[Federal Register Volume 85, Number 214 (Wednesday, November 4, 2020)]
[Proposed Rules]
[Pages 70358-70414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24194]
[[Page 70357]]
Vol. 85
Wednesday,
No. 214
November 4, 2020
Part IV
Department of Health and Human Services
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Centers for Medicare and Medicaid Services
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42 CFR Part 414
Medicare Program; Durable Medical Equipment, Prosthetics, Orthotics,
and Supplies (DMEPOS) Policy Issues and Level II of the Healthcare
Common Procedure Coding System (HCPCS); Proposed Rule
Federal Register / Vol. 85 , No. 214 / Wednesday, November 4, 2020 /
Proposed Rules
[[Page 70358]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 414
[CMS-1738-P]
RIN 0938-AU17
Medicare Program; Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) Policy Issues and Level II of the
Healthcare Common Procedure Coding System (HCPCS)
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would establish methodologies for adjusting
the Medicare durable medical equipment, prosthetics, orthotics, and
supplies (DMEPOS) fee schedule amounts using information from the
Medicare DMEPOS competitive bidding program for items furnished on or
after April 1, 2021, or the date immediately following the duration of
the emergency period described in section 1135(g)(1)(B) of the Social
Security Act, whichever is later; application evaluation processes and
other procedures related to Healthcare Common Procedure Coding System
(HCPCS) Level II code applications; and procedures for making benefit
category and payment determinations for new items and services that are
durable medical equipment (DME), prosthetic devices, orthotics and
prosthetics, therapeutic shoes and inserts, surgical dressings, or
splints, casts, and other devices used for reductions of fractures and
dislocations under Medicare Part B. In addition, this rule proposes to
classify continuous glucose monitors (CGMs) as DME under Medicare Part
B and establish fee schedule amounts for these items and related
supplies and accessories. Also, this proposed rule would expand the
scope of the Medicare Part B benefit for DME by revising the
interpretation of the ``appropriate for use in the home'' requirement
in the definition of DME specifically for certain drugs or biologicals
infused in the home using an external infusion pump. This proposed rule
would also make conforming changes to the regulations related to
implementation of section 106 of the Further Consolidated
Appropriations Act, 2020.
DATES: To be assured consideration, comments must be received at one of
the addresses specified in the ADDRESSES section, no later than 5 p.m.
on January 4, 2021.
ADDRESSES: In commenting, please refer to file code CMS-1738-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may send written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1738-P, P.O. Box 8013,
Baltimore, MD 21244-8010.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1738-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
[email protected] or Alexander Ullman, 410-786-9671, for issues
related to the DMEPOS payment policy.
[email protected] or Kim Campbell, 410-786-2289, for issues related
to HCPCS.
[email protected] for issues related to home infusion
therapy services payment policy.
SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following website as soon as possible after they have been
received: http://www.regulations.gov. Follow the search instructions on
that website to view public comments.
I. Executive Summary
A. Purpose
This proposed rule contains proposals related to the Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Fee
Schedule Amounts to ensure access to items and services in rural areas,
procedures for making benefit category and payment determinations for
new items and services that are DME, prosthetic devices, orthotics and
prosthetics, therapeutic shoes and inserts, surgical dressings, or
splints, casts, and other devices used for reductions of fractures and
dislocations to prevent delays in coverage of new items and services,
classification and payment for CGMs under the Part B benefit for DME to
establish the benefit category and payment rules for these items, and
the HCPCS Level II code application process to increase transparency
and gather public input on proposed code application procedures. This
proposed rule would expand the scope of the Medicare Part B benefit for
DME by revising the interpretation of the ``appropriate use in the
home'' requirement in the definition of DME at 42 CFR 414.202. External
infusion pumps used to administer certain drugs or biologicals in the
home would meet the definition of DME in cases where assistance in the
patient's home from a skilled home infusion therapy supplier is
necessary during the infusion and these home infusion therapy services
are separately covered and paid for by Medicare under the home infusion
therapy services benefit. This proposed rule would also make conforming
changes to the regulations related to implementation of section 106 of
the Further Consolidated Appropriations Act, 2020.
1. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Fee Schedule Adjustments
The purpose of this proposal is to establish the methodologies for
adjusting the fee schedule payment amounts for DMEPOS items and
services furnished in non-competitive bidding areas (non-CBAs) on or
after April 1, 2021 or the date immediately following the duration of
the emergency period described in section 1135(g)(1)(B) of the Social
Security Act (the Act) (42 U.S.C. 1320b-5(g)(1)(B)), whichever is
later. The emergency period we are referring to is the Public Health
Emergency (PHE) for coronavirus disease 2019 (COVID-19). We refer
readers to section II.A.6. of this rule for details regarding the
DMEPOS fee schedule changes CMS has already made as a result of the PHE
for COVID-19. CMS previously established transition rules for phasing
in the fee schedule adjustments under 42 CFR 414.210(g)(9), and these
rules address the phase in of the fee schedule adjustments for items
furnished through
[[Page 70359]]
December 31, 2020. The purpose of this proposal is to establish revised
DMEPOS fee schedule adjustment methodologies for items and services
furnished in non-CBAs on or after April 1, 2021 or the date immediately
following the duration of the PHE for COVID-19, whichever is later.
2. DMEPOS Fee Schedule Adjustments for Items and Services Furnished in
Rural Areas From June 2018 Through December 2018 and Exclusion of
Infusion Drugs From the DMEPOS CBP
The purpose of this section is to address our intent to finalize
and address comments received on the May 11, 2018 interim final rule
(83 FR 21912) entitled ``Medicare Program; Durable Medical Equipment
Fee Schedule Adjustments To Resume the Transitional 50/50 Blended Rates
To provide Relief in Rural Areas and Non-Contiguous Areas'' including
comments related to the conforming amendment excluding infusion drugs
from the DMEPOS CBP.
3. Healthcare Common Procedure Coding System (HCPCS) Level II Code
Application Process
CMS establishes and maintains certain codes under the HCPCS Level
II and is responsible for making decisions about additions, revisions,
and discontinuations to those codes. This proposed rule proposes
application procedures and evaluation processes for external HCPCS
Level II code applications related to drug or biological products, and
non-drug, non-biological items and services, as defined in this
proposed rule.
4. Benefit Category and Payment Determinations for DME, Prosthetic
Devices, Orthotics and Prosthetics, Therapeutic Shoes and Inserts,
Surgical Dressings, or Splints, Casts, and Other Devices Used for
Reductions of Fractures and Dislocations
The purpose of this proposal is to establish procedures for making
benefit category and payment determinations for new items and services
that are DME, prosthetic devices, orthotics and prosthetics,
therapeutic shoes and inserts, surgical dressings, or splints, casts,
and other devices used for reductions of fractures and dislocations
that permit public consultation through public meetings. Section 531(b)
of the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA) (Pub. L. 106-554) requires the Secretary
to establish procedures for coding and payment determinations for new
DME under part B of title XVIII of the Act that permit public
consultation in a manner consistent with the procedures established for
implementing coding modifications for ICD-9-CM (which has since been
replaced with ICD-10-CM as of October 1, 2015). CMS decided to expand
these procedures to all new items and services in 2005. We are
proposing to codify in regulation procedures for making benefit
category determinations and payment determinations for new items and
services that are DME, prosthetic devices, orthotics and prosthetics,
therapeutic shoes and inserts, surgical dressings, or splints, casts,
and other devices used for reductions of fractures and dislocations.
Consistent with current CMS practice, the proposed procedures will
incorporate public consultation on these determinations.
Whether or not an item or service falls under a Medicare benefit
category, such as the Medicare Part B benefit category for DME, is a
necessary step in determining whether an item may be covered under the
Medicare program and, if applicable, what statutory and regulatory
payment rules apply to the items and services. If the item is excluded
from coverage by the Act or does not fall within the scope of a defined
benefit category, the item cannot be covered under Title XVIII. On the
other hand, if the item is not excluded from coverage by the Act and is
found to fall within a benefit category, we will need to determine what
payment rules would apply to the item if other statutory criteria for
coverage of the item are met, such as whether the item or service meets
the reasonable and necessary criteria under section 1862(a)(1)(A) of
the Act.
Therefore, we are proposing procedures for use in determining if
items and services fall under the Medicare Part B benefit categories
for DME, prosthetic devices, orthotics, and prosthetics, surgical
dressings, splints, casts and other devices for the reduction of
fractures or dislocations, or therapeutic shoes and inserts, in order
to promote transparency, continue our longstanding practice of
establishing coverage and payment for new items and services that are
DME, prosthetic devices, orthotics and prosthetics, therapeutic shoes
and inserts, surgical dressings, or splints, casts, and other devices
used for reductions of fractures and dislocations soon after they are
identified through the HCPCS code application process, and prevent
delays in access to new technologies that are DME, prosthetic devices,
orthotics and prosthetics, therapeutic shoes and inserts, surgical
dressings, or splints, casts, and other devices used for reductions of
fractures and dislocations.
5. Classification and Payment for Continuous Glucose Monitors Under
Medicare Part B
The purpose of this proposed rule is to address classification and
payment for CGMs under the Medicare Part B benefit for DME.
6. Expanded Classification of External Infusion Pumps as DME
The purpose of this proposed rule is to revise our interpretation
of the ``appropriate for use in the home'' requirement at 42 CFR
414.202 as it applies to certain external infusion pumps. We are
proposing that an external infusion pump would be considered
``appropriate for use in the home'' if: (1) The Food and Drug
Administration (FDA)-required labeling requires the associated home
infusion drug to be prepared immediately prior to administration or
administered by a health care professional or both; (2) a qualified
home infusion therapy supplier (as defined at Sec. 486.505)
administers the drug or biological in a safe and effective manner in
the patient's home (as defined at Sec. 486.505); and (3) the FDA-
required labeling specifies infusion via an external infusion pump as a
route of administration, at least once per month, for the drug. The
home infusion therapy benefit is only available when a drug or
biological is administered through an external infusion pump that is an
item of DME. In addition, drugs or biologicals administered through an
external infusion pump that is an item of DME can be covered under the
Medicare Part B benefit for DME as supplies necessary for the effective
use of the external infusion pump. Under our proposal, if an individual
or caregiver is unable to safely and effectively administer certain
infusion drugs, such drugs could be covered as supplies necessary for
the effective use of an external infusion pump under the DME benefit if
the criteria listed previously is satisfied (and, presumably, the
external infusion pump satisfies all other relevant statutory and
regulatory requirements for DME).
7. Exclusion of Complex Rehabilitative Manual Wheelchairs and Certain
Other Manual Wheelchairs From the CBP
Section 106 of the Further Consolidated Appropriations Act, 2020
excludes complex rehabilitative manual wheelchairs and certain other
manual wheelchairs and related accessories from the DMEPOS CBP as well
as from fee schedule adjustments based on
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information from the DMEPOS CBP. This provision became effective
January 1, 2020, and we are currently implementing this provision
through program instructions, as authorized by section 106 of the
Further Consolidated Appropriations Act, 2020. This rule proposes to
make conforming changes to the regulations to reflect section 106 of
the Further Consolidated Appropriations Act, 2020.
