Editor's Note

ESRD Rule: It's a Start

The proposed rule includes a lot of positives, but experts have pointed out some notable issues.

• By David Kopf
• Sep 01, 2018

As we were putting this issue together, a big story hit: CMS released its proposed rule for ESRD and DMEPOS competitive bidding. There’s a good chance you might have read about this on the HME-Business.com site, or in our e-Source e-newsletter, but let’s review some “top level” elements of the proposed rule and the industry’s response.

In basic terms, the rule would revise the national competitive bidding program with a blend of smaller, short-term tweaks and larger, more structural changes; provides longer relief for rural and non-competitive bid area (CBA) providers; and addresses oxygen reimbursement.

One of the rule’s primary changes to the competitive bidding program is that future rounds of bidding would use lead item pricing, which would prevent ostensibly cheaper, less sophisticated devices from receiving more reimbursement than items in the same category that should cost more. In the rule, the item in the group of products with the highest total national allowed paid units during a specified time period would be considered the lead item in that particular grouping.

Following from that, the rule also establishes a new method for setting single payment amounts (SPAs) using maximum winning bids. The SPA for the lead item in each product category and CBA would be based on the maximum or highest amount bid for the item by suppliers in the winning range. The SPAs for all other items in the product category would be based on a percentage of the maximum winning bid for the lead item.

To address any lapses in competitive bidding contracts after Dec. 31, starting Jan. 1, 2019, the rule lets beneficiaries receive DMEPOS items from any Medicare-enrolled DMEPOS supplier until new contracts are awarded under the next round of the bidding program. This lets providers easily exit the bid program as well as let new suppliers offer products in contracted categories in competitive bidding areas, but without being bound by a contract.

For rural relief, The proposed rule would extend the 50/50 blended rate reimbursement rates for rural and non-contiguous areas (Alaska, Hawaii and U.S. territories) provided in CMS’s May IFR through Dec. 31, 2020. Moreover, CMS has asked for comments on whether the 50/50 blended rates should be extended to other non-bid areas.

However, the rule isn’t perfect. Advocates at AAHomecare, VGM Government Relations, state associations, and other corners of the industry have taken closer looks and noted some key problems:

For starters, AAHomecare highlighted the fact that the proposed rule doesn’t give relief to providers in non-bidding areas that aren’t rural and aren’t in Alaska, Hawaii or U.S territories. CMS cited a lack of claims data since July 2016 indicating patients in these areas were having insufficient access to HME or suffering adverse health effects as a result. Also, CMS is “taking issue” with the industry’s stance that the delivery costs in non-CBAs are higher than in the CBAs.

Also, VGM noted that while CMS’s plan to handle the lapse in bidding after Dec. 31 offers easy entry and exit into categories and CBAs typically covered by bid contracts, it underscored that competitive bidding SPAs were set under the assumption that contracted providers could make up the lower reimbursement by having a more exclusive dominion over certain categories in certain areas, and thus a higher volume in patients.

Another problem with the proposed rule is CMS’s plan to apply the 2006-era budget neutrality offset to stationary oxygen equipment to all classes of oxygen equipment starting January 2019. VGM noted that the separation of liquid oxygen classes is a recognition of the sizable differences between providing liquid and stationary oxygen. Also, the organization said it was “seriously concerned” because the rule does not address the significant costs associated with delivering oxygen.

There is a lot more to the proposed rule than I can cram into a column. AAHomecare summarized the DMEPOS-related items in the rule at bit.ly/2uHc0Nh, and VGM produced a video untangling a lot of the rule at youtu.be/mgwfjfRPQUA.

I’m sure that we’ll see more analysis and changes as the rule develops, but what I will say is that this shows CMS recognizes problems with the bidding program and is seeking viable fixes. It’s a start.

This article originally appeared in the September 2018 issue of HME Business.