Medicare Update

Subcommittee on Health Hears Testimony on DMEPOS Competitive Bidding

On May 6, 2008, the House Ways and Means Subcommittee on Health held a hearing on the Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) competitive bidding program.

During the hearing, the Subcommittee on Health entertained testimony from a number of witnesses, including Kerry Weems, the Centers for Medicare & Medicaid Services (CMS) Acting Administrator and Tom Ryan on behalf of the American Association for Homecare.

In testimony before the Subcommittee, the Acting CMS Administrator states that the "success story of DMEPOS competitive bidding is the amount of money that beneficiaries will save as a result of lower coinsurance..." and reports that, when fully implemented in 2010, the DMEPOS competitive bidding program is projected to save the Medicare program and taxpayers $1 billion annually. In fact, CMS claims that, across the first 10 metropolitan statistical areas and in each product category of the DMEPOS competitive bidding program, beneficiaries will see an average savings of 26 percent when the new payment rates take effect on July 1, 2008. 

However, in testimony before the Subcommittee, the American Association for Homecare (AAHomecare) depicts the DMEPOS competitive bidding program as "poorly conceived and fundamentally flawed."  In fact, AAHomecare points out that nearly 63 percent of the accredited, qualified homecare providers that submitted bids were disqualified in the first round of bidding because they were unable to navigate the bidding process. AAHomecare also raises a number of concerns about the DMEPOS competitive bidding program adversely impacting Medicare beneficiaries access to quality care. 

AAHomecare also believes that the savings projected by CMS for the first round of competitive bidding is misleading. According to AAHomecare, small suppliers (concerned about larger suppliers having a competitive advantage) may have bid extraordinarily low to remain viable. AAHomecare reports that the small suppliers may have assumed that the larger suppliers' bids would reflect accurate (higher) pricing and increase the final Medicare single payment amounts. However, AAHomecare believes that the number of small suppliers with extraordinarily low bids may have prevented many larger firms' bids from being considered. Therefore, AAHomecare questions whether the extraordinary low bid rates in the first round of the DMEPOS competitive bidding program will be sustainable over the 3 year contracting period.

Consequently, AAHomecare urges Congress to immediately halt the implementation of the DMEPOS competitive bidding program and reports that it supports the implementation of a rational, alternative process to determine Medicare pricing for DMEPOS items and services.

CMS Publishes New Claims Manual Chapter on DMEPOS Competitive Bidding

On May 9, 2008, the Centers for Medicare & Medicaid Services (CMS) issued Transmittal 1502 adding a new Chapter 36 to the Medicare Claims Processing Manual (CMS Pub. 100-04). 

In the new Chapter 36, CMS provides Medicare contractors with instructions regarding the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program, including CMS policy on grandfathered suppliers and items, and the transfer of title of capped rental DME items, oxygen and oxygen equipment. CMS reports that subsequent installments of Chapter 36 will contain additional instructions, information about the DMEPOS competitive bidding program, and possibly revisions to clarify language or add additional information on policy. CMS has also posted sample notification letters on the Competitive Bidding Implementation Contractor website, which suppliers may use to notify Medicare beneficiaries whether or not they elect to become a grandfathered supplier.

CMS to Host Conference Call on DMEPOS Competitive Bidding

On May 8, 2008, the Centers for Medicare & Medicaid Services (CMS) announced that it will host a national conference call on the implementation of the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program, which is scheduled to begin on July 1, 2008.

The national conference call will take place from 12:30 p.m. - 2:00 p.m. (EDT) on May 13, 2008.  During the conference call, CMS is expected to give a general overview of the DMEPOS competitive bidding program and address some exceptions and situations suppliers may encounter in the program's implementation.  CMS also reports that a presentation will be made by the Competitive Bidding Implementation Contractor.  CMS expects to post a PowerPoint presentation on the CMS website prior to the call.

To participate in the conference call, registration is required.  Registration will close at 12:30 p.m. (EDT) on May 12, 2008 or when available space has been filled.  CMS will also make an audio recording of the conference call available from 2:30 p.m. (EDT) on May 13, 2008 until 11:59 p.m. (EDT) on May 17, 2008.  The audio recording may be accessed by calling 1-800-642-1687 and using passcode 45744159.

CMS to Hold Home Health, Hospice & DME Open Door Forum

The Centers for Medicare & Medicaid Services (CMS) will hold the next Home Health, Hospice & DME Open Door Forum at 2:00 p.m. (EDT) on May 13, 2008.  There are 2 ways to participate in the Open Door Forum.   