B. Summary of the Major Provisions
1. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Fee Schedule Adjustments
This rule proposes to revise Sec. 414.210(g)(2) and (9) to
establish the fee schedule adjustment methodologies for items and
services furnished on or after April 1, 2021, or the date immediately
following the duration of the emergency period described in section
1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)), whichever is
later, in non-CBAs.
2. DMEPOS Fee Schedule Adjustments for Items and Services Furnished in
Rural Areas From June 2018 Through December 2018 and Exclusion of
Infusion Drugs From the DMEPOS CBP
We indicate in this rule our plan to finalize the May 11, 2018
interim final rule (83 FR 21912) entitled ``Medicare Program; Durable
Medical Equipment Fee Schedule Adjustments To Resume the Transitional
50/50 Blended Rates To provide Relief in Rural Areas and Non-Contiguous
Areas'' that resumed the transitional 50/50 blended rates for items
furnished in rural areas and noncontiguous areas from June 1, 2018
through December 31, 2018, including the conforming amendment to
exclude infusion drugs from the DMEPOS CBP.
3. Healthcare Common Procedure Coding System (HCPCS) Level II Code
Application Process
This proposed rule proposes application procedures and evaluation
processes for external HCPCS Level II code applications:
Coding cycles for code applications: This rule
proposes specific coding cycles for drug or biological products, and
non-drug, non-biological items and services, as defined in this
proposed rule, including timeframes for application submission and
final decisions; and additional procedures and exceptions to these
proposed processes.
Processes for Evaluating Coding Applications:
This rule proposes processes that CMS would use to evaluate code
applications to determine whether to add, revise, or discontinue a code
for drug or biological products, and non-drug, non-biological items and
services, as defined in this proposed rule.
4. Benefit Category and Payment Determinations for DME, Prosthetic
Devices, Orthotics and Prosthetics, Therapeutic Shoes and Inserts,
Surgical Dressings, or Splints, Casts, and Other Devices Used for
Reductions of Fractures and Dislocations
This proposed rule would establish procedures for making benefit
category and payment determinations for items and services that are
DME, prosthetic devices, orthotics and prosthetics, therapeutic shoes
and inserts, surgical dressings, or splints, casts, and other devices
used for reductions of fractures and dislocations for which a HCPCS
Level II code has been requested. Specifically, the purpose of the
procedure would be to determine whether the product for which a HCPCS
code has been requested meets the Medicare definition of DME, a
prosthetic device, an orthotic or prosthetic, a surgical dressing,
splint, cast, or other device used for reducing fractures or
dislocations, or a therapeutic shoe or insert and is not otherwise
excluded under Title XVIII, to determine how payment for the item of
service would be made, and to obtain public consultation on these
determinations.
5. Classification and Payment for Continuous Glucose Monitors Under
Medicare Part B
This rule proposes to classify all CGMs as DME and addresses the
payment for different types of CGMs, as well as supplies and
accessories used with CGMs. Additional determinations regarding whether
a CGM is covered in accordance with section 1862(a)(1)(A) of the Act,
or is otherwise excluded under Title XVIII, will be made by DME MACs
using the local coverage determination process or during the Medicare
claim-by-claim review process.
6. Expanded Classification of External Infusion Pumps as DME
We propose to interpret the ``appropriate for use in the home''
requirement within the definition of DME at 42 CFR 414.202 to be met
for certain external infusion pump if: (1) The Food and Drug
Administration (FDA)-required labeling requires the associated home
infusion drug to be prepared immediately prior to administration or
administered by a health care professional or both; (2) a qualified
home infusion therapy supplier (as defined at Sec. 486.505)
administers the drug or biological in a safe and effective manner in
the patient's home (as defined at Sec. 486.505); and (3) the FDA-
required labeling specifies infusion via an external infusion pump as a
possible route of administration, at least once per month, for the
drug. The home infusion therapy benefit is only available when a drug
or biological is administered through an external infusion pump that is
an item of DME. In addition, drugs or biologicals administered through
an external infusion pump that is an item of DME can be covered under
the Medicare Part B benefit for DME as supplies necessary for the
effective use of the external infusion pump.
7. Exclusion of Complex Rehabilitative Manual Wheelchairs and Certain
Other Manual Wheelchairs From the DMEPOS CBP
This rule proposes to revise the definition of ``item'' under the
CBP at 42 CFR 414.402 to exclude complex rehabilitative manual
wheelchairs and certain other manual wheelchairs and related
accessories as required by section 106(a) of the Further Consolidated
Appropriations Act, 2020.
C. Summary of Cost and Benefits
1. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Fee Schedule Adjustments
We estimate that the payment methodologies described in section
I.B.1. of this proposed rule would have no fiscal impact because the
Office of the Actuary has determined that this provision neither
increases nor decreases spending from what is assumed in the FY 2021
President's Budget.
2. DMEPOS Fee Schedule Adjustments for Items and Services Furnished in
Rural Areas From June 2018 Through December 2018 and Exclusion of
Infusion Drugs From the DMEPOS CBP
As we are signaling an intent to finalize an IFC that was already
promulgated in 2018, there would be no fiscal impacts associated with
this policy. The fiscal impacts of this IFC are considered to have
already occurred.
3. Healthcare Common Procedure Coding System (HCPCS) Level II Code
Application Process
This rule proposes to continue certain existing code application
policies and processes and proposes certain new coding policies and
procedures. All proposed policies and procedures are assumed to have no
fiscal impact when
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considered against the FY 2021 President's Budget baseline.
4. Benefit Category and Payment Determinations for DME, Prosthetic
Devices, Orthotics and Prosthetics, Therapeutic Shoes and Inserts,
Surgical Dressings, or Splints, Casts, and Other Devices Used for
Reductions of Fractures and Dislocations
This rule proposes to establish a process for making benefit
category and payment determinations for items and services that are
DME, prosthetic devices, orthotics and prosthetics, therapeutic shoes
and inserts, surgical dressings, or splints, casts, and other devices
used for reductions of fractures and dislocations and is assumed to
have an indeterminable fiscal impact due to the unique considerations
given to establishing payment for specific items.
5. Classification and Payment for Continuous Glucose Monitors Under
Medicare Part B
This rule proposes to classify all CGMs as DME and addresses the
payment for different types of CGMs. This classification is assumed to
have no fiscal impact when considered against the FY 2021 President's
Budget baseline.
6. Expanded Classification of External Infusion Pumps as DME
This rule proposes that an external infusion pump would be
considered ``appropriate for use in the home'' in accordance with the
definition of DME at 42 CFR 414.202 if: (1) The Food and Drug
Administration (FDA)-required labeling requires the associated home
infusion drug to be prepared immediately prior to administration or
administered by a health care professional or both; (2) a qualified
home infusion therapy supplier (as defined at Sec. 486.505)
administers the drug or biological in a safe and effective manner in
the patient's home (as defined at Sec. 486.505); and (3) the FDA-
required labeling specifies infusion via an external infusion pump as a
possible route of administration, at least once per month, for the
drug. The home infusion therapy benefit is only available when a drug
or biological is administered through an external infusion pump that is
an item of DME. In addition, drugs or biologicals administered through
an external infusion pump that is an item of DME can be covered under
the Medicare Part B benefit for DME as supplies necessary for the
effective use of the external infusion pump. This expanded
classification is assumed to be a small savings to Medicare in CY 2021
when considered against the FY 2021 President's Budget baseline.
7. Exclusion of Complex Rehabilitative Manual Wheelchairs and Certain
Other Manual Wheelchairs From the DMEPOS CBP
This rule proposes to revise the definition of ``item'' at 42 CFR
414.402 to exclude complex rehabilitative manual wheelchairs and
certain other manual wheelchairs and related accessories as required by
section 106(a) of the Further Consolidated Appropriations Act, 2020 and
is assumed to have no fiscal impact. These conforming changes to the
regulations have no impact since the exclusion of these items from the
CBP is mandated by the statute.
II. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Fee Schedule Adjustments
A. Background
1. DMEPOS Competitive Bidding Program
Section 1847(a) of the Act, as amended by section 302(b)(1) of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(Pub. L. 108-173), mandates the Medicare Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding
Program (CBP) for contract award purposes in order to furnish certain
competitively priced DMEPOS items and services subject to the CBP:
Off-the-shelf (OTS) orthotics, for which payment would
otherwise be made under section 1834(h) of the Act;
Enteral nutrients, equipment, and supplies described in
section 1842(s)(2)(D) of the Act; and
Certain DME and medical supplies, which are covered items
(as defined in section 1834(a)(13) of the Act) for which payment would
otherwise be made under section 1834(a) of the Act.
Section 1847(a) of the Act requires the Secretary of the Department
of Health and Human Services (the Secretary) to establish and implement
CBPs in competitive bidding areas (CBAs) throughout the U.S. Section
1847(a)(1)(B)(i) of the Act mandates that the programs be phased into
100 of the largest metropolitan statistical areas (MSA) by 2011 and
additional areas after 2011. Thus far, CBAs have been either an MSA or
a part of an MSA. Under the Office of Management and Budget (OMB)
standards for delineating MSAs, MSAs have at least one urbanized area
that has a population of at least 50,000. The MSA comprises the central
county or counties containing the core, plus adjacent outlying counties
having a high degree of social and economic integration with the
central county or counties as measured through commuting.\1\ OMB
updates MSAs regularly and the most recent update can be found in OMB
Bulletin No. 20-01.\2\ The statute allows us to exempt rural areas and
areas with low population density within urban areas that are not
competitive, unless there is a significant national market through mail
order for a particular item or service, from the CBP. We may also
exempt from the CBP items and services for which competitive
acquisition is unlikely to result in significant savings.
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\1\ OMB 2010 Standards for Delineating Metropolitan and
Micropolitan Statistical Areas; Notice, June 28, 2010 (75 FR 37252).
\2\ https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf?#.
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We refer to areas in which the CBP is not or has not been
implemented as non-competitive bidding areas (non-CBAs). There are
currently no CBAs due to a gap period in the DMEPOS CBP, however, we
use the term ``former CBAs'' to refer to the areas that were formerly
CBAs prior to the gap in the CBP, in order to distinguish those areas
from ``non-CBAs.'' More information on why there are currently no CBAs
can be found in the November 14, 2018 final rule entitled ``Medicare
Program; End-Stage Renal Disease Prospective Payment System, Payment
for Renal Dialysis Services Furnished to Individuals With Acute Kidney
Injury, End-Stage Renal Disease Quality Incentive Program, Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
Competitive Bidding Program (CBP) and Fee Schedule Amounts, and
Technical Amendments To Correct Existing Regulations Related to the CBP
for Certain DMEPOS,'' (83 FR 56922) (hereinafter CY 2019 ESRD PPS
DMEPOS final rule).
