process changes and increased transparency that in many
cases may be infeasible within the proposed timelines for a coding
cycle. Overwhelmingly, commenters responded negatively to our
explanation of the term ``claims processing need'' and how it would
apply throughout the HCPCS Level II code application evaluation
process. Commenters also did not support CMS assessing whether a given
item or service is ``primarily medical in nature'' as a threshold HCPCS
Level II code application evaluation factor.
In addition, we are not finalizing the ``Expanded Classification of
External Infusion Pumps as DME'' proposal because many commenters
believed that the proposed rule was unclear, needed more development,
raised concerns about cost-sharing and cost-shifting to the
beneficiary, and raised safety concerns related to decisions regarding
what drug therapies could safely be administered in a home/non-facility
setting. Several commenters noted the proposed rule could increase
beneficiary costs, and a commenter noted the policy would result in the
use of an infusion pump as the choice of drug administration for
payment purposes even if it was the less optimal method of
administration. A commenter believed that the proposal would result in
the beneficiary paying more for less, in light of the higher out-of-
pocket costs for home administration of infusion drugs, and the home
not being the highest-quality setting for infusion drug administration.
We proposed that an external infusion pump would be considered
``appropriate for use in the home'' if: (1) The Food and Drug
Administration (FDA)-required labeling requires the associated home
infusion drug to be prepared immediately prior to administration or
administered by a health care professional or both; (2) a qualified
home infusion therapy supplier (as defined at Sec. 486.505)
administers the drug or biological in a safe and effective manner in
the patient's home (as defined at Sec. 486.505); and (3) the FDA-
required labeling specifies infusion via an external infusion pump as a
route of administration, at least once per month, for the drug. We
received 31 comments on this proposal from DME and infusion suppliers,
beneficiaries, manufacturers, insurance companies, and trade
associations. Many commenters supported the proposed interpretation of
``appropriate for use in the home'' and the three proposed criteria for
determining when an infusion pump was ``appropriate for use in the
home,'' as well as the fact that if finalized, this proposal would
necessitate updates to the LCD for external infusion pumps to include
additional drugs and biologicals. However serious concerns were raised
about other aspects of the proposed rule. Some commenters stated that
the proposal would be a very narrow policy change that would offer
little in the way of expanded benefits for patients and would create
administrative complexity and uncertainty regarding Medicare coverage.
Some commenters supported the first criterion in our proposed standard
for determining whether an external infusion pump and associated
supplies could be covered under the Medicare Part B benefit for DME.
However, those commenters advocated that CMS remove the requirement
that the FDA-required labeling require the associated home infusion
drug be ``prepared immediately prior to administration.'' They noted
that this requirement is unclear, as most drugs have storage
information which permits use of a drug after mixing. Some commenters
supported the second criterion in our proposed standard, which required
that a qualified home infusion therapy services supplier administer the
drug or biological in a safe and effective manner in the patient's
home.
Commenters opposed the third criterion in our proposed standard,
and recommended that CMS remove the requirement that the FDA-required
labeling specify an external infusion pump as a possible route of
administration. Commenters stated that this requirement was too
restrictive and could limit access to therapies that would otherwise be
clinically appropriate for use in the home. Several commenters pointed
out that not all drugs included in the LCDs for Intravenous Immune
Globulin (policy number L33610) currently have labels that specify
using an external infusion pump as a possible route of administration,
though prescribers most often require these pumps to control the rate
of infusion. Several commenters believed that the proposed rule needed
more development, was unclear about which drugs could be covered under
the Medicare Part B benefit for DME as supplies, and could pose safety
concerns. A commenter noted the home setting is not the ideal
environment for prepping sterile medications for injection or infusion.
This commenter also stressed that the beneficiary may not be aware when
selecting an administration site (home or outpatient) of the large
difference in cost-sharing. Another commenter indicated that CMS should
not be the agency to decide if home infusion was safe and appropriate.
This commenter urged CMS to delay the expansion of the definition of
DME to include additional external infusion pumps until CMS can gather
an exact list of the drugs and biologicals that would be affected by
this policy and determine whether such drugs and biologicals can be
administered in the home safely and effectively under the parameters
CMS proposed. We thank the commenters for their input on the HCPCS and
infusion pump proposals.
III. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Fee Schedule Adjustments
A. Background
1. DMEPOS Competitive Bidding Program
Section 1847(a) of the Act, as amended by section 302(b)(1) of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(Pub. L. 108-173), mandates the Medicare DMEPOS CBP for contract
[[Page 73864]]
award purposes to furnish certain competitively priced DMEPOS items and
services subject to the CBP:
<bullet> Off-the-shelf (OTS) orthotics, for which payment would
otherwise be made under section 1834(h) of the Act;
<bullet> Enteral nutrients, equipment, and supplies described in
section 1842(s)(2)(D) of the Act; and
<bullet> Certain DME and medical supplies, which are covered items
(as defined in section 1834(a)(13) of the Act) for which payment would
otherwise be made under section 1834(a) of the Act.
Section 1847(a) of the Act requires the Secretary of the Department
of Health and Human Services (the Secretary) to establish and implement
CBPs in competitive bidding areas (CBAs) throughout the U.S. Section
1847(a)(1)(B)(i) of the Act mandates that the programs be phased into
100 of the largest metropolitan statistical areas (MSA) by 2011 and
additional areas after 2011. Thus far, CBAs have been either an MSA or
a part of an MSA. Under the Office of Management and Budget (OMB)
standards for delineating MSAs, MSAs have at least one urbanized area
that has a population of at least 50,000. The MSA comprises the central
county or counties containing the core, plus adjacent outlying counties
having a high degree of social and economic integration with the
central county or counties as measured through commuting.\1\ OMB
updates MSAs regularly and the most recent update can be found in OMB
Bulletin No. 20-01.\2\ The statute allows us to exempt rural areas and
areas with low population density within urban areas that are not
competitive, unless there is a significant national market through mail
order for a particular item or service, from the CBP. We may also
exempt from the CBP items and services for which competitive
acquisition is unlikely to result in significant savings.
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\1\ OMB 2010 Standards for Delineating Metropolitan and
Micropolitan Statistical Areas; Notice, June 28, 2010 (75 FR 37252).
\2\ <a href="https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf?#">https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf?#</a>.
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We refer to areas in which the CBP is not or has not been
implemented as non-competitive bidding areas (non-CBAs). We use the
term ``former CBAs'' to refer to the areas that were formerly CBAs
prior to a gap in the CBP, to distinguish those areas from ``non-
CBAs.'' More information on why there was a gap in the CBP from January
1, 2019 through December 31, 2020 can be found in the November 14, 2018
final rule titled ``Medicare Program; End-Stage Renal Disease
Prospective Payment System, Payment for Renal Dialysis Services
Furnished to Individuals With Acute Kidney Injury, End-Stage Renal
Disease Quality Incentive Program, Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding
Program (CBP) and Fee Schedule Amounts, and Technical Amendments To
Correct Existing Regulations Related to the CBP for Certain DMEPOS,''
(83 FR 56922) (hereinafter ``CY 2019 ESRD PPS DMEPOS final rule'').
Non-CBAs include rural areas, non-rural areas, and non-contiguous
areas. A rural area is defined in 42 CFR 414.202 as a geographic area
represented by a postal ZIP code, if at least 50 percent of the total
geographic area of the area included in the ZIP code is estimated to be
outside any MSA. A rural area also includes a geographic area
represented by a postal ZIP code that is a low population density area
excluded from a CBA in accordance with section 1847(a)(3)(A) of the Act
at the time the rules in Sec. 414.210(g) are applied. Non-contiguous
areas refer to areas outside the contiguous U.S.--that is, areas such
as Alaska, Guam, and Hawaii (81 FR 77936).
2. Payment Methodology for CBAs
In the DMEPOS CBP, suppliers bid for contracts for furnishing
multiple items and services, identified by HCPCS codes, under several
different product categories. In the CY 2019 ESRD PPS DMEPOS final
rule, we made significant changes to how we calculate single payment
amounts (SPAs) under the DMEPOS CBP. Prior to these changes, for
individual items within each product category in each CBA, the median
of the winning bids for each item was used to establish the SPA for
that item in each CBA. As a result of the changes we made in the CY
2019 ESRD PPS DMEPOS final rule, SPAs are calculated for the lead item
in each product category (per Sec. 414.402, the item in a product
category with multiple items with the highest total nationwide Medicare
allowed charges of any item in the product category prior to each
competition) based on the maximum winning bid (the highest of bids
submitted by winning suppliers) in each CBA.
Per Sec. 414.416(b)(3), the SPA for each non-lead item in a
product category (all items other than the lead item) is calculated by
multiplying the SPA for the lead item by the ratio of the average of
the 2015 fee schedule amounts for all areas for the non-lead item to
the average of the 2015 fee schedule amounts for all areas for the lead
item.
For competitively bid items and services furnished in a CBA, the
SPAs replace the Medicare allowed amounts established using the lower
of the supplier's actual charge or the fee schedule payment amount
recognized under sections 1834(a)(2) through (7) of the Act. Section
1847(b)(5) of the Act provides that Medicare payment for competitively
bid items and services is made on an assignment-related basis and is
equal to 80 percent of the applicable SPA, less any unmet Part B
deductible described in section 1833(b) of the Act.
3. Fee Schedule Adjustment Methodology for Non-CBAs
Section 1834(a)(1)(F)(ii) of the Act requires the Secretary to use
information on the payment determined under the Medicare DMEPOS CBP to
adjust the fee schedule amounts for DME items and services furnished in
all non-CBAs on or after January 1, 2016. Section 1834(a)(1)(F)(iii) of
the Act requires the Secretary to continue to make these adjustments as
additional covered items are phased in under the CBP or information is
updated as new CBP contracts are awarded. Similarly, sections
1842(s)(3)(B) and 1834(h)(1)(H)(ii) of the Act authorize the Secretary
to use payment information from the DMEPOS CBP to adjust the fee
schedule amounts for enteral nutrition and OTS orthotics, respectively,
furnished in all non-CBAs. Section 1834(a)(1)(G) of the Act requires
the Secretary to specify the methodology to be used in making these fee
schedule adjustments by regulation, and to consider, among other
factors, the costs of items and services in non-CBAs (where the
adjustments would be applied) compared to the payment rates for such
items and services in the CBAs.
In accordance with the requirements of section 1834(a)(1)(G) of the
Act, we conducted notice-and-comment rulemaking in 2014 to specify
methodologies for adjusting the fee schedule amounts for DME, enteral
nutrition, and OTS orthotics in non-CBAs in 42 CFR 414.210(g). We will
provide a summary of these methodologies, but also refer readers to the
July 11, 2014 proposed rule titled ``Medicare Program; End-Stage Renal
Disease Prospective Payment System, Quality Incentive Program, and
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies,'' (79
FR 40208) (hereinafter ``CY 2015 ESRD PPS DMEPOS proposed rule''), and
the November 6, 2014 final rule titled ``Medicare Program; End-Stage
Renal Disease Prospective Payment System, Quality Incentive Program,
and Durable
[[Page 73865]]
Medical Equipment, Prosthetics, Orthotics, and Supplies,'' (79 FR
66120) (hereinafter ``CY 2015 ESRD PPS DMEPOS final rule'') for
additional details.
The methodologies set forth in Sec. 414.210(g) account for
regional variations in prices, including for rural and non-contiguous
areas of the U.S. In accordance with Sec. 414.210(g)(1), we determine
regional adjustments to fee schedule amounts for each State in the
contiguous U.S. and the District of Columbia, based on the definition
of region in Sec. 414.202, which refers to geographic areas defined by
the Bureau of Economic Analysis (BEA) in the Department of Commerce for
economic analysis purposes (79 FR 66226). Under Sec. 414.210(g)(1)(i)
through (iv), adjusted fee schedule amounts for areas within the
contiguous U.S. are determined based on regional prices limited by a
national ceiling of 110 percent of the regional average price and a
floor of 90 percent of the regional average price (79 FR 66225). Under
Sec. 414.210(g)(1)(v), adjusted fee schedule amounts for rural areas
are based on 110 percent of the national average of regional prices.
Under Sec. 414.210(g)(2), fee schedule amounts for non-contiguous
areas are adjusted based on the higher of the average of the SPAs for
CBAs in non-contiguous areas in the U.S., or the national ceiling
amount.
For items and services that have been included in no more than 10
CBPs, Sec. 414.210(g)(3) specifies adjustments based on 110 percent of
the average of the SPAs. In cases where the SPAs from DMEPOS CBPs that
are no longer in effect are used to adjust fee schedule amounts, Sec.
414.210(g)(4) requires that the SPAs be updated by an inflation
adjustment factor on an annual basis based on the Consumer Price Index
for all Urban Consumers update factors from the mid-point of the last
year the SPAs were in effect to the month ending 6 months prior to the
date the initial payment adjustments would go into effect.
Under Sec. 414.210(g)(5), in situations where a HCPCS code that
describes an item used with different types of base equipment is
included in more than one product category in a CBA, a weighted average
of the SPAs for the code is computed for each CBA prior to applying the
other payment adjustment methodologies in Sec. 414.210(g). Under Sec.
414.210(g)(6), we will adjust the SPAs for certain items prior to using
those SPAs to adjust fee schedule amounts for items and services if
price inversions have occurred under the DMEPOS CBP. Price inversions
occur when one item in a grouping of items in a product category
includes a feature that another similar item in the product category
does not, and the average of the 2015 fee schedule amounts for the item
with the feature is higher than the average of the 2015 schedule
amounts for the item without the feature, but following a CBP
competition, the SPA for the item with the feature is lower than the
SPA for the item without the feature. For groupings of similar items
where price inversions have occurred, the SPAs for the items in the
grouping are adjusted to equal the weighted average of the SPAs for the
items in the grouping.\3\
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\3\ For further discussion regarding adjustments to SPAs to
address price inversions, we refer readers to the CY 2017 ESRD PPS
DMEPOS final rule, titled Medicare Program; End-Stage Renal Disease
Prospective Payment System, Coverage and Payment for Renal Dialysis
Services Furnished to Individuals With Acute Kidney Injury, End-
Stage Renal Disease Quality Incentive Program, Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding
Program Bid Surety Bonds, State Licensure and Appeals Process for
Breach of Contract Actions, Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies Competitive Bidding Program and Fee Schedule
Adjustments, Access to Care Issues for Durable Medical Equipment;
and the Comprehensive End-Stage Renal Disease Care Model, 81 FR
77937 (November 4, 2016).
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In Sec. 414.210(g)(8), the adjusted fee schedule amounts are
revised each time a SPA for an item or service is updated following one
or more new DMEPOS CBP competitions and as other items are added to the
DMEPOS CBP. The fee schedule amounts that are adjusted using SPAs are
not subject to the annual DMEPOS covered item update and are only
updated when SPAs from the DMEPOS CBP are updated or, in accordance
with Sec. 414.210(g)(10), when there are temporary gaps in the DMEPOS
CBP. Updates to the SPAs may occur as contracts are recompeted. In the
CY 2015 ESRD PPS DMEPOS final rule, we established Sec. 414.210(g)(9)
to provide for a transitional phase-in period of the DMEPOS fee
schedule adjustments. We established a 6-month transition period for
blended rates from January 1 through June 30, 2016 (79 FR 66228 through
66229). In establishing a transition period, we agreed with commenters
that phasing in the adjustments to the fee schedule amounts would allow
time for suppliers to adjust to the new payment rates, and further
noted that we would monitor the impact of the change in payment rates
on access to items and services and health outcomes using real time
claims data and analysis (79 FR 66228). Under Sec. 414.210(g)(9)(i),
we specified that the fee schedule adjustments for items and services
furnished between January 1, 2016 through June 30, 2016 would be based
on a blend of 50 percent of the unadjusted fee schedule amount and 50
percent of the adjusted fee schedule amount. Under Sec.
414.210(g)(9)(ii), we specified that for items and services furnished
with dates of service on or after July 1, 2016, the fee schedule
amounts would be fully adjusted in accordance with the rules specified
in Sec. 414.210(g)(1) through Sec. 414.210(g)(8).
4. 21st Century Cures Act
Section 16007(a) of the Cures Act was enacted on December 13, 2016,
and extended the transition period for the phase-in of fee schedule
adjustments at Sec. 414.210(g)(9)(i) by an additional 6 months from
July 1, 2016 through December 31, 2016. In the May 2018 IFC, we amended
Sec. 414.210(g)(9)(i) to implement the 6-month extension to the
initial transition period, as mandated by section 16007(a) of the Cures
Act. Accordingly, the fee schedule amounts were based on blended rates
until December 31, 2016, with full implementation of the fee schedule
adjustments applying to items and services furnished with dates of
service on or after January 1, 2017 (83 FR 21915). Section 16008 of the
Cures Act amended section 1834(a)(1)(G) of the Act to require that the
Secretary take into account certain factors when making any fee
schedule adjustments under sections 1834(a)(1)(F)(ii) or (iii),
1834(h)(i)(H)(ii), or 1842(s)(3)(B) of the Act for items and services
furnished on or after January 1, 2019. Specifically, the Secretary was
required to take into account: (1) Stakeholder input solicited
regarding adjustments to fee schedule amounts using information from
the DMEPOS CBP; (2) the highest bid by a winning supplier in a CBA; and
(3) a comparison of each of the following factors with respect to non-
CBAs and CBAs: The average travel distance and cost associated with
furnishing items and services in the area, the average volume of items
and services furnished by suppliers in the area, and the number of
suppliers in the area.