To participate by telephone, one must dial 1-800-837-1935 and reference conference ID 41864430.  To participate in person, RSVP and security clearance is required.  Further, one must RSVP by 2:00 p.m. (EDT) on May 9, 2008 to HOMEHEALTH_HOSPICE_DMEODF-L@cms.hhs.gov, and include your name, organization, phone number, and the words “Home Health” in the subject line.  The Open Door Forum will take place at the Hubert H. Humphrey Building, 200 Independence Avenue S.W., Washington, D.C. 

Starting 2 hours after the Open Door Forum, CMS will also make an audio recording available.  To access the audio recording, one must dial 1-800-642-1687 and enter the conference ID.  The recording will expire after 3 business days.

CMS to Host Second Audio Conference on DMEPOS Accreditation

The Centers for Medicare & Medicaid Services (CMS) will host a second telephone conference regarding the accreditation of Medicare suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) from 1:00 p.m. to 2:30 p.m. (EDT) on April 17, 2008.

CMS reports that the April 17, 2008 telephone conference is the second of four to provide guidance to DMEPOS suppliers on accreditation. During the telephone conference, CMS is expected to discuss compliance with the DMEPOS quality standards, the accreditation process, and provide for a question and answer session.  CMS has already posted the presentation materials on the CMS website. 

To participate in the telephone conference, registration is required.  Registration closes at 1:00 p.m. (EDT) on April 16, 2008 or when available space is filled. Beginning at 2:30 p.m. (EDT) on April 17, 2008, there will also be an audio replay of the telephone conference available.  To access the replay, one must dial 1-800-642-1687 and use passcode 39283514.

Association Requests Delay in DMEPOS Competitive Bidding Program

On March 26, 2008, the American Association for Homecare (AAHomecare) sent a letter to the Centers for Medicare & Medicaid Services (CMS) urging CMS to extend the contract evaluation window for suppliers who have been offered contracts in the first round of the durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program.  In the letter, AAHomecare also asks CMS to delay further implementation of the DMEPOS competitive bidding program until the concerns in the letter are fully examined and addressed.

According to the letter, AAHomecare believes that suppliers who have been awarded an opportunity to contract under the DMEPOS competitive bidding program must be given more than 10 days to evaluate the contract.  AAHomecare also points out that economic conditions have changed since the bidding period closed and that many suppliers anticipated winning contracts for more product categories than they were offered contracts. Therefore, AAHomecare believes that contract winners need more time evaluate the financial impact of the DMEPOS competitive bidding program.

In the letter, AAHomecare also reports being contacted by DMEPOS suppliers who have outlined irregularities or mistakes by the Competitive Bidding Implementation Contractor in the first round of DMEPOS competitive bidding program.  According to AAHomecare, such actions have caused the improper disqualification of round one bids with the vast majority of suppliers being removed from the bidding process for reasons related to financial documentation, accreditation and single-bid requirements. 

In the case of DMEPOS suppliers who have been improperly disqualified, AAHomecare calls for such suppliers to be reinserted in the supplier selection and contracting process.  According to AAHomecare, postponing further implementation of round one of the DMEPOS competitive bidding program will allow this to happen.

CMS Announces Single Payment Amounts for DMEPOS Competitive Bidding

On March 20, 2008, the Centers for Medicare & Medicaid Services (CMS) announced in a Press Release that it completed the bid evaluation process and announced the single payment amounts for the 1st round of the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program. 

According to CMS, the amounts that Medicare will pay for the 10 product categories in the 1st round of DMEPOS competitive bidding overall average 26 percent less than Medicare's previous payment amounts. CMS also reports that savings for beneficiary out-of-pocket costs and Medicare range from 14 percent on negative pressure wound therapy (NPWT) devices and accessories up to 43 percent on mail order diabetic supplies.  The 1st round of the DMEPOS competitive bidding program begins on July 1, 2008 in Charlotte, Cincinnati, Cleveland, Dallas, Kansas City, Miami, Orlando, Pittsburgh, Riverside and San Juan. 

CMS also reports that it is notifying all bidders of their bid results and that winning bidders will be mailed contracts.  Further, bidders whose bids were disqualified because they did not meet the requirements will receive a letter informing them of the reason(s) for disqualification. Finally, when all contracts are finalized this spring, CMS expects to make the list of contract suppliers available on the DMEPOS competitive bidding program page of the CMS website.

CMS to Host Home Health, Hospice & DME Open Door Forum

The Centers for Medicare & Medicaid Services (CMS) will hold the next Home Health, Hospice & DME Open Door Forum at 2:00 p.m. (EDT) on April 2, 2008.  There are 2 ways to participate in the Open Door Forum.   

