Medicare Program; Durable Medical Equipment Fee Schedule Adjustments To Resume the Transitional 50/50 Blended Rates To Provide Relief in Rural Areas and Non-Contiguous Areas
Interim final rule with comment period.
CFR Part: "42 CFR Part 414"
RIN Number: "RIN 0938-AT21"
Citation: "83 FR 21912"
Document Number: "CMS-1687-IFC"
Page Number: "21912"
"Rules and Regulations"
SUMMARY: This interim final rule with comment period makes technical amendments to the regulation to reflect the extension of the transition period from
EFFECTIVE DATE:
Effective date: The provisions of this interim final rule with comment period are effective on
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Table of Contents
I. Executive Summary
A. Purpose
B. Summary of the Major Provisions
C. Summary of Costs and Benefits
II. Durable Medical Equipment, Prosthetics,
A. Background for Payment Revisions for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
1. Fee Schedule Payment Basis for Certain DMEPOS
2. DMEPOS CBP
a. Payment Basis
b. Geographic Areas Designated Under the DMEPOS CBPs
B. Background on the Methodology for Adjusting Payment Amounts for Certain DMEPOS Using Information From DMEPOS CBPs
C. Transition Period for Phase-In of Fee Schedule Adjustments
1. Statutory Mandate To Reconsider Fee Schedule Adjustments
2. Fee Schedule Adjustment Impact Monitoring Data
3. Restoring Transitional Blended Fee Schedule Rates in Rural Areas and Non-Contiguous Areas
D. Fee Schedule Amounts for Accessories Used With Group 3 Complex Rehabilitative Power Wheelchairs
E. Technical Changes To Conform the Regulation to Section 5004(b) of the 21st Century Cures Act (the Cures Act): Exclusion of DME Infusion Drugs Under CBPs
III. Provisions of the Interim Final Rule With Comment Period
A. Transition Period for Phase-In of Fee Schedule Adjustments
B. Technical Changes To Conform the Regulation to Section 5004(b) of the Cures Act: Exclusion of DME Infusion Drugs Under CBPs
IV. Waiver of Proposed Rulemaking
V. Collection of Information Requirements
VI. Response to Comments
VII. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
2. Statement of Need
3. Overall Impact
B. Detailed Economic Analysis
a. Effects on the Medicare Program and Beneficiaries
b. Impact on Beneficiaries and Other Payers
c. Alternatives Considered
d. Regulatory Familiarization Costs
C. Accounting Statement
VIII. Regulatory Flexibility Act Analysis
IX. Unfunded Mandates Reform Act Analysis
X. Federalism Analysis
XI. Reducing Regulation and Controlling Regulatory Costs
XII. Congressional Review Act
I. Executive Summary
A. Purpose
This interim final rule with comment period amends the regulation at 42 CFR 414.210(g)(9) to reflect the extension of the transition period for phasing in fee schedule adjustments for certain durable medical equipment (DME) and enteral nutrition paid in areas not subject to the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP) through
B. Summary of the Major Provisions
* Transition Period for Phase in of Adjustments to Fee Schedule Amounts: We are amending
* Technical Change Excluding DME Infusion Drugs From the DMEPOS CBP: Section 5004(b) of the Cures Act amends section 1847(a)(2)(A) of the Social Security Act (the Act) to exclude drugs and biologicals described in section 1842(o)(1)(D) of the Act from the DMEPOS CBP. We are making conforming changes to the regulation to reflect the exclusion of infusion drugs, described in section 1842(o)(1)(D) of Act, from items subject to the DMEPOS CBP.
C. Summary of Costs and Benefits
This interim final rule with comment period resumes the blended adjusted Medicare fee schedule amounts during the transition period for certain items and services that are furnished in rural and non-contiguous areas not subject to the CBP beginning
We are unable to quantify the benefits of this interim final rule with comment period at this time; however, the goal of this interim final rule is to preserve beneficiary access to DME items and services in rural and non-contiguous areas not subject to the CBP during a transition period in which CMS will continue to study the impact of the change in payment rates on access to items and services in these areas. The alternative to this interim final rule with comment period would have been to allow the full phase in of fee schedule adjustments based on competitive bidding prices to continue in all non-competitive bidding areas (non-CBAs). We believe that resuming the fee schedule adjustment transition period in rural and non-contiguous areas promotes stability in the DMEPOS market in these areas, and enables CMS to work with stakeholders to preserve beneficiary access to DMEPOS.
