The Proposed Rule

Note: A complete summary via the CMS Newsroom may be found here.

In short, the Oct. 27 proposal is intended to establish payment methods for these items effective on or after April 1, 2021, or the end of the PHE, whichever is later.

But let’s begin with the current environment, of which you are likely aware:

As required by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, CMS had adjusted the fee schedule amounts for items and services furnished in rural and non-contiguous, non-competitive bidding areas based on a 50/50 blend of adjusted and unadjusted rates for the remainder of the COVID-19 public health emergency.

CMS also provided higher payments for certain DME items and services furnished in non-rural, non-competitive bidding areas by a 75/25 blend, with dates of service on or after March 6, 2020, through the remainder of the COVID-19 public health emergency.

As noted, the COVID-19 PHE resulted in legislative action that, among other things, was directed to allow DMEPOS suppliers with relatively better reimbursement from Medicare. The legislation provided suppliers in designated rural areas with a fee schedule that was a 50/50 blend of the rates before competitive bidding and of the then-applicable adjusted rates due to competitive bidding.

CMS-1738-P states:

Under the proposal, CMS would continue paying suppliers higher rates for furnishing items and services in rural and noncontiguous areas (this is Alaska and Hawaii except for Honolulu) as compared to items and services furnished in other areas, informed by stakeholder input indicating higher costs in these areas, greater travel distances and costs in certain non-CBAs compared to CBAs, the unique logistical challenges and costs of furnishing items to beneficiaries in the non-contiguous areas, significantly lower volume of items furnished in these areas versus CBAs, and concerns about financial incentives for suppliers in surrounding urban areas to continue including outlying rural areas in their service areas. Previous feedback from industry stakeholders expressed concern regarding beneficiary access to items and services furnished in rural and remote areas. …(W)e are proposing to continue paying the 50/50 blended rates in rural contiguous areas, but are proposing that the 50/50 blend will no longer be a transition rule under §414.210(g)(9), and will instead be the fee schedule adjustment methodology for items and services furnished in these areas under §414.210(g)(2) unless revised in future rulemaking. We are proposing that the fee schedule amounts for items and services furnished in rural contiguous areas on or after April 1, 2021, or the date immediately following the duration of the emergency period… whichever is later, be adjusted so that they are equal to a blend of 50 percent of 110 percent of the national average price for the item or service and 50 percent of the fee schedule amount for the area in effect on December 31, 2015, increased for each subsequent year beginning in 2016 by the annual update factors specified in sections 1834(a)(14).

What does this mean?

It means rural areas and non-contiguous Alaska/ Hawaii keep the 50/50 blend. The “transition” (temporary) blend was set to expire on April 1 or the end of the PHE, but this proposal makes it permanent—unless changed by future rulemaking.

What about “non-rural” areas that are cities and large towns but not large enough to be competitively bid? Prior to the CARES Act, they were reimbursed at a regional rate, or RSPA, which stands for “regional single payment amounts.” Effectively, these areas were reimbursed for items at approximately the same rate as the larger CBAs within their region. However, Congress did approve a better benefit—that is, 75% of the RSPA and 25% of the much higher non-competitive bidding rate. These amounts continue today and will continue until April 2021, or until the PHE is declared over.

However, this proposed rule does not allow for a continuation of this 75/25 blend at this time. It reads:

…(F)or items and services furnished on or after April 1, 2021, or the date immediately following the duration of the emergency period whichever is later, in all other nonrural non-CBAs within the contiguous United States, we are proposing that the fee schedule amounts be equal to 100 percent of the adjusted payment amount established under §414.210(g)(1)(iv).

This means these non-rural and non-bid areas revert to the lower-reimbursed RSPA amounts.

Geographic Payment Amounts

CMS established eight geographic regions and eight RSPAs. CMS calculates the RSPA for each region using the unweighted average of the SPAs for a DMEPOS item from all CBAs that are fully or partially located in that region, regardless of population. CMS averages the RSPAs, weighted by the number of states in that region, to calculate a national average RSPA.

Here is a visual of the 130 CBAs (the red “footprint” includes all the counties within the CBA):

The “regions” mirror the current regions used for unemployment analysis by the BEA:

CMS adjusts fee schedules for states in different regions of the country based on previous competitive bidding round pricing in these “regions.” The regional prices are limited by a national ceiling (110% of the average of regional prices) and floor (90% of the average of regional prices).

For example, Colorado non-bid areas will be reimbursed at the weighted average of not only the CBAs within the state, (Denver and Colorado Springs) but also the other CBAs in the Rocky Mountain region, such as Boise and Salt Lake City.

What about these CBAs? What will suppliers be paid for the next three years? The proposal includes:

For items that were included in Round 2021 but have essentially been removed from Round 2021 of the CBP, we are considering whether to simply extend application of the current fee schedule adjustment rules… until new SPAs are calculated for the items once competitive bidding of the items has been resumed.

Effectively, the current reimbursement amounts in the 130 CBAs would remain the same until a new bidding program came into effect.

Review the Proposed Rule and Submit Comments

CMS published a formal notice in the Federal Register, which included the offering of public comments and a deadline for submission. I urge all stakeholders to review the actual documents and proposed rule if you have accessed this information prior to the deadline of Jan. 3, 2021.

Submitting Comments on the Proposed Rule

Electronically: Go to www.regulations.gov and follow the “Submit a comment” instructions.

By regular mail: Send comments to Centers for Medicare & Medicaid Services Department of Health and Human Services, Attention: CMS1738-P, P.O. Box 8013, Baltimore, MD 212448010.