Zip Code Changes Impact HMEs

CMS has changed zip code designation for various areas which has in turned changed the reimbursement rates for providers in those areas.

• By David Kopf
• Jun 13, 2019

During the first half of this year, CMS made designation changes to 381 zip codes, according to VGM Government Relations, with 242 of those zip codes changing from rural designations to non-rural designations, which negatively impacts their funding according to CMS’s rate plans.

Some examples of how the zip code designation changes impacted certain areas:

• In Iowa, large areas were re-designated as non-bid, non-rural areas, which cut their reimbursement for some codes by 45.7 percent.
• In West Virginia, zip code changes reduced reimbursement for the same codes by 45.6 percent.
• In rural Texas, the zip codes that went from rural to non-rural reduced oxygen concentrator (E1390) reimbursement from $134.71 (first quarter) to $71.73 (second quarter), representing a 53 percent cut.
• Also in rural Texas, a BiPAP machine (E0470) started the first quarter at $185.52, but went to $104.56 starting in April, which constituted a 56 percent decline. Moreover, since the E0470 is a capped rental item, the purchase allowable was significantly impacted for providers in those areas.

“We have asked CMS for more information regarding their handling of DMEPOS Geographic Classification,” a statement from VGM Government Relations noted. “We asked CMS why are these Zip Codes being changed in the first place? What is CMS doing to mitigate the damage these changes in designations could be causing?”

• For the moment, VGM recommend that providers serving patients in rural and non-rural areas should:
• Be aware that while zip code designation changes could occur quarterly, CMS did not communicate these recent changes.
• So, they should monitor payments from Medicare for changes.
• Ensure that the billing staff that is posting payments are communicating any changes or concerns.
• Keep in mind that some zip codes went from non-rural to rural.

To provide more in-depth information, John Gallagher, vice president of VGM Government Relations, and Ronda Buhrmester, Director of Reimbursement for VGM, discussed CMS’s zip code changes for the next episode of the HME Business Podcast, which goes live on June 20. Make sure to subscribe via the major podcast platforms, such as iTunes, Stitcher and Google Play.