Non-CBAs include rural areas, non-rural areas, and non-contiguous
areas. A rural area is defined in 42 CFR 414.202 as a geographic area
represented by a postal ZIP code, if at least 50 percent of the total
geographic area of the area included in the ZIP code is estimated to be
outside any MSA. A rural area also includes a geographic area
represented by a postal ZIP code that is a low population density area
excluded from a CBA in accordance with section 1847(a)(3)(A) of the Act
at the time the rules in Sec. 414.210(g) are applied. Non-contiguous
areas refer to areas outside the contiguous U.S.--that is, areas such
as Alaska, Guam, and Hawaii (81 FR 77936).
[[Page 70362]]
2. Payment Methodology for CBAs
In the DMEPOS CBP, suppliers bid for contracts for furnishing
multiple items and services, identified by HCPCS codes, under several
different product categories. In the CY 2019 ESRD PPS DMEPOS final
rule, we made significant changes to how we calculate single payment
amounts (SPAs) under the DMEPOS CBP. Prior to these changes, for
individual items within each product category in each CBA, the median
of the winning bids for each item was used to establish the SPA for
that item in each CBA. As a result of the changes we made in the CY
2019 ESRD PPS DMEPOS final rule, SPAs are calculated for the lead item
in each product category (per Sec. 414.402, the item in a product
category with multiple items with the highest total nationwide Medicare
allowed charges of any item in the product category prior to each
competition) based on the maximum winning bid (the highest of bids
submitted by winning suppliers) in each CBA. Per Sec. 414.416(b)(3),
the SPA for each non-lead item in a product category (all items other
than the lead item) is calculated by multiplying the SPA for the lead
item by the ratio of the average of the 2015 fee schedule amounts for
all areas for the non-lead item to the average of the 2015 fee schedule
amounts for all areas for the lead item.
For competitively bid items and services furnished in a CBA, the
SPAs replace the Medicare allowed amounts established using the lower
of the supplier's actual charge or the fee schedule payment amount
recognized under sections 1834(a)(2) through (7) of the Act. Section
1847(b)(5) of the Act provides that Medicare payment for competitively
bid items and services is made on an assignment-related basis and is
equal to 80 percent of the applicable SPA, less any unmet Part B
deductible described in section 1833(b) of the Act.
3. Fee Schedule Adjustment Methodology for Non-CBAs
Section 1834(a)(1)(F)(ii) of the Act requires the Secretary to use
information on the payment determined under the Medicare DMEPOS CBP to
adjust the fee schedule amounts for DME items and services furnished in
all non-CBAs on or after January 1, 2016. Section 1834(a)(1)(F)(iii) of
the Act requires the Secretary to continue to make these adjustments as
additional covered items are phased in under the CBP or information is
updated as new CBP contracts are awarded. Similarly, sections
1842(s)(3)(B) and 1834(h)(1)(H)(ii) of the Act authorize the Secretary
to use payment information from the DMEPOS CBP to adjust the fee
schedule amounts for enteral nutrition and OTS orthotics, respectively,
furnished in all non-CBAs. Section 1834(a)(1)(G) of the Act requires
the Secretary to specify the methodology to be used in making these fee
schedule adjustments by regulation, and to consider, among other
factors, the costs of items and services in non-CBAs (where the
adjustments would be applied) compared to the payment rates for such
items and services in the CBAs.
In accordance with the requirements of Section 1834(a)(1)(G) of the
Act, we conducted notice-and-comment rulemaking in 2014 to specify
methodologies for adjusting the fee schedule amounts for DME, enteral
nutrition, and OTS orthotics in non-CBAs in 42 CFR 414.210(g). We will
provide a summary of these methodologies, but also refer readers to the
July 11, 2014 proposed rule entitled ``Medicare Program; End-Stage
Renal Disease Prospective Payment System, Quality Incentive Program,
and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies,''
(79 FR 40208) (hereinafter CY 2015 ESRD PPS DMEPOS proposed rule), and
the November 6, 2014 final rule entitled ``Medicare Program; End-Stage
Renal Disease Prospective Payment System, Quality Incentive Program,
and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies,''
(79 FR 66120 ( ) (hereinafter CY 2015 ESRD PPS DMEPOS final rule) for
additional details.
The methodologies set forth in Sec. 414.210(g) account for
regional variations in prices, including for rural and non-contiguous
areas of the U.S. In accordance with Sec. 414.210(g)(1), CMS
determines regional adjustments to fee schedule amounts for each state
in the contiguous U.S. and the District of Columbia, based on the
definition of region in Sec. 414.202, which refers to geographic areas
defined by the Bureau of Economic Analysis in the Department of
Commerce for economic analysis purposes (79 FR 66226). Under Sec.
414.210(g)(1)(i) through (iv), adjusted fee schedule amounts for areas
within the contiguous U.S. are determined based on regional prices
limited by a national ceiling of 110 percent of the regional average
price and a floor of 90 percent of the regional average price (79 FR
66225). Under Sec. 414.210(g)(1)(v), adjusted fee schedule amounts for
rural areas are based on 110 percent of the national average of
regional prices. Under Sec. 414.210(g)(2), fee schedule amounts for
non-contiguous areas are adjusted based on the higher of the average of
the SPAs for CBAs in non-contiguous areas in the U.S., or the national
ceiling amount.
For items and services that have been included in no more than 10
CBPs, Sec. 414.210(g)(3) specifies adjustments based on 110 percent of
the average of the SPAs. In cases where the SPAs from DMEPOS CBPs that
are no longer in effect are used to adjust fee schedule amounts, Sec.
414.210(g)(4) requires that the SPAs be updated by an inflation
adjustment factor on an annual basis based on the Consumer Price Index
for all Urban Consumers update factors from the mid-point of the last
year the SPAs were in effect to the month ending 6 months prior to the
date the initial payment adjustments would go into effect.
Under Sec. 414.210(g)(5), in situations where a HCPCS code that
describes an item used with different types of base equipment is
included in more than one product category in a CBA, a weighted average
of the SPAs for the code is computed for each CBA prior to applying the
other payment adjustment methodologies in Sec. 414.210(g). Under Sec.
414.210(g)(6), we will adjust the SPAs for certain items prior to using
those SPAs to adjust fee schedule amounts for items and services if
price inversions have occurred under the DMEPOS CBP. Price inversions
occur when one item in a grouping of items in a product category
includes a feature that another similar item in the product category
does not, and the average of the 2015 fee schedule amounts for the item
with the feature is higher than the average of the 2015 schedule
amounts for the item without the feature, but following a CBP
competition, the SPA for the item with the feature is lower than the
SPA for the item without the feature. For groupings of similar items
where price inversions have occurred, the SPAs for the items in the
grouping are adjusted to equal the weighted average of the SPAs for the
items in the grouping.\3\
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\3\ For further discussion regarding adjustments to SPAs to
address price inversions, we refer readers to the CY 2017 ESRD PPS
DMEPOS final rule, entitled Medicare Program; End-Stage Renal
Disease Prospective Payment System, Coverage and Payment for Renal
Dialysis Services Furnished to Individuals With Acute Kidney Injury,
End-Stage Renal Disease Quality Incentive Program, Durable Medical
Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding
Program Bid Surety Bonds, State Licensure and Appeals Process for
Breach of Contract Actions, Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies Competitive Bidding Program and Fee Schedule
Adjustments, Access to Care Issues for Durable Medical Equipment;
and the Comprehensive End-Stage Renal Disease Care Model, 81 FR
77937 (November 4, 2016).
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[[Page 70363]]
In Sec. 414.210(g)(8), the adjusted fee schedule amounts are
revised each time a SPA for an item or service is updated following one
or more new DMEPOS CBP competitions and as other items are added to the
DMEPOS CBP. The fee schedule amounts that are adjusted using SPAs are
not subject to the annual DMEPOS covered item update and are only
updated when SPAs from the DMEPOS CBP are updated or, in accordance
with Sec. 414.210(g)(10), when there are temporary gaps in the DMEPOS
CBP. Updates to the SPAs may occur as contracts are recompeted. In the
CY 2015 ESRD PPS DMEPOS final rule, we established Sec. 414.210(g)(9)
to provide for a transitional phase-in period of the DMEPOS fee
schedule adjustments. We established a 6-month transition period for
blended rates from January 1 through June 30, 2016 (79 FR 66228 through
66229). In establishing a transition period, CMS agreed with commenters
that phasing in the adjustments to the fee schedule amounts would allow
time for suppliers to adjust to the new payment rates, and further
noted that CMS would monitor the impact of the change in payment rates
on access to items and services and health outcomes using real time
claims data and analysis (79 FR 66228). Under Sec. 414.210(g)(9)(i),
we specified that the fee schedule adjustments for items and services
furnished between January 1, 2016 through June 30, 2016 would be based
on a blend of 50 percent of the unadjusted fee schedule amount and 50
percent of the adjusted fee schedule amount. Under Sec.
414.210(g)(9)(ii), we specified that for items and services furnished
with dates of service on or after July 1, 2016, the fee schedule
amounts would be fully adjusted in accordance with the rules specified
in Sec. 414.210(g)(1) through Sec. 414.210(g)(8).
4. 21st Century Cures Act
Section 16007(a) of the 21st Century Cures Act (Cures Act) was
enacted on December 13, 2016, and extended the transition period for
the phase-in of fee schedule adjustments at Sec. 414.210(g)(9)(i) by
an additional 6 months from July 1, 2016 through December 31, 2016. In
the May 11, 2018 interim final rule with comment period entitled
``Medicare Program; Durable Medical Equipment Fee Schedule Adjustments
To Resume the Transitional 50/50 Blended Rates To Provide Relief in
Rural Areas and Non-Contiguous Areas,'' 83 FR 21912 through 21925
(hereinafter 2018 Interim Final Rule), we amended Sec.
414.210(g)(9)(i) to implement the 6 month extension to the initial
transition period, as mandated by section 16007(a) of the Cures Act.
Accordingly, the fee schedule amounts were based on blended rates until
December 31, 2016, with full implementation of the fee schedule
adjustments applying to items and services furnished with dates of
service on or after January 1, 2017 (83 FR 21915). Section 16008 of the
Cures Act amended section 1834(a)(1)(G) of the Act to require that the
Secretary take into account certain factors when making any fee
schedule adjustments under sections 1834(a)(1)(F)(ii) or (iii),
1834(h)(i)(H)(ii), or 1842(s)(3)(B) of the Act for items and services
furnished on or after January 1, 2019. Specifically, the Secretary was
required to take into account: (1) Stakeholder input solicited
regarding adjustments to fee schedule amounts using information from
the DMEPOS CBP; (2) the highest bid by a winning supplier in a CBA; and
(3) a comparison of each of the following factors with respect to non-
CBAs and CBAs: The average travel distance and cost associated with
furnishing items and services in the area, the average volume of items
and services furnished by suppliers in the area, and the number of
suppliers in the area.