5. Extension of DMEPOS Fee Schedule Transition Period & Revised
Methodology
In the May 2018 IFC (83 FR 21918), we expressed an immediate need
to resume the transitional, blended fee schedule amounts in rural and
non-contiguous areas, noting strong stakeholder concerns about the
continued viability of many DMEPOS suppliers, our finding of a decrease
in the number of suppliers furnishing items and services subject to the
fee schedule adjustments, as well as the Cures Act mandate to consider
additional information material to
[[Page 73866]]
setting fee schedule adjustments based on information from the DMEPOS
CBP for items and services furnished on or after January 1, 2019. We
explained that resuming these transitional blended rates would preserve
beneficiary access to needed DME items and services in a contracting
supplier marketplace, while also allowing us time to address the
adequacy of the fee schedule adjustment methodology, as required by
section 16008 of the Cures Act. As a result, we amended Sec.
414.210(g)(9) by adding Sec. 414.210(g)(9)(iii) to resume the fee
schedule adjustment transition rates for items and services furnished
in rural and non-contiguous areas from June 1, 2018 through December
31, 2018. We explained that resuming these transitional blended rates
would allow additional time for suppliers serving rural and non-
contiguous areas to adjust their businesses, prevent suppliers that
beneficiaries may rely on for access to items and services in rural and
non-contiguous areas from exiting the business, and allow additional
time for us to monitor the impact of the blended rates. We also amended
Sec. 414.210(g)(9)(ii) to reflect that for items and services
furnished with dates of service from January 1, 2017 to May 31, 2018,
fully adjusted fee schedule amounts would apply (83 FR 21922). In
addition, we added Sec. 414.210(g)(9)(iv) to specify that fully
adjusted fee schedule amounts would apply for items furnished in non-
CBAs other than rural and non-contiguous areas from June 1, 2018
through December 31, 2018 (83 FR 21920). We explained that we would use
the extended transition period to further analyze our findings and
consider the information required by section 16008 of the Cures Act in
determining whether changes to the methodology for adjusting fee
schedule amounts for items furnished on or after January 1, 2019 are
necessary (83 FR 21918 through 21919).
In the CY 2019 ESRD PPS DMEPOS final rule, we finalized changes to
bidding and pricing methodologies under the DMEPOS CBP for future
competitions (83 FR 57020 through 57025). Specifically, we finalized
lead item pricing for all product categories under the DMEPOS CBP,
which would use the bid for the lead item to establish the SPAs for
both the lead item and all other items in the product category (the
non-lead items). We explained that this change would reduce the burden
on suppliers since they would no longer have to submit bids on numerous
items in a product category. We also finalized changes to the
methodology for calculating SPAs under the DMEPOS CBP based on lead
item pricing using maximum winning bids for lead items in each product
category. We finalized revisions to Sec. Sec. 414.414 and 414.416 to
reflect our changes to the bidding and pricing methodologies, and
revised the definitions of bid, composite bid, and lead item in Sec.
414.402. We expected that these changes would have a minimal effect on
savings under the DMEPOS CBP. However, during Round 2021 of the DMEPOS
CBP, we observed numerous occurrences where capacity, demand, and
projected savings, in concert with our policies, were incomparable to
previous rounds of competition.
Also, in the CY 2019 ESRD PPS DMEPOS final rule, we established fee
schedule adjustment transition rules for items and services furnished
from January 1, 2019 through December 31, 2020. We decided to make
these fee schedule adjustment transition rules effective for a 2-year
period only, for two reasons. First, we believed that we must proceed
cautiously when adjusting fee schedules in the short term in an effort
to protect access to items, while we continued to monitor health
outcomes, assignment rates, and other information (83 FR 57029).
Second, as part of the final rule, we made significant changes to the
way bids are submitted and SPAs are calculated under the CBP. We stated
in the final rule these changes could warrant further changes to the
fee schedule adjustment methodologies in the future (83 FR 57030).
Consistent with the requirements of section 16008 of the Cures Act,
we set forth our analysis and consideration of stakeholder input
solicited on adjustments to fee schedule amounts using information from
the DMEPOS CBP, the highest bid by a winning supplier in a CBA, and a
comparison of the various factors with respect to non-CBAs and CBAs. We
noted stakeholder concerns that the adjusted payment amounts
constrained suppliers from furnishing items and services to rural
areas, and their request for an increase to the adjusted payment
amounts for these areas (83 FR 57025). In reviewing highest winning
bids, we found no pattern indicating that maximum bids were higher for
areas with lower volume than for areas with higher volume (83 FR
57026). In our consideration of the Cures Act factors with respect to
non-CBAs and CBAs, we found higher costs for non-contiguous areas, an
increased average travel distance in certain rural areas, a
significantly lower average volume per supplier in non-CBAs, especially
in rural and non-contiguous areas, and a decrease in the number of non-
CBA supplier locations. Based on our consideration of the foregoing, we
expressed our belief that the fee schedule amounts for items and
services furnished from January 1, 2019 through December 31, 2020, in
all rural or non-contiguous areas should be based on a blend of 50
percent of the adjusted fee schedule amounts and 50 percent of the
unadjusted fee schedule amounts in accordance with the current
methodologies under paragraphs (1) through (8) of Sec. 414.210(g) (83
FR 57029).
We also expressed our belief that the fee schedule amounts for
items and services furnished from January 1, 2019 through December 31,
2020, in all areas that are non-CBAs, but are not rural or non-
contiguous areas, should be based on 100 percent of the adjusted fee
schedule amounts in accordance with the current methodologies under
paragraphs (1) through (8) of Sec. 414.210(g) (83 FR 57029). We
finalized amendments to the transition rules at Sec. 414.210(g)(9) to
reflect these fee schedule adjustment methodologies for items and
services furnished from January 1, 2019 through December 31, 2020 (83
FR 57039; 83 FR 57070 through 57071).
6. The Coronavirus Aid, Relief, and Economic Security Act
The Coronavirus Aid, Relief, and Economic Security (CARES) Act
(Pub. L. 116-136) was enacted on March 27, 2020. Section 3712 of the
CARES Act specifies the payment rates for certain DME and enteral
nutrients, supplies, and equipment furnished in non-CBAs through the
duration of the emergency period described in section 1135(g)(1)(B) of
the Act. Section 3712(a) of the CARES Act continues our policy of
paying the 50/50 blended rates for items furnished in rural and non-
contiguous non-CBAs through December 31, 2020, or through the duration
of the emergency period, if longer. Section 3712(b) of the CARES Act
increased the payment rates for DME and enteral nutrients, supplies,
and equipment furnished in areas other than rural and non-contiguous
non-CBAs through the duration of the emergency period. Beginning March
6, 2020, the payment rates for DME and enteral nutrients, supplies, and
equipment furnished in these areas are based on 75 percent of the
adjusted fee schedule amount and 25 percent of the historic, unadjusted
fee schedule amount, which results in higher payment rates as compared
to the full fee schedule adjustments that were previously required
under Sec. 414.210(g)(9)(iv). We made changes to
[[Page 73867]]
the regulation text at Sec. 414.210(g)(9), consistent with section
3712 of the CARES Act, in an IFC that we published in the May 8, 2020
Federal Register titled ``Medicare and Medicaid Programs; Additional
Policy and Regulatory Revisions in Response to the COVID-19 Public
Health Emergency.''
B. Current Issues
In the proposed rule (85 FR 70364), we proposed to establish fee
schedule adjustment methodologies for items and services furnished in
non-CBAs on or after April 1, 2021, or the date immediately following
the duration of the emergency period described in section 1135(g)(1)(B)
of the Act (42 U.S.C. 1320b-5(g)(1)(B)), whichever is later. In the
proposed rule (85 FR 70364), we stated that though the transition rules
under 42 CFR 414.210(g)(9)(iii) and 414.210(g)(9)(v) expired on
December 31, 2020, we believe that the rest of the current fee schedule
adjustment rules at Sec. 414.210(g) would continue to be in effect
should the emergency period described in section 1135(g)(1)(B) of the
Act (42 U.S.C. 1320b-5(g)(1)(B) (PHE) expire after January 1, 2021, and
before April 1, 2021. At the time, we presumed that the PHE would
expire in early 2021, and that we would finalize the proposed rule
around that time. Now that April 1, 2021 has passed, but the PHE is
still ongoing, and the proposed rule has yet to be finalized, we are
making a technical edit to reflect the new effective date for this
final rule. Consistent with our proposal, in the event that the
emergency period described in section 1135(g)(1)(B) of the Act (42
U.S.C. 1320b-5(g)(1)(B)) expires before the effective date specified in
the DATES section of this final rule (rather than April 1, 2021), the
current fee schedule adjustment rules at Sec. 414.210(g)(1) through
(8) would be used to adjust fee schedule amounts for items and services
furnished in non-CBAs and the current fee schedule adjustment rule at
Sec. 414.210(g)(10) would be used to adjust fee schedule amounts for
items and services furnished in CBAs or former CBAs until the final
rule takes effect on the effective date specified in the DATES section
of this final rule.
1. Section 16008 of the Cures Act Analysis
Section 1834(a)(1)(G) of the Act requires CMS to specify by
regulation the methodology to be used in adjusting DMEPOS fee schedule
amounts based on information from the DMEPOS CBP. Section 16008 of the
Cures Act amended section 1834(a)(1)(G) to specifically require that
CMS take into account a number of factors in making any fee schedule
adjustments for items and services furnished on or after January 1,
2019, including: (1) Stakeholder input we have solicited on adjustments
to fee schedule amounts using information from the DMEPOS CBP; (2) the
highest bid by a winning supplier in a CBA; and (3) a comparison of the
factors outlined in section 16008 of the Cures Act with respect to non-
CBAs and CBAs. Our analysis of the Cures Act factors focuses on the
effect we believe increased payment levels have had in rural and non-
contiguous non-CBAs, and the effect we believe fully adjusted fees have
had in non-rural contiguous non-CBAs. We also provide our analysis of
other metrics we believe are important in measuring the impacts of our
payment policies.
a. Stakeholder Input Gathered in Accordancew With Section 16008 of the
Cures Act
Section 16008 of the Cures Act requires us to solicit and take into
account stakeholder input in making fee schedule adjustments based on
information from the DMEPOS CBP for items and services furnished on or
after January 1, 2019. On March 23, 2017, we hosted a national provider
call to solicit stakeholder input regarding adjustments to fee schedule
amounts using DMEPOS CBP information (83 FR 57025 through 57026). More
than 330 participants called in, with 23 participants providing verbal
comments during the call. We also received 125 written comments from
stakeholders in response to our request for written comments. Our
announcement of this call, a copy of our presentation, the audio
recording of the call, and its transcript can be found at the following
link on the CMS website.\4\
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\4\ <a href="https://www.cms.gov/Outreach-and-Education/Outreach/NPC/National-Provider-Calls-and-Events-Items/2017-03-23-DMEPOS">https://www.cms.gov/Outreach-and-Education/Outreach/NPC/National-Provider-Calls-and-Events-Items/2017-03-23-DMEPOS</a>.
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In general, the commenters were mostly suppliers located in MSAs,
but also included manufacturers, trade organizations, and healthcare
providers such as physical and occupational therapists. For additional
details about the national provider call and a summary of oral and
written comments received, we refer readers to the CY 2019 ESRD PPS/
DMEPOS proposed rule (83 FR 57026). For a summary of public comments
received on the CY 2019 ESRD PPS DMEPOS proposed rule and our
responses, we refer readers to the CY 2019 ESRD PPS DMEPOS final rule
(83 FR 57030 through 57036).
While the stakeholder input from 2017 did not quantify the degree
to which costs of furnishing items in CBAs versus rural areas or any
other non-CBAs, the comments we received in response to our 2014
proposed rule (79 FR 40208) indicated that the adjusted fee schedule
amounts for rural areas should be equal to 120 to 150 percent of the
average of the regional single payment amounts (RSPAs) rather than 110
percent of the average of the RSPAs. In addition, a 2015 industry
survey of suppliers of respiratory equipment indicated that the cost of
furnishing respiratory equipment in ``super rural'' areas is 17 percent
higher than the cost of furnishing respiratory equipment in CBAs.\5\
The term ``super rural'' refers to areas identified as ``qualified
rural areas'' under the ambulance fee schedule statute at section
1834(l)(12)(B) of the Act (as implemented at 42 CFR 414.610(c)(5)(ii)).
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\5\ <a href="https://www.cqrc.org/img/CQRCCostSurveyWhitePaperMay2015Final.pdf">https://www.cqrc.org/img/CQRCCostSurveyWhitePaperMay2015Final.pdf</a>.
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For the purposes of the fee schedule for ambulance services, rural
areas are defined at 42 CFR 414.605 as areas located outside an urban
area (MSA), or a rural census tract within an MSA as determined under
the most recent version of the Goldsmith modification as determined by
the Federal Office of Rural Health Policy at the Health Resources and
Services Administration (HRSA). The most recent version of the
Goldsmith Modification are the Rural-Urban Commuting Area (RUCA) codes,
which are a method of determining rurality.\6\ Under 42 CFR
414.610(c)(5)(ii), for ground ambulance services furnished during the
period July 1, 2004 through December 31, 2022, the payment amount for
the ground ambulance base rate is increased by 22.6 percent where the
point of pickup is in a rural area determined to be in the lowest 25
percent of rural population arrayed by population density. We refer to
this as the ``super rural'' bonus, and the areas that receive this
super rural bonus as ``super rural'' areas.\7\ For purposes of payment
under the Medicare ambulance fee schedule, a ``super rural'' area is
thus a rural area determined to be in the lowest 25 percent of rural
population arrayed by population density. DMEPOS industry stakeholders
have recommended that this differential in payment between super rural
areas and MSAs may be adopted in the DMEPOS fee schedule payment
context as well.
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\6\ <a href="https://www.hrsa.gov/rural-health/about-us/definition/index.html">https://www.hrsa.gov/rural-health/about-us/definition/index.html</a>.
\7\ <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AmbulanceFeeSchedule/afspuf">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AmbulanceFeeSchedule/afspuf</a>.
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[[Page 73868]]
In general, we continue to receive feedback from industry
stakeholders expressing their belief that the fully adjusted fee
schedule amounts are too low and would have an adverse impact on
beneficiary access to items and services furnished in rural areas if
they are resumed in these areas. Industry stakeholders have also stated
that the fully adjusted fee schedule amounts are insufficient to cover
the supplier's costs, particularly for delivering items in rural areas.
We indicated in the November 2020 proposed rule that we have been
closely monitoring beneficiary health outcomes and access to DMEPOS
items. We stated that there has been no decline in allowed services for
items subject to the fee schedule adjustments at any point in time,
including 2017 and the first half of 2018 when payment in rural and
non-contiguous areas was based on the fully adjusted fee schedule
amounts. Traditional Medicare or fee-or-service allowed services for
items subject to the fee schedule adjustments rose from 24,882,018 in
2015 to 25,604,836 in 2016, 26,065,601 in 2017, and 26,481,002 in 2018.
This increase in allowed services occurred even though beneficiary fee-
for-service enrollment dropped by 0.6 percent from 33.7 million in 2016
to 33.5 million in 2018 while Medicare Advantage beneficiary enrollment
rose by 16.0 percent from 18.4 million in 2016 to 21.3 million in 2018.
During this time, suppliers accepted assignment (Medicare payment in
full) for most items and services (99.79 percent in 2017 and 99.81
percent in 2018). This rate of assignment remained extremely high
(99.68 percent in 2017 and 99.70 percent in 2018) even after removing
claims for Medicare participating suppliers and suppliers furnishing
items to beneficiaries with dual (Medicare and Medicaid) eligibility,
where assignment is mandatory. In addition, we stated that we continue
to monitor over one thousand health metrics (emergency room visits,
physician office visits, nursing home and hospital admissions, length
of need, deaths, etc.) and have not detected any negative impact of the
fee schedule adjustments on health outcomes. When analyzing the 2015
monthly average health outcome rates for beneficiaries in non-CBAs,
which was the last year we did not make any fee schedule adjustments in
non-CBAs, we noted reductions in both 2017 and 2018 in mortality rates,
hospitalization rates, physician visits, SNF admissions, and monthly
days in the hospital. The percentage of beneficiaries with emergency
room visits increased from 3.6 to 3.9 percent and monthly days in
nursing homes remained unchanged. Finally, we noted that beneficiary
inquiries and complaints related to DMEPOS items and services have
steadily declined since 2016 and have not increased.
b. Highest Winning Bids in CBAs Analysis
Section 16008 of the Cures Act requires us to take into account the
highest amount bid by a winning supplier in a CBA when making fee
schedule adjustments based on information from the DMEPOS CBP for items
and services furnished on or after January 1, 2019. As discussed
earlier, in the CY 2019 ESRD PPS DMEPOS final rule (83 FR 57026), we
found no pattern indicating that maximum bids are higher for areas with
lower volume than for areas with higher volume. For additional details,
we refer readers to the CY 2019 ESRD PPS DMEPOS proposed rule (83 FR
34360 through 34367). Additionally, for Round 2021 of the DMEPOS CBP,
SPAs were calculated for the lead item in each product category based
on the maximum winning bid, and therefore the maximum winning bid is
taken into account when making fee schedule adjustments based on
information from the CBP for items and services included in Round 2021
and furnished on or after January 1, 2019.
c. Travel Distance Analysis
Section 16008 of the Cures Act also requires us to take into
account a comparison of the average travel distance and costs
associated with furnishing items and services in CBAs and non-CBAs. In
the CY 2019 ESRD PPS DMEPOS proposed rule (83 FR 34367 through 34371),
we compared the average size of different non-CBAs nationally and found
that the CBAs had much larger service areas than the non-CBAs. We also
compared the average travel distances for suppliers in the different
areas using claims data for items and services subject to the fee
schedule adjustments. From our analysis, we found that the average
distance traveled in CBAs was generally greater than in most non-CBAs.