II. Durable Medical Equipment, Prosthetics,
A. Background for Payment Revisions for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
1. Fee Schedule Payment Basis for Certain DMEPOS
Section 1834(a) of the Act governs payment for DME covered under Part B and under Part A for a home health agency and provides for the implementation of a fee schedule payment methodology for DME furnished on or after
* Inexpensive or other routinely purchased items.
* Items requiring frequent and substantial servicing.
* Customized items.
* Oxygen and oxygen equipment.
* Other covered items (other than DME).
* Other items of DME (capped rental items).
Section 1834(h) of the Act governs payment for prosthetic devices, prosthetics, and orthotics (P&O) and sets forth fee schedule payment rules for P&O. Effective for items furnished on or after
2. DMEPOS CBP
a. Payment Basis
The DMEPOS CBP is mandated by section 1847(a) of the Act and requires the Secretary of the
* Off-the-shelf (OTS) orthotics for which payment would otherwise be made under section 1834(h) of the Act.
* Enteral nutrients, equipment and supplies described in section 1842(s)(2)(D) of the Act.
* Certain DME and medical supplies, which are covered items (as defined in section 1834(a)(13) of the Act) for which payment would otherwise be made under section 1834(a) of the Act.
The DME and medical supplies category includes items used in infusion and drugs (other than inhalation drugs) and supplies used in conjunction with DME, but excludes devices that have been classified in class III under the Federal Food, Drug, and
Under the DMEPOS CBP, Medicare sets single payment amounts (SPAs) for selected DMEPOS items and services furnished to beneficiaries in CBAs based on the median of bids submitted by winning suppliers and accepted by Medicare for each individual item and service. For competitively bid items and services furnished in a CBA, the SPAs replace the Medicare allowed amounts established using the lower of the supplier's actual charge or the payment amount recognized under sections 1834(a)(2) through (7) of the Act. Section 1847(b)(5) of the Act provides that Medicare payment for competitively bid items and services is made on an assignment-related basis, and is equal to 80 percent of the applicable SPA, less any unmet Part B deductible described in section 1833(b) of the Act.
B. Background on the Methodology for Adjusting Payment Amounts for Certain DMEPOS Using Information From DMEPOS CBPs
For DME furnished on or after
On
We received approximately 185 comments from suppliers, manufacturers, professional, state and national trade associations, physicians, physical therapists, beneficiaries and their caregivers, and one state government office. Commenters generally stated that costs do vary by geographic region and that costs in rural and non-contiguous areas of the
On
We received 89 public comments on the proposed rule, including comments from patient organizations, patients, manufacturers, health care systems, and DME suppliers. We made changes to the proposed methodologies based on these comments and finalized a method for paying higher amounts for certain items furnished in areas defined as rural areas. In addition, we provided a 6-month fee schedule adjustment phase in period from January through June of 2016, during which the fee schedule amounts would be based on 50 percent of the unadjusted fees and 50 percent of the adjusted fees to allow time for suppliers to adjust to the new payment rates and to monitor the impact of the change in payment rates on access to items and services. On
In order to delineate geographic areas to which adjusted fee schedule amounts for certain DMEPOS items are applied, we set forth a methodology to identify geographic areas using zip codes into 3 categories of rural, non-rural, and non-contiguous. We promulgated
In accordance with
In order to update the adjusted fee schedule amounts based on new competitions and provide for a transitional phase-in period of the fee schedule adjustments, we established
We finalized the 6-month transition period from
C. Transition Period for Phase-In of Fee Schedule Adjustments
We have determined that the transitional period for the phase-in of adjustments to fee schedule amounts should be resumed in non-CBA rural and non-contiguous areas in order to ensure access to necessary items and services in these areas. This interim final rule with comment period amends
1. Statutory Mandate To Reconsider Fee Schedule Adjustments
After we established the fee schedule adjustment methodology under
* The average travel distance and cost associated with furnishing items and services in the area.
* The average volume of items and services furnished by suppliers in the area.
* The number of suppliers in the area.
On
The oral and written comments are organized into the following categories:
Inadequacy of Adjusted Fee Schedule Amounts: Commenters claim the adjusted fee schedule amounts do not cover the cost of furnishing the items and are not sustainable. Many commenters opposed the current adjusted payment amounts as insufficient to sustain the current cost of doing business. Some commenters stated that current reimbursement levels are below the cost of doing business. Many commenters stated they were billing non-assigned for items, or were considering billing non-assigned in the future.
