The (Likely) Future of the Competitive Bidding Program. Grand Traverse Resort & Spa Acme, Michigan May 13, 2015

Transcription

1 The (Likely) Future of the Competitive Bidding Program Grand Traverse Resort & Spa Acme, Michigan May 13, 2015

2 Presented by Mark Higley, MBA Vice President Regulatory Affairs, VGM Group, Inc. Office: Cell:

3 Today s Goals: Define the new methodology for making national price adjustments based upon current DMEPOS rounds of competitive bidding with emphasis within state of Michigan nonmetropolitan areas; Define the phase-in of special payment rules in a limited number of (new) competitive bidding areas for CPAP and power wheelchair categories; and, Demonstrate how the DMEPOS supplier industry can affect an increase in the single payment amounts in future rounds.

4 First, however, let s get started with how many of us are still out there?... Supplier Type Code Supplier Type Code Description Count of Suppliers with Active Med ID (11/01/2010) Count of Suppliers with Active Med ID (11/01/2011) Count of Suppliers with Active Med ID (11/01/2012) Count of Suppliers with Active Med ID (11/01/2013) Count of Suppliers with Active Med ID (11/01/2014) 54 MED SUPPLY COMPANY 9,438 9,503 8,880 8,222 7,881 A6 MEDICAL SUPPLY COMPANY WITH RESPIRATORY THERAPIST 2,109 1,972 1,941 1,876 1, MEDICAL SUPPLY COMPANY WITH ORTHOTIC-PROSTHETIC MEDICAL SUPPLY COMPANY WITH ORTHOTIC PERSONNEL MEDICAL SUPPLY COMPANY WITH PROSTHETIC PERSONNEL B3 MEDICAL SUPPLY COMPANY WITH PEDORTHIC PERSONNEL B1 OXYGEN & EQUIPMENT MEDICAL SUPPLY COMPANY WITH REGISTERED PHARMACIST TOTAL 13,163 13,088 12,454 11,679 11,326

5 Those are locations (NPIs) (and NOT Companies!) So how do we find where they are and who they are?

6 Start Here!

7 Click here!

8 This is what you ll see!

9 This file is updated weekly! Hence you can access it real-time on the Internet or You can download and save as an alternative. It is BIG! 60MB I have the Michigan state file available for download upon request!

10 But it s simply Excel; you can widen columns as you desire and freeze the top frames

11 This spreadsheet may be copied/edited and is easily manipulated via the Data/Sort function. For example, you may wish to copy a certain state or region and obtain a listing of all suppliers in the area by city to determine competitor locations, alternate referral needs (e.g. you are out of stock or are considering subcontracting for bidding purposes), prospecting (e.g. for your Michigan state association), advocacy issues, and many other potential reasons. You can also sort these locations as to which suppliers offer certain products for example CPAP. There are 80 product categories in which the NSC recognizes and updates via the 855S format.

12 Any location with a current NCB contract is identified in the first column (by product category). There are 13 competitive bid product categories. This is because Round 1 Recompete had several revisions (new categories or combinations of categories) from Round 2.

13 Many full line suppliers offer dozens of products. Some niche suppliers (think opticians who offer cataract sunglasses) may only be in one or two categories. You will be able to sort these out by a tool I will demonstrate shortly. But let s start first with the NCB data The first 20 columns of this database (A to W) identify the supplier by location/contact detail and to whether the supplier has any competitive bid contracts. It also includes a column (X) as to whether the entity is a participating Medicare supplier. See next slides...

14 EXCEL ROW A Competitive Bid Service Area B Company Name C DBA Name D Address E Address 2 F City G State H Zip I Zip Plus 4 J Phone K Oxygen Supplies and Equipment L Mail-Order Diabetic Supplies M Enteral Nutrients, Equipment and Supplies N O CPAP Devices, Respiratory Assist Devices, and Related Supplies and Accessories Hospital Beds and Related Accessories P Q R S T U V W X Negative Pressure Wound Therapy Pumps and Related Supplies and Accessories Walkers and Related Accessories Support Surfaces (Group 2 mattresses and overlays) Standard (Power & Manual) Wheelchairs, Scooters, and Related Accessories External Infusion Pumps and Supplies General Home Equipment and Related Supplies and Accessories Respiratory Equipment and Related Supplies and Accessories Standard Mobility Equipment and Related Accessories Is Supplier Participating?