However, in reviewing certain non-CBAs, such as Frontier and Remote
(FAR) areas,\8\ Outside Core Based Statistical Areas (OCBSAs),\9\ and
super rural areas,\10\ we found that suppliers generally must travel
farther distances to beneficiaries located in those areas than for
beneficiaries located in CBAs and other non-CBAs. For additional
details on our previous travel distance analysis, we refer readers to
the CY 2019 ESRD PPS DMEPOS proposed rule (83 FR 34367 through 34371).
---------------------------------------------------------------------------
\8\ A Frontier and Remote (FAR) area is statistically delineated
by the Health Resources and Services Administration (HRSA) based on
remoteness and population sparseness. HRSA Methodology for
Designation of Frontier and Remote Areas, 79 FR 25599 through 25603
(May 5, 2014).
\9\ Outside Core Based Statistical Areas are delineated by OMB
as counties that do not qualify for inclusion in a Core Based
Statistical Area. OMB 2010 Standards for Delineating Metropolitan
and Micropolitan Statistical Areas; Notice, 75 FR 37245 (June 28,
2010).
\10\ Under the Ambulance Fee schedule (AFS), temporary add-on
payments known as the ``super rural bonus'' are available in
relation to areas that are within the lowest 25 percentile of all
rural areas arrayed by population density. 42 CFR 414.610(c)(5)(ii).
---------------------------------------------------------------------------
In the November 2020 proposed rule, we updated some of the travel
distance data used in our previous travel distance analysis with data
from 2018, which at the time was the most recent full year of CBP data.
As of January 1, 2021, Round 2021 of the CBP is underway and there are
currently contract suppliers furnishing OTS back and knee braces in
CBAs. We did not award competitive bidding contracts to suppliers for
any of the other product categories that were bid during Round 2021 of
the CBP because the SPAs (calculated based on bids) did not achieve
expected savings.\11\
---------------------------------------------------------------------------
\11\ <a href="https://www.cms.gov/files/document/round-2021-dmepos-cbp-single-payment-amts-fact-sheet.pdf">https://www.cms.gov/files/document/round-2021-dmepos-cbp-single-payment-amts-fact-sheet.pdf</a>.
---------------------------------------------------------------------------
As we indicated in the CY 2019 ESRD DMEPOS final rule (83 FR
57027), we looked at hospital beds and oxygen and oxygen equipment, as
they are items that are most likely to be delivered locally by
suppliers using company vehicles, as well as all items subject to the
fee schedule adjustments. The last time these items were included in
the CBP was in 2018, and so we believe this 2018 data is still relevant
for the purposes of this analysis.
In reviewing the data from 2018, we found that the same trends we
presented in the CY 2019 ESRD PPS DMEPOS proposed rule, which were
based on 2016 data, apply. Similar to our previous travel distance
analysis, to prevent the data from being skewed in certain ways, we
only included claims where the supplier billing address is in the same
or adjoining State as the beneficiary address, and we excluded claims
from suppliers with multiple locations that always use the same billing
address. These data restrictions left in place 96 percent of allowed
claims lines when looking at hospital beds, 97 percent when looking at
[[Page 73869]]
oxygen, and 92 percent when looking at all items.
Table 1--2018 Average Number of Miles Between Supplier and Beneficiary *
----------------------------------------------------------------------------------------------------------------
Beneficiary area Hospital beds Oxygen All items
----------------------------------------------------------------------------------------------------------------
CBAs............................................................ 28 23 30
Non-CBA MSAs.................................................... 24 22 28
Non-CBA Micro Areas............................................. 22 22 27
Non-CBA OCBSA................................................... 28 31 37
Super Rural..................................................... 37 37 42
FAR level 1..................................................... 27 31 36
FAR level 3..................................................... 40 41 47
----------------------------------------------------------------------------------------------------------------
* Includes claims where the supplier billing address is in the same or adjoining state as the beneficiary
address, excluding claims from suppliers with multiple locations that always use the same billing address.
We also reviewed in the November 2020 proposed rule travel distance
data updated by partial 2019 data spanning January through November
2019 (85 FR 70366). Average travel distances in former CBAs decreased,
while average travel distances in rural and non-rural non-CBAs
increased. Section 16008 of the Cures Act requires a comparison of
average travel distance with respect to non-CBAs and CBAs. At the time
of the November 2020 proposed rule, there were no CBAs due to the gap
period in the DMEPOS CBP, allowing any Medicare-enrolled DMEPOS
suppliers to furnish DMEPOS items and services. In the November 2020
proposed rule, we still reviewed data from former CBAs, as we believed
the decrease in average travel distance in the former CBAs was
additional confirmation that travel distances are generally greater in
CBAs while a CBP is in effect, when compared to non-CBAs. We stated
that average supplier travel distances in the former CBAs decreased for
a variety of reasons. For one, CBP contract suppliers must furnish
items and services to any beneficiary located in a CBA. During a gap
period in the CBP, any supplier may furnish items and services to a
beneficiary located in a former CBA and suppliers are no longer
obligated to service a beneficiary who may be farther away from the
supplier. Additionally, more suppliers can now furnish items and
services to beneficiaries, so a beneficiary could also receive items
and services furnished by a supplier located closer to the beneficiary.
Section 16008 of the Cures Act requires us to take into account a
comparison of the average travel distance and costs associated with
furnishing items and services in CBAs and non-CBAs. As a result, we
believe a payment methodology should account for this factor, and the
increased costs suppliers may face in reaching certain non-CBAs. When
we say certain non-CBAs, we are referring to non-CBAs classified as
either super rural, FAR, or OCBSA. This is because although we found
that the average travel distance for suppliers in non-CBAs is generally
lower than the average travel distance and costs for suppliers in CBAs
while the CBP was in effect, we found that suppliers generally must
travel farther distances to beneficiaries located in non-CBAs that are
super rural, FAR or OCBSA than for beneficiaries located in CBAs and
other non-CBAs. Still, industry stakeholders have expressed their
belief that the fully adjusted fee schedule amounts are too low and
have an adverse impact on beneficiary access to items and services
furnished in rural non-CBAs. We have not seen evidence of this, but
because stakeholder input is another factor in section 16008 of the
Cures Act, we are also factoring stakeholder input into our payment
methodology, and therefore believe a payment methodology should result
in higher payments for DMEPOS suppliers that furnish items and services
to all rural areas, instead of just those areas with greater travel
distance than CBAs. We believe this errs on the side of caution and may
incentivize suppliers to furnish items and services to all rural areas.
d. Cost Analysis
We presented our analysis of different sources of cost data in the
CY 2019 ESRD PPS DMEPOS proposed rule (83 FR 34371 through 34377).
Overall, in comparing CBAs to non-CBAs, we found that CBAs tended to
have the highest costs out of the cost data we examined. For certain
cost data, we also found that Alaska and Hawaii--both non-contiguous
areas--tended to have higher costs than many contiguous areas of the
U.S. We stated in the November 2020 proposed rule that we updated this
analysis with more recent data and did not notice any significant
differences in these overall findings.
We believe these findings support a payment methodology that
considers such increased costs in non-contiguous areas.
We also noted in the November 2020 proposed rule that we consider
assignment rates as a source of cost data and consider it a measure of
the sufficiency of payment to cover a supplier's costs for furnishing
items and services under the Medicare program (85 FR 70366). Assignment
rates for items subject to the fee schedule adjustments have not varied
significantly around the country, and they have consistently remained
over 99 percent in all areas. Thus, for the overwhelming majority of
claims for items and services furnished in the non-CBAs that were
subject to the fee schedule adjustments, suppliers have decided to
accept the Medicare payment amount in full, and have not needed to
charge the beneficiary for any additional costs that the Medicare
allowed payment amount did not cover. Of note, for the 17 months from
January 2017 through May 2018 when Medicare paid at the fully adjusted
fee level in all areas, or about 40 percent below the un-adjusted fee
schedule amounts on average, the assignment rate did not dip below 99
percent for the items and services subject to the adjusted fee schedule
amounts.
e. Average Volume of Items and Services Furnished by Suppliers in the
Area Analysis
Section 16008 of the Cures Act requires that we take into account a
comparison of the average volume of items and services furnished by
suppliers in CBAs and non-CBAs. In the CY 2019 ESRD PPS DMEPOS proposed
rule (83 FR 34377), we found that in virtually all cases, the average
volume of items and services furnished by suppliers is higher in CBAs
than non-CBAs. In the November 2020 proposed rule we reviewed updated
data from 2018, and found that in most cases, the average volume of
items and services furnished by suppliers was higher in
[[Page 73870]]
CBAs than in non-CBAs (85 FR 70367). We reviewed the number of allowed
claim lines on a national level for 15 different product categories
subject to the fee schedule adjustments. In doing so, we found that
non-CBAs had more allowed claim lines than CBAs for 4 of the 15 product
categories that we reviewed (nebulizer, oxygen, seat lifts, and
transcutaneous electrical nerve stimulation (TENS) devices). Rural non-
CBAs had more allowed claim lines than CBAs for 2 of the 15 product
categories that we reviewed (seat lifts and TENS). Finally, non-rural
non-CBAs had more allowed claims lines than CBAs for those same two
product categories (seat lifts and TENS).
Additionally, total services per supplier continued to increase in
2018 and 2019 in all non-CBAs. Thus, we found that the average volume
per supplier in non-CBAs continues to increase while assignment rates
are 99 percent or higher, and overall utilization remains steady or is
increasing. We believe these findings support a payment methodology
that takes into account and ensures beneficiary access to items and
services in non-CBAs with relatively low volume.
f. Number of Suppliers Analysis
Section 16008 of the Cures Act requires us to take into account a
comparison of the number of suppliers in the area.
The number of suppliers billing Medicare Fee-for-Service (FFS) for
items subject to fee schedule adjustments in all non-CBAs declined from
June 2018 through the end of 2019, which is the time period in which we
paid the fully adjusted fees in non-rural, contiguous non-CBAs and the
blended rates in rural and non-contiguous non-CBAs, in accordance with
42 CFR 414.210(g)(9)(iii) and (iv). More specifics about this decline
can be found in Table 2. We note that the decline in the number of
billing suppliers is part of a long-term trend that preceded the
adjustment of the fee schedule amounts beginning in 2016, but we are
still concerned about this trend, particularly for rural and non-
contiguous areas, because beneficiaries could have trouble accessing
items and services in these lower population areas if more suppliers
decide to stop serving these areas.
In the November 2020 proposed rule we studied supplier numbers and
found that when looking at a sample of HCPCS codes for high volume
items subject to fee schedule adjustments (E1390 for oxygen
concentrators, E0601 for CPAP machines, E0260 for semi-electric
hospital beds, and B4035 for enteral nutrition supplies), that the
average volume of items furnished by suppliers before they stopped
billing Medicare is very small compared to the average volume of items
furnished by suppliers who continued to bill (85 FR 70367). Data showed
that large national chain suppliers were accepting a large percentage
of the beneficiaries who were previously served by the smaller
suppliers that exited the Medicare market. In addition, the average
volume per supplier continues to increase (as the number of suppliers
who bill Medicare has declined in recent years, the suppliers that
still bill Medicare are picking up more volume), while overall services
continue to grow, suggesting industry consolidation rather than any
type of access issue for DME. Therefore, the decline in the number of
supplier locations may be largely a result of the same degree of
consolidation of suppliers furnishing items subject to the fee schedule
adjustments rather than a decline in beneficiary access to items
subject to the fee schedule adjustments. In addition, this trend in
consolidation is matched by an increase in the average volume of items
furnished per supplier, increasing economies of scale for these
suppliers, although this does decrease the number of overall suppliers'
beneficiaries can choose from to provide DMEPOS items. We do note that
the number of enrolled DMEPOS suppliers did increase by 2 percent from
86,061 in 2019 to 87,800 in 2020, the highest total since 2016 when the
total number of enrolled DMEPOS suppliers was 88,786. There are
therefore still many DMEPOS supplier locations throughout the country
furnishing DMEPOS items and services.
However, to determine what effect, if any, our payment amounts have
had on the number of billing suppliers, in the November 2020 proposed
rule, we also examined supplier numbers during defined timeframes in
which we paid suppliers the unadjusted and adjusted fees, and the 50/50
blended rates (50 percent unadjusted and 50 percent adjusted) (85 FR
70367). The declines in the number of billing suppliers in both rural
and non-rural non-CBAs were very similar, even when we increased
payment levels to the blended rates in rural and non-contiguous non-
CBAs, and continued paying the fully adjusted fees in non-rural/
contiguous non-CBAs. We did not see an appreciable difference in
supplier reductions between the two areas. We noted that non-contiguous
non-CBAs exhibited a slightly different trend than other non-CBAs, as
the number of billing suppliers in these areas increased from 2015 to
2016 when we paid the unadjusted fees, and January 2017 to May 2018
when we paid the fully adjusted fees, but subsequently declined between
June 2018 to November 2019 when we paid the blended rates.
For this analysis, we reviewed the following timeframes and noted
the payment policies in effect at that time:
<bullet> Period 1: January 2015-December 2015: Unadjusted fees in
all non-CBAs.
<bullet> Period 2: January 2016-December 2016: Blended rates in all
non-CBAs (as noted previously, Congress passed section 16007 of the
Cures Act on December 13, 2016, which made the blended rates effective
retroactively in all non-CBAs from June 30 through December 31, 2016).
<bullet> Period 3: January 2017-May 2018: Fully adjusted fees in
all non-CBAs.
<bullet> Period 4: June 2018-November 2019: Blended rates in rural
and non-contiguous non-CBAs, fully adjusted fees in non-rural non-CBAs
in the contiguous U.S.
Table 2--Number of Suppliers Who Billed for DME Subject to the Fee Schedule Adjustments
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-CBA non- Non-CBA Non-CBA non-
Period CBA % Change rural % Change rural % Change contiguous % Change
--------------------------------------------------------------------------------------------------------------------------------------------------------
Jan 2015-Dec 2015............................... 12,717 ........... 10,694 ........... 11,491 ........... 1,150 ...........
Jan 2016-Dec 2016............................... 11,698 -8.0 10,103 -5.5 10,772 -6.3 1,229 6.9
Jan 2017-May 2018 (fully adjusted).............. 9,127 -22.0 9,520 -5.8 10,173 -5.6 1,295 5.4
Jun 2018-Nov 2019............................... 10,381 13.7 8,778 -7.8 9,401 -7.6 1,238 -4.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Claims data through 2019/11/29 (2019 Week 48), Provider Enrollment, Chain, and Ownership System (PECOS) data through 2019/09/17.
[[Page 73871]]
As we noted in our previous analysis (83 FR 34380), we believe that
oxygen and oxygen equipment is one of the most critical items subject
to the fee schedule adjustments in terms of beneficiary access. If
access to oxygen and oxygen equipment is denied to a beneficiary who
needs oxygen, serious health implications can result. Oxygen and oxygen
equipment are also items that must be delivered to the beneficiary, and
set up and used properly in the home for safety reasons. Access to
oxygen and oxygen equipment in remote areas thus remains critical and
has been stressed by stakeholders. To determine if there were pockets
of the country where access to oxygen and oxygen equipment was in
jeopardy, in the November 2020 proposed rule, we reviewed data
depicting how many non-CBA counties are being served by only one oxygen
supplier (85 FR 70368). From 2016 to 2018, there was a total of 2,691
non-CBA counties with beneficiaries receiving Medicare-covered oxygen
supplies. For each year, there were approximately 38 to 39 counties
being served by only one oxygen supplier, serving approximately 68 to
78 beneficiaries receiving approximately 736 to 896 services (annually)
in those areas. Among the counties with only one oxygen supplier, the
majority had only one oxygen user during that year. All counties with a
single oxygen supplier from 2016 to 2018 had 100 percent assignment
rates for oxygen services, and more than half of the single-supplier
counties were in Puerto Rico.
We believe this shows that access to oxygen and oxygen equipment is
not in jeopardy. If there are oxygen claims for only one beneficiary in
the area, then only one billing supplier would show up in the data.
This does not mean that the supplier submitting the claims for this one
beneficiary is the only supplier available to furnish oxygen and oxygen
equipment in the area. There may be other suppliers able to serve these
areas as well and this would show up in the claims data if there were
more beneficiaries using oxygen in these areas and these beneficiaries
used more than one supplier. This also shows how non-CBAs can have far
less volume and fewer billing suppliers than CBAs. Thus, we believe
paying more money to suppliers serving rural and non-contiguous non-
CBAs takes into account those factors specified in section 16008 of the
Cures Act (volume and number of suppliers), and it errs on the side of
caution to prevent beneficiary access issues.
2. DMEPOS Fee Schedule Adjustment Impact Monitoring Data
In addition to the various Cures Act factors, we monitored other
metrics we believe are important in measuring the impacts of our
payment policies. We stated in the November 2020 proposed rule (85 FR
70368) that in reviewing claims data processed through mid-November in
2018 and 2019, that assignment rates for all claims for DMEPOS items
and services subject to fee schedule adjustments went up slightly from
2018 to 2019 in both non-rural non-CBAs (from 99.826 percent or
12,948,603 assigned services out of 12,971,110 to 99.833 percent or
11,594,547 assigned services out of 11,613,970) and rural non-CBAs
(from 99.79 percent or 13,285,838 assigned services out of 13,313,575
to 99.81 percent or 11,863,434 assigned services out of 11,885,683). We
stated to keep in mind that the 2019 claims data was not yet complete,
so the number of allowed services will be greater than what we
reported, but the final rate of assignment will likely not change much
if at all.
