On November 23, 2015 the Centers for Medicare & Medicaid Services (CMS) announced the fee schedules for 2016 for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). For items and services not included in product categories covered by the competitive bidding program, there is a fee schedule update factor of -0.4 percent. The negative payment adjustment for 2016 is the result of a 0.1 percent CPI-U increase, which is adjusted downward by a 0.5 percent multi-factor productivity adjustment. In addition, due to new Medicare requirements applicable to items included in the DMEPOS competitive bidding program, the payment rates for these items in 2016 in non-competitive bidding areas will be lower than the 2015 rates.

Beginning on January 1, 2016, CMS is required to use payment rates established under the competitive bidding program to adjust payment rates for the same products in non-competitive bidding areas (non-CBAs). In October 2014, CMS finalized a rule that contained its methodologies for adjusting fee schedule payment rates for DMEPOS in non-CBAs. The final regulations require CMS to establish regional payment amounts that are limited by national parameters:

• States in the Contiguous United States and District of Columbia: For each state in the contiguous United States and the District of Columbia, CMS establishes a regional price (regional single payment amount, or RSPA) equal to the un-weighted average of the single payment amounts for an item or service established for competitive bidding areas (CBAs) that are fully or partially located in the same region that contains the state (or District of Columbia). The RSPAs are limited by a national ceiling, equal to 110 percent of the average of the national average price (the un-weighted average of the regional prices), and a national floor, equal to 90 percent of the national average price.
• Rural Areas: The fee schedule amounts are adjusted to 110 percent of the national average price for all areas within a state that meet the definition of a rural area.
• Areas Outside the Contiguous United States: Fee schedule amounts for areas outside the contiguous United States are reduced to the greater of the average single payment amounts for the item or service for CBAs outside the contiguous United States or 110 percent of the national average price for the item or service.
• Items Included in 10 or Fewer Areas: Fee schedule amounts for items included in 10 or fewer CBAs are adjusted so that they are equal to 110 percent of the un-weighted average of the single payment amounts established for each of the areas. Items in this category currently include: infusion pumps, commode chairs, nebulizers, patient lifts, seat lifts, TENS devices, Group 2 complex rehabilitative power wheelchairs and certain wheelchair accessories.

CMS is phasing in the new requirements. As a result, fee schedule amounts from January through June of 2016 will be based on a 50/50 blend of current rates and adjusted rates. Nonetheless, since the newly released fee schedule amounts for DMEPOS reflect the payment rates established for 11 product categories in 99 CBAs under the competitive bidding program, Medicare payment rates for these items and services will be reduced throughout the United States. 

For example, during the first six months of 2016, Medicare reimbursement for renting enteral pumps (HCPCS B9002) in the continental United States generally will be reduced by 23 percent (from $121.70 to $93.15), and will be reduced by 21 percent (from $121.70 to $96.41) in rural areas. Similarly, monthly reimbursement for oxygen concentrators (E1390) will be reduced by 24 percent (from $180.92 to $137.04) and 22 percent ($180.92 to $141.74) in rural areas. The reimbursement for items and services subject to the competitive bidding program will be reduced further in the second half of 2016, when rates are fully adjusted.

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Centers for Medicare & Medicaid Services Releases Fee Schedule Amounts for DMEPOS for 2016