15 Example: Suppliers in Grand Rapids, MI; associated CBAs and to which contracts (YES or NO) these suppliers have:

16 Beginning with Column K (this is Oxygen Supplies and Equipment) the data option is either NO or YES. If NO this supplier has no competitive bid contract. If YES then the supplier (in this location) has a competitive bid contract for that product category. Both Round 1 recompete and Round 2 product categories follow in columns K through W. Again Remember there were differences in categories between these two rounds and hence the 13 categories. At column X the competitive bid data set ends and, as noted, column X is a YES or NO as to whether the supplier is participating.

17 The next series of columns include all 80 product categories included within the 855S enrollment data. If the supplier location is accredited/credentialed to bill Medicare for the category, the indication is YES. If not NO.

18 Starting with Column Y and ending at Column DA the products are as follows:

19 Automatic External Defibrillators (AEDS) Commodes, Urinals, & Bedpans Continuous Passive Motion (CPM) Devices Dynamic Splints Blood Glucose Monitors & Supplies: Non-Mail Order Blood Glucose Monitors & Supplies: Mail Order Blood Glucose Monitors: Mail Order Gastric Suction Pumps Heat & Cold Applications Hospital Beds: Electric Hospital Beds: Total Electric & Pediatric Hospital Beds: Manual Hospital Beds: Manual & Pediatric Infrared Heating Pad Systems Infusion Pumps & Supplies: External Infusion Infusion Pumps: Implantable & Uninterrupted Infusion Pumps & Supplies: Insulin Infusion Infusion Pumps & Supplies: Implanted Infusion Negative Pressure Wound Therapy Pumps & Supplies Neuromuscular Electrical Stimulators (NMES) Osteogenesis Stimulators Pneumatic Compression Devices Speech Generating Devices Support Surfaces: Pressure Reducing Beds, Mattresses, Overlays, & Pads Support Surfaces (e.g. Air Fluidized bed) Traction Equipment Transcutaneous Electrical Nerve Stimulators (TENS) Units Ultraviolet Light Devices Home Dialysis Equipment & Supplies Hemodialysis Equipment & Supplies Canes & Crutches Patient Lifts Power Operated Vehicles (Scooters) Seat Lift Mechanisms Walkers Wheelchairs & Accessories: Standard Manual Wheelchairs & Accessories: Standard Manual (e.g. Pediatrics) Wheelchairs & Accessories: Standard Power Wheelchairs & Accessories: Standard Power (e.g. Pediatrics and custom cushions ) Wheelchairs & Accessories: Complex Rehabilitative Manual Wheelchair Seating/Cushions Wheelchair Seating/Cushions (e.g. skin protecting seat cushions) Orthoses: Custom Fabricated Orthoses: Prefabricated Orthoses: Off-the-Shelf Breast Prostheses & Accessories Cochlear Implants Facial Prostheses Neurostimulators Ocular Prostheses Ostomy Supplies Somatic Prostheses Tracheostomy Supplies Urological Supplies Voice Prosthetics Prosthetic Lenses: Conventional Eyeglasses Prosthetic Lenses: Conventional Contact Lenses Prosthetic Lenses: Prosthetic Cataract Lenses Enteral Nutrients, Equipment, & Supplies Enteral Nutrients & Supplies for Special Metabolic Needs and Pediatrics Parenteral Nutrients, Equipment & Supplies Limb Prostheses Eye Prostheses CPAP, RADs, & Related Supplies & Accessories CPAP and RADs Supplies (e.g. combination masks) High Frequency Chest Wall Oscillation (HFCWO) Devices Invasive Mechanical Ventilation Intermittent Positive Pressure Breathing (IPPB) Devices Intrapulmonary Percussive Ventilation Devices Mechanical In-Exsufflation Devices Nebulizer Equipment & Supplies Nebulizer Equipment: Ultrasonic and Controlled Dose Oxygen Equipment & Supplies Respiratory Suction Pumps Ventilators, Accessories & Supplies Surgical Dressings Diabetic Shoes & Inserts: Prefabricated Diabetic Shoes & Inserts: Custom Fabricated

20 Now, I recognize that much data may be difficult to comprehend (!!!) What you could do is select just a state or region, and copy it into another blank spreadsheet. Then, using the Filter function (a very simple maneuver) select by product category or competitive bid contract.

21 As an example, I copied all of the Michigan suppliers from the master spreadsheet. There are over 2700 NPI locations!! Again you can copy my file today, or, if you want the most current version, download it per the previous instructions.

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23 Now Let s Use the Filter Function!

24 Click Filter and Select a Column (Category)

25 Drop down menu

26 Choose Yes Only & Click OK

27 Of 2733 Michigan Locations, 510 offer Oxygen

28 Let s add CPAP to the Filter!

29 The new count is 491

30 Let s add one more: Hospital Beds

31 And now the count is only 208 locations In a relatively large state. If you add additional products, the number dwindles quickly.