When looking at claims processed through May 28, 2021, we found
that assignment rates for all claims for DMEPOS items and services
subject to fee schedule adjustments went slightly up in non-rural non-
CBAs from 2019 to 2020 (99.82 percent to 99.85 percent) and 2020 to
2021 (99.85 percent to 99.88 percent). Assignment rates also increased
in rural non-CBAs from 2019 to 2020 (99.80 to 99.84 percent) and 2020
to 2021 (99.84 to 99.85 percent). Finally, assignment rates also
increased in non-contiguous non-CBAs from 2019 to 2020 (99.53 percent
to 99.79 percent) and 2020 to 2021 (99.79 percent to 99.89 percent). We
have also been monitoring other claims data from non-CBAs, and we have
not observed any trends indicating an increase in adverse beneficiary
health outcomes associated with the fee schedule adjustments. We
monitor mortality rates, hospitalization rates, ER visit rates, SNF
admission rates, physician visit rates, monthly days in hospital, and
monthly days in SNF. Except for death information, which comes from the
Medicare Enrollment Database, all other outcomes are derived from
claims (inpatient, outpatient, Part B carrier, and SNF). Our monitoring
materials cover historical and regional trends in these health outcome
rates across a number of populations, allowing us to observe deviations
that require further drilldown analyses. We monitor health outcomes in
the enrolled Medicare population (Medicare Parts A and B), dual
Medicare and Medicaid population, long-term institutionalized
population, as well as various DME utilizers and access groups. This
helps paint a complete picture of whether an increase in an outcome is
across the board (not linked to DME access), or is unique to certain
populations. Specifically, we focus on any increases that are unique to
the DME access groups, which include beneficiaries who are likely to
use certain DME based on their diagnoses, and we would conduct
drilldown analyses and policy research to pinpoint potential reasons
for such increases.
In addition, in the November 2020 proposed rule, we examined what
effect, if any, paying the blended rates in rural and non-contiguous
non-CBAs had on utilization of DME (85 FR 70368). We compared the
utilization of oxygen equipment between June 2017 through December
2017, and June 2018 through December 2018. We compared these two time
periods, because we paid the blended rates in rural and non-contiguous
non-CBAs from June 1, 2018 through December 31, 2018, in accordance
with the 2018 IFC (83 FR 21915). During the 2017 time period, we paid
the fully adjusted fees in all non-CBAs. During the 2018 time period,
we paid the blended rates in rural and non-contiguous non-CBAs and the
fully adjusted fees in the non-rural contiguous non-CBAs from June 1,
2018 through December 31, 2018. We specifically studied oxygen
utilization in rural areas without Micropolitan Statistical Areas, that
is OCBSAs, as these counties have the least populated urban areas, and
as we stated in the CY 2019 ESRD PPS DMEPOS final rule, one reason for
paying higher rates was to ensure beneficiary access in rural and
remote areas (83 FR 57029). We found that the number of allowed units
in OCBSAs decreased comparably in all areas. Payment at the blended
rates between June 1, 2018, and December 31, 2018, increased allowed
charges in OCBSAs by 42 percent, but this had no apparent effect on
increasing services in OCBSAs. Additionally, the significant reduction
of liquid oxygen equipment allowed services trend continued in OCBSAs
as well as in all areas. The decline in the number of oxygen
concentrators that were furnished declined at the same rate in OCBSAs
as in all areas. Access to oxygen equipment in OCBSAs was unchanged,
despite a 49 percent increase in unit prices.
In sum, we do not believe our payment rates had a discernible
impact on any trends that were already occurring before we paid the
higher fees, and we did not see any appreciable differences between the
areas in which
[[Page 73872]]
we paid the higher 50/50 blended rates in rural and non-contiguous non-
CBAs and the areas in which we pay the fully adjusted fees in non-
rural/contiguous non-CBAs. In addition, assignments rates are still
high in all non-CBAs--over 99 percent--which means over 99 percent of
suppliers are accepting Medicare payment as payment in full and not
balance billing beneficiaries for the cost of the DME.
We sought comments on all of our findings.
Table 3--Summary of Our Analysis of the Section 16008 Cures Act Factors
------------------------------------------------------------------------
Section 16008 Cures Act factors Summary of our analysis
------------------------------------------------------------------------
Stakeholder Input................. <bullet> Most of the input we have
received has come from the DMEPOS
industry, such as DMEPOS suppliers,
expressing that the fully adjusted
fee schedule amounts are too low,
and that CMS should increase how
much Medicare pays DMEPOS suppliers
to furnish items and services to
beneficiaries in non-CBAs. These
stakeholders expressed concerns
that the level of the adjusted
payment amounts constrains
suppliers from furnishing items and
services to rural areas.
<bullet> Stakeholder input that did
not support such payment increases
included input from the Medicare
Payment Advisory Commission
(MedPAC), which believed any
adjustment for rural and non-
contiguous areas should be limited
to only the amount needed to ensure
access, targeted at areas and
products for which an adjustment is
needed, and that CMS should
consider taking steps to offset the
cost of any adjustments. MedPAC
supported setting fee schedule
rates in urban, contiguous non-CBAs
based 100 percent on information
from the CBP.*
Highest Winning Bid............... <bullet> In the CY 2019 ESRD PPS
DMEPOS final rule (83 FR 57026), we
found no pattern indicating that
maximum bids are higher for areas
with lower volume than for areas
with higher volume.
Travel Distance................... <bullet> Average travel distance
between the supplier and
beneficiary is generally higher in
CBAs than in non-CBAs, except for
non-CBAs classified as FAR, super
rural, or OCBSA.
Cost.............................. <bullet> We examined four sources of
cost data: (1) The Practice Expense
Geographic Practice Cost Index (PE
GPCI), (2) delivery driver wages
from the Bureau of Labor Statistics
(BLS), (3) real estate taxes from
the U.S. Census Bureau's American
Community Survey (ACS), and (4) gas
and utility prices from the
Consumer Price Index (CPI).
<bullet> Overall, in comparing CBAs
to non-CBAs, CBAs tended to have
the highest costs out of the cost
data we examined. For certain cost
data, we also found that Alaska and
Hawaii--both non-contiguous areas--
tended to have higher costs than
many contiguous areas of the U.S.
Assignment rates, which we consider
to be a measure of the sufficiency
of payment to cover a supplier's
costs for furnishing items and
services under the Medicare
program, have consistently remained
high at over 99 percent (out of
100) in non-CBAs, meaning over 99
percent of suppliers furnishing
items subject to fee schedule
adjustments in the non-CBAs are
accepting the Medicare payment in
full.
Volume............................ <bullet> CBAs generally have higher
volume than non-CBAs.
<bullet> Total services per supplier
continued to increase in 2018 and
2019 in non-CBAs.
Number of Suppliers............... <bullet> The number of suppliers
billing Medicare for furnishing
items and services subject to fee
schedule adjustments in the non-
CBAs has been declining for several
years, and this downward trend
started years before CMS started
adjusting fee schedule amounts in
the non-CBAs in 2016.
<bullet> When looking at a sample of
HCPCS codes for high volume items
subject to fee schedule
adjustments, the average volume of
items furnished by suppliers before
they stopped billing Medicare is
very small compared to the average
volume of items furnished by
suppliers who continued to bill.
Data shows that large national
chain suppliers are accepting a
large percentage of the
beneficiaries who were previously
served by the smaller suppliers
that exited the Medicare market. In
addition, the average volume per
supplier continues to increase (as
the number of suppliers who bill
Medicare decline, the suppliers
that still bill Medicare are
picking up more volume), while
overall services continue to grow,
suggesting industry consolidation
rather than any type of access
issue for DME. Therefore, the
decline in the number of supplier
locations is largely a result of
the consolidation of suppliers
furnishing items subject to the fee
schedule adjustments rather than a
decline in beneficiary access to
items subject to the fee schedule
adjustments.
<bullet> When looking at different
timeframes over the last several
years in which we paid different
fee schedule amounts (unadjusted
fees, adjusted fees, and the 50/50
blended rates), we did not see an
appreciable effect that these
payment changes had on stemming the
reduction in the number of
suppliers billing Medicare.
<bullet> All counties with a single
oxygen supplier from 2016 to 2018
had 100 percent assignment rates
for oxygen services, and more than
half of the single-supplier
counties were in Puerto Rico.
------------------------------------------------------------------------
* <a href="https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/comment-letters/08312018_esrd_cy2019_dme_medpac_comment_v2_sec.pdf">https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/comment-letters/08312018_esrd_cy2019_dme_medpac_comment_v2_sec.pdf</a>.
C. Proposed Provisions
After reviewing updated information that must be taken into
consideration in accordance with section 1834(a)(1)(G) of the Act in
determining adjustments to DMEPOS fee schedule amounts, we proposed to
revise Sec. 414.210(g) to establish three different methodologies for
adjusting fee schedule amounts for DMEPOS items and services included
in more than 10 competitive bidding programs furnished in non-CBAs on
or after April 1, 2021, or the date immediately following the duration
of the emergency period described in section 1135(g)(1)(B) of the Act
(42 U.S.C. 1320b-5(g)(1)(B)), whichever is later (85 FR 70370). We
proposed three different fee schedule adjustment methodologies, based
on the non-CBA in which the items are furnished: (1) One fee schedule
adjustment methodology for items and services furnished in non-
contiguous non-CBAs; (2) another adjustment methodology for items and
services furnished in non-CBAs within the contiguous United States that
are defined as rural areas at Sec. 414.202; and (3) a third adjustment
methodology for items and services furnished in all other non-CBAs
(non-rural areas within the contiguous United States) (85 FR 70370).
With respect to
[[Page 73873]]
items and services furnished in no more than ten competitive bidding
programs, we proposed to continue using the methodology in Sec.
414.210(g)(3) to adjust the fee schedule amounts for these items
furnished on or after April 1, 2021 (85 FR 70370). The rest of the
discussion that follows addresses the fee schedule adjustments for
items and services that have been included in more than ten competitive
bidding programs.
First, we proposed to continue paying the 50/50 blended rates in
non-contiguous non-CBAs (85 FR 70370). However, we proposed that the
50/50 blend will no longer be a transition rule under Sec.
414.210(g)(9), and will instead be the fee schedule adjustment
methodology for items and services furnished in these areas under Sec.
414.210(g)(2) unless revised in future rulemaking. We proposed that the
fee schedule amounts for items and services furnished on or after April
1, 2021, or the date immediately following the duration of the
emergency period described in section 1135(g)(1)(B) of the Act (42
U.S.C. 1320b-5(g)(1)(B)), whichever is later, in non-contiguous non-
CBAs be adjusted so that they are equal to a blend of 50 percent of the
greater of the average of the SPAs for the item or service for CBAs
located in non-contiguous areas or 110 percent of the national average
price for the item or service determined under Sec. 414.210(g)(1)(ii)
and 50 percent of the unadjusted fee schedule amount for the area,
which is the fee schedule amount in effect on December 31, 2015,
increased for each subsequent year beginning in 2016 by the annual
update factors specified in sections 1834(a)(14), 1834(h)(4), and
1842(s)(1)(B) of the Act, respectively, for durable medical equipment
and supplies, off-the-shelf orthotics, and enteral nutrients, supplies,
and equipment. We explained our rationale for a methodology that
incorporates 110 percent of the national average price in our CY 2015
ESRD PPS DMEPOS final rule (79 FR 66225). We stated that we believe
that a variation in payment amounts both above and below the national
average price should be allowed, and we believe that allowing for the
same degree of variation (10 percent) above and below the national
average price is more equitable and less arbitrary than allowing a
higher degree of variation (20 percent) above the national average
price than below (10 percent), as in the case of the national ceiling
and floor for the Prosthetic & Orthotic fee schedule, or allowing for
only 15 percent variation below the national average price, as in the
case of the national ceiling and floor for the DME fee schedule (79 FR
66225).
Second, we proposed to continue paying the 50/50 blended rates in
rural contiguous areas; however, we proposed that the 50/50 blend will
no longer be a transition rule under Sec. 414.210(g)(9), and will
instead be the fee schedule adjustment methodology for items and
services furnished in these areas under Sec. 414.210(g)(2) unless
revised in future rulemaking (85 FR 70370). We proposed that the fee
schedule amounts for items and services furnished in rural contiguous
areas on or after April 1, 2021 or the date immediately following the
duration of the emergency period described in section 1135(g)(1)(B) of
the Act (42 U.S.C. 1320b-5(g)(1)(B)), whichever is later, be adjusted
so that they are equal to a blend of 50 percent of 110 percent of the
national average price for the item or service determined under Sec.
414.210(g)(1)(ii) and 50 percent of the fee schedule amount for the
area in effect on December 31, 2015, increased for each subsequent year
beginning in 2016 by the annual update factors specified in sections
1834(a)(14), 1834(h)(4), and 1842(s)(1)(B) of the Act, respectively,
for durable medical equipment and supplies, off-the-shelf orthotics,
and enteral nutrients, supplies, and equipment. We also proposed to
revise Sec. 414.210(g)(1)(v) to address the period before April 1,
2021, to say that for items and services furnished before April 1,
2021, the fee schedule amount for all areas within a State that are
defined as rural areas for the purposes of this subpart is adjusted to
110 percent of the national average price determined under paragraph
(g)(1)(ii) of this section. We decided to propose a policy of paying a
50/50 blend of adjusted and unadjusted rates in non-contiguous non-CBAs
and in rural non-CBAs, as opposed to a different ratio (such as a 75/25
blend, which is an alternative we considered and discuss further in
this section), because past stakeholder input from the DME industry has
expressed support for this 50/50 blend. For instance, we proposed
paying the 50/50 blend for rural and non-contiguous non-CBAs from
January 1, 2019 through December 31, 2020 in our CY 2019 ESRD PPS
DMEPOS proposed rule, and we finalized this policy in our CY 2019 ESRD
PPS DMEPOS final rule. Most of the comments we received on the proposed
rule were from commenters in the DME industry, such as homecare
associations, DME manufacturers, and suppliers, and these commenters
generally supported the 50/50 blended rates provisions.
Third, for items and services furnished on or after April 1, 2021
or the date immediately following the duration of the emergency period
described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-
5(g)(1)(B)), whichever is later, in all other non-rural non-CBAs within
the contiguous United States, we proposed that the fee schedule amounts
be equal to 100 percent of the adjusted payment amount established
under Sec. 414.210(g)(1)(iv) (85 FR 70370).
Accordingly, we proposed to add paragraph Sec. 414.210(g)(9)(vi)
to say that for items and services furnished in all areas with dates of
service on or after April 1, 2021, or the date immediately following
the duration of the emergency period described in section 1135(g)(1)(B)
of the Act, whichever is later, based on the fee schedule amount for
the area is equal to the adjusted payment amount established under
Sec. 414.210(g) (85 FR 70370).
Thus under our proposed provision, we will continue paying
suppliers significantly higher rates for furnishing items and services
in rural and non-contiguous areas as compared to items and services
furnished in other areas because of stakeholder input indicating higher
costs in these areas, greater travel distances and costs in certain
non-CBAs compared to CBAs, the unique logistical challenges and costs
of furnishing items to beneficiaries in the non-contiguous areas,
significantly lower volume of items furnished in these areas versus
CBAs, and concerns about financial incentives for suppliers in
surrounding urban areas to continue including outlying rural areas in
their service areas. Previous feedback from industry stakeholders
expressed concern regarding beneficiary access to items and services
furnished in rural and remote areas.
Furthermore, in our analysis, we found that suppliers must travel
farther distances to deliver items to beneficiaries located in super
rural areas and areas outside both MSAs and micropolitan statistical
areas than the distances they must travel to deliver items to
beneficiaries located in CBAs (while the CBP was in effect). We also
found that certain non-contiguous areas tended to have higher costs,
and had smaller numbers of oxygen suppliers and beneficiaries. Rural
and non-contiguous areas also have much lower volume of DMEPOS items
furnished by suppliers than in CBAs, and we are also concerned that
national chain suppliers or suppliers in higher populated urban areas
that are currently serving rural areas may abandon these areas if they
are less profitable markets due to fee
[[Page 73874]]
schedule adjustments and may instead concentrate on the larger markets
only. We believe that this feedback as well as these findings supports
a payment methodology that errs on the side of caution and ensures
adequate payment for items and services furnished to beneficiaries in
all rural and non-contiguous non-CBAs. We also believed that the
proposed fee schedule adjustment methodologies would create an
incentive for suppliers to continue serving areas where fewer
beneficiaries reside and will therefore further ensure beneficiary
access to items and services in these areas. We proposed to continue
paying the 50/50 blended rates in rural and non-contiguous non-CBAs,
and 100 percent of the adjusted payment amount established under Sec.
414.210(g)(1)(iv) in non-rural non-CBAs in the contiguous U.S., takes
into account stakeholder feedback as well as information from our
previous and updated analyses of the Cures Act factors (85 FR 70371).
