Policy & Regulation News

New DMEPOS Prices Reduce Medicare Spending, Ensure Care Access

CMS has announced that partially adjusted DMEPOS fees have continued to reduce Medicare spending and the program has had no negative impact on patient outcomes.

By Jacqueline LaPointe

- Riding on the success of the competitive bidding program for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), CMS has announced that expanding competitive bidding prices for DMEPOS items nationwide has continued to reduce Medicare spending while maintaining patient outcomes.

New DMEPOS fees have decreased Medicare spending and preserved patient outcomes

In a blog post, CMS reported that medical suppliers and healthcare providers have generally accepted adjusted payments for DMEPOS items based on average competitive bidding prices in specific regions and the nation. The expansion aimed to ensure Medicare beneficiaries receive necessary medical equipment while reducing healthcare costs for patients and taxpayers.

New DMEPOS fees have also been phased in using 50 percent adjusted payment amounts and 50 percent unadjusted payment amounts.

“Based on these monitoring efforts, we continue to believe that the partially adjusted fees implemented in January 2016 have had no negative impact on beneficiary access to quality items and services,” wrote Sean Cavanaugh, Deputy Administrator and Director for the Center of Medicare. “We will continue to monitor all data very closely leading up to and following implementation of the phase-in of the fully adjusted DMEPOS fee schedule adjustments on July 1, 2016.”

In efforts to save Medicare $4.4 million by the end of 2020, CMS increased the reach of the competitive bidding program to include non-competitive bidding areas.

Before 2016, lower payment amounts for specific DMEPOS items were limited to certain geographic locations, where a single supplier was awarded the furnishing and reimbursement rights for that item. DMEPOS prices were based on the median prices from the competitive bidding process from potential suppliers.

CMS designed the competitive bidding program to lower prices and reimbursements for DMEPOS items that followed a fee schedule, which reportedly did not reflect market prices. Under the fee schedule, some supplies were three to four times higher than updated retail prices.

The program was able to save $580 million in nine markets in the first bidding round. The second round and the national mail order programs have saved up to $3.6 billion between 2013 and 2015.

To further reduce Medicare spending and help more beneficiaries access quality supplies, CMS has applied competitive bidding information to regions outside of the designated areas. The new payment rates are based on a regional price amounts for specific items, which is determined by finding the average price from all competitive bidding areas in the region and comparing it to a national average amount.

The adjusted DMEPOS fees will soon apply to all Medicare medical suppliers and providers by July 1.

Through the blog post, CMS reported that the gradual implementation of the adjusted payment amounts has had no negative effect on supply rates and patient outcomes.

“In addition to continued high acceptance of the new, adjusted DMEPOS payment rates from providers and suppliers and steady health outcomes across all non-competitive bidding areas, the amount of these supplies and services furnished in non-competitive bidding areas has remained steady as well,” stated Cavanaugh.

While suppliers and providers are still maintaining the same volume of DMEPOS items to beneficiaries, patients have also preserved access to quality medical items and care.

“We have been monitoring health outcomes data closely and have not detected any changes in the number of deaths, hospital and nursing home admission rates, monthly hospital and nursing home days, physician visit rates, and emergency room visits in 2016 (after the new, adjusted DMEPOS payment rates were in place) compared to 2015 (before the new, adjusted DMEPOS payment rates) in the non-competitive bidding areas,” added Cavanagh.

This indicates that changes in DMEPOS payment rates have not contributed to costly adverse events, such as hospital admissions and prolonged hospital stays.

CMS also stated that 1-800-Medicare staff have received less calls related to access issues with DMEPOS items and services in the first quarter of 2016 (when the program expanded) compared to the first quarter of 2015.

Despite some success with the new program, some healthcare stakeholders have criticized the adjusted payment rates during the proposed rule’s comment period.

Under the competitive bidding program, Medicare suppliers were awarded an exclusive contract for specific DMEPOS items. While unaccepted suppliers were not typically reimbursement for providing that item in a specific area, the awarded supplier was able to lower prices and increase volume because other suppliers were discouraged from furnishing that item.

The expanded program does not limit who gets reimbursement for DMEPOS items and no single supplier will be awarded a larger market share. Healthcare suppliers are concerned that their organizations cannot maintain large volumes of supplies at reduced reimbursement rates without the exclusive contract.

With the full integration of adjusted DMEPOS fees on the horizon, healthcare stakeholders will soon find out if the expanded program will continue to reduce Medicare spending or simply cause temporary price decreases in a larger market.

Dig Deeper:

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