Travel Distance: Commenters claim the average travel distance and cost for suppliers serving rural areas are greater than the average travel distance and cost for suppliers serving CBAs. Many commenters described farther travel distances in rural areas than in non-rural areas. For the purpose of implementing the fee schedule adjustment methodologies at
Volume of Services: Many commenters asserted that the average volume of services furnished by suppliers, when serving non-CBAs, are lower than the average volume of services furnished by suppliers, when serving CBAs. Many commenters stated that they do not get the same increase in volume that suppliers who obtain competitive bidding contracts get, which does not allow them to have economies of scale and obtain products at lower costs. Claims data for 2016 and 2017 indicates that the average volume of allowed services for suppliers serving CBAs is significantly higher than the average volume of allowed services for suppliers serving non-CBAs, particularly rural and non-contiguous areas.
Beneficiary Access: Many commenters stated that the adjusted fees have reduced the number of suppliers in the area, and that this has caused or will cause beneficiary access issues. Some commenters explained that they were the only supplier in the area. Claims data indicates that the number of supplier locations furnishing items and services subject to the fee schedule adjustments changed from 13,535 in 2015 to 12,617 in 2016.
Adverse Beneficiary Health Outcomes: Commenters stated that beneficiaries are going without items and this is causing adverse health outcomes. Commenters stated that hospital readmissions and lengths of stay, falls, and fractures are increasing as a result of the fee schedule reductions.
Delivery Expenses: A few commenters provided an estimate of how much their delivery expenses cost, their estimated service radius, and the average distance traveled. Several commenters stated that they have reduced the size of their service area due to the level of reimbursement that they are receiving.
Costs in Rural and Non-Contiguous Areas: Many commenters stated rural areas have unique costs, costs that are higher than non-rural areas. Similar to comments received on our CY 2015 ESRD PPS proposed rule (79 FR 40275 through 40315) and discussed in the CY 2015 ESRD PPS final rule (79 FR 66223 through 66265), some commenters stated that a 10 percent payment increase in rural areas is not enough to cover costs in rural areas. One commenter stated that non-contiguous areas, such as
Two commenters pointed to the Ambulance Fee Schedule and one commenter pointed to the
Using the Highest Winning Bids for the Adjusted Fee Schedule Methodology: Five commenters suggested that the adjusted fee schedule amounts be based on maximum winning bids in CBAs rather than the median of winning bids in CBAs. One commenter suggested that the maximum winning bids should be the starting point for the adjustments and that additional payment should be added on to these amounts to pay for the higher costs of furnishing items and services in non-CBAs.
One of the factors CMS must consider when making fee schedule adjustments for items and services furnished on or after
In addition, the adjusted fee schedule amounts for stationary oxygen equipment in non-contiguous, non-CBAs are lower than the SPA for stationary oxygen equipment in the
The establishment of the payment class for OGPE resulted in an increase in Medicare payments for these items and services. Therefore, each year, a budget neutrality offset is applied to the monthly payment amount for stationary oxygen equipment to ensure that the OGPE payment class does not result in oxygen and oxygen equipment expenditures that would be more or less than the expenditures that would have been made without the OGPE class. As more beneficiaries shift to using OGPE, the budget neutrality offset that is applied to the stationary oxygen equipment payment rate increases. The budget neutrality requirement does not apply under the DMEPOS CBP because under section 1847(a) of the Act, the payment amounts for oxygen and oxygen equipment are established based on bids submitted and accepted by winning suppliers under the program, and not based on the payment rules under section 1834(a) of the Act. The budget neutrality offset has resulted in payment amounts for stationary oxygen equipment in CBAs being higher than the adjusted fee schedule amounts in some cases. Restoring the blended fee schedule rates paid in rural and non-contiguous non-CBAs during the transition period would result in fee schedule amounts for oxygen and oxygen equipment in these areas being higher than the SPAs paid in all of the CBAs. Therefore, payment at the blended rates would avoid situations where payment for furnishing oxygen in a rural or non-contiguous, non-CBA is lower than payment for furnishing oxygen in a CBA.