5. Extension of DMEPOS Fee Schedule Transition Period & Revised
Methodology
In the 2018 Interim Final Rule (83 FR 21918), we expressed an
immediate need to resume the transitional, blended fee schedule amounts
in rural and non-contiguous areas, noting strong stakeholder concerns
about the continued viability of many DMEPOS suppliers, our finding of
a decrease in the number of suppliers furnishing items and services
subject to the fee schedule adjustments, as well as the Cures Act
mandate to consider additional information material to setting fee
schedule adjustments based on information from the DMEPOS CBP for items
and services furnished on or after January 1, 2019. We explained that
resuming these transitional blended rates would preserve beneficiary
access to needed DME items and services in a contracting supplier
marketplace, while also allowing CMS time to address the adequacy of
the fee schedule adjustment methodology, as required by section 16008
of the Cures Act. As a result, we amended Sec. 414.210(g)(9) by adding
Sec. 414.210(g)(9)(iii) to resume the fee schedule adjustment
transition rates for items and services furnished in rural and non-
contiguous areas from June 1, 2018 through December 31, 2018. We
explained that resuming these transitional blended rates would allow
additional time for suppliers serving rural and non-contiguous areas to
adjust their businesses, prevent suppliers that beneficiaries may rely
on for access to items and services in rural and non-contiguous areas
from exiting the business, and allow additional time for CMS to monitor
the impact of the blended rates. We also amended Sec.
414.210(g)(9)(ii) to reflect that for items and services furnished with
dates of service from January 1, 2017 to May 31, 2018, fully adjusted
fee schedule amounts would apply (83 FR 21922). In addition, we added
Sec. 414.210(g)(9)(iv) to specify that fully adjusted fee schedule
amounts would apply for items furnished in non-CBAs other than rural
and non-contiguous areas from June 1, 2018 through December 31, 2018
(83 FR 21920). We explained that we would use the extended transition
period to further analyze our findings and consider the information
required by section 16008 of the Cures Act in determining whether
changes to the methodology for adjusting fee schedule amounts for items
furnished on or after January 1, 2019 are necessary (83 FR 21918
through 21919).
In the CY 2019 ESRD PPS DMEPOS final rule, we finalized changes to
bidding and pricing methodologies under the DMEPOS CBP for future
competitions (83 FR 57020 through 57025). Specifically, we finalized
lead item pricing for all product categories under the DMEPOS CBP,
which would use the bid for the lead item to establish the SPAs for
both the lead item and all other items in the product category (the
non-lead items). We explained that this change would reduce the burden
on suppliers since they would no longer have to submit bids on numerous
items in a product category. We also finalized changes to the
methodology for calculating SPAs under the DMEPOS CBP based on lead
item pricing using maximum winning bids for lead items in each product
category. We finalized revisions to Sec. Sec. 414.414 and 414.416 to
reflect our changes to the bidding and pricing methodologies, and
revised the definitions of bid, composite bid, and lead item in Sec.
414.402.
Also in the CY 2019 ESRD PPS DMEPOS final rule, we established fee
schedule adjustment transition rules for items and services furnished
from January 1, 2019 through December 31, 2020. We decided to make
these fee schedule adjustment transition rules effective for a 2-year
period only, for two reasons. First, we believed that we must proceed
cautiously when adjusting fee schedules in the short term in an effort
to protect access to items, while we continued to monitor health
outcomes, assignment rates, and other information (83 FR 57029).
Second, as
[[Page 70364]]
part of the final rule, we made significant changes to the way bids are
submitted and SPAs are calculated under the CBP. We stated in the final
rule these changes could warrant further changes to the fee schedule
adjustment methodologies in the future (83 FR 57030). Consistent with
the requirements of Section 16008 of the Cures Act, we set forth our
analysis and consideration of stakeholder input solicited on
adjustments to fee schedule amounts using information from the DMEPOS
CBP, the highest bid by a winning supplier in a CBA, and a comparison
of the various factors with respect to non-CBAs and CBAs. We noted
stakeholder concerns that the adjusted payment amounts constrained
suppliers from furnishing items and services to rural areas, and their
request for an increase to the adjusted payment amounts for these areas
(83 FR 57025). In reviewing highest winning bids, we found no pattern
indicating that maximum bids were higher for areas with lower volume
than for areas with higher volume (83 FR 57026). In our consideration
of the Cures Act factors with respect to non-CBAs and CBAs, we found
higher costs for non-contiguous areas, an increased average travel
distance in certain rural areas, a significantly lower average volume
per supplier in non-CBAs, especially in rural and non-contiguous areas,
and a decrease in the number of non-CBA supplier locations. Based on
our consideration of the foregoing, we expressed our belief that the
fee schedule amounts for items and services furnished from January 1,
2019 through December 31, 2020, in all rural or non-contiguous areas
should be based on a blend of 50 percent of the adjusted fee schedule
amounts and 50 percent of the unadjusted fee schedule amounts in
accordance with the current methodologies under paragraphs (1) through
(8) of Sec. 414.210(g) (83 FR 57029). We also expressed our belief
that the fee schedule amounts for items and services furnished from
January 1, 2019 through December 31, 2020, in all areas that are non-
CBAs, but are not rural or non-contiguous areas, should be based on 100
percent of the adjusted fee schedule amounts in accordance with the
current methodologies under paragraphs (1) through (8) of Sec.
414.210(g) (83 FR 57029). We finalized amendments to the transition
rules at Sec. 414.210(g)(9) to reflect these fee schedule adjustment
methodologies for items and services furnished from January 1, 2019
through December 31, 2020 (83 FR 57039; 83 FR 57070 through 57071).
6. The Coronavirus Aid, Relief, and Economic Security Act
The Coronavirus Aid, Relief, and Economic Security (CARES) Act
(Pub. L. 116-136) was enacted on March 27, 2020. Section 3712 of the
CARES Act specifies the payment rates for certain DME and enteral
nutrients, supplies, and equipment furnished in non-CBAs through the
duration of the emergency period described in section 1135(g)(1)(B) of
the Social Security Act. Section 3712(a) of the CARES Act continues our
policy of paying the 50/50 blended rates for items furnished in rural
and non-contiguous non-CBAs through December 31, 2020, or through the
duration of the emergency period, if longer. Section 3712(b) of the
CARES Act increased the payment rates for DME and enteral nutrients,
supplies, and equipment furnished in areas other than rural and non-
contiguous non-CBAs through the duration of the emergency period.
Beginning March 6, 2020, the payment rates for DME and enteral
nutrients, supplies, and equipment furnished in these areas are based
on 75 percent of the adjusted fee schedule amount and 25 percent of the
historic, unadjusted fee schedule amount, which results in higher
payment rates as compared to the full fee schedule adjustments that
were previously required under Sec. 414.210(g)(9)(iv). We made changes
to the regulation text at Sec. 414.210(g)(9), consistent with section
3712 of the CARES Act, in an interim final rule with comment period
that we published in the May 8, 2020 Federal Register entitled
``Medicare and Medicaid Programs; Additional Policy and Regulatory
Revisions in Response to the COVID-19 Public Health Emergency.''
B. Current Issues
We are now proposing the fee schedule adjustment methodologies for
items and services furnished in non-CBAs on or after April 1, 2021, or
the date immediately following the duration of the emergency period
described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-
5(g)(1)(B)), whichever is later. Though the transition rules under 42
CFR 414.210(g)(9) expire on December 31, 2020, we believe that the rest
of the current fee schedule adjustment rules at 414.210(g) would
continue to be in effect should the emergency period described in
section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B) expire
after January 1, 2021, and before April 1, 2021. In other words, in the
event that the emergency period described in section 1135(g)(1)(B) of
the Act (42 U.S.C. 1320b-5(g)(1)(B)) expires before April 1, 2021, the
current fee schedule adjustment rules at Sec. 414.210(g)(1) through
(8) would be used to adjust fee schedule amounts for items and services
furnished in non-CBAs and the current fee schedule adjustment rule at
414.210(g)(10) would be used to adjust fee schedule amounts for items
and services furnished in CBAs or former CBAs until March 31, 2021.
1. Section 16008 of the Cures Act Analysis
As discussed, section 16008 of the Cures Act requires that we take
into account a number of factors in making any fee schedule adjustments
for items and services furnished on or after January 1, 2019,
including: (1) Stakeholder input we have solicited on adjustments to
fee schedule amounts using information from the DMEPOS CBP; (2) the
highest bid by a winning supplier in a CBA; and (3) a comparison of the
factors outlined in section 16008 of the Cures Act with respect to non-
CBAs and CBAs. Our analysis of the Cures Act factors focuses on the
effect we believe increased payment levels have had in rural and non-
contiguous non-CBAs, and the effect we believe fully adjusted fees have
had in non-rural contiguous non-CBAs. We also provide our analysis of
other metrics we believe are important in measuring the impacts of our
payment policies.
a. Stakeholder Input Gathered in Accordance With Section 16008 of the
Cures Act
Section 16008 of the Cures Act requires us to solicit and take into
account stakeholder input in making fee schedule adjustments based on
information from the DMEPOS CBP for items and services furnished on or
after January 1, 2019. On March 23, 2017, we hosted a national provider
call to solicit stakeholder input regarding adjustments to fee schedule
amounts using DMEPOS CBP information (83 FR 57025 through 57026). More
than 330 participants called in, with 23 participants providing oral
comments during the call. We also received 125 written comments from
stakeholders in response to our request for written comments. Our
announcement of this call, a copy of our presentation, the audio
recording of the call, and its transcript can be found at the following
link on the CMS website.\4\
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\4\ https://www.cms.gov/Outreach-and-Education/Outreach/NPC/National-Provider-Calls-and-Events-Items/2017-03-23-DMEPOS.
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In general, the commenters were mostly suppliers located in MSAs,
but also included manufacturers, trade
[[Page 70365]]
organizations, and healthcare providers such as physical and
occupational therapists. For additional details about the national
provider call and a summary of oral and written comments received, we
refer readers to the CY 2019 ESRD PPS/DMEPOS proposed rule (83 FR
57026). For a summary of public comments received on the CY 2019 ESRD
PPS DMEPOS proposed rule and our responses, we refer readers to the CY
2019 ESRD PPS DMEPOS final rule (83 FR 57030 through 57036). While the
stakeholder input from 2017 did not quantify the degree to which costs
of furnishing items in CBAs versus rural areas or any other non-CBAs,
the comments we received in response to our 2014 proposed rule (79 FR
40208) indicated that the adjusted fee schedule amounts for rural areas
should be equal to 120 to 150 percent of the average of the regional
single payment amounts (RSPAs) rather than 110 percent of the average
of the RSPAs. In addition, a 2015 industry survey of suppliers of
respiratory equipment indicated that the cost of furnishing respiratory
equipment in ``super rural'' areas is 17 percent higher than the cost
of furnishing respiratory equipment in CBAs.\5\ The term ``super
rural'' refers to areas identified as ``qualified rural areas'' under
the ambulance fee schedule statute at section 1834(l)(12)(B) of the Act
(as implemented at 42 CFR 414.610(c)(5)(ii)). For the purposes of the
fee schedule for ambulance services, rural areas are defined at 42 CFR
414.605 as areas located outside an urban area (MSA), or a rural census
tract within an MSA as determined under the most recent version of the
Goldsmith modification as determined by the Federal Office of Rural
Health Policy at the Health Resources and Services Administration
(HRSA). The most recent version of the Goldsmith Modification are the
Rural-Urban Commuting Area (RUCA) codes, which are a method of
determining rurality.\6\ Under 42 CFR 414.610(c)(5)(ii), for ground
ambulance services furnished during the period July 1, 2004 through
December 31, 2022, the payment amount for the ground ambulance base
rate is increased by 22.6 percent where the point of pickup is in a
rural area determined to be in the lowest 25 percent of rural
population arrayed by population density. CMS refers to this as the
``super rural'' bonus, and the areas that receive this super rural
bonus as ``super rural'' areas.\7\ For purposes of payment under the
Medicare ambulance fee schedule, a ``super rural'' area is thus a rural
area determined to be in the lowest 25 percent of rural population
arrayed by population density. DMEPOS industry stakeholders have
recommended that this differential in payment between super rural areas
and MSAs may be adopted in the DMEPOS fee schedule payment context as
well.
