CMS Announces Temporary Fee Schedule Increase For Certain Medical Equipment Furnished In Rural Areas

Today the Centers for Medicare & Medicaid Services (CMS) published an interim final rule with comment period that will provide a temporary Medicare rate hike for certain durable medical equipment (DME) and enteral nutrition furnished in rural and non-contiguous areas of the country (Alaska, Hawaii, and U.S. territories) that are not included in competitive bidding.

By way of background, the Affordable Care Act mandated that CMS use pricing information from the DME, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program (CBP) to adjust fee schedule amounts for items furnished in areas where the CBP is not implemented. A highly-technical CMS rule implemented these adjustments, with a transition period during January 1, 2016 - June 30, 2016, during which CMS used 50/50 blended rates. The 21st Century Cures Act extended the transition period through December 31, 2016, mandated that CMS study the impact of the CBP on beneficiary access to DME, and established additional factors for CMS to consider in making fee schedule adjustments effective beginning January 1, 2019. Fully-adjusted fee schedule rates went into effect January 1, 2017, with rates that were on average 50% lower than the unadjusted rates for all of the items and services subject to the adjustments ("Adjusted Rates").

In the preamble to the new interim final rule, published May 11, 2018, CMS discusses information it has collected to date regarding the impact of the Adjusted Rates. CMS notes that stakeholders overwhelmingly believe that these Adjusted Rates are insufficient to cover supplier costs for furnishing items and services in rural and noncontiguous areas and are impacting beneficiary health outcomes. CMS concluded that if it continued to apply the Adjusted Rates in these areas, "adverse impacts on beneficiary health outcomes, or on small businesses exiting the market, could be irreversible." CMS therefore is resuming the...