AAHomecare to CMS: Withdraw Flawed Proposed Rule on NCB Expansion

The current Medicare national competitive bidding program for durable medical equipment (DME) is so badly flawed that it should not be expanded to additional regions of the country, the American Association for Homecare (AAHomecare) says.

AAHomecare's comments were in a Sept. 2 letter to Centers for Medicare & Medicaid Services (CMS) Administrator Marilyn Tavenner, and were in response to CMS's call for comments regarding a proposed rule that would expand competitive bidding to parts of the country not currently participating.

Applying Current Payment Amounts in New CBAs

In particular, the association objected to the proposed rule's plan to use single payment amounts (SPAs) from the current Medicare competitive bidding program to set Medicare payment rates for other geographical areas, including rural ones.

"CMS intends to use the single payment amounts from the DMEPOS competitive bidding program to adjust Medicare payment rates in areas outside the competitive bidding areas (CBAs)," the AAHomecare letter notes. "SPAs are the product of a profoundly flawed competitive bidding program and do not reflect the true cost of doing business in a CBA or group of CBAs. They should not be used to establish Medicare payment rates in areas outside CBAs."

AAHomecare contends that business costs for DME suppliers vary widely among geographical regions -- for instance, in rural areas versus urban ones. For that reason, applying one CBA's pricing to a region that might be very different is not reasonable, the association says.

"We are disappointed that CMS has not done more to understand the demographic and economic conditions that distinguish areas outside CBAs from CBAs and each other," the AAHomecare letter says. "CMS acknowledges in the preamble that §1834a of the Social Security Act requires the agency to consider the 'costs of items and services' in areas in which the SPAs will be applied, but the agency has ignored that mandate, asserting without any substantive discussion that there is no conclusive evidence to support the differences."

The letter suggests there are more accurate ways to determine payment amounts.

"Although §1847 requires the agency to use 'information' from the bidding programs to adjust Medicare pricing in areas outside CBAs, the statute does not require CMS to use SPA data only," the letter says. "AAHomecare recommends that CMS use the clearance price for products in a product category in a CBA or groups of CBAs instead of the SPAs. The clearance price, or pivotal bid, is where pricing and expected demand for an item in a CBA intersect. The clearance price is not subject to the distortions inherent under the design of the current bidding program, which identifies the SPA as the median of all the bids up to the pivotal bid. The current program systematically skews pricing downward, which would place beneficiaries in rural and other hard-to-serve areas at risk."

DME suppliers have long contended that consumers in rural areas can be more difficult to serve because they may live farther away from suppliers versus consumers living in larger metropolitan areas. DME deliveries and repair calls can therefore require longer drives and take more time, and can sometimes require driving over more difficult terrain than typically encountered in larger cities.

CMS Suggests "Bundling" Payment Plans

The AAHomecare letter also raises a number of concerns over CMS's desire to implement "bundling" of DME and payments in future competitive bidding programs.

The bundling idea came about as part of CMS's examination of whether it should change payment processes for DME involved in competitive bidding.

A February 2014 CMS fact sheet on the topic says, "CMS is considering whether different payment rules for DME and enteral nutrients, supplies and equipment (enteral nutrition) should be considered under the competitive bidding programs. The current standard payment rules were written in the 1980s in an attempt to save money and depending on the item or payment class the item falls under, allow a purchase basis for certain items. These rules also allow a capped rental basis, with the beneficiary taking ownership of the capped rental equipment after 13 months of continuous use, or a continuous monthly rental basis where the monthly payments are not capped and continue for as long as medical necessity and Part B coverage continues."

In considering a so-called "bundling" system that would impact both the DME provided and how payments are issued to suppliers, the fact sheet says, "Complicated claims processing systems and edits are needed to count rental months, prevent duplicate payments for thousands of separately coded items, and track utilization of ongoing replacements of supplies and accessories. CMS is seeking comments on whether it should consider simplifying the payment rules under competitive bidding programs for certain DME and enteral nutrition by making one monthly payment to the supplier for all related items and services needed each month. The monthly payments would continue as long as medical necessity for the covered items continued, and the supplier would be responsible for furnishing all items and services needed each month."

The AAHomecare letter includes a lengthy section called, "CMS Must Withdraw the Proposal to Include Bundling Under a Competitive Bidding Program."

AAHomecare Says Bundling Won't Work

The association contends that CMS "does not have the authority to substitute a bundled payment for DME or enteral products in place of the payment rules that Congress established under the Social Security Act" and "cannot substitute a bundled continuous rental payment for the payment rules under the fee schedules."

In addition, "CMS has not shown how requiring suppliers to bid on bundles of equipment supplies and accessories would benefit Medicare beneficiaries," the letter says. "On the contrary, a competitive bidding program that uses bundling would create the wrong incentives for suppliers and is especially bad for beneficiaries. Bundling will force suppliers to establish formularies, which, in turn, diminish access for beneficiaries with specific individual needs. Bidding will be based on generic bundles that would be different from one supplier to the next, and CMS would have no basis for evaluating bids because of the lack of transparency for what is in a bundle."

On an even more elementary level, AAHomecare contends CMS "cannot proceed with bundling without first establishing criteria for determining the 'bundle' of equipment and services."

In other words, AAHomecare says, no data are in place to determine which DME should be "bundled" and provided to a particular Medicare beneficiary with a particular diagnosis and prognosis.

"There is no data to establish what bundles may be appropriate for specific patients and no coverage criteria to determine when a beneficiary qualifies for a bundle of equipment, services and supplies," the letter says. And with no assessment criteria available, AAHomecare adds, DME suppliers won't know which equipment to include in a bundle or how much service they'll have to provide - making it impossible to submit informed, accurate bids during the bidding process.

AAHomecare's letter makes specific reference to the possibility of bundling for power wheelchairs.

"AAHomecare is opposed to the Medicare bundling proposal for power wheelchairs," the association says. "We are opposed to bundling both by product category that would result in one code and also by base power wheelchair HCPCS code... There is no consensus on what a 'wheelchair bundle' must contain, and this lack of transparency almost certainly will result in lower quality care for beneficiaries."

If CMS insists on going forward with a "pilot program" for a power chair bundle, AAHomecare recommends following the bundling used by New York's Medicaid program, whose bundle includes a standard power chair by base codes only; does not include products with a separate medical policy; and allows for separate billing for repairs after 13 months.

To read the AAHomecare letter in its entirety, click HERE.

About the Author

Laurie Watanabe is the editor of Mobility Management. She can be reached at lwatanabe@1105media.com.

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