32 The Round Two Recompete: My predictions

33 Factors: 1. Respiratory Equipment and Related Supplies and Accessories (includes oxygen, oxygen equipment, and supplies; continuous positive airway pressure (CPAP) devices and respiratory assist devices (RADs) and related supplies and accessories) 2. Standard Mobility Equipment and Related Accessories (includes walkers, standard power and manual wheelchairs, scooters, and related accessories) 3. General Home Equipment and Related Supplies and Accessories (includes hospital beds and related accessories, group 1 and 2 support surfaces, commode chairs, patient lifts, and seat lifts)

34 For many Round 2 recompete bidding companies, these product categories combine products not typically furnished by the supplier in the today s marketplace. For example, HMEs furnishing oxygen and oxygen equipment do not necessarily furnish CPAP devices and RADs.

35 The combining of product categories (e.g., oxygen and CPAP) might result in a reduction in the amount of out-of-area bidders, who, in previous rounds, bid CPAP in virtually all areas of the country. Delivery of CPAP supplies have seen, arguably, an increase in drop-shipments. Now that the bidding supplier must also offer oxygen and oxygen equipment in the same CBAs (requiring comparably more in-home service), I anticipate a decrease in the number of out-of-area contracts offered (with a resulting increase in reimbursement/single payment amounts). There are also about 17% less traditional HME supplier locations in the marketplace. You saw the previous summary via my FOIA report:

36 CMS-1614-F The Affordable Care Act amended the Medicare Modernization Act statute to mandate use of information from the DMEPOS competitive bidding program to adjust the fee schedule amounts for DME in areas where competitive bidding programs are not implemented by no later than January 1, CMS estimates that by applying bid rates throughout the entire United States it would save over $7 billion over FY 2016 through This obviously affects the many non-metro regions of the Michigan service area!

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38 DME Provisions Proposed (changes to) the methodology for making national price adjustments based upon information gathered from (all previous) competitive bidding program (CBPs). And A proposed phase in of special payment rules (bundling) in to-be-determined 12 metro areas.

39 National Pricing How? Adjust fee schedule amounts for states in different regions of the country based on previous competitive bidding round pricing in these regions. The regional prices would be limited by a national ceiling (110% of the average of regional prices) and floor (90% of the average of regional prices) There were three possible Regions (see next) Most attendees here today service the Great Lakes BEA region.

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41 CMS determines a regional price for each state equal to the average of the single payment amount for an item or service from the CBAs that are fully or partially located in the same region where the state is located. CMS determines a national average price equal to the average of the regional prices. The regional price cannot be greater than 110 percent of the national average nor less than 90 percent of the national average price.

42 Adjust fee schedules annually using CPI-U Revise the SPA each time there is a new round of bidding. Use national ceiling for rural states and outside contiguous US.

43 Although we believe that the costs of furnishing items and services in rural areas are different than the costs of furnishing items and services in urban areas, there is no evidence to support a statement that the difference in costs is significant. However, in order to proceed cautiously on this matter in the interest of ensuring access to covered DMEPOS items and services, we are proposing to phase in the price adjustments, as explained below, so that we can monitor the impact of the adjustments as they are gradually phased in.

44 While not released We have the current SPAs in all markets from the current programs. As CMS has provided us the methodology to determine the regional payment amounts (RSPAs), and has confirmed that the BEA regional array will be utilized, we can hence determine the RSPAs for the Great Lakes (which includes Michigan) region now.

45 Summary of Provisions: The new adjusted pricing for DMEPOS CBP items will begin on January 1, This will be a phase-in process over 6 months, allowables will be reduced by 50% on 1/1/16 and 100% on 7/1/16. CMS finalized a pricing methodology for noncompetitive bidding areas. A rural area will be defined as a postal zip code that has more than 50 percent of its geographic area outside of a metropolitan area (MSA) or a zip code that has a low population density area that was excluded from a competitive bidding area. The payment amount will be 110 percent of the average of the SPAs of all the areas where CBPs are implemented.

46 Let s use an example. A fictional HME provider in Michigan has asked me what the reimbursement would be in Genesee county for a month of oxygen on January and after July 1, 2016

47 This county is in a metropolitan area but not included in the CBA (bid area). Michigan is in the Great Lakes region. Using the averages of the oxygen single payment amounts in the of all CBAs in this region, the reimbursement would be $ on January 1, 2016, and then $90.71 on July 1, 2016.

