Two bills have been introduced in the House of Representatives and the Senate to modify payments for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). On November 19, 2015, Senator John Thune (R-SD) introduced the “DME Access and Stabilization Act of 2015” (S. 2312), and on December 8th Representative Tom Price (R-GA) introduced the “Protecting Access through Competitive-pricing Transition Act of 2015” or the “PACT Act of 2015.” Both bills would modify the method for adjusting payments for DMEPOS in non-competitive bidding areas (non-CBAs) and raise the bidding ceilings for DME subject to the competitive bidding program. However, the bills have significant differences. The Senate bill would cap federal Medicaid reimbursement to states for DME at the level of Medicare payment rates for the same items; the House bill does not include this provision. The House bill would establish licensure and performance guarantee requirements under the competitive bidding program. In addition, it would establish a DMEPOS market-pricing program demonstration project. These provisions are not included in the Senate bill.
The bills would modify the payment ceiling applied to payment adjustments for DMEPOS in non-CBAs using payment rates established under the competitive bidding program. The Senate bill provides that for items and services furnished between January 1, 2016 and December 31, 2018, the Secretary would adjust the fee schedule amount to the lesser of (1) the “applicable percent” of the regional price for the region in which the area is located, and (2) the fee schedule amount that otherwise would be determined for such area on January 1, 2015. The applicable percent for a rural area or an area in a frontier State would be 130 percent, and for any other area, the applicable percent would be 120 percent. The House bill would require the Secretary to adjust the fee schedule amount for items and services furnished during this same timeframe to the lesser of (1) 130 percent of the regional price for the State in which the area is located, regardless if the area is rural or not, and (2) the fee schedule amount that otherwise would be determined for such area on January 1, 2015. Both bills would phase in the adjustments over a two-year period in equal increments.
For items and services furnished on or after January 1, 2019, both bills require the Secretary to solicit and receive stakeholder feedback when using information on the payment determined under the competitive bidding program to adjust the payment amount for DMEPOS in non-CBAs. In addition, the Secretary would be required to account for (1) the average travel distance and cost associated with furnishing items and services in a competitive bidding area (CBA), (2) the average volume of items and services furnished by providers in a CBA, (3) the clearing price of items and services, and (4) the number of providers in CBAs compared to the number of providers in non-CBAs.
Additionally, the bills would raise the payment ceiling for DME subject to the competitive bidding program. Rather than payments being limited to the single payment amount established under the previous round of the competitive bidding program, payments would be capped at the amount that would have been paid under the fee schedule as of 2015. The Senate bill would apply this new payment limit to competitive bidding contracts that begin on or after January 1, 2019, while the House would apply it to contracts that begin on or after January 1, 2017. This provision does not appear to apply to enteral nutrition, one of the product categories subject to competitive bidding.
In addition, the Senate bill provides that beginning on January 1, 2020, federal Medicaid reimbursement to states for DME would be limited to the Medicare payment rates for the same items. The bill would also require the Medicare Beneficiary Ombudsman to evaluate the impact of the competitive bidding program, including the impact of limiting federal Medicaid reimbursement of DME subject to the competitive bidding program to rates established under the program, on beneficiary health status and health outcomes.
The House bill would establish state licensure and performance guarantee requirements for bidding entities. Specifically, bidding entities would be required to satisfy applicable State licensure requirements for the area for all items in a bid for a product category. In addition, each bidding entity would be required to submit a cash deposit as a bid and performance bond, although the Secretary would have the discretion to accept a letter of credit from a financial institution in lieu of such cash deposit. The deposit would be retained as a performance guarantee by the Secretary, and would be returned to the entity within 90 days of the date of completion of the contract. The deposit would be retained by the Secretary if the contract is terminated prior to the expiration of the contract. If an entity’s bid is not accepted, the bid and performance deposit will be returned within 90 days of the date of notice of nonacceptance.
The House bill also would establish a six-year DMEPOS market-pricing demonstration project which would involve at least three rounds of auctions for “market-priced items and services” in “eligible auction areas” throughout the United States. “Market-priced items and services” would include: (1) enteral nutrients, equipment and supplies; (2) oxygen supplies and equipment; (3) standard power wheelchairs, power scooters, and related accessories; (4) manual wheelchairs; (5) continuous positive airway pressure devices, respiratory assistive devices, and related supplies; (6) hospital beds and related accessories; (7) walkers and related accessories; (8) support services (group 2 mattresses and overlays); (9) negative pressure wound therapy pumps and related supplies and accessories; (10) off-the-shelf orthotics to the extent they are included in a competitive bidding program; (11) mail order diabetic supplies; and (12) other items and services that could have been subject to participation in the competitive bidding program.
“Eligible auction areas,” would include “counties, aggregation of counties, or parts of counties” that “form economically interdependent areas (as reflecting standard econometric market models).” The Secretary would be required to select at least 10 “eligible auction areas” that constituted the Round 2 Recompete competitive bidding areas. For mail order diabetic supplies, “eligible auction areas” would include two states specified by the Secretary, which when combined, represent at least 7 percent of the total population of individuals who are either entitled to Medicare Part A or enrolled under Part B, based on the most recent available data.
The Secretary would design the auction utilizing a transparent process outlined in the bill, and would be required to use a competitive process to select and enter into a 6-year contract with an auction expert and a market monitor. Within 6 months of enactment, the Secretary would convene a design conference comprised of stakeholders, including manufacturers, suppliers and trade associations of DMEPOS, beneficiaries, and CMS. The auction expert would provide the design conference with a demonstration of the preliminary auction design, lead a mock auction, solicit feedback from suppliers on the relationship between the lead product prices and the value of other products in a particular category, and request input related to improvements aimed at small suppliers. The auction expert would be required to submit to the Secretary an auction design that accounts for the feedback from the design conference.
Within 7.5 months of enactment, the Secretary would use an expedited rulemaking process to propose a rule to implement the auction design. Within 11 months of enactment, the market monitor would be required to conduct the first auction. Prior to the auction, the market monitor would be required to detail auction rules and processes, identify eligible bidders, and specify the target capacity for eligible bidders, and assign product weights. An eligible bidder would include a supplier that: (1) applies to participate in an auction in an area for a lead product; (2) is identified by the Secretary as a supplier of a market priced item or service that is the subject of an auction in an eligible auction area; (3) satisfies licensure and performance guarantee requirements; and (4) meets other licensure, bid-bond and other requirements, as specified by the Secretary.
During the auction, the market monitor would be required to establish a clearing price for each lead product for each eligible area. The Secretary would award a contract for products in a product category to each eligible bidder whose bid submitted for the lead product in the product category is at or below the clearing price established for the product. An eligible bidder awarded a contract would be required to accept the contract. The contract would include a requirement that the bidder furnish items and services in sufficient quantities to satisfy the needs of individuals in the eligible auction area for the period of time. Contracts would be valid for 2 years.
The Secretary, in consultation with the market monitor, would be required to monitor the performance of suppliers awarded contracts and the effects of the demonstration project. If the Secretary, in consultation with the market monitor, determines that a contract supplier has failed to comply with the requirements of the demonstration, the Secretary would implement enforcement measures, which could result in the termination of the contract.
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Bills Introduced to Modify Payments for DMEPOS