The proposed fee schedule adjustment methodologies rely on SPAs
generated by the CBP. We only awarded Round 2021 CBP contracts to
bidders in the OTS back braces and OTS knee braces product
categories.\12\ We did not award Round 2021 CBP contracts to bidders
that bid in any other product categories that were included in Round
2021 of the CBP, therefore, CMS does not have any new SPAs for these
items and services. As a result, we stated in the November 2020
proposed rule that we were seriously considering whether to simply
extend application of the current fee schedule adjustment transition
rules for all of the items and services that were included in Round
2021 of the CBP but have essentially been removed from Round 2021 of
the CBP (85 FR 70371). That is, for non-CBAs, the fee schedule
adjustment transition rules at Sec. 414.210(g)(9) and, for CBAs and
former CBAs (CBAs where no CBP contracts are in effect), the fee
schedule adjustment rules at Sec. 414.210(g)(10), would be extended
until a future round of the CBP. More specifically, for non-CBAs, we
proposed to extend the transition rules at Sec. 414.210(g)(9)(iii) and
(v) for items and services included in product categories other than
the OTS back and knee brace product categories, and, for these same
items and services furnished in CBAs or former CBAs, we proposed to
extend the rules at Sec. 414.210(g)(10), until such product categories
are competitively bid again in a future round of the CBP (85 FR 70371).
In this situation, we stated that the proposed fee schedule adjustments
discussed previously in the November 2020 proposed rule and in this
final rule would only apply to OTS back braces and OTS knee braces
furnished in non-CBAs on or after April 1, 2021 (85 FR 70371) .
However, as we discussed previously in this final rule, now that April
1, 2021 has passed, but the PHE is still ongoing, and this rule has yet
to be finalized, we are finalizing the proposed language with a
technical edit to reference the effective date specified in the DATES
section of this final rule to reflect the new effective date.
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\12\ The link to the announcement is <a href="https://www.cms.gov/files/document/round-2021-dmepos-cbp-single-payment-amts-fact-sheet.pdf">https://www.cms.gov/files/document/round-2021-dmepos-cbp-single-payment-amts-fact-sheet.pdf</a>.
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In short, beginning on the effective date specified in the DATES
section of this final rule or the date immediately following the
duration of the emergency period described in section 1135(g)(1)(B) of
the Act, whichever is later, there would be several different fee
schedule adjustment methodologies in effect, depending on where an item
or service is furnished, and whether CMS has awarded Round 2021 CBP
contracts for that item or service. For OTS back braces and OTS knee
braces included in Round 2021 of the CBP and furnished in CBAs, payment
would be made in accordance with the methodologies described in 42 CFR
414.408. For OTS back braces and OTS knee braces included in Round 2021
of the CBP and furnished in rural and non-contiguous non-CBA areas,
payment would be made in accordance with the methodologies we have
proposed in the November 2020 proposed rule (85 FR 70371) and discuss
in this final rule at Sec. 414.210(g)(2). For OTS back braces and OTS
knee braces included in Round 2021 of the CBP furnished in non-rural
and contiguous non-CBA areas, payment would be made using the
methodologies described in 42 CFR 414.210(g)(1)(iv).
For items and services included in the product categories that have
essentially been removed from Round 2021 of the CBP, payment would be
based on the methodologies described in 42 CFR 414.210(g)(10) when such
items and services are furnished in CBAs or former CBAs. When such
items and services are furnished in rural and non-contiguous non-CBAs,
payment would be based on the methodologies we proposed at 42 CFR
414.210(g)(2) and the methodology at 42 CFR 414.210(g)(4). In non-rural
and contiguous non-CBA areas, payment for these items and services
would be based on the methodologies described in 42 CFR
414.210(g)(1)(iv) and the methodology at (g)(4). CMS welcomed comment
on whether the transition rules at Sec. 414.210(g)(9) and fee schedule
adjustment rules at Sec. 414.210(g)(10) should continue for these
items and services that have essentially been removed from Round 2021
of the CBP. Specifically, we invited comment on whether we should
extend the transition rules at Sec. 414.210(g)(9)(iii) and (v) for
items and services furnished in non-CBAs and included in product
categories other than the OTS back and knee brace product categories,
and, for these same items and services furnished in CBAs or former
CBAs, whether we should extend the rules at Sec. 414.210(g)(10), until
such product categories are competitively bid again in a future round
of the CBP.
Comment: Several commenters supported paying the 50/50 blended
rates in rural and non-contiguous non-CBAs on a permanent basis. A few
commenters believed this methodology will better ensure beneficiary
access by helping DMEPOS suppliers stay in business and account for
costs related to the COVID-19 pandemic. A commenter stated that there
are costs related to the pandemic that are unlikely to be eliminated by
the end of the COVID-19 public health emergency, and they thus support
a permanent extension of the current rural non-CBA blended rates. A
commenter stated they appreciated that the proposal would bring
stability to DMEPOS suppliers by eliminating the transitional nature of
these rates and making them part of the fee schedule adjustment
methodology until revised in future rulemaking. A commenter supported
higher payments in rural areas, and stated they supported the proposal
that for DME items and services furnished before April 1, 2021, the fee
schedule amount for all areas within a State that are defined as rural
areas would be adjusted to 110 percent of the national average price.
Response: We thank the commenters for support of our proposal. In
finalizing this fee schedule adjustment methodology, we aim to ensure
that suppliers are incentivized to serve beneficiaries in rural and
non-contiguous non-CBAs.
We agree that higher payments can better ensure access to items and
services and maintain, if not increase, a supplier's willingness to
furnish items and services. We do point out however that higher
payments to suppliers results in higher cost sharing for beneficiaries,
which could negatively affect access to DMEPOS items and services if
beneficiaries decide to forego such items and services due to higher
cost sharing.
Regarding comments supporting a permanent adoption of the 50/50
blended rates in rural and non-contiguous non-CBAs, as well as the
[[Page 73875]]
comment appreciating that this methodology will no longer be a
transition rule under Sec. 414.210(g)(9), we note that although we are
finalizing our proposal to pay 50/50 blended rates in the rural and
non-contiguous non-CBAs, as we further discuss in section ``E.
Provisions of Final Rule'' of this final rule, we will likely be
revisiting this issue and the fee schedule adjustment methodologies for
all items in all areas again in the future. Furthermore, regarding
commenter's concerns about the potential for lasting COVID-19 pandemic
costs, and the permanence of the 50/50 blended rate fee schedule
adjustment methodology, we are unsure of the extent to which COVID-19
has affected the costs of furnishing DMEPOS and whether such costs will
indeed be permanent. For example, we have not seen any significant
changes in assignment rates across the country, and we consider
assignment rates to be indicative of the sufficiency of payment to
cover a supplier's costs for furnishing DMEPOS items and services to
Medicare beneficiaries. We will continue to monitor payments in rural
and contiguous areas and all non-CBAs, as well as health outcomes,
assignment rates, and other information in such areas.
Regarding the comment supporting our proposal that for DME items
and services furnished before April 1, 2021, the fee schedule amount
for all areas within a State that are defined as rural areas would be
adjusted to 110 percent of the national average price, we note that the
effective date for this final rule will now be the effective date
specified in the DATES section of this final rule rather than April 1,
2021. Additionally, the COVID-19 PHE was renewed, effective on October
18, 2021.
As a result, we are finalizing the language as proposed with a
technical edit to now address the period before the effective date
specified in the DATES section of this final rule, instead of before
April 1, 2021. Specifically, for items and services furnished before
the effective date specified in the DATES section of this final rule,
the fee schedule amount for all areas within a State that are defined
as rural areas for the purposes of this subpart is adjusted to 110
percent of the national average price determined under paragraph
(g)(1)(ii) of this section. In the November 2020 proposed rule, we
proposed to reference April 1, 2021 in the revised Sec.
414.210(g)(1)(v). However, as we previously discussed in this final
rule, April 1, 2021 has passed and the PHE is still ongoing. Because
this rule has not finalized yet, we are finalizing the proposed
regulation text with a technical edit to reference the effective date
specified in the DATES section of this final rule rather than the April
1, 2021 effective date.
Comment: A commenter believed that the closer the rates are to the
2015 unadjusted fee schedule, the more innovation there would be from
providers.
Response: We thank the commenter for their comment. The commenter
did not elaborate on why they believed the closer the rates are to the
2015 fee unadjusted fee schedule, the more innovation there would be
from providers. Nevertheless, we are not aware of, nor do we believe
there is a link between innovation and the 2015 fee schedule. In fact,
the Government Accountability Office (GAO) and the HHS Office of
Inspector General (OIG) have published numerous reports detailing how
the unadjusted fee schedule amounts were higher, often significantly,
than the amounts that suppliers paid to purchase products from
manufacturers and wholesalers, the list prices on suppliers' websites,
and the amounts paid by private payers and other government
purchasers.\13\ We do not think using the 2015 fee schedule rates leads
to innovation.
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\13\ <a href="https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun18_medpacreporttocongress_rev_nov2019_note_sec.pdf">https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun18_medpacreporttocongress_rev_nov2019_note_sec.pdf</a>.
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Comment: Some commenters, in expressing their support of the
proposed 50/50 blended rates in rural and non-contiguous non-CBAs,
highlighted differences between rural and urban areas. A commenter
stated that non-urban costs-to-serve is higher due to labor/drive
times, use of higher cost third party distribution services, and lower
equipment return rates. A commenter also discussed their hiring
practices and associated labor costs, stating that employing
individuals they deemed to be qualified in areas outside of the
metropolitan areas is more challenging and costlier because of a
limited pool of qualified individuals in these areas. Another commenter
stated that Medicare beneficiaries in rural areas are geographically
dispersed, hard to reach, and do not have the same access to systems of
care available in more populated areas. The commenter stated that tough
terrain, long distances between patients and providers/suppliers, and
fewer health care resources mean that DME suppliers must incur added
costs to deliver the appropriate medical equipment and supplies to
patients on a timely basis. The commenter stated that this translates
into added costs for transportation, delivery and clinical staff, fuel,
and other expenses. The commenter stated that extension of the blended
rates promotes access for beneficiaries in rural areas, making it less
likely suppliers will be forced to close or stop providing DME to
Medicare beneficiaries, and that they provide choices to beneficiaries
to select from among a greater number of DME suppliers, as well as a
greater variety of brand-name items and services that may meet their
needs better than others.
Response: We have presented our analysis of factors that affect the
cost of furnishing DMEPOS items and services in rural areas (areas
outside MSAs) versus non-rural areas (MSAs) in past rulemaking (83 FR
57025) and in the preamble of the proposed rule and this final rule.
While the data shows that the volume of items furnished in CBAs and
MSAs is higher than the volume of items furnished in areas outside
MSAs, the data we analyzed indicates that other factors such as: Labor
rates/wages; gasoline prices; rent, utilities and other overhead costs;
average travel time and distances; etc., suggest that these costs are
higher in CBAs and MSAs than in areas outside MSAs. We have not been
able to definitively conclude that the overall costs of furnishing
DMEPOS items and services are higher or lower in rural areas than in
other areas. However, for now, we believe it is necessary to continue
paying the higher rates to suppliers for furnishing items in rural and
non-contiguous areas to maintain access to DMEPOS items and services in
these more remote areas.
Comment: Several commenters stated that the fee schedule rates for
non-rural areas should be at a 75/25 blended rate. Commenters stated
that the 75/25 blended rates that are currently in effect in non-rural
contiguous non-CBAs, in accordance with section 3712(b) of the CARES
Act, should continue even after the public health emergency ends. A
commenter supported continuing the 75/25 blend, and to phase in the
full fee schedule adjustments in these areas beginning January 1, 2024.
A commenter clarified that the 75 percent portion should be based on
the current rates in former CBAs, and the 25 percent portion of the
blended payment formula should be based on the unadjusted fee schedule.
A few commenters stated that the current rates were developed via a
flawed auction bid methodology, and they were based on pre-pandemic
demand and cost structure. A commenter stated that this payment should
last not just through the end of the public health emergency, but until
the product categories can be re-bid under a program structured to
reflect
[[Page 73876]]
what they say are true market conditions. Another commenter stated the
75/25 blended rates will ensure suppliers can continue to provide
critical DME to beneficiaries as suppliers encounter increased costs
and a different market as a result of the pandemic. A few commenters
stated that there are costs related to the pandemic that are unlikely
to be eliminated by the end of the public health emergency, and they
thus support a permanent extension of the current non-rural non-CBA
blended rates.
A few commenters also stated concerns regarding access to home
respiratory services, including oxygen. For instance, commenters
discussed how the COVID-19 PHE has caused more patients to receive home
respiratory therapy. Commenters were unsure how many of these patients
would require home respiratory therapy on a long-term basis, and that
it was therefore important that CMS establish payment rates that will
sustain DME and home respiratory therapy suppliers now and over the
longer term.
Response: Section 3712 of the CARES Act (Pub. L. 116-136) specifies
the payment rates for certain DME and enteral nutrients, supplies, and
equipment furnished in non-CBAs through the duration of the emergency
period described in section 1135(g)(1)(B) of the Act. Section 3712(a)
of the CARES Act continued our policy of paying the 50/50 blended rates
for items furnished in rural and non-contiguous non-CBAs through
December 31, 2020, or through the duration of the emergency period, if
longer. Section 3712(b) of the CARES Act increased the payment rates to
a 75/25 blend for DME and enteral nutrients, supplies, and equipment
furnished in areas other than rural and non-contiguous non-CBAs through
the duration of the COVID-19 public health emergency period.
In the May 2020 COVID-19 IFC, we stated we believed the purpose of
section 3712 of the CARES Act was to aid suppliers in furnishing items
under very challenging situations during the COVID-19 PHE (85 FR
27571).
Furthermore, we have long maintained that the fully adjusted rates
in non-rural non-CBAs are sufficient. For instance, we indicated in the
CY 2019 ESRD PPS DMEPOS proposed rule (83 FR 34382) that although the
average volume of items and services furnished by suppliers in non-
rural non-CBAs is lower than the average volume of items and services
furnished by suppliers in CBAs, the travel distances and costs for
these areas are lower than the travel distances and costs for CBAs. We
stated that because the travel distances and costs for these areas are
lower than the travel distances and costs for CBAs, we believe the
fully adjusted fee schedule amounts are sufficient.
Assignment rates were above 99 percent in non-rural contiguous non-
CBAs when the fully adjusted rates were implemented. With regards to
oxygen, in 2019 when we were paying the fully adjusted rates in non-
rural non-CBAs, the assignment rate for oxygen was 99.95 percent. From
2020 to 2021, assignment rates for oxygen in non-rural non-CBAs were
nearly identical--99.96 percent in 2020, and 99.95 percent in 2021.
Additionally, when looking at non-CBAs on a national level, we have not
seen evidence of a sustained increase in oxygen use as a result of the
COVID-19 PHE. For all non-CBAs, the total number of claim lines for
oxygen declined from 2019 to 2020 by 5.63 percent, and declined by 2.27
percent from 2020 to 2021. This is from using data through the same
week in the respective year (week 42), to understand the impact of the
fee schedule adjustment while accounting for claim delay.
We will continue to monitor payments in all non-CBAs, as well as
health outcomes, assignment rates, and other information.
Comment: A commenter stated the rates for the non-rural non-CBAs
should increase at least to the clearing price (or to the maximum
winning bids) of the ``old'' SPA, or an additional 5-10 percent, to
account for an increase in costs of raw materials, production, and
supply chain. The commenter stated that they expected SPAs to increase
under the new bidding methodologies we finalized in the CY 2019 ESRD
PPS DMEPOS final rule, and that the non-rural non-CBA rates should
reflect these expected increases.
Another commenter stated CMS should apply an adjustment to the
pricing methodology to offset the lack of volume increase in the non-
rural non-CBAs.
Response: We continue to believe that the fully adjusted rates in
non-rural non-CBAs are sufficient and that paying any additional amount
once the PHE ends would be unnecessary. We will continue to monitor
payments in these and all non-CBAs, including health outcomes,
assignment rates, and other information.
Comment: A commenter stated CMS should extend the 50/50 blended
rates to non-rural, non-CBAs to ensure that beneficiaries have
appropriate access and choice of quality DME items and services,
including OTS orthoses subject to competitive bidding for the first
time.
Response: As noted previously, once the PHE ends, we believe paying
fee schedule amounts equal to 100 percent of the adjusted payment
amount established under Sec. 414.210(g)(1)(iv) in non-rural
contiguous non-CBAs will be sufficient. Assignment rates were above 99
percent in these areas when the fully adjusted rates were implemented.
We will continue to monitor payments in these and all non-CBAs,
including health outcomes, assignment rates, and other information.
Comment: A few commenters discussed how in a bidding program, there
is a guarantee that there will be fewer competitors and larger volume
of business, but that does not exist in non-bid areas and therefore
there is no logical nexus between rates established in CBAs and the
costs to serve in non-CBAs. The commenters also cited concern with the
steady decreasing number of DME suppliers across the country, and
stated it indicates a dwindling number of suppliers and real potential
access issues.
Response: We believe there is a logical nexus between rates
established in CBAs and the costs to furnish items in non-CBAs. We
believe the 99 percent assignment rate in non-CBAs is a strong
indication that there is a logical nexus between CBAs and the costs to
furnish items in non-CBAs. As we noted in the November 2020 proposed
rule, we consider assignment rates as a source of cost data and
consider it a measure of the sufficiency of payment to cover a
supplier's costs for furnishing items and services under the Medicare
program (85 FR 70366). Assignment rates for items subject to the fee
schedule adjustments have not varied significantly around the country,
and they have consistently remained over 99 percent in all areas. Thus,
for the overwhelming majority of claims for items and services
furnished in the non-CBAs that were subject to the fee schedule
adjustments, suppliers have decided to accept the Medicare payment
amount in full, and have not needed to charge the beneficiary for any
additional costs that the Medicare allowed payment amount did not
cover. We also have not seen evidence of fee schedule adjustments
causing access issues, but we will continue to monitor for any such
issues. Finally, we note that the number of enrolled DMEPOS suppliers
increased by 2 percent from 86,061 in 2019 to 87,800 in 2020, the
highest total since 2016 when the total number of enrolled DMEPOS
suppliers was 88,786. There are therefore still many DMEPOS supplier
locations throughout the
[[Page 73877]]
country furnishing DMEPOS items and services.
