News Feature

Playing the Waiting Game

The HME industry waited a long time for CMS to unveil its final payment rule for DMEPOS suppliers. Now that CMS has released the rule, where does the industry stand, and how does it move forward to secure better reimbursement?

• By David Kopf
• Feb 03, 2022

CMS has a funny way of timing things. Way back in October 2020, when the nation was reeling with some of the worst of the Covid-19, the Centers for Medicare and Medicaid Services made two announcements that seemed particularly well-timed for their near-Halloween announcement dates: The first was the eyebrow-raising decision to forego awarding contracts for 13 categories of Round 2021 of its competitive bidding program. The second was that it released a proposed rule on DMEPOS payment policy.

While the decision to essentially punt most of Round 2021 set tongues wagging, the proposed rule was of equal import, given that it addressed reimbursement. Key provisions in the proposed rule were:

• It would continue the 50/50 blended rate for rural HME suppliers. Other non-bid area suppliers would be paid at 100 percent of the adjusted fee schedule. It excluded complex rehab manual wheelchairs, some additional manual wheelchairs, and certain manual wheelchair accessories from the bid program.
• It made changes related to the Healthcare Common Procedure Coding System (HCPCS) Level II Code Application Process.
• It included changes to the process for making Benefit Category Determinations and Payment Determinations for DME and other Items and services under Part B.
• It would change the classification and payment for Continuous Glucose Monitors under Part B.
• It expanded the classification of external infusion pumps as DME.

Not Far Enough

Naturally, the big concern on a DME payment rule is that the reimbursement is sufficient. And while CMS’s proposed rule offered some help, it didn’t go far enough. The 50/50 rate that CMS originally proposed was a good start; it helps a lot of providers, according to Kim Brummett, vice president of regulatory affairs for the American Association for Homecare.

“Well, it obviously helps any rural supplier, but it’s not limited to only those that exist in rural areas,” she says. “We have lots of suppliers that take care of patients in all three distinct areas. Be that the old CBAs, non-rural, or rural. So anywhere there’s a patient population, those suppliers benefit from that 50/50 blend.”

However, the 50/50 rate didn’t go far enough given that CMS’s single payment amount (SPA) rates are founded on old rates from 2016, according to Brummett. Furthermore, they don’t acknowledge the market realities providers face, particularly in the era of the Covid pandemic and supply chain problems, adds Tom Ryan, the president and CEO of AAHomecare.

So, when CMS opened the window for public comments, AAHomecare then submitted its comments for the proposed rule, which included the following recommendations on reimbursement:

• Rates in former CBAs should be based on a 90/10 blended payment formula. “The 90 percent should be based on the current single payment amounts in former CBAs, and the 10 percent should be based on the 2015 unadjusted fee schedule,” Brummett explains.
• Rates in non-rural, non-CBAs should be based on a 75/25 blended payment formula. “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,” Brummett says. “The industry currently has this blend because of the pandemic, but it ends when the public health emergency ends. … Unfortunately, it seems likely that the PHE is going to be extended, and most likely through 2022,” she adds.

AAHomecare also made some recommendations regarding product coding, complex rehab, and diabetic supplies:

• CMS should eliminate its proposed limit on the number of times an applicant can re-submit applications for new or revised Level II HCPCS codes, as long as the applicant includes new data/information to support the request.
• CMS should add to its HCPCS code panel representatives from state Medicaid programs and or a representative from the National Association of Medicaid Directors and representatives of commercial payers. CMS should also rely on outside clinical experts. For example, those it has established through MEDCAC.
• AAHomecare recommended that CMS incorporate into its HCPCS code application process a public notice and comment for its gap-filling and comparability analyses after a positive preliminary HCPCS code decision to allow for both public input and for CMS to publicize the information it uses in making these payment determinations.
• CMS should permanently exempt accessories used with complex manual wheelchairs from competitive bid program-derived pricing, as it did in 2017 for accessories used with complex power wheelchairs.
• AAHomecare generally supported CMS’ proposal to expand coverage to adjunctive Continuous Glucose Monitors (CGMs) but urged the Agency to address a number of outstanding implications and allow for public comment on those issues.

A Long Delay

The comments were submitted and then began the waiting game. HME industry and DMEPOS suppliers waited for CMS to release the final rule, but nothing happened for several months of 2021.

“The change in administration caused many rules to be held up as HHS and CMS staff were replaced,” Brummett explains. “The new administration took their time to review and most likely adjust the content which caused the delay in publication.”

However, AAHomecare worked to move things along. When it was finally able to host a virtual version of its annual Washington Legislative Conference in September 2021, it circulated a House congressional sign-on letter calling for the final rule. Introduced into the House by Reps. Cathy McMorris Rodgers (R-Wash.) and Paul Tonko (D-N.Y.), the letter urged the leadership of CMS and HHS to finalize the DME rule and to adopt the additional rate provisions. The letter garnered 95 signatures from various House lawmakers.

Less than a month later, in late October 2021, after the House sign-on letter was sent to CMS and HHS, CMS’s DME final payment rule was moved to the Office of Management and Budget (OMB) for review. That marked the final, necessary stage in the regulatory review and approval process.

Fast forward to December 2021 and, after a long wait, the industry finally got its final DME payment rule — just in time for the Holiday season. Here’s what the final rule offered:

• It continued the originally proposed 50/50 blended rate for rural HME suppliers.
• CMS didn’t finalize the HCPCS coding recommendation limiting manufacturers to only two submissions.
• CMS didn’t finalize the CGM coding and payment recommendations.

The industry also secured a win with accessories for manual complex rehab wheelchair accessories, but in a separate final rule that was released in July 2021, in which CMS said it would no longer apply competitive bidding-derived reimbursement rates to those accessories.

However, CMS’s final payment rule did not include the two main reimbursement items that the industry sought:

• Extend the 75/25 blended rate for non-rural areas beyond the end of the PHE.
• It did not base rates in former CBAs on a 90/10 blended payment formula.

Ignoring the Core Problem

Not getting those two items means the final rule didn’t truly address the heart of the problem when it comes to DME reimbursement: rates are based on what amounts to ancient history as far as the healthcare marketplace is concerned.

“We obviously wanted to address the rates that were in the formally bid product categories,” Ryan says. “Those were from a six-year-old competitive bidding program that used a completely different bidding methodology. Then we put the new guardrails in place and rebid it, and the industry bid smart. Well, when we did all that — pre-pandemic — the rates came back and didn’t show significant savings.

In fact, the market reality during the bidding of 2019 showed increases in many categories, yet CMS continued basing its reimbursement on dated rates that were completely disconnected from the market realities and massive costs of today’s Covid-constrained healthcare market.

“CMS responded that it believed that it took care of [providers costs] with its CPI increase and it does not see any issues with access to care or any change in assignment rate,” Ryan explains. “So, therefore, they do not see a problem. However, monitoring the state of the industry, the supply chain crisis, the continual barrage of surcharges, increased costs of goods, and just increased costs to serve patients from an operational standpoint during the pandemic, the situation is very challenging for providers.”

Heading to Capitol Hill

If anything, CMS not addressing the heart of the problem lets the industry and its legislative allies know where they stand.

“The Hill was waiting to see where CMS was on some of these requests,” Ryan explains. “And now we know that we have no choice but to go through Capitol Hill for adjustments.”

And those adjustments use a familiar method: a blended rate between the adjusted and the unadjusted fee schedule.

“And what seemed to make the most sense to us, when we did the math, was a 90/10 blended rate,” Ryan explains. “So that 90/10 blended rate is going to give us an average adjustment — depending on the CBA and the product category — of around 11 percent up to actually 20 percent to some product categories. It really depends on the product category and the CBA, but using that formula, you take a product category like oxygen, you can see rate increases on the average of about 15 percent. We believe that is more in line with where we need to be.”

