CMS Releases ESRD/DMEPOS Final Rule

Rule is a mixed bag, including some but not all of the additional reforms industry stakeholders had advocated for in public comments and Congressional letters.

CMS has released its final ESRD/DMEPOS rule, which contains some, but not all of the additional competitive bidding and reimbursement reforms for which HME stakeholders have been calling.

“The rule finalized today makes innovative changes to the Medicare payment rules for the durable medical equipment and end-stage renal disease programs,” said CMS Administrator Seema Verma.  “It also helps to ensure continued access to durable medical equipment and makes significant improvements to our competitive bidding system.

“Based on many comments we received on our DME proposal from suppliers, manufacturers and their associations -- all of whom supported our proposals -- we are implementing market-oriented reforms to Medicare’s DMEPOS Competitive Bidding Program that also reduce the burden on suppliers by simplifying the bidding process,” she added.

After CMS released its proposed rule, HME providers and advocates sent in hundreds of public comments and worked with members of Congress to collect signatures on Congressional letters in the House and Senate that called for CMS to add three main additional reforms to the Final Rule:

  • Raise the reimbursement rates in CBAs during the bidding gap period.
  • Extend rural relief to all non-Competitive Bidding Areas
  • Improve access to liquid oxygen.

The American Association for Homecare conducted an initial analysis and found that the Final Rule incorporates most, but not all, of the important provisions outlined in its Proposed Rule. These include:

  • An extension of the 50/50 blended reimbursement rates for rural and non-contiguous areas (i.e., Alaska & Hawaii) through Dec. 31, 2020.
  • A new method for determining single payment amounts (SPAs) under the bidding program using maximum winning bids.
  • Lead item pricing for future competitive bidding rounds.
  • The bidding gap — starting Jan. 1, 2019, beneficiaries may receive DMEPOS items from any DMEPOS supplier enrolled in Medicare until new contracts are awarded under the next round of the bidding program sometime around Dec. 31, 2020.
  • CBA pricing will be subject to annual CPI adjustments until the next bidding round takes place.
  • CMS will create a new class for portable liquid oxygen equipment by splitting the existing class of portable gaseous and portable liquid oxygen. CMS would increase the payment amount for the new portable liquid oxygen class so that it is the same as the OGPE (oxygen generating portable equipment) rate. 
  • CMS will change the way that it calculates budget neutrality.  Under the new methodology, CMS would apply the offset to all oxygen and oxygen equipment classes and HCPCS codes beginning on January 1, 2019.

That said, the Final Rule does not contain two provisions that both HME stakeholders and many members of Congress supported and urged CMS to add to the final rule:

  • The broader application of the 50-50 blended rate relief to all non-bid areas.
  • Retroactively applying Consumer Price Index (CPI) adjustments in CBAs based on the increase in the CPI from 2013 through 2018.

All told, AAHomecare President and CEO Tom Ryan deemed the Final Rule a net positive that reforms future rounds of the bid program and offers relief to rural providers. He also noted that it reflects recognition on CMS’s part that the bid program has problems and a willingness to work with the HME industry to fix it. However, the work isn’t done, he said.

“While I believe that CMS is making a smart decision in pausing the bidding program to work on additional fixes, I’m disappointed that the Agency is allowing pricing generated under this flawed program to stay in place until the next bidding round,” he said. “While many suppliers who did not win bids will take advantage of the chance to serve Medicare beneficiaries again during the gap period, they will be contending with rates that provide razor-thin or even negative profit margins.

“Those same unsustainable rates will also be felt by suppliers in non-bid areas, who face higher costs in serving more widely-spread patient populations,” he added. “These suppliers can’t wait for more the more sustainable rates that we expect from future rounds of an improved bidding program; they need relief now.”

Ryan added that the additional reforms in the final rule were achieved thanks to grassroots advocacy in the industry.

“Thanks to the dedicated efforts of suppliers of every size, our state and regional association partners, and other leading HME stakeholders, we’ve strengthened our capacity get Capitol Hill educated and engaged on our policy priorities, which has been critical in convincing regulators to take a close look at the bidding program,” he said.

For more information, read CMS’s fact sheet on the final rule and CMS’s complete text of the final rule.

About the Author

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

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