48 But how about service areas not adjacent to a metropolitan area in Michigan?

49 These rural areas that have not been subject to competitive bidding, and hence the adjusted fee schedule amounts will be based on 110 percent of the national average RSPA. As noted earlier, CMS has adopted an expanded definition of rural areas eligible for this provision. The array of ZIP codes defined as rural will be released sometime in Thus, the RSPA in rural Michigan for E1390 is $

50 Lastly, how about a state that has NO CBAs?? CMS dubs these states as rural or frontier In this case the SPA would again be 110% of the national average.

51 Can we see (now) the actual RSPAs? Yes! AAH Regulatory Council has created a document which includes the high utilization codes. Go to: HomecareFinalRulePricing.pdf

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53 Summary

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56 Our questions for CMS When will CMS publish the RSPAs, rural rates and interim (Jan- Jun 2016) rates? When will CMS publish zip codes that are rural? How will rural rates be identified on the state fee schedules? Will a modifier be used? How will providers identify rural areas on claims (Will there be a rural rate modifier? Will the DMEMAC systems automatically determine reimbursement based on the patient s zip code)? How will complex rehab technology accessories be reimbursed which have not been included in a CBP but are assigned to a HCPCS code which has been included in a CBP and are for use with Group 3 or above power wheelchairs? Currently those are distinguished by the use of modifiers and paid at the traditional payment amounts. Will that remain after Jan 1, 2016?

57 This issue is especially troubling (Source:) Frequently Asked Questions on Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) 2015 Medicare Payment Final Rules (CMS-1614-F) Adjusting DMEPOS Payment Amounts Using Competitive Bidding Information 42 CFR (g) 2Q. When CMS uses competitive bidding information to adjust the DMEPOS fee schedule amounts in accordance with the methodologies established under this rule, would the bid limits for competitions under the competitive bidding program(s) that begin after the adjusted fee schedule amounts are implemented be based on the adjusted fee schedule amounts?

58 2A.Yes. This issue is discussed in the November 6, 2014, Federal Register at 79 FR The payment amounts that would be adjusted in accordance with sections 1834(a)(1)(F)(ii) and (iii) of the Act for DME, section 1834(h)(2)(H)(ii) of the Act for orthotics, and section 1842(s)(2)(B) of the Act for enteral nutrients, supplies, and equipment shall be used to limit bids submitted under future competitions and DMEPOS competitive bidding programs (CBPs) in accordance with regulations at (f).

59 Section 1847(b)(2)(A)(iii) of the Act prohibits the awarding of contracts under a CBP unless total payments made to contract suppliers in the competitive bidding area (CBA) are expected to be less than the payment amounts that would otherwise be made. In order to assure savings under a CBP, the fee schedule amount that would otherwise be paid is used to limit the amount a supplier may submit as their bid for furnishing the item in the CBA. The payment amounts that would be adjusted in accordance with sections 1834(a)(1)(F)(ii) and (iii) of the Act for DME, section 1834(h)(2)(H)(ii) of the Act for orthotics, and section 1842(s)(2)(B) of the Act for enteral nutrients, supplies, and equipment would be the payment amounts that would otherwise be made if payments for the items and services were not made through implementation of a CBP. Therefore, the adjusted fee schedule amounts would become the new bid limits.

60 Next: Bundling Also within CMS-1614-F, CMS is adopting with revisions its proposal to test a limited phase-in of bundled payments for certain types of DME subject to competitive bidding, under the auspices of the CMS Center for Medicare and Medicaid Innovation's demonstration authority.

61 This is a limited phase in (12 areas) of bundled monthly payment amounts for the equipment, supplies, accessories, maintenance and repairs for (then proposed) enteral nutrition, oxygen, standard wheelchairs, hospital beds, CPAP/RAD in place of capped rental policies. CMS will move forward with a bundling for power wheelchairs and CPAP in up to 12 markets. CMS did not move forward with bundling for: oxygen, standard manual wheelchairs, enteral nutrition, RADs, and hospital beds.

62 CMS will initially test this payment model in no more than 12 CBAs in conjunction with competitions that begin on or after January 1, 2015; any expansion of the program would follow program evaluation and future notice and comment rulemaking. Under this policy, the SPA for the monthly rental of DME will be based on bids for the monthly rental of DME and all item and service associated with the rental equipment, including all related supplies, accessories, maintenance, and servicing.

63 The SPA is based on bids submitted and accepted on a monthly basis for each month of medical need during the contract period. Separate payment for replacement of equipment, repair or maintenance and servicing of equipment, or for replacement of accessories and supplies necessary for the effective use of the equipment would not be allowed.

