On October 31, 2019, CMS issued a final rule (the Final Rule) that updates payment policies and rates under the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) effective for calendar year (CY) 2020 and makes changes to payment for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) items and services. Notable ESRD PPS policies finalized in the Final Rule include the exclusion of certain drugs from eligibility for the Transitional Drug Add-On Payment Adjustment (TDAPA) and the creation of a new transitional add-on payment adjustment for certain new and innovative renal dialysis equipment or supplies furnished by ESRD facilities. With respect to DMEPOS payment policies, CMS finalized a methodology for calculating fee schedule amounts for new DMEPOS items, created a standardized set of required elements for all DMEPOS orders, created a “Master List” of items potentially subject to prior authorization and/or face-to-face encounter and written order prior to delivery requirement, and revised certain requirements pertaining to changes of ownership (CHOWs).

ESRD PPS Provisions

CMS made the following notable changes pertaining to the ESRD PPS:

• Annual updates.
  • CMS updated the ESRD PPS base rate for CY 2020 to $239.33 – an increase of $4.06 to the current base rate. The acute kidney injury dialysis payment rate will equal the same amount.
  • CMS also updated the wage indices and outlier amounts using the most recent data.
• TDAPA policies.
  • CMS will exclude from TDAPA drugs approved under 21 U.S.C. § 355(j) and drugs approved under 21 U.S.C. § 355(c) that are classified by FDA as new drug application (NDA) Types 3, 5, 7, or 8; Type 3 in combination with Type 2 or 4; Type 5 in combination with Type 2; or Type 9 when the parent NDA is Type 3, 5, 7 or 8. These categories represent generic drugs, new dosage forms or new formulations of previously approved active ingredients, drugs that were previously marketed but without an approved NDA, and prescription over-the-counter drugs.
  • TDAPA payment for calcimimetics will continue in CY 2020 but the amount will change to 100 percent of average sales price (ASP).
  • To address insufficient reporting by manufacturers of ASP data, CMS will stop applying TDAPA for a new product if CMS does not receive a full calendar quarter of ASP data within 30 days of the last day of the third calendar quarter after TDAPA payments for the product begin.
• Transitional add on payment for equipment and supplies. CMS finalized the establishment of a new Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies (TPNIES). TPNIES payment will be available for equipment and supplies that (1) have been designated by CMS as a renal dialysis service, (2) were granted marketing authorization by FDA on or after January 1, 2020, (3) are commercially available by January 1 of the year in which the payment adjustment would take effect, (4) have a HCPCS application submitted by September 1 of the payment adjustment year, (5) meet the substantial clinical improvement criteria specified at 42 C.F.R. § 412.87(b)(1), and (6) are not capital-related assets.
• Erythropoiesis-stimulating agent monitoring policy. The erythropoiesis-stimulating agent monitoring policy is discontinued.

DMEPOS Provisions

CMS made the following notable changes pertaining to DMEPOS items:

• Fee schedule amounts for new DMEPOS items and services.
  • For a new DMEPOS item that is determined to be comparable to an existing item, the amount of the existing item will be assigned to the new item. For a new DMEPOS item that is determined to be without a comparable existing item, the fee schedule amount will be based on other sources of commercial pricing data, such as retail prices or information from supplier invoices.
  • CMS did not finalize the use of technology assessments to establish the fee schedule amount for new items.
  • A one-time adjustment will be applied to gap-filled fee schedule amounts if, within 5 years of establishing the initial fee schedule amount based on supplier or commercial prices, such prices decrease by less than 15 percent.
• Conditions of payment applied to certain DMEPOS items.
  • CMS created the following standardized set of required elements for all DMEPOS orders: beneficiary name or Medicare identifier, description of item, quantity to be dispensed, date, treating practitioner name or identifier, and treating practitioner signature.
  • CMS developed a “Master List” of items potentially subject to prior authorization and/or face-to-face encounter and written order prior to delivery requirement. The list is included in the Final Rule as Table 13.
• Change of ownership regulations. In the regulations governing the DMEPOS competitive bidding program (CBP), CMS made several changes pertaining to CHOWs. Specifically, CMS removed the requirement for a supplier to notify CMS of a CHOW 60 days prior to the effective date of such CHOW, removed the distinction for a “new entity,” and changed the timing requirement of submitting a novation agreement to CMS to within 10 days following the effective date of the CHOW.
• Data measuring sales of diabetic testing strips. In the proposed rule, CMS requested suggestions for sources of data measuring sales of diabetic testing strips to Medicare beneficiaries, to assist CMS in complying with a statutory provision that requires CMS to determine such volume through the use of multiple sources of data. In the Final Rule, CMS stated that, while some commentators responded to CMS’s request, the comments did not mention any data or readily available sources of data. Accordingly, CMS has not yet devised a final method for determining strip sales volumes.

The Final Rule is currently available here, and the CMS announcement is available here.