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\5\ https://www.cqrc.org/img/CQRCCostSurveyWhitePaperMay2015Final.pdf.
\6\ https://www.hrsa.gov/rural-health/about-us/definition/index.html.
\7\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AmbulanceFeeSchedule/afspuf.
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In general, we continue to receive feedback from industry
stakeholders expressing their belief that the fully adjusted fee
schedule amounts are too low and are having an adverse impact on
beneficiary access to items and services furnished in rural areas.
Industry stakeholders have also stated that the fully adjusted fee
schedule amounts are insufficient to cover the supplier's costs,
particularly for delivering items in rural areas.
We have been closely monitoring beneficiary health outcomes and
access to DMEPOS items. There has been no decline in allowed services
for items subject to the fee schedule adjustments at any point in time,
including 2017 and the first half of 2018 when payment in rural and
non-contiguous areas was based on the fully adjusted fee schedule
amounts. Traditional Medicare or fee-or-service allowed services for
items subject to the fee schedule adjustments rose from 24,882,018 in
2015 to 25,604,836 in 2016, 26,065,601 in 2017, and 26,481,002 in 2018.
This increase in allowed services occurred even though beneficiary fee-
for-service enrollment dropped by 0.6 percent from 33.7 million in 2016
to 33.5 million 2018 while Medicare Advantage beneficiary enrollment
rose by 16.0 percent from 18.4 million in 2016 to 21.3 million in 2018.
During this time, suppliers accepted assignment (Medicare payment in
full) for most items and services (99.79 percent in 2017 and 99.81
percent in 2018). This rate of assignment remained extremely high
(99.68 percent in 2017 and 99.70 percent in 2018) even after removing
claims for Medicare participating suppliers and suppliers furnishing
items to beneficiaries with dual (Medicare and Medicaid) eligibility,
where assignment is mandatory. In addition, we have continued to
monitor over one thousand health metrics (emergency room visits,
physician office visits, nursing home and hospital admissions, length
of need, deaths, etc.) and have not detected any negative impact of the
fee schedule adjustments on health outcomes. When analyzing the 2015
monthly average health outcome rates for beneficiaries in non-CBAs,
which was the last year we did not make any fee schedule adjustments in
non-CBAs, we have seen reductions in both 2017 and 2018 in mortality
rates, hospitalization rates, physician visits, SNF admissions, and
monthly days in the hospital. The percentage of beneficiaries with
emergency room visits increased slightly from 3.6 to 3.9 percent and
monthly days in nursing homes remained unchanged. Finally, we note that
beneficiary inquiries and complaints related to DMEPOS items and
services have steadily declined since 2016 and have not increased.
b. Highest Winning Bids in CBAs Analysis
Section 16008 of the Cures Act requires us to take into account the
highest amount bid by a winning supplier in a CBA when making fee
schedule adjustments based on information from the DMEPOS CBP for items
and services furnished on or after January 1, 2019. As discussed
earlier, in the CY 2019 ESRD PPS DMEPOS final rule (83 FR 57026), we
found no pattern indicating that maximum bids are higher for areas with
lower volume than for areas with higher volume. For additional details,
we refer readers to the CY 2019 ESRD PPS DMEPOS proposed rule (83 FR
34360 through 34367).
c. Travel Distance Analysis
Section 16008 of the Cures Act also requires us to take into
account a comparison of the average travel distance and costs
associated with furnishing items and services in CBAs and non-CBAs. In
the CY 2019 ESRD PPS DMEPOS proposed rule (83 FR 34367 through 34371),
we compared the average size of different non-CBAs nationally and found
that the CBAs had much larger service areas than the non-CBAs. We also
compared the average travel distances for suppliers in the different
areas using claims data for items and services subject to the fee
schedule adjustments. From our analysis, we found that the average
distance traveled in CBAs was generally greater than in most non-CBAs.
However, in reviewing certain non-CBAs, such as Frontier and Remote
(FAR) areas,\8\ Outside Core Based
[[Page 70366]]
Statistical Areas (OCBSAs),\9\ and super rural areas,\10\ we found that
suppliers generally must travel farther distances to beneficiaries
located in those areas than for beneficiaries located in CBAs and other
non-CBAs. For additional details on our previous travel distance
analysis, we refer readers to the CY 2019 ESRD PPS DMEPOS proposed rule
(83 FR 34367 through 34371).
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\8\ A Frontier and Remote (FAR) area is statistically delineated
by the Health Resources and Services Administration (HRSA) based on
remoteness and population sparseness. HRSA Methodology for
Designation of Frontier and Remote Areas, 79 FR 25599 through 25603
(May 5, 2014).
\9\ Outside Core Based Statistical Areas are delineated by OMB
as counties that do not qualify for inclusion in a Core Based
Statistical Area. OMB 2010 Standards for Delineating Metropolitan
and Micropolitan Statistical Areas; Notice, 75 FR 37245 (June 28,
2010).
\10\ Under the Ambulance Fee schedule (AFS), temporary add-on
payments known as the ``super rural bonus'' are available in
relation to areas that are within the lowest 25 percentile of all
rural areas arrayed by population density. 42 CFR 414.610(c)(5)(ii).
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We have updated some of the travel distance data used in our
previous travel distance analysis with data from 2018, which is the
most recent full year of data with CBAs. In reviewing the data from
2018, we found that the same trends we presented in the CY 2019 ESRD
PPS DMEPOS proposed rule, which were based on 2016 data, apply. Similar
to our previous travel distance analysis, to prevent the data from
being skewed in certain ways, we only included claims where the
supplier billing address is in the same or adjoining state as the
beneficiary address, and we excluded claims from suppliers with
multiple locations that always use the same billing address. These data
restrictions left in place 96 percent of allowed claims lines when
looking at hospital beds, 97 percent when looking at oxygen, and 92
percent when looking at all items.
Table 1--2018 Average Number of Miles Between Supplier and Beneficiary *
----------------------------------------------------------------------------------------------------------------
Beneficiary area Hospital beds Oxygen All items
----------------------------------------------------------------------------------------------------------------
CBAs............................................................ 28 23 30
Non-CBA MSAs.................................................... 24 22 28
Non-CBA Micro Areas............................................. 22 22 27
Non-CBA OCBSA................................................... 28 31 37
Super Rural..................................................... 37 37 42
FAR level 1..................................................... 27 31 36
FAR level 3..................................................... 40 41 47
----------------------------------------------------------------------------------------------------------------
* Includes claims where the supplier billing address is in the same or adjoining state as the beneficiary
address, excluding claims from suppliers with multiple locations that always use the same billing address.
We also reviewed travel distance data updated by partial 2019 data
spanning January through November 2019. Average travel distances in
former CBAs decreased, while average travel distances in rural and non-
rural non-CBAs increased. Section 16008 of the Cures Act requires a
comparison of average travel distance with respect to non-CBAs and
CBAs. However, there are currently no CBAs due to the gap period in the
DMEPOS CBP, allowing any Medicare-enrolled DMEPOS suppliers to furnish
DMEPOS items and services. We still reviewed data from former CBAs, as
we believe the decrease in average travel distance in the former CBAs
is additional confirmation that travel distances are generally greater
in CBAs while a CBP is in effect, when compared to non-CBAs. We believe
average supplier travel distances in the former CBAs decreased for a
variety of reasons. For one, CBP contract suppliers must furnish items
and services to any beneficiary located in a CBA. Now that there is a
gap period in the CBP, any supplier may furnish items and services to a
beneficiary located in a former CBA and suppliers are no longer
obligated to service a beneficiary who may be farther away from the
supplier. Additionally, more suppliers can now furnish items and
services to beneficiaries, so a beneficiary could also receive items
and services furnished by a supplier located closer to the beneficiary.
Section 16008 of the Cures Act requires us to take into account a
comparison of the average travel distance and costs associated with
furnishing items and services in CBAs and non-CBAs. As a result, we
believe a payment methodology should account for this factor, and the
increased costs suppliers may face in reaching certain non-CBAs. When
we say certain non-CBAs, we are referring to non-CBAs classified as
either super rural, FAR, or OCBSA. This is because although we found
that the average travel distance for suppliers in non-CBAs is generally
lower than the average travel distance and costs for suppliers in CBAs
while the CBP was in effect, we found that suppliers generally must
travel farther distances to beneficiaries located in non-CBAs that are
super rural, FAR or OCBSA than for beneficiaries located in CBAs and
other non-CBAs. Still, industry stakeholders have expressed their
belief that the fully adjusted fee schedule amounts are too low and
have an adverse impact on beneficiary access to items and services
furnished in rural non-CBAs. We have not seen evidence of this, but
because stakeholder input is another factor in section 16008 of the
Cures Act, we are also factoring stakeholder input into our payment
methodology, and therefore believe a payment methodology should result
in higher payments for DMEPOS suppliers that furnish items and services
to all rural areas, instead of just those areas with greater travel
distance than CBAs. We believe this errs on the side of caution and may
incentivize suppliers to furnish items and services to all rural areas.
d. Cost Analysis
We presented our analysis of different sources of cost data in the
CY 2019 ESRD PPS DMEPOS proposed rule (83 FR 34371 through 34377).
Overall, in comparing CBAs to non-CBAs, we found that CBAs tended to
have the highest costs out of the cost data we examined. For certain
cost data, we also found that Alaska and Hawaii--both non-contiguous
areas--tended to have higher costs than many contiguous areas of the
U.S. We updated this analysis with more recent data and did not notice
any significant differences in these overall findings.
We believe these findings support a payment methodology that
considers such increased costs in non-contiguous areas.