Comment: The commenters shared the changes they have experienced as
a result of the COVID-19 pandemic, as well as their recommendations for
what the payment rates should be in the former CBAs. Several commenters
stated they oppose extending the application of the current fee
schedule adjustment transition rules for all of the items and services
that were included in Round 2021 of the CBP but were effectively
removed from Round 2021 of the CBP. A few commenters cited the COVID-19
pandemic as a reason for opposing extending the transition period and
rates, saying that these rates were based on pre-PHE demand, and that
fee schedule adjustments should reflect a new environment suppliers and
manufacturers are facing as a result of the COVID-19 pandemic.
Commenters stated additional costs from increased freight and other
supply chain costs, shipping delays, hazard pay for direct care
employees, personal protective equipment (PPE), and software and
hardware to enable employees to work remotely. Commenters stated that
these additional costs will likely continue throughout the pandemic,
and may continue post-pandemic. A few commenters stated that SPAs were
developed via a flawed auction bid methodology, and were outdated. A
commenter recommended that the rates in former CBAs should reflect
those established for Round 2 and Round 1 re-compete, updated by the
CPI-U for each year since then. The commenter stated that setting the
SPAs at these prior rates will provide suppliers with an increase that
is necessary to reflect the 2020 change in the market.
Many commenters stated payment rates in the former CBAs should be
based on a 90/10 blended payment formula, with the 90 percent based on
the current payment rates in former CBAs (including the CPI-U updates),
and the 10 percent based on the 2015 unadjusted fee schedules.
Commenters stated that setting the rates based upon a 90-10 blended
rate would provide for a modest increase to compensate for what they
say is a flawed SPA setting methodology, for rates they say are 6 years
old in a market they say has changed over those years, and for what
they say are increased costs caused by the COVID-19 pandemic. A
commenter stated that rates in former CBAs should at least be increased
to the clearing price of those former bid program amounts.
Response: Per Sec. 414.210(g)(10), during a temporary gap in the
entire DMEPOS CBP and National Mail Order CBP or both, the fee schedule
amounts for items and services that were competitively bid and
furnished in areas that were competitive bidding areas at the time the
program(s) was in effect are adjusted based on the SPAs in effect in
the competitive bidding areas on the last day before the CBP contract
period of performance ended, increased by the projected percentage
change in the Consumer Price Index for all Urban Consumers (CPI-U) for
the 12-month period ending on the date after the contract periods
ended. If the gap in the CBP lasts for more than 12 months, the fee
schedule amounts are increased once every 12 months on the anniversary
date of the first day of the gap period based on the projected
percentage change in the CPI-U for the 12-month period ending on the
anniversary date.
We do not agree that increasing the adjusted fee schedule amounts
for items and services furnished in the former CBAs based on a 90/10
blended payment formula is necessary. The assignment rate for the vast
majority of the items and services that were included in Round 2021 of
the CBP has remained around 99 percent in the former CBAs in 2020 and
2021. If the costs to furnish DMEPOS items and services in the former
CBAs increased as a result of COVID-19 or the DME market has
fundamentally changed as a result of the COVID-19 pandemic to the point
where the current payment rates are insufficient, we believe this would
be reflected in the assignment rates and assignment rates would
decrease across a variety of former CBAs and product categories in 2020
and 2021. However, that has not happened. For instance, when looking at
the monthly assignment rate for oxygen in 2020 (the assignment rates of
all former CBAs aggregated, with claims data through May 14, 2021),
every month in 2020 had an assignment rate of 99 percent.
Further, in 2021, the assignment rate has remained the same except
for the months of March and April, in which there was 100 percent
assignment. Finally, in response to comments saying that setting the
rates based upon a 90-10 blended rate would provide for a modest
increase to compensate for a flawed SPA calculation methodology, and 6-
year-old rates in a changed market, we would like to note that it has
not been 6 years since the last CBP contract performance period ended.
Until the next round of the CBP commences, we believe the payment
rates set forth in Sec. 414.210(g)(10) for the former CBAs will be
sufficient, but we will continue to monitor for any issues.
Comment: A few commenters supported the proposal for CBAs and
former CBAs (CBAs where no CBP contracts are in effect), in which the
fee schedule adjustment rules at Sec. 414.210(g)(10) would be extended
until a future round of the CBP.
Response: We thank the commenters for their support of our
proposal.
Comment: A couple of commenters requested that given concerns and
uncertainty caused by the COVID-19 pandemic, CMS should postpone the
implementation of the fee schedule adjustment methodologies in non-CBAs
for the orthotics, back and knee braces included in Round 2021 of the
CBP. The commenters stated that they should be paid at the unadjusted
fee schedule amount for furnishing such items outside of CBAs. The
commenters stated there are significant differences between the
provision of DME and O&P care in urban/suburban areas and the rural or
non-contiguous areas that make up the majority of non-CBAs. For
instance, a commenter discussed how Medicare beneficiaries in rural
areas are geographically dispersed, hard to reach, and do not have the
same access to systems of care available in more populated areas. The
commenter stated that tough terrain, long distances between patients
and providers/suppliers, and fewer health care resources mean that DME
suppliers must incur added costs to deliver the appropriate medical
equipment and supplies to patients on a timely basis. The commenter
stated this translates into added costs for transportation, delivery
and clinical staff, fuel, and other expenses.
Response: We have been closely monitoring the implementation of
Round 2021 of the CBP, and have not detected any issues with the fee
schedule adjustments for OTS back and knee braces. In the non-CBAs, the
assignment rates for the back and knee braces included in Round 2021 of
the CBP are over 99 percent. We also believe that continuing to pay for
those orthotic codes at the unadjusted fee schedule amount would be
fiscally imprudent as that would mean continuing to pay at rates the
HHS Office of Inspector General has previously found to be grossly
excessive.\14\ MedPAC noted in its comments on the CY 2019 ESRD PPS
DMEPOS final rule (83 FR 57035) that, ``Expanding CBP into new product
categories, such as orthotics, would produce substantial savings and
help
[[Page 73878]]
prevent fraud and abuse.'' \15\ MedPAC, when discussing the history of
DMEPOS payment methods, has also noted that excessively high payment
rates increased expenditures and likely encouraged inappropriate
utilization.\16\ This is of particular relevance because of recent past
instances of fraud involving orthotic braces.\17\ \18\
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\14\ <a href="https://oig.hhs.gov/oas/reports/region5/51700033.pdf">https://oig.hhs.gov/oas/reports/region5/51700033.pdf</a>.
\15\ <a href="https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/comment-letters/08312018_esrd_cy2019_dme_medpac_comment_v2_sec.pdf">https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/comment-letters/08312018_esrd_cy2019_dme_medpac_comment_v2_sec.pdf</a>.
\16\ <a href="https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun18_medpacreporttocongress_rev_nov2019_note_sec.pdf">https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun18_medpacreporttocongress_rev_nov2019_note_sec.pdf</a>.
\17\ <a href="https://www.justice.gov/opa/pr/federal-indictments-and-law-enforcement-actions-one-largest-health-care-fraud-schemes">https://www.justice.gov/opa/pr/federal-indictments-and-law-enforcement-actions-one-largest-health-care-fraud-schemes</a>.
\18\ <a href="https://www.justice.gov/opa/pr/five-individuals-charged-roles-65-million-nationwide-conspiracy-defraud-federal-health-care">https://www.justice.gov/opa/pr/five-individuals-charged-roles-65-million-nationwide-conspiracy-defraud-federal-health-care</a>.
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We believe fee schedule adjustments for these items and services
are appropriate, and we would like to note that such adjustments are
mandated by section 1834(a)(1)(F) of the Act. We will continue to
monitor for any issues.
Comment: A commenter stated there were flaws in the data CMS
presented, such as not having a control group to see if data like ER
admission rates are relative to DMEPOS changes or other trends like
pressure on hospitals from CMS to decrease readmissions or face
penalties.
Response: We believe our health outcomes monitoring data are robust
and a valuable tool. We compare historical health outcomes data between
CBAs, non-rural non-CBAs, and rural CBAs in the same BEA region. Thus,
we do see if health outcomes changes are unique to certain BEA regions
or areas within those regions, and if they track with other BEA regions
or other areas within the same BEA region. We also compare historical
health outcomes data for non-contiguous non-CBAs and non-contiguous
CBAs.
As we indicated in the November 2020 proposed rule, we monitor
mortality rates, hospitalization rates, ER visit rates, SNF admission
rates, physician visit rates, monthly days in hospital, and monthly
days in SNF (85 FR 70368). Except for death information, which comes
from the Medicare Enrollment Database, all other outcomes are derived
from claims (inpatient, outpatient, Part B carrier, and SNF). Our
monitoring materials cover historical and regional trends in these
health outcome rates across a number of populations, allowing us to
observe deviations that require further drilldown analyses. We monitor
health outcomes in the enrolled Medicare population (Medicare Parts A
and B), dual Medicare and Medicaid population, long-term
institutionalized population, as well as various DME utilizers and
access groups. This helps paint a complete picture of whether an
increase in an outcome is across the board (not linked to DME access),
or is unique to certain populations. Specifically, we focus on any
increases that are unique to the DME access groups, which include
beneficiaries who are likely to use certain DME based on their
diagnoses, and we would conduct drilldown analyses and policy research
to pinpoint potential reasons for such increases.
Additionally, our health outcomes monitoring data is but one piece
of multiple sources of data that we use to analyze the effects of the
fee schedule adjustments. We also analyze assignment rates, total
services, total services by supplier, travel distance, and other data
to provide a more complete picture on the effects of the fee schedule
adjustments.
Comment: A commenter discussed the assignment rate data that
continues to be above 99 percent in non-CBAs, saying the increase in
assignment rate over time does not surprise them, as the commenter, a
DME supplier, says customers choose to pay cash for common affordable
items, such as walkers, instead of pursuing a prescription or
documentation as it is not worth the time and hassle. The commenter
stated that if a beneficiary sees a doctor for a walker, in order for
the beneficiary to get reimbursed for the walker, the beneficiary will
likely have to schedule another visit for the more major health issues
they are experiencing, as the commenter stated most doctors now only
address one issue at a time, and that this will never be measured in
the CMS data.
Response: Although there could be a situation in which a
beneficiary elects to pay cash for some DME items, we do not believe
this explains the consistently high assignment rates across different
parts of the country for prolonged periods of time. High assignment
rates preceded the fee schedule adjustments, and high assignment rates
have continued even after the fee schedule adjustments have been in
effect for the last several years. We believe the high assignment rates
are an indication that the payment rates are sufficient and that
assignment rates are a valuable tool in monitoring the effects of the
fee schedule adjustments.
Comment: Commenters shared their concerns in regards to beneficiary
complaints and patient choice of equipment. Specifically, a commenter
stated its hypothesis that beneficiary complaints to CMS have decreased
because beneficiaries have become resigned to accept low quality
products because the commenter, a DME supplier, has told beneficiaries
they cannot afford to buy the name brand products at the rates Medicare
pays. The commenter also stated that spending an hour navigating
through call centers to complain about the big national and regional
chains where they are being consolidated is fruitless. Additionally,
the commenter stated that complaining to CMS is fruitless if the
beneficiary does not like the one option offered by a supplier
accepting assignment, and that beneficiaries accept what they can get
and if it does not work they come back and buy the nice piece of
equipment out of pocket. The commenter also stated that suppliers will
continue to consolidate, and that beneficiaries will continue to have
fewer options not just in terms of suppliers, but in DMEPOS products.
Another commenter expressed concern that suppliers have stopped
carrying specific items for which Medicare payments are too low, and
stated that they have seen many essential items such as heavy-duty
walkers are not well reimbursed and thus it is harder to find a DME
supplier that carries one and will sell to Medicare patients.
Response: We recognize the value of and encourage beneficiaries to
communicate any complaints about their DME to Medicare. More
information on filing a complaint about DME can be found here: <a href="https://www.medicare.gov/claims-appeals/file-a-complaint-grievance/complaints-about-durable-medical-equipment-dme">https://www.medicare.gov/claims-appeals/file-a-complaint-grievance/complaints-about-durable-medical-equipment-dme</a>.
With regard to patient choice and suppliers supplying specific
equipment, we believe the situations the commenters describe underscore
one of the many benefits of the DMEPOS CBP. We also believe that
expanding the CBP into additional areas of the country would provide
these benefits to more beneficiaries and could work towards addressing
some of the concerns the commenters have expressed.
The Medicare Learning Network Fact Sheet MLN900927 titled, ``DMEPOS
Competitive Bidding Program Referral Agents'' discusses some of these
benefits that are relevant to those situations the commenters
describe.\19\
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\19\ <a href="https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/DME_Ref_Agt_Factsheet_ICN900927.pdf">https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/DME_Ref_Agt_Factsheet_ICN900927.pdf</a>.
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In particular, and as discussed in MLN900927, the CBP includes a
beneficiary safeguard to ensure that beneficiaries have access to
specific
[[Page 73879]]
brands when needed to avoid an adverse medical outcome. This safeguard,
which is sometimes called the Physician Authorization Process, allows a
physician (including a podiatric physician) or treating practitioner
(that is, a physician assistant, clinical nurse specialist, or nurse
practitioner) to prescribe a specific brand or mode of delivery to
avoid an adverse medical outcome. The physician or treating
practitioner must document in the beneficiary's medical record the
reason why the specific brand is necessary to avoid an adverse medical
outcome. This documentation, which would be in the physician's order
and notes, must include all of the following:
<bullet> The product's brand name.
<bullet> The features that this product has versus other brand name
products.
<bullet> An explanation of how these features are necessary to
avoid an adverse medical outcome.
If a physician or treating practitioner prescribes a particular
brand for a beneficiary to avoid an adverse medical outcome, the
contract supplier must, as a term of its contract, ensure that the
beneficiary receives the needed item. The contract supplier has three
options:
<bullet> The contract supplier can furnish the specific brand as
prescribed.
<bullet> The contract supplier can consult with the physician or
treating practitioner to find another appropriate brand of item for the
beneficiary and obtain a revised written prescription.
<bullet> The contract supplier can assist the beneficiary in
locating a contract supplier that will furnish the particular brand of
item prescribed by the physician or treating practitioner.
If the contract supplier cannot furnish the specific brand and
cannot obtain a revised prescription or locate another contract
supplier that will furnish the needed item, the contract supplier must
furnish the item as prescribed. We discuss this particular issue
further in the final rule we published in the Federal Register on April
10, 2007 titled ``Medicare Program; Competitive Acquisition for Certain
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) and Other Issues'' (72 FR 18064).
A contract supplier is prohibited from submitting a claim to
Medicare if it provides an item other than that specified in the
written prescription. Any change in the prescription requires a revised
written prescription. In addition, contract suppliers are required to
accept assignment for items they furnish to Medicare beneficiaries.
Comment: A commenter questioned why the total number of DMEPOS
services had been increasing from 2016 to 2018 despite a decline in
enrolled beneficiaries. The commenter posited several theories for this
increase, including the notion that it is because items supplied have
decreased in quality and require more frequent replacement, the
surviving regional and national suppliers know that they can only be
profitable when ``up-selling'' customers to accept all eligible
accessories and supplies when dispensing, that technology advances have
allowed for an increase in resupply rates, and that there is rampant
fraud resulting in billions of dollars of claims. Finally, the
commenter questioned whether the numbers would look different if all
the fraud-related items and suppliers were not in this data.
Response: We have been monitoring claims and health outcomes data
such as deaths, emergency room visits, physician office visits,
hospital and nursing home admissions and lengths of stay, etc., very
closely since the fee schedule adjustments were implemented in 2016 and
have not seen any signs that health outcomes have been negatively
affected by the fee schedule adjustments. Overall, health outcomes have
remained the same or have improved since 2016, and this is an
indication that there has not been a decrease in the quality of DMEPOS
items and services furnished. Although we know that a certain
percentage of Medicare claims for DMEPOS items and services are
fraudulent, we do not currently have data to determine whether fee
schedule adjustments have had any impact on the number of fraudulent
claims furnished for DMEPOS items and services.
In the CY 2019 ESRD PPS DMEPOS proposed rule (83 FR 57032), we
discussed utilization trends in the non-CBAs for the 2016 to 2018 time
period. In particular, we noted that while utilization of DME varied
throughout area and by particular item, the number of total services
increased from 2016 to 2017 (2.05 percent), and from 2017 to 2018 (3.08
percent) when looking at the number of total services furnished through
week 34 of the respective year. We noted that there had been a
persistent increase in total volume of services furnished in non-CBAs
from 2016 to 2018, and that this was driven by an increase in CPAP/
RADs. All other products exhibited either a continuous decline from
2016 through 2018, or at least a decline from 2017 to 2018.
