Durable Medical Equipment Fee Schedule Adjustments to Resume the Transitional 50/50 Blended Rates to Provide Relief in Rural Areas and Non-Contiguous Areas (CMS-1687-IFC)

Durable Medical Equipment Fee Schedule Adjustments to Resume the Transitional 50/50 Blended Rates to Provide Relief in Rural Areas and Non-Contiguous Areas 
(CMS-1687-IFC)

The Centers for Medicare & Medicaid Services (CMS) issued an interim final rule with comment period (IFC) to increase the adjusted fee schedule rates for certain durable medical equipment (DME) and enteral nutrition furnished in rural and non-contiguous areas of the country not subject to the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP) from June 1, 2018, through December 31, 2018. The rule aims to prevent potential problems with access to medically necessary DME in rural and non-contiguous areas of the country. 

The rule also makes conforming changes to the regulations related to sections 5004(b) and 16007(a) of the 21^st Century Cures Act (Cures Act).

Increased Fee Schedule Amounts  

Section 1834(a)(1)(F)(ii) of the Social Security Act requires adjustments to the fee schedule amounts for all Durable Medical Equipment (DME) subject to competitive bidding furnished in areas where Competitive Bidding Programs (CBPs) have not been implemented. Similarly, section 1842(s)(3)(B) of the Social Security Act authorizes the Secretary to use payment information from the DMEPOS CBPs to adjust the fee schedule amounts for enteral nutrition furnished in all areas that are not competitive bidding areas (CBAs). The fee schedule adjustments were phased in for items and services furnished from January 1 through June 30, 2016, so that each fee schedule amount was adjusted 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. Section 16007(a) of the Cures Act enacted on December 13, 2016 extended the transition period and blended fee schedule amounts from July 1 through December 31, 2016 until the fully adjusted fee schedule amounts took effect on January 1, 2017.

Section 16008 of the Cures Act requires CMS to consider additional information in making any adjustments to the fee schedule amounts for items and services furnished on or after January 1, 2019, such as stakeholder input and differences in costs of furnishing items in CBAs versus non-CBAs. In 2017, CMS hosted a national provider call to solicit stakeholder input regarding adjustments to fee schedule amounts using information from the DMEPOS CBP. During that call, and in other engagements, stakeholders have described that the fully adjusted fee schedule amounts can result in rapid declines in the number of services and suppliers, particularly in rural areas.

This rule increases the fee schedule amounts to a blend of 50 percent of the fee schedule amounts that would have been paid had no adjustments been made and 50 percent of the adjusted fee schedule amounts in rural and noncontiguous areas not subject to the CBP. A rural area is defined at § 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 metropolitan area. Additionally, the 50/50 blended rates would apply to what has been defined in the DMEPOS program as non-contiguous areas (Alaska, Hawaii, and U.S. territories). This rule applies to items and services furnished from June 1, 2018 through December 31, 2018. Single payment amounts in the Honolulu, Hawaii CBA are unchanged by this rule.

During this period, CMS will continue to review the information required by section 16008 of the Cures Act in determining what changes to the methodology for adjusting fee schedule amounts for items and services furnished on or after January 1, 2019, may be necessary. CMS intends to undertake subsequent notice-and-comment rulemaking for rates for durable medical equipment in 2019 and beyond. 

2018 Rural Fee Schedule Amounts (state averages shown)

¹n/a – Item included in 10 or fewer CBAs and therefore has one national adjusted rate with no rural rates

Impact Analysis

The IFC increases the Medicare fee schedule amounts for certain DME items and services and enteral nutrition that are furnished in rural and non-contiguous areas (Alaska, Hawaii, and United States territories) not subject to the CBP from June 1, 2018, through December 31, 2018. It is estimated that these 50/50 blended fee schedule adjustments would cost over $290 million in Medicare benefit payments and $70 million in Medicare beneficiary cost sharing. For dual eligible beneficiaries, Medicaid pays the cost sharing. The impact for Medicaid is split between a Federal portion and the States’ portion, which for this rule is $10 million and $10 million, respectively. 

Additional Technical Changes

We are also finalizing technical changes to the regulations, such as a revision to reflect the exclusion of infusion drugs from the DMEPOS CBPs as required by section 5004(b) of the Cures Act.

For information on the data monitoring program for adjustments to the DMEPOS fee schedule, please visit: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSFeeSched/Fee-Adjustment-Monitoring.html

The final rule can be found can be downloaded from the Federal Register at: http://www.federalregister.gov/inspection.aspx.

###