We note that we also consider assignment rates as a source of cost
data, and consider it a measure of the sufficiency of payment to cover
a supplier's costs for furnishing items and services under the Medicare
program. Assignment rates for items subject to the fee schedule
adjustments have not varied significantly around the country, and they
have consistently remained
[[Page 70367]]
over 99 percent in all areas. Thus, for the overwhelming majority of
claims for items and services furnished in the non-CBAs that were
subject to the fee schedule adjustments, suppliers have decided to
accept the Medicare payment amount in full, and have not needed to
charge the beneficiary for any additional costs that the Medicare
allowed payment amount did not cover. Of note, for the 17 months from
January 2017 through May 2018 when Medicare paid at the fully adjusted
fee level in all areas, or about 40 percent below the un-adjusted fee
schedule amounts on average, the assignment rate did not dip below 99
percent for the items and services subject to the adjusted fee schedule
amounts.
e. Average Volume of Items and Services Furnished by Suppliers in the
Area Analysis
Section 16008 of the Cures Act requires that we take into account a
comparison of the average volume of items and services furnished by
suppliers in CBAs and non-CBAs. In the CY 2019 ESRD PPS DMEPOS proposed
rule (83 FR 34377), we found that in virtually all cases, the average
volume of items and services furnished by suppliers is higher in CBAs
than non-CBAs. In reviewing updated data from 2018, we found that in
most cases, the average volume of items and services furnished by
suppliers was higher in CBAs than in non-CBAs. We reviewed the number
of allowed claim lines on a national level for 15 different product
categories subject to the fee schedule adjustments. In doing so, we
found that non-CBAs had more allowed claim lines than CBAs for 4 of the
15 product categories that we reviewed (nebulizer, oxygen, seat lifts,
and transcutaneous electrical nerve stimulation (TENS) devices). Rural
non-CBAs had more allowed claim lines than CBAs for 2 of the 15 product
categories that we reviewed (seat lifts and TENS). Finally, non-rural
non-CBAs had more allowed claims lines than CBAs for those same two
product categories (seat lifts and TENS).
Additionally, total services per supplier continued to increase in
2018 and 2019 in all non-CBAs. Thus, we found that the average volume
per supplier in non-CBAs continues to increase while assignment rates
are 99 percent or higher, and overall utilization remains steady or is
increasing. We believe these findings support a payment methodology
that takes into account and ensures beneficiary access to items and
services in non-CBAs with relatively low volume.
f. Number of Suppliers Analysis
Section 16008 of the Cures Act requires us to take into account a
comparison of the number of suppliers in the area.
The number of suppliers billing Medicare Fee-for-Service (FFS) for
items subject to fee schedule adjustments in all non-CBAs declined from
June 2018 through the end of 2019, which is the time period in which we
paid the fully adjusted fees in non-rural, contiguous non-CBAs and the
blended rates in rural and non-contiguous non-CBAs, in accordance with
42 CFR 414.210(g)(9)(iii) and (iv). More specifics about this decline
can be found in Table 2. We note that the decline in the number of
billing suppliers is part of a long-term trend that preceded the
adjustment of the fee schedule amounts beginning in 2016, but we are
still concerned about this trend, particularly for rural and non-
contiguous areas, because beneficiaries could have trouble accessing
items and services in these lower population areas if more suppliers
decide to stop serving these areas.
We studied supplier numbers and found that when looking at a sample
of HCPCS codes for high volume items subject to fee schedule
adjustments (E1390 for oxygen concentrators, E0601 for CPAP machines,
E0260 for semi-electric hospital beds, and B4035 for enteral nutrition
supplies), that the average volume of items furnished by suppliers
before they stopped billing Medicare is very small compared to the
average volume of items furnished by suppliers who continued to bill.
Data shows that large national chain suppliers are accepting a large
percentage of the beneficiaries who were previously served by the
smaller suppliers that exited the Medicare market. In addition, the
average volume per supplier continues to increase (as the number of
suppliers who bill Medicare decline, the suppliers that still bill
Medicare are picking up more volume), while overall services continue
to grow, suggesting industry consolidation rather than any type of
access issue for DME. Therefore, the decline in the number of supplier
locations is largely a result of the consolidation of suppliers
furnishing items subject to the fee schedule adjustments rather than a
decline in beneficiary access to items subject to the fee schedule
adjustments. In addition, this trend in consolidation is matched by an
increase in the average volume of items furnished per supplier,
increasing economies of scale for these suppliers, although this does
decrease the number of overall suppliers beneficiaries can choose from
to provide DMEPOS items.
However, to determine what effect, if any, our payment amounts have
had on the number of billing suppliers, we also examined supplier
numbers during defined timeframes in which we paid suppliers the
unadjusted and adjusted fees, and the 50/50 blended rates (50 percent
unadjusted and 50 percent adjusted). The declines in the number of
billing suppliers in both rural and non-rural non-CBAs were very
similar, even when we increased payment levels to the blended rates in
rural and non-contiguous non-CBAs, and continued paying the fully
adjusted fees in non-rural/contiguous non-CBAs. We did not see an
appreciable difference in supplier reductions between the two areas. We
note that non-contiguous non-CBAs exhibited a slightly different trend
than other non-CBAs, as the number of billing suppliers in these areas
increased from 2015 to 2016 when we paid the unadjusted fees, and
January 2017 to May 2018 when we paid the fully adjusted fees, but
subsequently declined between June 2018 to November 2019 when we paid
the blended rates.
For this analysis, we reviewed the following timeframes and noted
the payment policies in effect at that time:
Period 1: January 2015-December 2015: Unadjusted fees in all
non-CBAs
Period 2: January 2016-December 2016: Blended rates in all
non-CBAs (as noted previously, Congress passed section 16007 of the
Cures Act on December 13, 2016, which made the blended rates effective
retroactively in all non-CBAs from June 30 through December 31, 2016)
Period 3: January 2017-May 2018: Fully adjusted fees in all
non-CBAs
Period 4: June 2018-November 2019: Blended rates in rural and
non-contiguous non-CBAs, fully adjusted fees in non-rural non-CBAs in
the contiguous U.S.
[[Page 70368]]
Table 2--Number of Suppliers Who Billed for DME Subject to the Fee Schedule Adjustments
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-CBA Non-CBA Non-CBA
Period CBA % Change non-rural % Change rural % Change non[dash]contiguous % Change
--------------------------------------------------------------------------------------------------------------------------------------------------------
Jan 2015-Dec 2015.............................. 12,717 .......... 10,694 .......... 11,491 .......... 1,150 ..........
Jan 2016-Dec 2016.............................. 11,698 -8.0 10,103 -5.5 10,772 -6.3 1,229 6.9
Jan 2017-May 2018 (fully adjusted)............. 9,127 -22.0 9,520 -5.8 10,173 -5.6 1,295 5.4
Jun 2018-Nov 2019.............................. 10,381 13.7 8,778 -7.8 9,401 -7.6 1,238 -4.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Claims data through 2019/11/29 (2019 Week 48), Provider Enrollment, Chain, and Ownership System (PECOS) data through 2019/09/17.
As we noted in our previous analysis (83 FR 34380), we believe that
oxygen and oxygen equipment is one of the most critical items subject
to the fee schedule adjustments in terms of beneficiary access. If
access to oxygen and oxygen equipment is denied to a beneficiary who
needs oxygen, serious health implications can result. Oxygen and oxygen
equipment are also items that must be delivered to the beneficiary, and
set up and used properly in the home for safety reasons. Access to
oxygen and oxygen equipment in remote areas thus remains critical and
has been stressed by stakeholders. To determine if there were pockets
of the country where access to oxygen and oxygen equipment was in
jeopardy, we reviewed data depicting how many non-CBA counties are
being served by only one oxygen supplier. From 2016 to 2018, there was
a total of 2,691 non-CBA counties with beneficiaries receiving
Medicare-covered oxygen supplies. For each year, there were
approximately 38 to 39 counties being served by only one oxygen
supplier, serving approximately 68 to 78 beneficiaries receiving
approximately 736 to 896 services (annually) in those areas. Among the
counties with only one oxygen supplier, the majority had only one
oxygen user during that year. All counties with a single oxygen
supplier from 2016 to 2018 had 100 percent assignment rates for oxygen
services, and more than half of the single-supplier counties were in
Puerto Rico.
We believe this shows that access to oxygen and oxygen equipment is
not in jeopardy. If there are oxygen claims for only one beneficiary in
the area, then only one billing supplier would show up in the data.
This does not mean that the supplier submitting the claims for this one
beneficiary is the only supplier available to furnish oxygen and oxygen
equipment in the area. There may be other suppliers able to serve these
areas as well and this would show up in the claims data if there were
more beneficiaries using oxygen in these areas and these beneficiaries
used more than one supplier. This also shows how non-CBAs can have far
less volume and fewer billing suppliers than CBAs. Thus, we believe
paying more money to suppliers serving rural and non-contiguous non-
CBAs takes into account those factors specified in Section 16008 of the
Cures Act (volume and number of suppliers), and it errs on the side of
caution in seeking to prevent beneficiary access issues.
2. DMEPOS Fee Schedule Adjustment Impact Monitoring Data
In addition to the various Cures Act factors, we have also been
monitoring other metrics we believe are important in measuring the
impacts of our payment policies. In reviewing claims data processed
through mid-November in 2018 and 2019, we found that assignment rates
for all claims for DMEPOS items and services subject to fee schedule
adjustments went up slightly from 2018 to 2019 in both non-rural non-
CBAs (from 99.826 percent or 12,948,603 assigned services out of
12,971,110 to 99.833 percent or 11,594,547 assigned services out of
11,613,970) and rural non-CBAs (from 99.79 percent or 13,285,838
assigned services out of 13,313,575 to 99.81 percent or 11,863,434
assigned services out of 11,885,683). Keep in mind that the 2019 claims
data is not yet complete, so the number of allowed services will be
greater than what is reported here, but the final rate of assignment
will likely not change much if at all.
We have also been monitoring other claims data from non-CBAs, and
we have not observed any trends indicating an increase in adverse
beneficiary health outcomes. We monitor mortality rates,
hospitalization rates, ER visit rates, SNF admission rates, physician
visit rates, monthly days in hospital, and monthly days in SNF. Except
for death information, which comes from the Medicare Enrollment
Database, all other outcomes are derived from claims (inpatient,
outpatient, Part B carrier, and SNF). Our monitoring materials cover
historical and regional trends in these health outcome rates across a
number of populations, allowing us to observe deviations that require
further drilldown analyses. We monitor health outcomes in the enrolled
Medicare population (Medicare Parts A and B), dual Medicare and
Medicaid population, long-term institutionalized population, as well as
various DME utilizers and access groups. This helps paint a complete
picture of whether an increase in an outcome is across the board (not
linked to DME access), or is unique to certain populations.
Specifically, we focus on any increases that are unique to the DME
access groups, which include beneficiaries who are likely to use
certain DME based on their diagnoses, and we would conduct drilldown
analyses and policy research to pinpoint potential reasons for such
increases. In addition, we examined what effect, if any, paying the
blended rates in rural and non-contiguous non-CBAs had on utilization
of DME. We compared the utilization of oxygen equipment between June
2017 through December 2017, and June 2018 through December 2018. We
compared these two time periods, because we paid the blended rates in
rural and non-contiguous non-CBAs from June 1, 2018 through December
31, 2018, in accordance with the 2018 Interim Final Rule (83 FR 21915).