2. Fee Schedule Adjustment Impact Monitoring Data
Regarding adverse health beneficiary outcomes, we have been monitoring claims data from non-CBAs, some of which pre-dates the implementation of the fully adjusted fee schedule amounts. To the extent that this data pre-dates the implementation of the fully adjusted fees, it is less likely to demonstrate any adverse impacts. The data does not show any observable trends indicating an increase in adverse health outcomes such as mortality, hospital and nursing home admission rates, monthly hospital and nursing home days, physician visit rates, or emergency room visits in 2016 or 2017 compared to 2015 in the non-CBAs, overall. In addition, we have been monitoring data on the rate of assignment in non-CBAs, which reflects when suppliers are accepting Medicare payment as payment in full and not balance billing beneficiaries for the cost of the DME. More importantly, the monitoring data does not indicate the extent to which suppliers that have not already exited the Medicare program are struggling to maintain current service levels or individual cases where access or health outcomes may have been affected. We are soliciting comments on ways to improve our fee schedule adjustment impact monitoring data.
3. Resuming Transitional Blended Fee Schedule Rates in Rural and Non-Contiguous Areas
The monitoring data described in section II.C.2 of this interim final rule with comment is retrospective claims data for payment of items already furnished. Stakeholders state that this data is of limited utility in assessing the development of adverse trends in access to items and services, or that the health of beneficiaries is being negatively affected by the fully adjusted fee schedule amounts. Claims data does not capture all of the challenges experienced by beneficiaries and suppliers, such as suppliers going out of business or timely delivery of items. Further, this claims data is also limited to a retrospective view to address potential future problems. In other words, it does not serve as a tool that can guard against the negative outcomes raised by stakeholders, as discussed elsewhere in the preamble. In fact, the Government Accountability Office (GAO) acknowledged challenges associated with the monitoring of DMEPOS and the CBP in its review of the first year of the DMEPOS CBP Round 1 Rebid, stating that the monitoring methods used by CMS in assessing the impact of competitive bidding did not directly show whether beneficiaries received the DME they needed on time. /1/ We do note, however, that the
FOOTNOTE 1 U.S. Government Accountability Office. Medicare: Review of the First Year of CMS's Durable Medical Equipment Competitive Bidding Program's Round 1 Rebid,
FOOTNOTE 2
Approximately 85 percent of the DME industry are considered small businesses according to the
FOOTNOTE 3 Medicare claims process through
FOOTNOTE 4 There were 12,537 supplier locations furnishing items subject to the fee reductions in 2016, based on claims processed through
There are additional factors that section 16008 of the Cures Act requires us to take into account in making adjustments to the fee schedule amounts for items and services furnished beginning in 2019. We know that the average volume of items and services furnished per supplier in non-CBAs is significantly less than the average volume of items and services furnished per supplier in CBAs. Additionally, the number of suppliers in general has been steadily decreasing over time and this trend is not abating. As the number of suppliers serving non-CBAs continues to decline, the volume of items and services furnished by the remaining suppliers is increasing. However, we do not know if the suppliers that remain will have the financial ability to continue expanding their businesses to continue to satisfy market demand. We also do not know if large suppliers serving both urban and rural areas will continue to serve the rural areas representing a much smaller percentage of their business than urban areas. We specifically address the stakeholder comments and concerns below.
Based on the stakeholder comments and decrease in the number of supplier locations, there is an immediate need to resume the transitional, blended fee schedule amounts in rural and non-contiguous areas. Resuming these transitional blended rates will preserve beneficiary access to needed DME items and services in a contracting supplier marketplace, while allowing CMS to address the adequacy of the fee schedule adjustment methodology, as required by section 16008 of the Cures Act. We recognize that reduced access to DME may put beneficiaries at risk of poor health outcomes or increase the length of hospital stays.
