Durable Medical Equipment (DME) Competitive Bidding and Oxygen

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HHS and CMS Letter
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DME Oxygen Comments to CMS
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DME Oxygen Joint Press Release
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The DME Competitive Bidding Program was mandated by Congress in 2003. The statute requires Medicare to replace the current fee schedule payment methodology for selected DME items, including oxygen and other respiratory equipment, with a competitive bid process designed to improve the methodology to set DME payment amounts, reduce beneficiary out-of-pocket expenses, and save the Medicare program money while ensuring beneficiary access to quality items and services. CMS recently applied competitive bid rates to rural and non-competitive bid areas based on certain statutory requirements which resulted in significant cuts to oxygen equipment and caused concern in protecting patients’ access to needed equipment. AARC joined the homecare industry in asking Congress to sign-on to a letter to the Secretary of HHS and CMS Administrator requesting they use their authority to make important, needed reforms to current DME policies and regulations and protect beneficiary access. One hundred and fifty-three members signed the letter.

Subsequent to that campaign, AAHomecare initiated a survey to determine the impact on beneficiary access. Members of AARC’s post-acute care section participated in the survey. Approximately 78% of Medicare beneficiaries said they have experienced difficulties with access to home medical equipment and services provided by supplier(s) since July 1, 2016, the date CMS fully implemented cuts to rural and non-bid areas. For oxygen patients only, 59% said they experienced difficulties with access to oxygen-related home medical equipment and services since July 1, 2016.

In response to stakeholder comments and Congressional interest, CMS acknowledged for the first time there are flaws in the program in its proposed 2019 update to competitive bidding. Two items are noteworthy. First, CMS proposes to increase beneficiary access and simplify the program by moving to a “lead item” bid process. Under this method, one item in a grouping of similar items would be the lead item for bidding purposes. Currently, suppliers submit bids for all items within a product category, such as respiratory equipment, which often contains items that serve different purposes, e.g., oxygen versus CPAP. CMS will not award new contracts expiring on Dec. 31, 2018, effectively putting the program on hold while it evaluates necessary reforms. In the interim, effective Jan. 1, 2019, beneficiaries may receive DME items from any enrolled DME supplier.

Second, CMS acknowledges the current pricing structure which provides higher payments and incentives for suppliers to furnish oxygen generating portable equipment (OGPE) has created a disincentive for suppliers to furnish portable liquid oxygen. Like OGPE, portable liquid oxygen is a lightweight system that promotes ambulation, but it is costlier to furnish and, according to CMS, its use has dropped significantly, accounting for only 2 percent of utilization of portable oxygen. To address the problem and increase payment for portable liquid oxygen, CMS proposes to add two new oxygen payment classes. However, due to a statutory requirement that any change would have to be budget neutral, CMS would have to reduce payment in another class to make up for the increase in liquid oxygen. In other words, CMS would have to “rob Peter to pay Paul” which could create a whole new set of access issues.

AARC, together with a number of patient and physician groups, submitted joint comments to CMS on Sept. 6, 2018 calling for the agency to use its authority to “carve out” portable liquid oxygen from the competitive bidding program. AARC and other advocates have also met with key Members of Congress, the Office and Management and Budget and CMS to garner support for the recommendation. AARC also participated in a joint press release which was featured in the AARC News Now on Sept. 13, 2018 announcing its support for patient access to supplemental oxygen.