Congress Returns as MedPAC Discusses Expansion of DMEPOS Competitive Bidding

The U.S. House and Senate return to Washington this month to debate and pass a large number of appropriations bills that will fund the federal government for Fiscal Year 2020, which begins on October 1st.  In all likelihood, now that a budget agreement was reached in July, the bills will begin to move through Congress and be signed by the President, but it is likely a short-term continuing resolution will be necessary to allow them to finish this massive job.

In the meantime, CMS is accepting comments until September 27th on a proposed rule on Durable Medical Equipment, Prosthetics, Orthotics, and Supplies that changes how CMS sets reimbursement levels for new technologies and dramatically expands prior authorization of prosthetics and orthotics.  The full text of the rule, which also includes updates to CMS’ payment system for end-stage renal disease, can be found here, and a CMS fact sheet summarizing the major provisions in the rule can be found here.

Finally, on September 5th, 2019, the Medicare Payment Advisory Commission (MedPAC), an independent legislative branch agency that provides Congress with analysis and policy advice on the Medicare program, held a meeting that included a session titled Examining Competitive Bidding for Diabetes Testing Supplies and Expanding Medicare’s DMEPOS Competitive Bidding Program. A slide deck used to make the presentation can be found here.

The presentation provided an overview of the competitive bidding program (CBP) implemented under the Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) payment system, with a particular focus on the impact that CBP has had on spending and utilization for diabetes testing supplies. The presentation set the stage for a discussion of ways to expand the DMEPOS CBP throughout the Medicare program. The Commissioners offered questions and feedback on the presentation and the future of Medicare competitive bidding.

 MedPAC staff provided an overview of the two payment systems for DMEPOS items, the competitive bidding program and the fee schedule. Staff contended that many DMEPOS fee schedule amounts are “excessive,” and that the implementation of competitive bidding has resulted in “substantially” lower payment rates: among the 25 highest-expenditure products in 2017.  In fact, median payment rates declined nearly 50%.  Though MedPAC admits that utilization decreased for most product categories included in CBP, the Commission contends that CBP did not disrupt patient access, citing CMS data that shows no negative changes in beneficiary outcomes.  To further support the competitive bidding program, staff cited data demonstrating increased spending on non-CBP products.

The presentation also discussed the April 2019 Department of Justice enforcement action alleging a nationwide fraud scheme for off-the-shelf (OTS) orthotics, and posited that excessive fee schedule rates for these items likely encouraged the alleged abuse. Staff concluded the presentation by suggesting that the Commissioners and policymakers consider expanding CMS’s authority to include additional products in the CBP, specifically pointing to a list of candidate products identified by MedPAC in 2017.  NAAOP will continue to closely monitor competitive bidding and report to our membership as developments occur.

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