Suppliers have noted that they have struggled under the fully adjusted fee schedule and that they do not believe they can continue to furnish the items and services at the current rates. Stakeholders overwhelmingly have stated that the fully adjusted fee schedule amounts are not sufficient to cover supplier costs for furnishing items and services in rural and non-contiguous areas and the number of suppliers furnishing items in these areas continues to decline. Further, section 16008 of the Cures Act mandates that we consider stakeholder input and additional information in making fee schedule adjustments based on information from the DMEPOS CBP for items and services furnished beginning in 2019. The information we have collected, however, includes input from many stakeholders indicating that the fully adjusted fee schedule amounts are too low and that this is having an adverse impact on beneficiary access to items and services, particularly in rural and non-contiguous areas. Given the strong stakeholder concern about the continued viability of many DMEPOS suppliers, coupled with the Cures Act mandate to consider additional information material to setting fee schedule adjustments, it would be unwise to continue with the fully adjusted fee schedule rates in the vulnerable rural and non-contiguous areas for 7 months. Any adverse impacts on beneficiary health outcomes, or on small businesses exiting the market, could be irreversible. It is in the best interest of the beneficiaries living in these areas to maintain a blend of the historic unadjusted fee schedule amounts and fee schedule amounts adjusted using SPAs established under the DMEPOS CBP to prevent suppliers that might be on the verge of closing from closing, as they may be the only option for beneficiaries in these areas. While our systematic monitoring in these areas has not shown problematic trends to this point, that monitoring by its nature looks backward and reflects other limitations, as discussed in section II.C.2 of this interim final rule with comment. Given the rapid changes in health care delivery that may disproportionately impact rural and more isolated geographic areas, there is concern that the continued decline of the fees and the number of suppliers in such areas may impact beneficiary access to items and services. These adjustments would maintain a balance between the higher historic rates and rates adjusted based on bidding in larger metropolitan areas where suppliers furnish a much larger volume of DMEPOS items and services and support continued access to services. In order to safeguard beneficiaries' access to necessary items and services, we should immediately resume the transition period for the phase-in of fee schedule adjustments in these areas that was in place during CY 2016. Therefore, we are revising
D. Fee Schedule Amounts for Accessories Used With Group 3 Complex Rehabilitative Power Wheelchairs
In the CY 2010 final rule (75 FR 73390) published in the
Section 154(a)(1)(B) of the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008 (Pub. L. 110-275), amended section 1847(a)(2)(A) of the Act to exclude group 3 or higher complex rehabilitative power wheelchairs and related accessories when furnished in connection with such wheelchairs from competitive bidding. At the same time, section 154(a)(1)(A) of MIPPA amended section 1847(a)(1) of the Act to add paragraph (D) which terminated Round 1 and required rebidding Round 1 for the same items and services and the same areas with some changes. Since we included group 2 complex rehabilitative power wheelchairs and related accessories (including seating systems) and seat and back cushions, under Round 1 of the DMEPOS CBP, we were required to include those wheelchairs and accessories in the Round 1 Rebid of the DMEPOS CBP. The accessories (including seating systems) and cushions furnished in connection with group 2 complex rehabilitative power wheelchairs (HCPCS codes K0835 through K0843) are the same items furnished in connection with group 3 complex rehabilitative power wheelchairs (HCPCS codes K0848 through K0864).
Single payment amounts were implemented on
Section 1834(a)(1)(F)(ii) of the Act mandates the adjustment of fee schedule amounts for items that are furnished in non-CBAs based on information from the CBPs beginning on
Section 2 of the Patient Access and Medicare Protection Act of 2015 (Pub. L. 114-115) delayed the adjustments to the fee schedule amounts for accessories (including seating systems) and seat and back cushions when furnished in connection with group 3 complex rehabilitative power wheelchairs until
Complex rehabilitative power wheelchairs are used by patients needing functionality, such as head or sip and puff controls, power tilt or recline seating, or ventilators mounted to the wheelchair, which are not available on standard power wheelchairs. The ability and performance of the wheelchair in meeting the patients' specialized needs is critical, and most patients use wheelchair bases with group 3 level performance to meet these needs. Far fewer use group 2 wheelchair bases, which are the bases that the accessories were included with under Round 1 of the DMEPOS CBP.