To participate by telephone, one must dial 1-800-837-1935 and reference conference ID 37587040.  To participate in person, one must RSVP by 2:00 p.m. (EDT) on March 31, 2008 to HOMEHEALTH_HOSPICE_DMEODF-L@cms.hhs.gov, and include your name, organization, phone number, and the words “Home Health” in the subject line.  The Open Door Forum will take place at the Hubert H. Humphrey Building, 200 Independence Avenue S.W., Washington, D.C. 

Starting 2 hours after the Open Door Forum, CMS will also make an audio recording available.  To access the audio recording, one must dial 1-800-642-1687 and enter the conference ID.  The recording will expire after 3 business days.

CMS Announces Accreditation Dates for DMEPOS Competitive Bidding

The Centers for Medicare & Medicaid Services (CMS) recently announced 2 important dates associated with bidding in the second round of the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program.

According to CMS, DMEPOS suppliers must be accredited or have applied for accreditation by May 14, 2008 to submit a bid for the second round of DMEPOS competitive bidding and will need to be accredited to be awarded a contract.  CMS reports that the accreditation deadline for the second round of DMEPOS competitive bidding is October 31, 2008. 

For additional information on accreditation including CMS-approved Deemed Accreditation Organizations, visit the DMEPOS Accreditation page of the CMS website.

OIG Recommends Further Strengthening DMEPOS Supplier Enrollment Process

On March 3, 2008, the Department of Health and Human Services' Office of Inspector General (OIG) issued a Press Release announcing the release of a Report entitled Los Angeles County Suppliers' Compliance With Medicare Standards: Results From Unannounced Visits (Report).

According to the Report, Los Angeles is a high-risk area for fraudulent activity involving suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS).  Further, the Report indicates that in late 2007 the OIG conducted unannounced site visits on 905 DMEPOS suppliers in Los Angeles County.  During the visits, the OIG focused on 4 DMEPOS supplier standards that could be quickly verified through observation.  The 4 standards require that suppliers:

• maintain physical facilities;
• be accessible during business hours;
• have visible signs; and
• post hours of operation.

The OIG found that 115 of the 905 suppliers (or 13 percent) did not maintain physical facilities or were not open during unannounced site visits.  Furthermore, the Report indicates that 79 suppliers (or 9 percent) were open but did not meet at least one of the 2 additional standards (i.e., did not post hours of operation or post signs indicating a business name). 

The OIG also found that 124 suppliers (or 14 percent) met the 4 requirements, but their claims had in common an atypical characteristic. For instance, the OIG reports that more than half of the beneficiaries for whom the suppliers billed did not receive other Medicare services (such as an office visit) from the physicians who ordered the DMEPOS. The OIG reports that this characteristic is prevalent among non-compliant suppliers.

In the Report, the OIG recommends that the Centers for Medicare & Medicaid Services (CMS) strengthen the Medicare DMEPOS supplier enrollment process and ensure that suppliers meet Medicare supplier standards.  In fact, the OIG continues to recommend that CMS:

• conduct more unannounced site visits to suppliers, which could include full site inspections and abbreviated site inspections, to supplement, not replace full site inspections and to determine whether suppliers still exist at the addresses on record;
• perform more rigorous background checks of applicants and currently enrolled high-risk suppliers (including business owners and managing employees);
• assess the fraud risk of suppliers and focus monitoring and enforcement on high-risk suppliers;
• increase prepayment review of DMEPOS claims, especially claims from new suppliers and suppliers deemed high risk;
• require suppliers in areas particularly vulnerable to fraud and abuse to reenroll with the National Supplier Clearinghouse more frequently than every 3 years; and
• strengthen the Medicare supplier standards by establishing a minimum number of hours of operation and establishing minimum inventory requirements for product and service types.

In addition, the OIG recommends that CMS:

• require all suppliers to pay a Medicare enrollment application fee to cover the cost of:
  • full site inspections or abbreviated site inspections to monitor suppliers' compliance with Medicare standards; and
  • criminal background checks;
• require a supplier to pay an additional Medicare enrollment fee if, during a site visit (conducted during business hours), the supplier's facility is closed or inaccessible, necessitating an additional site visit; and
• seek legislative authority to impose temporary moratoriums, on an as needed basis, on supplier enrollment in high-fraud areas.

According to the Report, CMS believes that it has already addressed the majority of the recommendations that also appear in the Report entitled South Florida Suppliers' Compliance With Medicare Standards: Results From Unannounced Visits.