July 13, 2018 CRT Providers and Manufacturers, On Wednesday CMS released the long-awaited proposed rule that includes potential changes to the Medicare Competitive Bidding Program (CBP) and other potential changes relating to DME payment rates. Overall this is a positive proposed rule, with important improvements being proposed for payment in non-bid areas as well as substantive improvements to the CBP. Proposed rule CMS-1691-P has been published by CMS as an initiative to "modernize and drive innovation in DME". You can access a copy of the proposed rule here and the CMS Fact Sheet here. There is a great deal to analyze and we will be sharing more details after further review, but here are the initial highlights to keep to keep you informed: 1.) This is a "proposed rule" and CMS is looking for public comments on the proposed changes. Those comments are due by September 10 and NCART will be responding in detail. We expect CMS to issue a final rule around November 1, so it would be effective January 1, 2019. 2.) Current CBP supplier contracts will expire on December 31, so beginning January 1, 2019 and until new CBP contracts are awarded, beneficiaries may receive DME items from any Medicare enrolled DME supplier. "Transitional" payment rates are outlined below. CMS does not provide a time frame for when new CBP contracts would begin. 3.) CMS is proposing transitional fee schedule amounts for DME furnished on or after January 1, 2019 in areas that are currently Competitive Bid Areas (CBAs) and in areas that are currently not CBAs depending on the area in which the items are furnished: • For areas that are currently CBAs: Items furnished on or after January 1, 2019, until new CBP contracts are awarded, will be paid at 2018 Single Payment Amounts (SPAs) for that CBA increased by the net Consumer Price Index update. • For non-CBAs that are either rural areas or non-contiguous areas: Items furnished from January 1, 2019 through December 31, 2020 will be paid at the 50/50 rates currently in effect for June 1 to December 31, 2018. These are the rates that CMS established in the May 2018 Interim Final Rule and CMS is proposing to extend these higher rates for an additional two years. • For all other non-CBAs: Items and services furnished from January 1, 2019 through December 31, 2020 will be paid at the current payment rates. CMS does ask the question if payment rates for these areas should also be set at the 50/50 rates currently in effect for rural and non-contiguous non-CBAs. This raises the possibility of CBP relief being extended to these areas and will be an important point to comment on. 4.) CMS is proposing changes to the Competitive Bidding Program. These changes have been supported by leading auction experts: • Implementing "lead item" pricing based on maximum winning bid amounts. This is similar to what CMS had earlier identified as "lead item bidding". If finalized, bidders would bid on one item in a product category, and the remaining items in the product category would have prices set based on the pricing ratio reflected in 2015 fee schedules. • Revising the definition of lead item to mean the item in a product category with the highest total nationwide Medicare allowed charges of any item in the product category. • Revising the definition of composite bid to mean the bid submitted by the supplier for the lead item in the product category. • Setting the Single Payment Amount (SPA) at the highest winning composite bid amount for that product category, rather than the median of all winning composite bid amounts. • Revising/increasing product categories to allow for better grouping of related items. • CMS asks for comments on whether some of the larger CBAs should be subdivided into smaller geographic areas. 5.) CMS is requesting suggestions on how it can better set payment rates for new DMEPOS items, a topic that is of particular interest for CRT. 6.) CMS is proposing new payment classes for portable oxygen and oxygen equipment and new payment rules for certain ventilators. There's a lot to digest and CMS indicates more detail will be coming. We'll be working with other industry associations as we move ahead and will keep you updated. Please let us know if you have any questions or comments in the meantime.