Section 1847(a)(2)(A) of the Act provides the categories of items that are subject to the CBP and excludes certain complex rehabilitative power wheelchairs recognized by the Secretary as classified within group 3 or higher (and related accessories when furnished in connection with such wheelchairs). This statutory exclusion should inform our implementation of section 1834(a)(1)(F) of the Act such that the fee schedule amounts for wheelchair accessories and back and seat cushions used in conjunction with group 3 complex rehabilitative power wheelchairs should not be adjusted based on the methodologies set forth in
E. Technical Changes To Conform the Regulations to Section 5004(b) of the Cures Act: Exclusion of DME Infusion Drugs Under CBPs
Section 5004(b) of the Cures Act amends section 1847(a)(2)(A) of the Act to exclude drugs and biologicals described in section 1842(o)(1)(D) of the Act from the CBP. We are making conforming technical changes to the regulations text consistent with statutory requirements to exclude drugs and biologicals from the CBP. We are amending 42 CFR 414.402 to reflect that infusion drugs are not included in the CBP by revising the definition of "Item" in paragraph (2) to add the words "and infusion" after the words "other than inhalation". The sentence will read as follows: "Supplies necessary for the effective use of DME other than inhalation and infusion drugs." We are also removing a reference to drugs being included in the CBP by deleting the phrase "or subpart I" in
III. Provisions of the Interim Final Rule With Comment Period
A. Transition Period for Phase-In of Fee Schedule Adjustments
We are amending
As previously stated in section II.C.1 of this interim final rule with comment, stakeholders overwhelmingly have stated that the fully adjusted fee schedule amounts are not sufficient to cover supplier costs for furnishing items and services in rural and non-contiguous areas and are impacting beneficiary health outcomes. Section 16008 of the Cures Act requires CMS to consider certain factors in making fee schedule adjustments using information from the CBP for items and services furnished in non-CBAs on or after
Finally, because this IFC will result in a change to the 2018 fee schedule amounts for the various classes of oxygen and oxygen equipment, the annual budget neutrality adjustment for 2018, mandated by regulations at
B. Technical Changes To Conform the Regulations to Section 5004(b) of the Cures Act: Exclusion of DME Infusion Drugs Under CBPs
We are making conforming technical changes to the regulations text consistent with statutory requirements to exclude drugs and biologicals from the CBP. Specifically, we are amending
IV. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking in the
As discussed below, and for reasons cited throughout this interim final rule with comment period, we find good cause to waive notice-and-comment rulemaking and issue this interim final rule with comment period to address fee schedule adjustments based on information from the CBP in rural and non-contiguous areas because we believe it is contrary to the public interest to go through notice-and-comment rulemaking for this provision. We also find good cause to waive the 30-day delay in effective date of this interim final rule with comment period as a delay in effective date would also be contrary to the public interest. The full fee schedule adjustments took effect on
We also find it unnecessary to undertake notice-and-comment rulemaking to make technical changes to conform the regulations to the statutory requirement under section 5004(b) of the Cures Act that infusion drugs used with DME be excluded from the DMEPOS CBP. We also find good cause to waive the delay in the effective date for this interim final rule with comment period because it would be contrary to the public interest to further delay updating the regulations to be consistent with the statute and avoid possible confusion that infusion drugs are still subject to competitive bidding, particularly given that the statutory exclusion is self-implementing and already effective.
Although we did not formally publish a notice of proposed rulemaking in the
We received numerous comments from stakeholders, such as comments that expressed how the current adjusted fee schedule is not enough to cover a DME supplier's costs of running a business and that many suppliers are not able to sustain reductions in payment of up to 60 percent on average that resulted from the full fee schedule adjustments, resulting in a number of suppliers leaving the business and many more considering leaving the business in the near future. Such a result would negatively impact beneficiaries' access to critical items and services necessary for their care. Some stakeholders commented that some of the more remote, high cost areas are served by only one or a few suppliers. In 2016, there was a 7 percent decline in the number of supplier locations furnishing items and services subject to the fee schedule adjustments in non-CBAs. The magnitude of this decline in supplier locations from 13,535 to 12,617 indicates that the number of supplier locations serving these areas continues to decline at the same time that stakeholders are indicating their expectations of additional supplier exits. In situations where there may only be one supplier serving an area, if the supplier were to stop furnishing items (for example oxygen), the beneficiaries in this area could be harmed significantly if there are no suppliers left to deliver replacement of necessary oxygen. We are concerned that national chain suppliers of oxygen may close locations in more remote areas if the rate they are paid for furnishing items in a market where the volume of services is low does not justify the overhead expenses of retaining the locations. Due to the inherent limitation associated with using retrospective claims data, our systematic monitoring in these areas has not been able to reflect problematic trends identified by numerous stakeholders. As noted, the GAO has also acknowledged challenges associated with the monitoring of DMEPOS and the CBP, stating that the monitoring methods used by CMS in assessing the impact of competitive bidding did not directly show whether beneficiaries received the DME they needed on time or whether adverse health outcomes were caused by problems accessing DMEPOS. Given the rapid changes in health care delivery that may disproportionately impact rural and more isolated geographic areas, we are concerned that the continued decline of the fees and the number of suppliers in such areas may exacerbate the already emergent access concerns faced by beneficiaries. In general, we are concerned that beneficiaries in certain areas of the country could lose access to items and services if they rely on one or a few suppliers to furnish these items and services and these suppliers are no longer able to furnish the items and services at the fully adjusted fee schedule amounts.
