Medicare's Claim of Success in DME Bid Program Disputed

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By Mindy Yochelson

May 18 — Supplier groups disputed the Medicare agency's claim that its monitoring of durable medical equipment shows that its competitive bidding program is working successfully for suppliers and beneficiaries.

Tom Ryan, president of the trade group American Association for Homecare, told Bloomberg BNA May 18 that the monitoring period of the claims used by the Centers for Medicare & Medicaid Services was “too short” to make a determination of success.

The Council for Quality Respiratory Care, a group of respiratory therapy providers and manufacturers, said in a statement that the data “do not reflect the cuts’ full impact on beneficiary access and outcomes or overall Medicare spending.”

Accepting Assignment

The CMS May 17 said that its data show that DME providers in locations subject to competitive bidding rates continue to accept payments based on Medicare rates that resulted from the bidding process.

In January, as required by a 2014 rule, the CMS began to phase in new rates in noncompetitive bidding areas based on payment information from some of the 99 areas in which there is competitive bidding.

Specifically, the agency said it saw no change in the rate of assignment for the first four months in 2016 compared with the first four months in 2015.

Suppliers in nonbidding areas aren't required to accept assignment of Medicare claims for items subject to competitive bidding. Accepting assignment means that the suppliers accept the Medicare fee schedule amount as payment in full.

The monitoring data show “no change in the rate of assignment for the first four months in 2016 (99.88 percent) compared to the first four months in 2015 (99.87 percent),” the CMS said. “There was also no change in the rate of assignment in rural areas in 2016 (99.90 percent) compared to 2015 (99.90 percent), while the rate of assignment in non-contiguous areas changed only slightly in 2016 (99.81 percent) compared to 2015 (99.90 percent).”

This means that “the fee schedule adjustments implemented in January have not had a negative impact on beneficiary access to quality items and services,” the agency said. The data for assignment are a “valuable indicator” that rates are sufficient.

The CMS in late 2015 released reimbursement amounts for 11 items of DME with bid-derived reimbursements for the nonbid areas.

Phasing in New Rates

To ease the transition, the rates are being phased in from January to June. During that time, prices will be based on a 50-50 blend of unadjusted fee schedule amounts and 50 percent of the adjusted fee schedule amounts.

Fully adjusted rates will take effect July 1.

The respiratory care council said the May 17 data release is not only based on just four months—January-April—but looks only at the practice of assignment.

“Four months is not sufficient time to assess the impact of such a substantial cut, let alone enough time to fully evaluate whether the full cuts—which could be 50 percent or more over last year’s rates—should be implemented July 1,” the council said.

“Home respiratory therapy providers have warned that, if implemented on July 1, these cuts will result in an unavoidable reduction in services,” including a shift of beneficiaries to more expensive care settings, the coalition said.

More Data Soon

Sean Cavanaugh, CMS's deputy administrator and director of the Center for Medicare, said in a May 17 blog posting that the CMS expects to post “additional data on assignment rates, access to items and services, and health outcomes in the near future.”

However, Ryan of AAHomecare questioned the phrase “near future” when the July 1 date for the full adjustments is just “44 days away.”

His group, he said, has seen “pockets of changes in service and standards of care.”

He also questioned assumptions based on data from the first quarter of 2016 when there could have been a mix of 2015 claims—based on the higher rate—with the 2016 lower rates and wondered about the number of claims used.

The council and AAHomecare said they support H.R. 5210 and S. 2736, which would delay implementation of the full fee amounts in the nonbid areas, among other provisions.

The House bill, which has 52 co-sponsors, and the Senate bill, which has 27 co-sponsors, are “our No. 1 priority,” Ryan told Bloomberg BNA.

To contact the reporter on this story: Mindy Yochelson in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at