When looking at updated data from 2019 to 2020 and 2020 to 2021
(using data through the same week in the respective year--week 42--to
understand the impact of the fee schedule adjustment while accounting
for claim delay), the total number of claim lines for all items and
services subject to fee schedule adjustments in the non-CBAs slightly
decreased, and we believe COVID-19 likely played a role in this
decrease. For instance, researchers have documented that in 2020 there
was a decrease in health care utilization as a result of the COVID-19
pandemic.<SUP>20 21</SUP>
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\20\ <a href="https://www.healthsystemtracker.org/chart-collection/how-have-healthcare-utilization-and-spending-changed-so-far-during-the-coronavirus-pandemic/#item-covidcostsuse_marchupdate_4">https://www.healthsystemtracker.org/chart-collection/how-have-healthcare-utilization-and-spending-changed-so-far-during-the-coronavirus-pandemic/#item-covidcostsuse_marchupdate_4</a>.
\21\ <a href="https://aspe.hhs.gov/pdf-report/Medicare-FFS-Spending-Utilization">https://aspe.hhs.gov/pdf-report/Medicare-FFS-Spending-Utilization</a>.
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From 2019 to 2020, the only product categories that experienced an
increase in total number of claim lines were CPAP device and supplies,
infusion pump and supplies, and insulin infusion pump and supplies. For
example, for CPAP device and supplies, the total number of claim lines
increased by 3.43 percent from 2019 to 2020 (when using data through
week 42 of the respective year). From 2020 to 2021, only the
transcutaneous electrical nerve stimulation (TENS) product category
experienced an increase in total number of claim lines with a 0.78
percent increase.
Comment: Commenters provided insights into our travel distance
analysis. Specifically, a commenter stated that the travel distance
analysis CMS presented in the November 2020 proposed rule, which
presented the average number of miles between suppliers and
beneficiaries, does not accurately reflect their business network, nor
service and clinical support infrastructure. For instance, the
commenter stated that while their patients do receive services directly
to their home, the majority of services are delivered to the hospital
or outpatient setting at the time of discharge. The commenter stated
they also maintain distribution centers to allow shipment of ongoing
supplies as needed, and that often their central distribution
warehouses are used to ship on behalf of the service billing locations.
Another commenter stated that average travel distance to furnish items
and services to beneficiaries in 2017 was far greater outside of CBAs
than in CBAs.
Response: We appreciate learning about the nature of the
commenter's business network and how it effects their travel distance
for furnishing services to beneficiaries. Section 16008 of the Cures
Act requires us to conduct a comparison of several factors with respect
to non-CBAs and CBAs, and one of those factors is the average travel
distance and cost associated with
[[Page 73880]]
furnishing items and services in the area. The kind of travel that the
commenter experiences may be true for their particular company.
However, past stakeholder input from the DME industry has often focused
on the travel distances DME suppliers travel to reach beneficiaries'
homes, particularly in rural areas. As such, that is why we decided to
focus on the travel distance between the beneficiary's residential ZIP
code and the supplier's ZIP code. With regard to the commenter saying
that the average travel distance to furnish items and services to
beneficiaries in 2017 was far greater outside of CBAs than in CBAs, our
data does not show that to be the case, unless looking at specific
types of areas. As we found in the CY 2019 ESRD PPS DMEPOS proposed
rule (83 FR 34367 through 34371) and in the November 2020 proposed rule
(85 FR 70366), travel distances were only greater in certain non-CBAs,
which included Frontier and Remote (FAR), OCBSAs, and Super Rural
areas.
D. Alternatives Considered but Not Proposed
We considered, but did not propose, three alternatives to our
provisions and we sought comments on these alternatives:
1. Adjust Fee Schedule Amounts for Super Rural Areas and Non-Contiguous
Areas Based on 120 Percent of the Fee Schedule Amounts for Non-Rural
Areas
Under the first alternative, we considered prior suggestions from
stakeholders to use the ambulance fee schedule concept of a ``super
rural area'' when determining fee schedule adjustments for non-CBAs (85
FR 70371). Specifically, we considered the provision to eliminate the
definition of rural area at Sec. 414.202 and 42 CFR 414.210(g)(1)(v),
which brings the adjusted fee schedule amounts for rural areas up to
110 percent of the national average price determined under Sec.
414.210(g)(1)(ii). In place of this definition and rule, we considered
the provision for an adjustment to the fee schedule amounts for DMEPOS
items and services furnished in super rural non-CBAs within the
contiguous U.S. equal to 120 percent of the adjusted fee schedule
amounts determined for other, non-rural non-CBAs within the same State.
For example, the adjusted fee schedule amount for super rural, non-CBAs
within Minnesota would be based on 120 percent of the adjusted fee
schedule amount (in this case, the regional price) for Minnesota
established in accordance with Sec. 414.210(g)(1)(i) through (iv).
Consistent with the ambulance fee schedule rural adjustment factor at
Sec. 414.610(c)(5)(ii), we considered defining ``super rural'' as a
rural area determined to be in the lowest 25 percent of rural
population arrayed by population density, where a rural area is defined
as an area located outside an urban area (MSA), or a rural census tract
within an MSA as determined under the most recent version of the
Goldsmith modification as determined by the Federal Office of Rural
Health Policy at the Health Resources and Services Administration. Per
this definition and under this alternative rule, certain areas within
MSAs would be considered super rural areas whereas now they are treated
as non-rural areas because they are located in counties that are
included in MSAs. For all other non-CBAs, including areas within the
contiguous U.S. that are outside MSAs but do not meet the definition of
super rural area, we considered adjusting the fee schedule amounts
using the current fee schedule adjustment methodologies under Sec.
414.210(g)(1) and Sec. 414.210(g)(3) through (8).
In addition to addressing past stakeholder input, this alternative
approach would provide a payment increase that is somewhat higher than,
but similar to the 17 percent payment differential identified by
stakeholders in 2015 based on a survey of respiratory equipment
suppliers.\22\ In addition, we have received input from suppliers that
serve low population density areas within MSAs that are not CBAs. These
stakeholders claim that they are serving low population density areas
that are not near to or served by suppliers located in the urban core
areas of the MSA and believe they must receive higher payments than
suppliers serving the higher population density areas of the MSA. Under
the alternative fee schedule adjustment methodology, if these low
population density areas were to meet the definition of super rural
area, they would receive a 20 percent higher payment than areas that
are not super rural areas. This alternative payment rule would address
these concerns with how the current payment rules and definition of
rural area affect these areas, and would target payments for those
rural areas that are low population density areas, regardless of
whether they are located in an MSA or not. This approach would also
address concerns raised from stakeholders on the March 23, 2017 call
regarding the cost of traveling long distances to serve far away,
remote areas.
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\22\ <a href="https://www.cqrc.org/img/CQRCCostSurveyWhitePaperMay2015Final.pdf">https://www.cqrc.org/img/CQRCCostSurveyWhitePaperMay2015Final.pdf</a>.
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Under this alternative, Sec. 414.210(g)(2), which addresses fee
schedule adjustments for DMEPOS items and services furnished in non-
contiguous areas, would be replaced with a new rule that adjusts the
fee schedule amounts for non-contiguous areas based on the higher of
120 percent of the average of the SPAs for the item or service in CBAs
outside the contiguous U.S. (currently only Honolulu, Hawaii), or the
national average price determined under Sec. 414.210(g)(1)(ii).
Comment: A couple commenters stated that while they did not support
the alternative of adjusting the fee schedule amounts for super rural
and non-contiguous areas based on 120 percent of the fee schedule
amounts for non-rural areas, they recommend eliminating the fee
schedule amounts for rural areas up to 110 percent of the national
average price determined under Sec. 414.210(g)(1)(ii)) and maintaining
the 50/50 blend, but replacing the current rural definition (and
corresponding ZIP codes) by including the ``super rural'' ZIP codes
within the current array of rural ZIP codes. The commenters stated that
because certain areas within MSAs are treated as non-rural areas, as
they are located in counties that are included in MSAs, the commenters
were concerned that the current array of suppliers in higher populated
urban areas that are currently serving these rural areas within an MSA
may abandon these areas if they are less profitable.
Response: Although we are not finalizing this particular
alternative that we considered, we acknowledge the commenters'
recommendations regarding this particular alternative and we will keep
these points in mind for future consideration.
Comment: A commenter stated it would not be appropriate to adjust
the fee schedule amounts relying on the geographic designations used in
the Ambulance Fee Schedule, or suggested rates based on industry data
from 2015. The commenter stated many things have changed since 2015
that have affected the costs of furnishing items and services,
including the COVID-19 pandemic and the increased costs of personal
protective equipment (PPE), supply shortages, and personnel costs. The
commenter also stated that the Census Bureau has shifted to a sampling
methodology that impacts the RUCAs, which has changed the way the ZIP
code designations are calculated under the Ambulance Fee Schedule, and
that they were concerned that these changes have led super-rural areas
and rural areas being designated as urban. The
[[Page 73881]]
commenter stated that before this methodology is applied to any other
part of Medicare, CMS must work to address the underlying problems
these changes have created.
Response: We are not finalizing this particular alternative and
will keep these points in mind for future consideration.
After consideration of the public comments we received, we are not
finalizing this alternative considered.
2. Establish Additional Phase-in Period for Fully Adjusted Fee Schedule
Amounts for Rural Areas and Non-Contiguous Areas
We considered proposing an alternative fee schedule adjustment
methodology that would establish an additional transition period to
allow us to determine the impact of the new SPAs and monitor the impact
of adjusted fee schedule amounts (85 FR70372). Under this alternative,
we considered adjusting the fee schedule amounts for items and services
furnished in rural areas and non-contiguous non-CBAs based on a 75/25
blend of adjusted and unadjusted rates for the 3-year period from April
1, 2021, or the date immediately following the duration of the
emergency period described in section 1135(g)(1)(B) of the Act (42
U.S.C. 1320b-5(g)(1)(B)), whichever is later, through December 31,
2023. Such a phase-in would bring the fee schedule payment amounts down
closer to the fully adjusted fee levels and allow for a 3-year period
to monitor the impact of the lower rates on access to items and
services in these areas before potentially phasing in the fully
adjusted rates in 2024.
Comment: A commenter stated they favor the permanent extension of
the current rural and non-rural non-CBA blended rates instead of the
alternative phase-in of the fully adjusted fee schedule amounts
discussed in the November 2020 proposed rule, as it is important for
patients and suppliers to have stable rates, in their view.
Response: We did not propose to extend the 75/25 blended rates in
the non-rural contiguous non-CBAs once the PHE ends. We did, however,
propose a fee schedule adjustment methodology under Sec. 414.210(g)(1)
for the non-rural contiguous non-CBAs that is not time-limited,
transitional, or dependent upon the next round of the CBP. We agree
with the commenter that it is important to provide patients and
suppliers with stable rates to the extent feasible. Of note, the fully
adjusted rates had been in continuous effect in the non-rural
contiguous non-CBAs from January 2017 through March 5, 2020. During
that time period, the rate of assignment for items and services subject
to fee schedule adjustments furnished in those areas was over 99
percent. We believe that the fully adjusted rates will be sufficient
for when the PHE ends.
After consideration of the public comments we received, we are not
finalizing this alternative considered.
3. Extend Current Fee Schedule Adjustments for Items and Services
Furnished in Non-CBAs, CBAs, and Former CBAs That Were Included in
Product Categories Removed From Round 2021 of the CBP
CMS only awarded Round 2021 CBP contracts to bidders in the OTS
back braces and OTS knee braces product categories. CMS did not award
Round 2021 CBP contracts to bidders that bid in any other product
categories that were included in Round 2021 of the CBP, therefore, CMS
does not have any new SPAs for these items and services. As a result,
under this alternative, we considered whether to simply extend
application of the current fee schedule adjustment rules for all of the
items and services that were included in Round 2021 of the CBP but were
essentially removed from Round 2021 of the CBP (85 FR 70372).
Specifically, for items and services included in product categories
that have essentially been removed from Round 2021 of the CBP, CMS
considered extending the transition rules at Sec. 414.210(g)(9)(iii)
and (v) for items and services furnished in non-CBAs and the fee
schedule adjustment rules at Sec. 414.210(g)(10) for items and
services furnished in CBAs or former CBAs until such product categories
are competitively bid again in a future round of the CBP. Under this
alternative, we would adjust the fee schedule amounts for items and
services furnished in areas other than rural areas and non-contiguous
non-CBAs in accordance with Sec. 414.210(g)(9)(v) based on 100 percent
of the adjusted rates beginning on April 1, 2021 or the date
immediately following the duration of the emergency period described in
section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)),
whichever is later, through the date immediately preceding the
effective date of the next round of CBP contracts. As previously
discussed in this final rule, now that April 1, 2021 has passed, but
the public health emergency is still ongoing, and this rule has yet to
be finalized, we are making a technical edit to reflect the new
effective date for this final rule. The fee schedule amounts for items
and services removed from the CBP and furnished in rural and non-
contiguous non-CBAs would continue to be adjusted based on a 50/50
blend in accordance with Sec. 414.210(g)(9)(iii) through the date
immediately preceding the effective date of the next round of CBP
contracts. Under, this alternative, the fee schedule adjustment
transition rules under Sec. 414.210(g)(9) would continue in effect
through the date immediately preceding the effective date of the next
round of CBP contracts. This alternative differs from our proposal and
this final rule, as we proposed and are finalizing a fee schedule
adjustment methodology for non-CBAs under Sec. 414.210(g)(1) and
(g)(2), that is not time-limited, transitional, or dependent upon the
next round of the CBP.
For items and services included in product categories that have
effectively been removed from Round 2021 of the CBP, the fee schedule
amounts for items and services furnished in CBAs or former CBAs would
continue to be adjusted in accordance with Sec. 414.210(g)(10) through
the date immediately preceding the effective date of the next round of
CBP contracts. In contrast, for items and services that are included in
Round 2021 of the CBP, the fee schedule amounts for such items and
services would be adjusted in accordance with the adjustment
methodologies outlined in this final rule; we would pay the 50/50
blended rates in rural and non-contiguous non-CBAs, and 100 percent of
the adjusted payment amount established under Sec. 414.210(g)(1)(iv)
in non-rural non-CBAs in the contiguous U.S.
Comment: Commenters opposed this alternative for the reasons
discussed in previous comments in section III.C. of this final rule.
Most commenters opposed continuation of the current rates in the former
CBAs, supported a permanent extension of the 50/50 blended rates in
rural and non-contiguous non-CBAs, and opposed paying 100 percent of
the adjusted payment amount established under Sec. 414.210(g)(1)(iv)
in non-rural non-CBAs in the contiguous U.S. Commenters opposed
continuation of the current rates in the former CBAs saying they are
based on SPAs established by a flawed bid methodology developed over 6
years ago. Instead, and as previously discussed, many commenters
supported a permanent extension of the 50/50 blended rates in rural and
non-contiguous non-CBAs, a 75/25 blended rate methodology in the non-
rural non-CBAs in the contiguous U.S., and a 90/10 blended rate
methodology in the former CBAs in which the 90 percent must be based on
the current payment
[[Page 73882]]
rates in the former CBAs (including the CPI-U updates) and the 10
percent must be based on the 2015 unadjusted fee schedule. Finally, as
previously discussed, a few commenters supported the proposal for CBAs
and former CBAs (CBAs where no CBP contracts are in effect), in which
the fee schedule adjustment rules at Sec. 414.210(g)(10) would be
extended until a future round of the CBP. However, these commenters did
not support the non-CBA policies in this alternative considered, and
instead supported a permanent extension of the 50/50 blended rates in
rural and non-contiguous non-CBAs, and a 75/25 blended rate methodology
in the non-rural non-CBAs in the contiguous U.S.
Response: After consideration of the public comments we received,
we are not finalizing this alternative considered. As we discuss in
section III.E. of this final rule titled ``Provisions of Final Rule'',
we will be finalizing our proposals discussed later in this section. We
expect to revisit fee schedule adjustments in the future.
E. Provisions of Final Rule
We are finalizing our proposals, with the modification of the
effective date, in this final rule. In the November 2020 proposed rule,
we proposed the fee schedule adjustment methodologies for items and
services furnished in non-CBAs on or after April 1, 2021, or the date
immediately following the duration of the emergency period described in
section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)),
whichever is later (85 FR 70370). However, as we previously discussed
in this final rule, now that April 1, 2021 has passed, and given that
the COVID-19 PHE is still ongoing, we are making a technical edit to
change the April 1, 2021 date to the effective date specified in the
DATES section of this final rule to reflect the new effective date for
these provisions. Other than the modification of the April 1, 2021
effective date, we are finalizing our proposals without modification.
First, we will continue paying the 50/50 blended rates in non-
contiguous non-CBAs, but the 50/50 blend will no longer be a transition
rule under Sec. 414.210(g)(9), and will instead be the fee schedule
adjustment methodology for items and services furnished in these areas
under Sec. 414.210(g)(2) unless revised in future rulemaking. For
items and services furnished in non-contiguous non-CBAs, the fee
schedule amounts for such items and services furnished on or after the
effective date specified in the DATES section of this final rule, or
the date immediately following the duration of the emergency period
described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-
5(g)(1)(B)), whichever is later, will be adjusted so that they are
equal to a blend of 50 percent of the greater of the average of the
SPAs for the item or service for CBAs located in non-contiguous areas
or 110 percent of the national average price for the item or service
determined under Sec. 414.210(g)(1)(ii) and 50 percent of the
unadjusted fee schedule amount for the area, which is the fee schedule
amount in effect on December 31, 2015, increased for each subsequent
year beginning in 2016 by the annual update factors specified in
sections 1834(a)(14), 1834(h)(4), and 1842(s)(1)(B) of the Act,
respectively, for durable medical equipment and supplies, off-the-shelf
orthotics, and enteral nutrients, supplies, and equipment.