64 CMS is also adopting various special transition policies, grandfathered supplier provisions, rules regarding repair and maintenance of beneficiaryowned power wheelchairs, and rules to ensure that bids submitted for items paid on a continuous rental basis are less than would otherwise be paid. CMS will provide advance notice to suppliers and beneficiaries about any special payment rules to be included in a CBP.

65 Commentary and analysis courtesy of Andrea Stark and MiraVista! Contact Andrea at

66 CMS Rationale

67 How the bundled payment demo will work:

68 How the bids will be set for the demo:

69 The next steps: Based on the final rule, CMS seeks to phase in the initial round of the bundled payment demo as early as 2017.

70 CPAP/RAD inclusion:

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72 The Comparator CBAs :

73 (From Final Rule) To evaluate the quality of care for beneficiaries affected by the special payment rules, we proposed that, at a minimum, we would utilize health status outcomes based criteria that would measure specific indicators such as mortality, morbidity, hospitalizations, emergency room, and other applicable indicators unique to each product category. To evaluate beneficiary access to necessary items and services we proposed that, at a minimum, we would monitor utilization trends for each product category and track beneficiary complaints related to access issues. To evaluate the cost of the program, we proposed that, at a minimum, we would analyze the claims data for allowed services and allowed cost for each product category and the associated accessories, supplies and repair cost in the 12 CBAs and the comparator CBAs. We proposed to analyze the effect of the proposed payment rules on beneficiary cost sharing.

74 Historical Use of Bundled Methodologies:

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78 Hypothetical CPAP Reimbursement in NON-bid area: TOTAL: $6,238.67

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80 1993 CPAP Bundle: CPAP Bundle $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ ` $ $ $ $ $ $ $ References: For CY 2014, the update factor of 1.0 percent is applied to the applicable CY 2013 DMEPOS fee schedule amounts. In accordance with the statutory Sections 1834(a)(14) and 1886(b)(3)(B)(xi)(II) of the Act, the DMEPOS fee schedule amounts are to be updated for 2014 by the percentage increase in the consumer price index for all urban consumers (United States city average) or CPI-U for the 12- month period ending with June of 2013, adjusted by the change in the economy-wide productivity equal to the 10-year moving average of changes in annual economy-wide private non-farm business Multi-Factor Productivity (MFP). The MFP adjustment is 0.8 percent and the CPI-U percentage increase is 1.8 percent. Thus, the 1.8 percentage increase in the CPI-U is reduced by the 0.8 percentage increase in the MFP resulting in a net increase of 1.0 percent for the update factor. CY : Same as referenced above : In accordance with Section 30(c) of the MMA, the fee schedule update factors for 2004 through 2008 for DME, other than items designated as class III devices by the Food and Drug Administration (FDA), are equal to zero (0) percent. 2009: MIPPA -9.5% Reduction : Gap Filling document:

81 Questions for CMS: When will bundling occur? The Preamble states in conjunction with Round 2 recompete and not before 2017? What will be the length of the bundling contracts? Need more information on timing and process of how CMS will or has developed bundles. Specifically the items to be included and the calculation used to determine the ceiling payment amount for the bundle to be bid. Will there be opportunity for input on PMD and CPAP bundles? How much advance notice, given radical new rules? Does the CPAP bundling require adherence to current PAP supply utilization guidelines?

82 CMS must adjust the bid ceiling to account for increased repair responsibility post ownership transfer, how will CMS do that? For the up to 12 new CBAs, is the intention to do CPAP and PMD together or will they be separate; for example 4 CPAP and 8 PMD? Will CMS develop new HCPCS codes for the bundle of services, creating one for CPAP and one for PMD? How will secondary payers/medicaid be able to pay co-pays given new codes and a bundle that has no cap? Current managed care contracts have established limits that do not consider a never ending co pay. If new codes are not established for a bundled rate how will claims be processed if Medicare is the secondary payer?

83 The final rule indicated medical documentation issues would be addressed outside of the rule. How and when will they be addressed? Current Medicare requirements restrict a beneficiary s ability to change suppliers regardless of how the payment is structured. One of the cited goals in the final rule is to allow beneficiaries to easily change supplies and this is not the case as the documentation requirements stand today. In the new CBAs for the bundles, what happens when the contract period ends or the patient moves out of the CBA? Does the supplier pick-up equipment? Does the patient then receive the title? How frequently (monthly, quarterly) will the following be measured and publically reported?

84 Contact Information Mark Higley, Vice President - Regulatory Affairs mark.higley@vgm.com O: C: