Dive Brief:

• CMS' recent proposal to revamp how it calculates durable medical equipment Medicare fee schedule amounts for products without historical payment data is coming under fire from the homecare industry, which says it "strongly opposes" the proposal.
• The American Association for Homecare argued in a comment the agency's proposed methodology to determine payments is primarily focused on minimizing reimbursement at the expense of maintaining beneficiary access to services, DME, and investment into new technologies.
• The trade group instead wants CMS to establish a committee of stakeholders tasked with partaking in a negotiated rulemaking process with the HHS secretary to determine pricing for new DME.

Dive Insight:

Under CMS' proposed rule, the agency would revamp its gap-filling process by establishing a framework to compare new DME items to comparable items on the market to determine fees. CMS Administrator Seema Verma said in July the DME reforms, if implemented, will facilitate more competition in the DME market and result in more accurate Medicare payments, benefiting both patients and taxpayers.

The framework would use a comparable item analysis to inform gap-filling using five categories: physical components, mechanical components, electrical components, function and intended use, and additional attributes and features.

If no comparable item exists, CMS proposed examining internet retail prices or supplier invoices. But the agency acknowledged that gap-filling using supplier prices could end up costing the government because new device markets are not yet competitive, and it floated reexamining DME prices if commercial prices fall.  

AAHomecare called the current gap-fill system "out of date and fundamentally flawed," but argued CMS must replace the system instead of building upon it.

"The gap-fill methodology, in combination with under-defined coding, creates a competitive advantage for providing the cheapest products assigned to a code which could reduce beneficiaries' access to the goods and services that they need," AAHomecare CEO Tom Ryan wrote.

CMS' proposed framework to compare new technology to older items is not fleshed out enough and lacks adequate transparency, the trade group added.

"We are highly skeptical that any third party outside of a particular device's manufacturer could truly understand how a particular device would compare to seemingly similar technology, in terms of its production and related costs," AAHomecare said.

CMS' idea to use internet pricing as a data source to determine pricing for new items also came under fire. AAHomecare called the idea "akin to wholesale pricing," adding internet pricing doesn't cover expenses such as documentation requirements, audits and other compliance costs of participating as a DME Medicare supplier.