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Fee Adjustment Monitoring

DMEPOS Fee Schedule Adjustment Impact Monitoring

On January 1, 2011, the Centers for Medicare & Medicaid Services (CMS) launched the first phase of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program in nine different areas of the country. On July 1, 2013, the CMS launched the second phase of the Medicare DMEPOS Competitive Bidding Program in one hundred additional areas of the country. The CMS also implemented a National Mail Order competitive bidding program for replacement of diabetic supplies necessary for the effective use of blood glucose monitors on July 1, 2013.

The CMS has been conducting real-time claims analysis to monitor health status for groups of Medicare beneficiaries in competitive bidding areas (CBAs). Health status monitoring results are shown in files updated on a quarterly basis.

Fee Schedule Adjustments

Section 1834(a)(1)(F) of the Social Security Act requires the CMS to adjust fee schedule amounts for durable medical equipment (DME) on January 1, 2016, in areas where competitive bidding programs (CBPs) are not in place for these items based on information from the CBPs. Section 1842(s)(3)(B) of the Social Security Act provides authority for making adjustments to the fee schedule amount for enteral nutrients, equipment and supplies (enteral nutrition) based on information from CBPs. The CMS issued a final rule on November 6, 2014 (79 FR 66223) on the methodologies for adjusting DMEPOS fee schedule amounts using information from CBPs.

The adjustments to the fee schedule amounts for most items furnished in the contiguous United States are based on the average of single payment amounts from CBPs located within the geographic region of the country where the State is located. The contiguous United States is divided into eight geographic regions based on the eight regions established by the Federal Bureau of Economic Analysis (BEA) for the purpose of conducting economic analyses. These regional single payment amounts (RSPAs) are then limited by a national floor and a national ceiling based on 90 percent and 110 percent of the average of the RSPAs. In no case can a State fee schedule amount be lower than the national floor amount or higher than the national ceiling amount. For non-contiguous areas, the adjusted fee schedule amounts are based on the higher of the single payment amount from the Honolulu, Hawaii CBP or the national ceiling amount for the contiguous areas.

The CMS considered comments from stakeholders expressing concern about possible negative impacts the adjustments might have on quality and access to items and services, especially in rural areas of the country. In light of these concerns, the adjustments to the fee schedule amounts for DME and enteral nutrition were phased in during the first six months of 2016, for claims with dates of service January 1, 2016 through June 30, 2016, so that each fee schedule amount is based on a blend of 50 percent of the fee schedule amount that would have gone into effect on January 1, 2016, if not adjusted based on information from the CBP, and 50 percent of the adjusted fee schedule amount. In addition, in no case can the adjusted fee for a rural area (any area outside a Metropolitan Statistical Area) be lower than the national ceiling amount described above.

The CMS has been closely monitoring claims and health outcomes data to verify that beneficiary access to quality items and services in Non-Competitive Bidding (NCB) areas continues during and after the six month transition. A valuable indicator of whether payment amounts are sufficient is the percentage of claims that suppliers have submitted as assigned, accepting the fee schedule amount as payment in full. Suppliers in NCB areas are not required to accept assignment of Medicare claims for items subject to competitive bidding (CB items). This means that if an adjusted fee schedule amount is not sufficient to cover the costs of furnishing the item to a particular beneficiary in the supplier’s service area because of where the beneficiary lives or for other reasons, the supplier can decide not to accept assignment of the claim and collect the extra money needed to cover their costs directly from the beneficiary.

See the first file in the Downloads section below for the results of assignment rates for claims processed for CB items furnished in NCB Areas from January thru June 2016. The data compares the rate of assignment for the first six months of 2015 versus the first six months of 2016, for claims processed thru the first 35 weeks of each year. Overall, there was no change in the rate of assignment in the first six months of 2016 (99.86 percent) versus the first four months of 2015 (99.86 percent).

The data is broken out for the eight BEA geographic regions of the contiguous United States, as well as non-contiguous areas (i.e., Alaska, Hawaii, Puerto Rico, Virgin Islands, etc., combined). The data is also broken out to compare the rate of assignment of claims for competitive bidding items furnished in rural areas versus non-rural areas. The rate of assignment of claims in 2016 continues to be very high overall in both rural and non-rural areas. Finally, the data is broken out for several different categories of items.

All claims data for 2016 is based on claims with dates of service on or after January 1, 2016.

In addition to data on rates of assignment, data on health outcomes for beneficiaries in non-competitive bidding areas has also been posted. No changes in mortality, hospital and nursing home admission rates, monthly hospital and nursing home days, physician visit rates, or emergency room visits have been detected in 2016 compared to 2015. The data are displayed by product category (e.g., enteral nutrition, hospital beds, infusion pumps, oxygen) for both the utilizer group (beneficiaries using the items) and access group (beneficiaries with a diagnosis that suggests they could have a need for the items). The data are broken out for the different regions of the country, including the non-contiguous areas, and for urban versus rural areas. As the charts and data show, there is no indication that the reductions in the fee schedule amounts in January in any way adversely affected health outcomes or access to DMEPOS items and services in non-competitive bidding areas.

On July 1, 2016, the fully adjusted fee schedule amounts took effect. See the fourth file in the Downloads section below for the results of assignment rates for claims processed for CB items furnished in NCB Areas in July through December of 2016. The data compares the rate of assignment for claims with dates of service in July through December of 2015 versus the rate of assignment for claims with dates of service in July through December of 2016. Overall, there was virtually no change in the July through December rate of assignment for 2016 (99.81 percent) versus the July through December rate of assignment for 2015 (99.88 percent).

Additional assignment data for CB items furnished in NCB areas from July 2016 on will be posted as they become available.

Note: The fully adjusted DMEPOS 2016 fee schedule amounts that were in effect from July 1, 2016 through December 31, 2016 are available as DME16-C (includes all changes identified in CR9642) in the download section below.

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