To that end, Jay Witter, senior vice president of public policy for AAHomecare, and Cara Bachenheimer, lobbyist and government affairs for Health Care Group of Brown & Fortunato, worked with Reps. Markwayne Mullin (R-Okla.) and Paul Tonko (D-N.Y.) to draft legislative language that would apply the 90/10 blended Medicare reimbursement rate for items in the 13 product categories whose bid results were not implemented in Round 2021. These increased rates would apply from Jan. 1, 2022 to Dec. 31, 2023.

In tandem with this effort, Ryan said AAHomecare has already had discussions with its Senate champions as well as the Senate Finance Committee and Sen. John Thune (R-N.D.) concerning the need to develop legislative language that would keep some of the 75/25 relief rates for non-rural areas from the CARES Act in place beyond the end of the public health emergency, since the challenges impacting providers are not going to go away.

The 75/25 reimbursement would represent a significant reimbursement gain for non-rural providers. CMS did an estimate that was published by non-partisan analysis group Medicare Payment Advisory Commission (MedPAC), and the analysis showed that the 75/25 blend represented a 33 percent reimbursement increase. For comparison, the 50/50 blend represented a 66 percent increase.

“As we get the 90-day extensions to the public health emergency, we continue to advocate for our needs when it is coming to an end,” he says. “And we’ll more than likely get a notice when it is going to end. And we believe that the PHE will likely go to the end of the year. But when it does end, we need to make sure we can get another piece of legislation that would extend it.”

Public Awareness Push

When the legislative language is released, the industry needs co-sponsors to sign their names supporting that nascent legislation. To that end, AAHomecare has been busy at work to set the stage for that effort — for several months, in fact.

Working with partners Keybridge Communications, AAHomecare has run a nine-month media campaign touting the value of HME and the need for market-based reimbursement generated nearly 100 placements in print, online, and on television. The association estimates that the coverage reached almost 130 million people across 26 states and the District of Columbia since its April 2021 launch.

The campaign hit all the right notes when it comes to supporting legislation calling for revised DME reimbursement:

• One of the high-profile elements of the campaign was an opinion column, “Outdated Medicare Rules Threaten Older Americans’ Access to Home Medical Equipment,” authored by AAHomecare’s vice chair, Josh Marx, that ran in healthcare-focused STAT News. The piece detailed the business environment the industry is facing and makes a case for sustainable rates.
• The campaign also secured wide syndication for a story by the influential non-profit outlet CalMatters that detailed the impacts of product shortages, shipping container costs, and other supply chain problems impacting HME providers.
• Two columns written by AAHomecare’s Ryan that discussed HME providers’ supply chain challenges and the cost structures the industry is facing. Initially written for InsideSources and the International Business Times, both columns were syndicated in dozens of print and online outlets.
• A Jan. 4 Spectrum News story and video that included supply and price issues impacting HME suppliers in the Albany, N.Y. area.

“So, we have been setting the table from a PR standpoint, talking about the value for home care, talking about supply chain issues, talking about the need for a raise,” Ryan explains.

With Reps. Mullin and Tonko’s 90/10 legislation poised for release at press time, AAHomecare is launching an industry-wide push for HME providers to urge their lawmakers to be original co-sponsors for the bill. The grassroots outreach should help increase the awareness of the need to fix DME reimbursement.

“We’ll have another Op-Ed that’s more specific that’ll talk about how the legislative language is in the Hill’s hands and we need them to act upon it,” Ryan notes. The first challenge will be to get co-sponsors. Then you have to find a vehicle; that will be the next challenge.”

And while holding out for another legislative vehicle to come along extends the reimbursement waiting game just a little bit more, it’s a “long game” that the industry is playing to win.

This article originally appeared in the Jan/Feb 2022 issue of HME Business.