CMS Proceeds with Controversial Rural Rate Plan

Plan defies intent of CURES Act; AAHomecare head Ryan calls it a "slap in the face" for industry and lawmakers

CMS has implemented a plan that the American Association for Homecare previously labeled “disappointing” in order to readjust reimbursement for claims on DME filed by rural and non-bid area providers for items provisioned between July 1, 2016 and Dec. 31, 2016.

CMS originally announced the plan in February, and it immediately drew concern, because it looked like CMS intended to recalculate the rates in a way that did not adhere to the CURES Act, and would not give providers their full reimbursement. Now CMS’s announcement makes it clear that it will not follow the intent of CURES Act's rural relief provisions, which became law last December.

Instead of calculating the 50/50, blended fee schedule for rural and non-bid area providers' claims on the Jan. 1, 2016 fee schedule, CMS is using the lower July 1, 2016 fee schedule, which will result in considerably lower reimbursement for those claims.  

To illustrate how much lower, AAHomecare calculated how reimbursement for E1390 (oxygen) in various regions would vary between the January 2016 (50/50 blend with Round Two information) reimbursement; the newly updated July 2016 regional rates (50/50 blend using the Round Two re-compete bids), and the original July 2016 rate:

How CMS's Rural/Non-Bid Reimbursment for E1390 Varies From Jan. 2016 Rates


January 2016

Original July 2016

Updated July 2016

% Difference From Original July Rates

% Difference From Jan  2016 Rates

Far West






Great Lakes












New England












Rocky Mountain


















Source: American Association for Homecare

“CMS’s decision to recalculate these rates based on the July 1 fee schedule instead of the rates in effect on Jan. 1 is a slap in the face to both the home medical equipment community, as well as to members of Congress who worked hard to include relief for our industry into the CURES bill,” said AAHomecare President and CEO Tom Ryan. “Individuals on Capitol Hill we've spoken with are perplexed that CMS has defied clear Congressional intent to essentially extend the Jan. 1 rates for the second half of 2016.

“While we’re disappointed with this outcome, we're more determined than ever to advocate for better reimbursement policy for home medical equipment providers,” he continued.  “This development lends additional urgency to our industry's efforts to provide longer term relief for rural and non-bid providers, and I expect these rates will help spur the HME community into heartfelt advocacy on this issue.”

About the Author

David Kopf is the Executive Editor of HME Business and DME Pharmacy magazine. Follow him on Twitter at @postacutenews.


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