CMS Releases Rural Zip Codes for Bid Expansion

Sixty-four percent of the areas outside of Round One and Two CBAs will be classified as rural.

The Centers for Medicare and Medicaid services have released the zip codes for the non-bid areas that will be impacted by the national expansion of competitive bidding, which goes into effect Jan. 1, 2016.

How the zip codes are classified has been a closely watched factor in the expansion, as the zip codes that are classified as “rural” will receive better reimbursement.

Of the 43,000 zip codes designated by the U.S. Postal Service, Round One comprises 3,714 of those codes (8.6 percent of the total), and Round Two covers 13,902 of them (32.3 percent), according to analysis from the American Association for Homecare. The remaining zip codes impacted by the bid expansion are broken into two groups:

Regional zip codes, which cover 9,099 codes (20.9 percent of the total). These regional zip codes are subjected to new rates based on competitive bidding reimbursement.

Rural zip codes, which cover 16,285 zip codes (37.8 percent of the total. These areas will receive the rates based on bidding, but will receive a 10 percent increase.

“While CMS’ plan to expand the reach of the bidding program remains problematic, the fact that 64 percent of the areas outside of CBAs that will now be subject to bidding program-derived prices will be classified as ‘rural’ is positive news; this figure is higher than we had expected,” a statement from the association read.

CMS’s Rate Phase-In

For HME items affected by the expansion, the final rule phases in a new reimbursement rates for non-CBAs over 6 months beginning January 1, 2016.  CMS divided up the continuous 48 states into eight distinct regions. 

CMS will phase in the rate cuts that will be ushered in by the bid program expansion over course of 2016. As part of the program, CMS divided up the 48 contiguous states into eight regions. An un-weighted average of all of the single payment amounts (SPAs) from the CBAs in each of the eight will be used to determine a regional single payment amount (RSPA) for each covered item, according to AAHomecare. 

From Jan. 1, 2016 to June 30, 2016, reimbursement for affected product categories will be based on 50 of the current, un-adjusted fee schedule, plus 50 percent of the RSPAs. Then, on July 1, 2016, the rates will drop to fully implement the bidding-derived rates, HME billing firm MiraVista LLC reports.

For example, based on that model, a provider in the Mideast region could expect to see an oxygen concentrator (E1390) that currently has a $178.23 reimbursement rate, go down to $134.21 on Jan. 1, 2016 (a 25 percent decrease), and then go down to $90.18 on July 1, 2016 (a 49 percent decrease), according to AAHomecare.

“The RSPAs are still bound to a national average that cannot vary more than 10 percent above or below the combined, un-weighted average of all RSPAs in the country,” AAHomecare reports. “As such, any area with a RSPA that is greater than 110 percent of the national average will be adjusted downward. Even the most remote, rural areas like Montana and North Dakota will be bound to the national ceiling even though costs may far exceed that of the high-population CBAs from which the prices were derived.”

Coming Out Swinging

Meanwhile, the industry and lawmakers are preparing legislation that would reform the expansion by improving reimbursement rates, as well as other tweaks, and advocacy efforts calling to protect providers and patients from the expansion are already underway.

Rep. Tom Price (R-Ga.) is working to launch legislation that would decreased the expansion’s negative impact. Specifically, the legislation calls for:

  • Establishing a single-payment-amount-plus-30 percent adjustment to help rural providers survive cuts that they could not replace with additional volume, due to the geographic limitations of their markets.
  • Providing a four-year phase-in for the national price adjustments.
  • Reinstating an unadjusted fee schedule as bid cap, instead of CMS proposal for cap at previous bid rates.
  • Providing for a demonstration project for a market pricing program (MPP) approach, similar to the approach Rep. Price outlined in H.R. 1717 in the 113th Congress.

In the upper chamber, Dr. Price has reportedly been working with Sen. John Thune (R-S.D.) to create companion legislation.

On the grassroots level, AAHomecare called on providers to send letters to their Congress members via the website PowerofHomecare.com, which has generated 3,800 letters to Congress in two months. The association said the industry needed to “beat that number” if it wanted to stave off the national expansion and urged providers to share the website with their contacts.

“An email or a call to a Congressional office may seem like a drop in the bucket, but as we work towards the introduction of this new legislation, we need Congressional offices to be hearing from their constituents on this issue,” a statement from the association read. “Numbers matter. These calls and emails educate policymakers, apply pressure, and swing key legislators to our side.”

Download the Zip Codes

For providers interested in examining the zip codes themselves, the preliminary zip codes are part of a collection of files compressed in a .ZIP file that is available for download from CMS at http://go.cms.gov/1P2fazI. Once decompressed, the excel file containing the zip codes is named, “DMERuralZIP.xlsx” (companion .TXT and .CSV files accompany the Excel file). The remaining documents in the .ZIP archive are predominantly blank fee schedules.

About the Author

David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on LinkedIn at linkedin.com/in/dkopf/ and on Twitter at @postacutenews.

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