Our monitoring data, by its very nature, would not alert us to the present and imminent threats to beneficiary access that stakeholders have raised in recent months. If CMS continues to pay the fully adjusted payment rates in rural and non-contiguous areas, it could further jeopardize the infrastructure of suppliers that beneficiaries rely on for access to necessary items and services in remote areas of the country. Smaller suppliers that serve remote areas may not be able to sustain larger reductions in payment because they have a limited number of ways to reduce costs. If they only have one location and a few employees to begin with, they cannot close locations or lay off employees to reduce costs. Larger suppliers that serve both remote, rural areas and urban areas may elect to close locations in the remote areas where volume of services are significantly lower because the overhead expense of maintaining the location may no longer justify retaining these locations. Therefore, we believe it is necessary to prevent future, potential access problems and adverse health outcomes for beneficiaries by resuming the fee schedule adjustment transition period in rural and non-contiguous areas. Immediately restoring the blended rates in rural and non-contiguous areas, which will cut the magnitude of the full adjustments in half, can prevent potential erosion of the supplier infrastructure that could potentially be on the verge of impacting access and health outcomes in rural and non-contiguous areas. By restoring the transition period in rural and non-contiguous areas effective
In light of these concerns, while we consider broader changes to the fee schedule adjustment methodology as required by section 16008 of the Cures Act, we believe there is good cause to issue this interim final rule with comment period to revise
We note that this rule is urgent to preserve beneficiary access to DME items and services in rural and non-contiguous areas during this transition period, that CMS is continuing to study the impact of the change in payment rates on access to items and services in these areas, and that we intend to undertake subsequent notice-and-comment rulemaking for CY 2019.
Section 5004(b) of the Cures Act further amends section 1847(a)(2)(A) of the Act to exclude drugs and biologicals described in section 1842(o)(1)(D) of the Act. We are finalizing conforming regulatory changes to reflect our interpretation of these statutory requirements to exclude infusion drugs, described in section 1842(o)(1)(D) of the Act, as a covered item that could be subject to the DMEPOS CBPs. Because this is just a minor technical change to conform the language in the regulations to the statute, we believe that a notice and comment period for this change is unnecessary.
Therefore, as noted above, we find good cause to waive the notice of proposed rulemaking to address fee schedule adjustments in rural and non-contiguous areas based on information from the CBP, and to make technical changes to the regulations so they conform to the statutory requirement under section 5004(b) of the Cures Act that infusion drugs used with DME be excluded from the DMEPOS CBP. We also find good cause to waive the delay in effective date and issue this interim final rule with comment period with an effective date of
V. Collection of Information Requirements
This document does not impose information collection requirements, that is, reporting, recordkeeping or third-party disclosure requirements. Consequently, there is no need for review by the
VI. Response to Comments
Because of the large number of public comments we normally receive on
VII. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
We have examined the impacts of this interim final rule with comment period as required by Executive Order 12866 on Regulatory Planning and Review (
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866 defines a "significant regulatory action" as an action that is likely to result in a rule: (1) Having an annual effect on the economy of
A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects (
2. Statement of Need
This interim final rule with comment period amends the regulation to revise the date that the initial fee schedule adjustment transition period ended and resumes the fee schedule adjustment transition period for certain DME items and services and enteral nutrition furnished in rural and non-contiguous areas not subject to the DMEPOS CBP from
3. Overall Impact
The interim final rule with comment period resumes the transitional adjusted Medicare fee schedule amounts for certain items and services that are furnished in rural and non-contiguous areas beginning
B. Detailed Economic Analysis
a. Effects on the Medicare Program and Beneficiaries
This interim final rule with comment period resumes transitional adjusted Medicare fee schedule amounts for certain items and services furnished in rural and non-contiguous areas beginning
Table 1--Cash Impact of Resuming the Adjusted Fee Schedule Transition FY Impact on the Impact on Federal States' benefit beneficiary share share payments in cost sharing in of of dollars dollars Medicaid Medicaid (to the nearer 10 (to the nearer 10 *3 *3 million) *1 million) *2 2018 170 40 5 5 2019 120 30 5 5 *1 Does not include premium offset. *2 Includes Medicaid payments. *3 Copayments made for dual eligible Medicare beneficiaries.