During the 2017 time period, we paid the fully adjusted fees in all
non-CBAs. During the 2018 time period, we paid the blended rates in
rural and non-contiguous non-CBAs and the fully adjusted fees in the
non-rural contiguous non-CBAs from June 1, 2018 through December 31,
2018. We specifically studied oxygen utilization in rural areas without
Micropolitan Statistical Areas, that is OCBSAs, as these counties have
the least populated urban areas, and as we stated in the CY 2019 ESRD
PPS DMEPOS final rule, one reason for paying higher rates was to ensure
beneficiary access in rural and remote areas (83 FR 57029). We found
that the number of allowed units in OCBSAs decreased comparably in all
areas. Payment at the blended rates between June 1, 2018 and December
31, 2018 increased allowed charges in OCBSAs by 42 percent, but this
had no apparent effect on increasing services in OCBSAs. Additionally,
the significant reduction of liquid oxygen equipment allowed services
trend continued in OCBSAs as well as in all areas. The decline in the
number of oxygen concentrators that were furnished
[[Page 70369]]
declined at the same rate in OCBSAs as in all areas. Access to oxygen
equipment in OCBSAs was unchanged, despite a 49 percent increase in
unit prices.
In sum, we do not believe our payment rates had a discernible
impact on any trends that were already occurring before we paid the
higher fees, and we did not see any appreciable differences between the
areas in which we paid the higher 50/50 blended rates in rural and non-
contiguous non-CBAs and the areas in which we pay the fully adjusted
fees in non-rural/contiguous non-CBAs. In addition, assignments rates
are still high in all non-CBAs--over 99 percent--, which means over 99
percent of suppliers are accepting Medicare payment as payment in full
and not balance billing beneficiaries for the cost of the DME.
We seek comments on all of our findings.
Table 3--Summary of Our Analysis of the Section 16008 Cures Act Factors
------------------------------------------------------------------------
Section 16008 Cures Act
factors Summary of our analysis
------------------------------------------------------------------------
Stakeholder input............ Most of the input we have
received has come from the DMEPOS
industry, such as DMEPOS suppliers,
expressing that the fully adjusted fee
schedule amounts are too low, and that
CMS should increase how much Medicare
pays DMEPOS suppliers to furnish items
and services to beneficiaries in non-
CBAs. These stakeholders expressed
concerns that the level of the adjusted
payment amounts constrains suppliers
from furnishing items and services to
rural areas.
Stakeholder input that did not
support such payment increases included
input from the Medicare Payment Advisory
Commission (MedPac), which believed any
adjustment for rural and non-contiguous
areas should be limited to only the
amount needed to ensure access, targeted
at areas and products for which an
adjustment is needed, and that CMS
should consider taking steps to offset
the cost of any adjustments. MedPac
supported setting fee schedule rates in
urban, contiguous non-CBAs based 100
percent on information from the CBP.*
Highest Winning Bid.......... In the CY 2019 ESRD PPS DMEPOS
final rule (83 FR 57026), we found no
pattern indicating that maximum bids are
higher for areas with lower volume than
for areas with higher volume.
Travel Distance.............. Average travel distance between
the supplier and beneficiary is
generally higher in CBAs than in non-
CBAs, except for non-CBAs classified as
FAR, super rural, or OCBSA.
Cost......................... We examined four sources of cost
data: (1) The Practice Expense
Geographic Practice Cost Index (PE
GPCI), (2) delivery driver wages from
the Bureau of Labor Statistics (BLS),
(3) real estate taxes from the U.S.
Census Bureau's American Community
Survey (ACS), and (4) gas and utility
prices from the Consumer Price Index
(CPI).
Overall, in comparing CBAs to
non-CBAs, CBAs tended to have the
highest costs out of the cost data we
examined. For certain cost data, we also
found that Alaska and Hawaii--both non-
contiguous areas--tended to have higher
costs than many contiguous areas of the
U.S. Assignment rates, which we consider
to be a measure of the sufficiency of
payment to cover a supplier's costs for
furnishing items and services under the
Medicare program, have consistently
remained high at over 99 percent (out of
100) in non-CBAs, meaning over 99
percent of suppliers furnishing items
subject to fee schedule adjustments in
the non-CBAs are accepting the Medicare
payment in full.
Volume....................... CBAs generally have higher
volume than non-CBAs.
Total services per supplier
continued to increase in 2018 and 2019
in non-CBAs.
Number of Suppliers.......... The number of suppliers billing
Medicare for furnishing items and
services subject to fee schedule
adjustments in the non-CBAs has been
declining for several years, and this
downward trend started years before CMS
started adjusting fee schedule amounts
in the non-CBAs in 2016.
When looking at a sample of
HCPCS codes for high volume items
subject to fee schedule adjustments, the
average volume of items furnished by
suppliers before they stopped billing
Medicare is very small compared to the
average volume of items furnished by
suppliers who continued to bill. Data
shows that large national chain
suppliers are accepting a large
percentage of the beneficiaries who were
previously served by the smaller
suppliers that exited the Medicare
market. In addition, the average volume
per supplier continues to increase (as
the number of suppliers who bill
Medicare decline, the suppliers that
still bill Medicare are picking up more
volume), while overall services continue
to grow, suggesting industry
consolidation rather than any type of
access issue for DME. Therefore, the
decline in the number of supplier
locations is largely a result of the
consolidation of suppliers furnishing
items subject to the fee schedule
adjustments rather than a decline in
beneficiary access to items subject to
the fee schedule adjustments.
When looking at different
timeframes over the last several years
in which we paid different fee schedule
amounts (unadjusted fees, adjusted fees,
and the 50/50 blended rates), we did not
see an appreciable effect that these
payment changes had on stemming the
reduction in the number of suppliers
billing Medicare.
All counties with a single
oxygen supplier from 2016 to 2018 had
100 percent assignment rates for oxygen
services, and more than half of the
single-supplier counties were in Puerto
Rico.
------------------------------------------------------------------------
* http://www.medpac.gov/docs/default-source/commentletters/08312018_esrd_cy2019_dme_medpac_comment_v2_sec.pdf?sfvrsn=0.
[[Page 70370]]
C. Provisions of the Proposed Regulations
After reviewing updated information that must be taken into
consideration in accordance with section 1834(a)(1)(G) of the Act in
determining adjustments to DMEPOS fee schedule amounts, we are
proposing to revise Sec. 414.210(g) to establish three different
methodologies for adjusting fee schedule amounts for DMEPOS items and
services included in more than ten competitive bidding programs
furnished in non-CBAs on or after April 1, 2021, or the date
immediately following the duration of the emergency period described in
section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-5(g)(1)(B)),
whichever is later. We are proposing three different fee schedule
adjustment methodologies, based on the non-CBA in which the items are
furnished: (1) One fee schedule adjustment methodology for items and
services furnished in non-contiguous non-CBAs; (2) another adjustment
methodology for items and services furnished in non-CBAs within the
contiguous United States that are defined as rural areas at Sec.
414.202; and (3) a third adjustment methodology for items and services
furnished in all other non-CBAs (non-rural areas within the contiguous
United States). With respect to items and services furnished in no more
than ten competitive bidding programs, we are proposing to continue
using the methodology in Sec. 414.210(g)(3) to adjust the fee schedule
amounts for these items furnished on or after April 1, 2021. The rest
of the discussion that follows addresses the fee schedule adjustments
for items and services that have been included in more than ten
competitive bidding programs.
First, we are proposing to continue paying the 50/50 blended rates
in non-contiguous non-CBAs, but are proposing that the 50/50 blend will
no longer be a transition rule under Sec. 414.210(g)(9), and will
instead be the fee schedule adjustment methodology for items and
services furnished in these areas under Sec. 414.210(g)(2) unless
revised in future rulemaking. We are proposing that the fee schedule
amounts for items and services furnished on or after April 1, 2021, or
the date immediately following the duration of the emergency period
described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-
5(g)(1)(B)), whichever is later, in non-contiguous non-CBAs be adjusted
so that they are equal to a blend of 50 percent of the greater of the
average of the SPAs for the item or service for CBAs located in non-
contiguous areas or 110 percent of the national average price for the
item or service determined under Sec. 414.210(g)(1)(ii) and 50 percent
of the unadjusted fee schedule amount for the area, which is the fee
schedule amount in effect on December 31, 2015, increased for each
subsequent year beginning in 2016 by the annual update factors
specified in sections 1834(a)(14), 1834(h)(4), and 1842(s)(1)(B) of the
Act, respectively, for durable medical equipment and supplies, off-the-
shelf orthotics, and enteral nutrients, supplies, and equipment. We
explained our rationale for a methodology that incorporates 110 percent
of the national average price in our CY 2015 ESRD PPS DMEPOS final
rule. We stated that we believe that a variation in payment amounts
both above and below the national average price should be allowed, and
we believe that allowing for the same degree of variation (10 percent)
above and below the national average price is more equitable and less
arbitrary than allowing a higher degree of variation (20 percent) above
the national average price than below (10 percent), as in the case of
the national ceiling and floor for the Prosthetic & Orthotic fee
schedule, or allowing for only 15 percent variation below the national
average price, as in the case of the national ceiling and floor for the
DME fee schedule.
Second, we are proposing to continue paying the 50/50 blended rates
in rural contiguous areas, but are proposing that the 50/50 blend will
no longer be a transition rule under Sec. 414.210(g)(9), and will
instead be the fee schedule adjustment methodology for items and
services furnished in these areas under Sec. 414.210(g)(2) unless
revised in future rulemaking. We are proposing that the fee schedule
amounts for items and services furnished in rural contiguous areas on
or after April 1, 2021 or the date immediately following the duration
of the emergency period described in section 1135(g)(1)(B) of the Act
(42 U.S.C. 1320b-5(g)(1)(B)), whichever is later, be adjusted so that
they are equal to a blend of 50 percent of 110 percent of the national
average price for the item or service determined under Sec.
414.210(g)(1)(ii) and 50 percent of the fee schedule amount for the
area in effect on December 31, 2015, increased for each subsequent year
beginning in 2016 by the annual update factors specified in sections
1834(a)(14), 1834(h)(4), and 1842(s)(1)(B) of the Act, respectively,
for durable medical equipment and supplies, off-the-shelf orthotics,
and enteral nutrients, supplies, and equipment. We are also revising
Sec. 414.210(g)(1)(v) to address the period before April 1, 2021, to
say that for items and services furnished before April 1, 2021, the fee
schedule amount for all areas within a state that are defined as rural
areas for the purposes of this subpart is adjusted to 110 percent of
the national average price determined under paragraph (g)(1)(ii) of
this section. We decided to propose a policy of paying a 50/50 blend of
adjusted and unadjusted rates in non-contiguous non-CBAs and in rural
non-CBAs, as opposed to a different ratio (such as a 75/25 blend, which
is an alternative we considered and discuss further in this section),
because past stakeholder input from the DME industry has expressed
support for this 50/50 blend. For instance, we proposed paying the 50/
50 blend for rural and non-contiguous non-CBAs from January 1, 2019
through December 31, 2020 in our CY 2019 ESRD PPS DMEPOS proposed rule,
and we finalized this policy in our CY 2019 ESRD PPS DMEPOS final rule.