Second, we will continue paying the 50/50 blended rates in rural
contiguous areas, but the 50/50 blend will no longer be a transition
rule under Sec. 414.210(g)(9), and will instead be the fee schedule
adjustment methodology for items and services furnished in these areas
under Sec. 414.210(g)(2) unless revised in future rulemaking. For
items and services furnished in rural contiguous areas on or after the
effective date specified in the DATES section of this final rule or the
date immediately following the duration of the emergency period
described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-
5(g)(1)(B)), whichever is later, the fee schedule amounts will be
adjusted so that they are equal to a blend of 50 percent of 110 percent
of the national average price for the item or service determined under
Sec. 414.210(g)(1)(ii) and 50 percent of the fee schedule amount for
the area in effect on December 31, 2015, increased for each subsequent
year beginning in 2016 by the annual update factors specified in
sections 1834(a)(14), 1834(h)(4), and 1842(s)(1)(B) of the Act,
respectively, for durable medical equipment and supplies, off-the-shelf
orthotics, and enteral nutrients, supplies, and equipment.
We note that the 50/50 blended rates for DMEPOS items and services
furnished in rural and non-contiguous areas that we are finalizing in
this rule are, on average, approximately 66 percent higher than the
fully adjusted fee schedule amounts. Previous stakeholder input from
MedPAC has indicated that the 50/50 blended rates are ``costly'' and
create ``. . . a financial burden for the Medicare program and
beneficiaries''. MedPAC has also previously opined on the
appropriateness of the unadjusted fee schedule, which comprises 50
percent of the 50/50 blended rates. MedPAC stated, ``products not
included in the CBP continue to largely be paid on the basis of the
historical fee schedule, and the Commission has found many of these
rates are likely excessive.'' \23\ In light of this previous
stakeholder input from MedPAC, we are concerned that this fee schedule
adjustment methodology may result in payment amounts that are excessive
compared to the fully adjusted fee schedule amounts. However, as we
discussed in the November 2020 proposed rule, this fee schedule
adjustment methodology errs on the side of caution, as we aim to ensure
beneficiary access to items and services in rural and remote areas of
the country. For instance, we proposed paying the 50/50 blend for rural
and non-contiguous non-CBAs from January 1, 2019, through December 31,
2020, in our CY 2019 ESRD PPS DMEPOS proposed rule, and we finalized
this policy in our CY 2019 ESRD PPS DMEPOS final rule. Most of the
comments we received on this proposal were from commenters in the DME
industry, such as homecare associations, DME manufacturers, and
suppliers, and these commenters generally supported the 50/50 blended
rates proposal.
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\23\ <a href="https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/comment-letters/08312018_esrd_cy2019_dme_medpac_comment_v2_sec.pdf">https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/comment-letters/08312018_esrd_cy2019_dme_medpac_comment_v2_sec.pdf</a>.
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The 50/50 blended rates were initially established for phase in
purposes, so we may consider alternative methodologies for adjusting
fee schedule amounts for rural and non-contiguous areas in the future.
We will be undertaking analyses to assess the extent to which these
payments are ``excessive'', as per MedPAC's comment. In addition, we
may decide it is necessary to propose changes to the fee schedule
adjustment methodologies in the future depending on potential changes
to the CBP. Therefore, we will likely be revisiting this issue and the
fee schedule adjustment methodologies for all items in all areas again
in the future.
Third, we will revise Sec. 414.210(g)(1)(v) to establish that for
items and services furnished before the effective date specified in the
DATES section of this final rule, the fee schedule amount for all areas
within a state that are defined as rural areas for the purposes of this
subpart is adjusted to 110 percent of the national average price
determined under paragraph (g)(1)(ii) of this section. In the November
2020 proposed rule, we proposed to reference April 1, 2021 in the
revised Sec. 414.210(g)(1)(v). However, as we previously discussed in
this final rule,
[[Page 73883]]
April 1, 2021, has passed and the COVID-19 PHE is still ongoing.
Because this rule has yet to be finalized, the regulation text will
reference the effective date specified in the DATES section of this
final rule effective date rather than April 1, 2021.
Fourth, we are finalizing our proposal so that for items and
services furnished on or after the effective date specified in the
DATES section of this document, or the date immediately following the
termination of the emergency period described in section 1135(g)(1)(B)
of the Act (42 U.S.C. 1320b-5(g)(1)(B)) (that is, the COVID-19 PHE),
whichever is later, in all other non-rural, non-CBAs within the
contiguous United States, the fee schedule amounts will be equal to 100
percent of the adjusted payment amount established under Sec.
414.210(g)(1)(iv).
Fifth and finally, we are finalizing our proposal to add paragraph
Sec. 414.210(g)(9)(vi) to establish that for items and services
furnished in all areas with dates of service on or after the effective
date specified in the DATES section of this document, or the date
immediately following the duration of the emergency period described in
section 1135(g)(1)(B) of the Act, whichever is later, based on the fee
schedule amount for the area is equal to the adjusted payment amount
established under Sec. 414.210(g).
IV. DMEPOS Fee Schedule Adjustments for Items and Services Furnished in
Rural Areas From June 2018 Through December 2018 and Exclusion of
Infusion Drugs From the DMEPOS CBP
A. Overview
On May 11, 2018 we published an IFC (83 FR 21912) in the Federal
Register titled ``Medicare Program; Durable Medical Equipment Fee
Schedule Adjustments to Resume the Transitional 50/50 Blended Rates to
Provide Relief in Rural Areas and Non-Contiguous Areas''. In this
section of this final rule, we will present the provisions of the May
2018 IFC followed by summation of the comments received and our
responses.
Section 5004(b) of the Cures Act amended section 1847(a)(2)(A) of
Act to exclude drugs and biologicals described in section 1842(o)(1)(D)
of the Act from the DMEPOS CBP. In the May 2018 IFC, we made conforming
changes to the regulation to reflect the exclusion of infusion drugs,
described in section 1842(o)(1)(D) of Act, from items subject to the
DMEPOS CBP.
As discussed in section II. of this rule, in the May 2018 IFC, we
also expressed an immediate need to resume the transitional, blended
fee schedule amounts in rural and non-contiguous areas, noting strong
stakeholder concerns about the continued viability of many DMEPOS
suppliers, our finding of a decrease in the number of suppliers
furnishing items and services subject to the fee schedule adjustments,
as well as the Cures Act mandate to consider additional information
material to setting fee schedule adjustments based on information from
the DMEPOS CBP for items and services furnished on or after January 1,
2019 (83 FR 21918). We amended Sec. 414.210(g)(9) by adding Sec.
414.210(g)(9)(iii) to resume the fee schedule adjustment transition
rates for items and services furnished in rural and non-contiguous
areas from June 1, 2018 through December 31, 2018. We also amended
Sec. 414.210(g)(9)(ii) to reflect that for items and services
furnished with dates of service from January 1, 2017 to May 31, 2018,
fully adjusted fee schedule amounts would apply (83 FR 21922). We also
added Sec. 414.210(g)(9)(iv) to specify that fully adjusted fee
schedule amounts would apply for certain items furnished in non-CBAs
other than rural and non-contiguous areas from June 1, 2018 through
December 31, 2018 (83 FR 21920). We explained that we would use the
extended transition period to further analyze our findings and consider
the information required by section 16008 of the Cures Act in
determining whether changes to the methodology for adjusting fee
schedule amounts for items furnished on or after January 1, 2019 were
necessary (83 FR 21918 through 21919). We respond to the comments we
received on these issues later in this final rule.
B. Background
1. Background for Payment Revisions for DMEPOS
For further background regarding the DMEPOS CBP, payment
methodology for CBAs, and the fee schedule adjustment methodology for
non-CBAs, we refer readers to section III.A. of this final rule.
On February 26, 2014, we published an Advance Notice of Proposed
Rulemaking (ANPRM) in the Federal Register titled, ``Medicare Program;
Methodology for Adjusting Payment Amounts for Certain Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Using
Information from Competitive Bidding Programs'' (79 FR 10754). In that
ANPRM, we solicited stakeholder input on several factors including
whether the costs of furnishing various DMEPOS items and services vary
based on the geographic area in which they are furnished in relation to
developing a payment methodology to adjust DMEPOS fee schedule amounts
or other payment amounts in non-CBAs based on DMEPOS competitive
bidding payment information.
We received approximately 185 comments from suppliers,
manufacturers, professional, State and national trade associations,
physicians, physical therapists, beneficiaries and their caregivers,
and State government offices. Commenters generally stated that costs
vary by geographic region and that costs in rural and non-contiguous
areas of the U.S. (Alaska, Hawaii, Puerto Rico, etc.) are significantly
higher than costs in urban areas and contiguous areas of the U.S. A
commenter representing many manufacturers and suppliers listed several
key variables or factors that influence the cost of furnishing items
and services in different areas that should be considered. This
commenter stated that information on all bids submitted under the CBP
should be considered and not just the bids of winning suppliers. Some
commenters expressed concern that the SPAs assume a significant
increase in volume to offset lower payment amounts. Commenters also
recommended phasing in the adjusted fee schedule amounts, allowing for
adjustments in fees if access issues arise, and annual inflation
updates to adjusted fee schedule amounts.
On July 11, 2014, we published the CY 2015 ESRD PPS proposed rule
in the Federal Register titled ``Medicare Program; End-Stage Renal
Disease Prospective Payment System, Quality Incentive Program, and
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies;'' (79
FR 40208) as required by section 1834(a)(1)(G) of the Act, to establish
methodologies for using information from the CBP to adjust the fee
schedule amounts for items and services furnished in non-CBAs in
accordance with sections 1834(a)(1)(F)(ii) and 1834(h)(1)(H)(ii) of the
Act. We also proposed making adjustments to the payment amounts for
enteral nutrition as authorized by section 1842(s)(3)(B) of the Act.
We received 89 public comments on the proposed rule, including
comments from patient organizations, patients, manufacturers, health
care systems, and DME suppliers. We made changes to the proposed
methodologies based on these comments and finalized a method for paying
higher amounts for certain items furnished in areas defined as rural
areas. In addition, we provided a 6-month fee schedule adjustment phase
in period from January through June of 2016, during which the fee
schedule amounts
[[Page 73884]]
would be based on 50 percent of the unadjusted fees and 50 percent of
the adjusted fees to allow time for suppliers to adjust to the new
payment rates and to monitor the impact of the change in payment rates
on access to items and services. On November 6, 2014, we published the
CY 2015 ESRD PPS final rule (79 FR 66223 through 66265) to finalize the
methodologies at Sec. 414.210(g) based on public comments received on
the CY 2015 ESRD PPS proposed rule (79 FR 40208). A summary of the
methodologies is described in section III.A. of this final rule.
To update the adjusted fee schedule amounts based on new
competitions and provide for a transitional phase-in period of the fee
schedule adjustments, we established Sec. 414.210(g)(8) and (9) in the
CY 2015 ESRD PPS final rule (79 FR 66263). In Sec. 414.210(g)(8), the
adjusted fee schedule amounts are updated when a SPA for an item or
service is updated following one or more new DMEPOS CBP competitions
and as other items are added to DMEPOS CBP. The fee schedule amounts
that are adjusted using SPAs are not subject to the annual DMEPOS
covered item update and are only updated when SPAs from the DMEPOS CBP
are updated. Updates to the SPAs may occur as contracts are recompeted.
Section 414.210(g)(9)(i), specifies that the fee schedule adjustments
were phased in for items and services furnished with dates of service
from January 1, 2016, through June 30, 2016, so that each fee schedule
amount was adjusted based on a blend of 50 percent of the fee schedule
amount if not adjusted based on information from the CBP, and 50
percent of the adjusted fee schedule amount. Section 414.210(g)(9)(ii)
specifies that for items and services furnished with dates of service
on or after July 1, 2016, the fee schedule amounts would be equal to
100 percent of the adjusted fee schedule amounts. Commenters
recommended CMS phase in the fee schedule adjustments to give suppliers
time to adjust to the change in payment amounts (79 FR 66228). Some
commenters recommended a 4-year phase-in of the adjusted fees. CMS
agreed that phasing in the adjustments to the fee schedule amounts
would allow time for suppliers to adjust to the new payment rates and
would allow time to monitor the impact of the change in payment rates
on access to items and services. We decided 6 months was enough time to
monitor access and health outcomes to determine if the fee schedule
adjustments created a negative impact on access to items and services.
Therefore, we finalized a 6-month phase-in period of the blended rates
(79 FR 66228 through 66229).
We finalized the 6-month transition period from January 1 through
June 30, 2016 in the CY 2015 ESRD PPS final rule (79 FR 66223) that was
published in the Federal Register on November 6, 2014. The Cures Act
was enacted on December 13, 2016, and section 16007(a) of the Cures Act
extended the transition period for the phase-in of fee schedule
adjustments at Sec. 414.210(g)(9)(i) by 6 additional months so that
fee schedule amounts were based on a blend of 50 percent of the
adjusted fee schedule amount and 50 percent of the unadjusted fee
schedule amount until December 31, 2016 (with full implementation of
the fee schedule adjustments applying to items and services furnished
with dates of service on or after January 1, 2017).
2. Transition Period for Phase-In of Fee Schedule Adjustments
We determined that the transitional period for the phase-in of
adjustments to fee schedule amounts should be resumed in non-CBA rural
and non-contiguous areas to ensure access to necessary items and
services in these areas. The May 2018 IFC amended Sec. 414.210(g)(9)
to change the end date for the initial transition period for the phase-
in of adjustments to fee schedule amounts for certain items based on
information from the DMEPOS CBP from June 30, 2016 to December 31,
2016, to reflect the extension that was mandated by section 16007(a) of
the Cures Act. The May 2018 IFC also amended Sec. 414.210(g)(9) to
resume the transition period for the phase-in of adjustments to fee
schedule amounts for certain items furnished in non-CBA rural and non-
contiguous areas from June 1, 2018 through December 31, 2018, for the
reasons discussed in this final rule.
a. Statutory Mandate To Reconsider Fee Schedule Adjustments
After we established the fee schedule adjustment methodology under
Sec. 414.210(g), Congress amended section 1834(a)(1)(G) of the Act to
require that CMS take certain steps and factors into consideration
regarding the fee schedule adjustments for items and services furnished
on or after January 1, 2019, to ensure that the rates take into account
certain aspects of providing services in non-CBAs. Specifically,
section 16008 of the Cures Act amended section 1834(a)(1)(G) of the Act
to require in the case of items and services furnished on or after
January 1, 2019, that in making any adjustments to the fee schedule
amounts in accordance with sections 1834(a)(1)(F)(ii) and (iii) of the
Act, the Secretary must: (1) Solicit and take into account stakeholder
input; and (2) take into account the highest bid by a winning supplier
in a CBA and a comparison of each of the following factors with respect
to non-CBAs and CBAs:
<bullet> The average travel distance and cost associated with
furnishing items and services in the area.
<bullet> The average volume of items and services furnished by
suppliers in the area.
<bullet> The number of suppliers in the area.
On March 23, 2017, CMS hosted a national provider call to solicit
stakeholder input regarding adjustments to fee schedule amounts using
information from the DMEPOS CBP.\24\ The national provider call was
announced on March 3, 2017, and we requested written comments by April
6, 2017. We received 125 written comments from stakeholders. More than
330 participants called into our national provider call, with 23
participants providing oral comments during the call. In general, the
commenters were mostly suppliers, but also included manufacturers,
trade organizations, and healthcare providers such as physical and
occupational therapists. These industry stakeholders expressed concerns
that the level of the adjusted payment amounts constrained suppliers
from furnishing items and services to rural areas. These stakeholders
requested an increase to the adjusted payment amounts for these areas.
The written comments generally echoed the oral comments from the call
held on March 23, 2017, whereby commenters claimed that the adjusted
fees were not sufficient to cover the costs of furnishing items and
services in rural and non-contiguous areas and that it was having an
impact on access to items and services in these areas. For additional
details about the national provider call and a summary of oral and
written comments received, we refer readers to the CY 2019 ESRD PPS/
DMEPOS proposed rule (83 FR 57026).
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\24\ <a href="https://www.cms.gov/Outreach-and-Education/Outreach/NPC/National-Provider-Calls-and-Events-Items/2017-03-23-DMEPOS">https://www.cms.gov/Outreach-and-Education/Outreach/NPC/National-Provider-Calls-and-Events-Items/2017-03-23-DMEPOS</a>.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=descending.
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In the May 2018 IFC, we stated that one of the factors CMS must
consider when making fee schedule adjustments for items and services
furnished on or after January 1, 2019, in accordance with section 16008
of the Cures Act, is the average volume of items and
[[Page 73885]]
services furnished by suppliers in an area (83 FR 21917). We then noted
that data for items furnished in 2016 and 2017 showed that the average
volume of items furnished by suppliers in CBAs exceeded the average
volume of items furnished by suppliers in rural and non-contiguous
areas. We stated that this supports stakeholder input that the
suppliers in rural and non-contiguous areas have an average volume of
business less than that of their counterparts in CBAs, and that this
difference may make it more difficult for suppliers in rural and non-
contiguous areas to meet their expenses (83 FR 21917).
In addition, at the time of this May 2018 IFC, the adjusted fee
schedule amounts for stationary oxygen equipment in non-contiguous,
non-CBAs were lower than the SPA for stationary oxygen equipment in the
Honolulu, Hawaii, CBA and the adjusted fee schedule amounts for
stationary oxygen equipment in some rural areas were lower than the
SPAs in CBAs within the same State. This was due to the combination of
the fee schedule adj
[…truncated; see source link]Indexed from Federal Register on December 28, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.