b. Impact on Beneficiaries and Other Payers
In order to preserve beneficiary access to DME items and services, this rule, as indicated above, will result in a
For dual eligible beneficiaries, Medicaid pays the cost sharing. The Medicaid payment is split between a Federal portion and the states' portion, which for this rule is
Beneficiaries who do not have supplemental insurance or who are not dual eligible will have increased cost sharing as a result of this interim final rule with comment period.
c. Alternatives Considered
One alternative considered to address concerns about access to items and services in non-CBAs would be to apply the 50/50 blended rates in all non-CBAs, since stakeholders commented regarding problems related to access to necessary items and services in all non-CBAs. This would cost
Table 2--Comparison of the Costs of Alternative Rules With the Interim Final Rule With Comment Period FY Interim 50/50 25/75 final Blend in Blend in rule all all non-CBAs non-CBAs 2018 170 330 170 2019 120 240 120
We did not elect either of these alternatives and chose to apply the 50/50 blended rates in rural and non-contiguous areas only to ensure access to items and services for Medicare beneficiaries in these areas.
Public comments are requested on these and any other related alternatives.
d. Regulatory Familiarization Costs
If regulations impose administrative costs on private entities, such as the time needed to read and interpret this interim final rule with comment period, we should estimate the cost associated with regulatory review. Due to the uncertainty involved with accurately quantifying the number of entities that will review the rule, we assume that the number of reviewers of this final rule is about the same number of commenters on similar, past rules. We acknowledge that this assumption may understate or overstate the costs of reviewing this interim final rule with comment period. Using the wage information from the
C. Accounting Statement
As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 3, we have prepared an accounting statement showing the classification of the transfers and costs associated with the various provisions of this interim final rule with comment period.
Table 3--Accounting Statement: Classification of Estimated Transfers and Costs/Savings, With Annualization Period 2018-2019 DME provisions Category Transfers Annualized Monetized Transfers$146 million (7%) or$145 million (3%). From Whom to Whom Federal government to Medicare providers. Increased Beneficiary Co-insurance$35 million (7%) or 35 million (3%). Payments From Whom to Whom Beneficiaries to Medicare providers.
In accordance with the provisions of Executive Order 12866, this rule was reviewed by the
VIII. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act (
In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. Our data indicates that only around 6.9 percent of small rural hospitals are organizationally linked to a DME supplier with paid claims in 2017. Thus, we do not believe this interim final rule with comment period will have a significant impact on operations of a substantial number of small rural hospitals.
IX. Unfunded Mandates Reform Act Analysis
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of
X. Federalism Analysis
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has Federalism implications. The Secretary has determined that this rule does not impose substantial direct requirement costs on state or local governments, preempt states, or otherwise have a Federalism implication.
XI. Reducing Regulation and Controlling Regulatory Costs
Executive Order 13771, titled Reducing Regulation and Controlling Regulatory Costs, was issued on
XII. Congressional Review Act
This rule is subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C.
List of Subjects in 42 CFR Part 414
Administrative practice and procedure, Health facilities, Health professions, Kidney diseases, Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the
PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES
1. The authority citation for part 414 continues to read as follows:
Authority: Secs. 1102, 1871, and 1881(b)(l) of the Social Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(l)).
2. Section 414.210 is amended by revising paragraph (g)(9) to read as follows.
* * * * *
(g) * * *
(9) Transition rules. The payment adjustments described above are phased in as follows:
(i) For applicable items and services furnished with dates of service from
(ii) For items and services furnished with dates of service from
(iii) For items and services furnished in rural areas and non-contiguous areas (
(iv) For items and services furnished in areas other than rural or non-contiguous areas with dates of service from
3. Section 414.402 is amended in paragraph (2) of the definition of "Item" by removing the words "inhalation drugs" and by adding in their place "inhalation and infusion drugs".
4. Section 414.412(b)(2) is amended by removing the phrase ", or subpart I of this part".
5. Section 414.414(f) is amended by removing the words "or drug" and the phrase "or the same drug under subpart I".
Dated:
Administrator,
Dated:
Alex M. Azar II,
Secretary,
[FR Doc. 2018-10084 Filed 5-9-18;
BILLING CODE 4120-01-P
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