Most of the comments we received on this proposal were from commenters
in the DME industry, such as homecare associations, DME manufacturers,
and suppliers, and these commenters generally supported the 50/50
blended rates proposal.
Third, for items and services furnished on or after April 1, 2021
or the date immediately following the duration of the emergency period
described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-
5(g)(1)(B)), whichever is later, in all other non-rural non-CBAs within
the contiguous United States, we are proposing that the fee schedule
amounts be equal to 100 percent of the adjusted payment amount
established under Sec. 414.210(g)(1)(iv).
Accordingly, we are proposing to add paragraph Sec.
414.210(g)(9)(vi) to say that for items and services furnished in all
areas with dates of service on or after April 1, 2021, or the date
immediately following the duration of the emergency period described in
section 1135(g)(1)(B) of the Act, whichever is later, based on the fee
schedule amount for the area is equal to the adjusted payment amount
established under Sec. 414.210(g).
Thus under our proposal, CMS would continue paying suppliers
significantly higher rates for furnishing items and services in rural
and non-contiguous areas as compared to items and services furnished in
other areas because of stakeholder input indicating higher costs in
these areas, greater travel distances and costs in certain non-CBAs
compared to CBAs, the unique logistical challenges and costs of
furnishing items to beneficiaries in the non-contiguous areas,
significantly lower volume of items furnished in these areas versus
[[Page 70371]]
CBAs, and concerns about financial incentives for suppliers in
surrounding urban areas to continue including outlying rural areas in
their service areas. Previous feedback from industry stakeholders
expressed concern regarding beneficiary access to items and services
furnished in rural and remote areas.
Furthermore, in our analysis, we found that suppliers must travel
farther distances to deliver items to beneficiaries located in super
rural areas and areas outside both MSAs and micropolitan statistical
areas than the distances they must travel to deliver items to
beneficiaries located in CBAs (while the CBP was in effect). We also
found that certain non-contiguous areas tended to have higher costs,
and had smaller numbers of oxygen suppliers and beneficiaries. Rural
and non-contiguous areas also have much lower volume of DMEPOS items
furnished by suppliers than in CBAs, and we are also concerned that
national chain suppliers or suppliers in higher populated urban areas
that are currently serving rural areas may abandon these areas if they
are less profitable markets due to fee schedule adjustments and may
instead concentrate on the larger markets only. We believe that this
feedback as well as these findings supports a payment methodology that
errs on the side of caution and ensures adequate payment for items and
services furnished to beneficiaries in all rural and non-contiguous
non-CBAs. We also believe that the proposed fee schedule adjustment
methodologies would create an incentive for suppliers to continue
serving areas where fewer beneficiaries reside and will therefore
further ensure beneficiary access to items and services in these areas.
We believe that this proposal, which proposes to continue paying the
50/50 blended rates in rural and non-contiguous non-CBAs, and 100
percent of the adjusted payment amount established under Sec.
414.210(g)(1)(iv) in non-rural non-CBAs in the contiguous U.S., takes
into account stakeholder feedback as well as information from our
previous and updated analyses of the Cures Act factors.
The purpose of the 50/50 blend is to ensure payment rates are
sufficient to maintain access to DME in areas where suppliers often
furnish a lower volume of DME, such as rural areas of the country and
non-contiguous areas.
The proposed fee schedule adjustment methodologies rely on SPAs
generated by the CBP. CMS recently announced that it will only award
Round 2021 CBP contracts to bidders in the OTS back braces and OTS knee
braces product categories.\11\ CMS will not award Round 2021 CBP
contracts to bidders that bid in any other product categories that were
included in round 2021 of the CBP, therefore, CMS will not have any new
SPAs for these items and services. As a result, we are seriously
considering whether to simply extend application of the current fee
schedule adjustment transition rules for all of the items and services
that were included in Round 2021 of the CBP but have essentially been
removed from Round 2021 of the CBP. That is, for non-CBAs, the fee
schedule adjustment transition rules at Sec. 414.210(g)(9) and, for
CBAs and former CBAs (CBAs where no CBP contracts are in effect), the
fee schedule adjustment rules at Sec. 414.210(g)(10), would be
extended until a future round of the CBP. More specifically, for non-
CBAs, we would extend the transition rules at Sec. 414.210(g)(9)(iii)
and (v) for items and services included in product categories other
than the OTS back and knee brace product categories, and, for these
same items and services furnished in CBAs or former CBAs, we are
considering extending the rules at Sec. 414.210(g)(10), until such
product categories are competitively bid again in a future round of the
CBP. In this situation, the proposed fee schedule adjustments discussed
previously in this proposed rule would only apply to OTS back braces
and OTS knee braces furnished in non-CBAs on or after April 1, 2021.
---------------------------------------------------------------------------
\11\ The link to the announcement is https://www.cms.gov/files/document/round-2021-dmepos-cbp-single-payment-amts-fact-sheet.pdf.
---------------------------------------------------------------------------
In short, beginning on April 1, 2021 or the date immediately
following the duration of the emergency period described in section
1135(g)(1)(B) of the Act, whichever is later, there would be several
different fee schedule adjustment methodologies in effect, depending on
where an item or service is furnished, and whether CMS has awarded
Round 2021 CBP contracts for that item or service. For OTS back braces
and OTS knee braces included in Round 2021 of the CBP and furnished in
CBAs, payment would be made in accordance with the methodologies
described in 42 CFR 414.408. For OTS back braces and OTS knee braces
included in Round 2021 of the CBP and furnished in rural and non-
contiguous non-CBA areas, payment would be made in accordance with the
methodologies we are proposing in this proposed rule in Sec.
414.210(g)(2). For OTS back braces and OTS knee braces included in
Round 2021 of the CBP furnished in non-rural and contiguous non-CBA
areas, payment would be made using the methodologies described in 42
CFR 414.210(g)(1)(iv).
For items and services included in the product categories that have
essentially been removed from Round 2021 of the CBP, payment would be
based on the methodologies described in 42 CFR 414.210(g)(10) when such
items and services are furnished in CBAs or former CBAs. When such
items and services are furnished in rural and non-contiguous non-CBAs,
payment would be based on the methodologies we proposed at 42 CFR
414.210(g)(2) and the methodology at 42 CFR 414.210(g)(4). In non-rural
and contiguous non-CBA areas, payment for these items and services
would be based on the methodologies described in 42 CFR
414.210(g)(1)(iv) and the methodology at (g)(4). CMS welcomes comment
on whether the transition rules at Sec. 414.210(g)(9) and fee schedule
adjustment rules at Sec. 414.210(g)(10) should continue for these
items and services that have essentially been removed from Round 2021
of the CBP. Specifically, we invite comment on whether we should extend
the transition rules at Sec. 414.210(g)(9)(iii) and (v) for items and
services furnished in non-CBAs and included in product categories other
than the OTS back and knee brace product categories, and, for these
same items and services furnished in CBAs or former CBAs, whether we
should extend the rules at Sec. 414.210(g)(10), until such product
categories are competitively bid again in a future round of the CBP.
3. Alternatives Considered But Not Proposed
We considered, but are not proposing, three alternatives to our
proposals and we are seeking comments on these alternatives:
a. Adjust Fee Schedule Amounts for Super Rural Areas and Non-Contiguous
Areas Based on 120 Percent of the Fee Schedule Amounts for Non-Rural
Areas
Under the first alternative, we considered prior suggestions from
stakeholders to use the ambulance fee schedule concept of a ``super
rural area'' when determining fee schedule adjustments for non-CBAs.
Specifically, we considered proposing to eliminate the definition of
rural area at Sec. 414.202 and 42 CFR 414.210(g)(1)(v), which brings
the adjusted fee schedule amounts for rural areas up to 110 percent of
the national average price determined under section 414.210(g)(1)(ii).
In place of this definition and rule, we considered proposing an
adjustment to the fee schedule amounts for DMEPOS items and services
furnished in super rural
[[Page 70372]]
non-CBAs within the contiguous U.S. equal to 120 percent of the
adjusted fee schedule amounts determined for other, non-rural non-CBAs
within the same state. For example, the adjusted fee schedule amount
for super rural, non-CBAs within Minnesota would be based on 120
percent of the adjusted fee schedule amount (in this case, the regional
price) for Minnesota established in accordance with section
414.210(g)(1)(i) through (iv). Consistent with the ambulance fee
schedule rural adjustment factor at Sec. 414.610(c)(5)(ii), we
considered defining ``super rural'' as a rural area determined to be in
the lowest 25 percent of rural population arrayed by population
density, where a rural area is defined as an area located outside an
urban area (MSA), or a rural census tract within an MSA as determined
under the most recent version of the Goldsmith modification as
determined by the Federal Office of Rural Health Policy at the Health
Resources and Services Administration. Per this definition and under
this alternative rule, certain areas within MSAs would be considered
super rural areas whereas now they are treated as non-rural areas
because they are located in counties that are included in MSAs. For all
other non-CBAs, including areas within the contiguous U.S. that are
outside MSAs but do not meet the definition of super rural area, we
considered adjusting the fee schedule amounts using the current fee
schedule adjustment methodologies under Sec. 414.210(g)(1) and Sec.
414.210(g)(3) through (8).
In addition to addressing past stakeholder input, this alternative
approach would provide a payment increase that is somewhat higher than,
but similar to the 17 percent payment differential identified by
stakeholders in 2015 based on a survey of respiratory equipment
suppliers.\12\ In addition, we have received input from suppliers that
serve low population density areas within MSAs that are not CBAs. These
stakeholders claim that they are serving low population density areas
that are not near to or served by suppliers located in the urban core
areas of the MSA and believe they should receive higher payments than
suppliers serving the higher population density areas of the MSA. Under
the alternative fee schedule adjustment methodology, if these low
population density areas were to meet the definition of super rural
area, they would receive a 20 percent higher payment than areas that
are not super rural areas. This alternative payment rule would address
these concerns with how the current payment rules and definition of
rural area affect these areas, and would target payments for those
rural areas that are low population density areas, regardless of
whether they are located in an MSA or not. This approach would also
address concerns raised from stakeholders on the March 23, 2017 call
regarding the cost of traveling long distances to serve far away,
remote areas.
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\12\ https://www.cqrc.org/img/CQRCCostSurveyWhitePaperMay2015Final.pdf.
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Under this alternative, Sec. 414.210(g)(2), which addresses fee
schedule adjustments for DMEPOS items and services furnished in non-
contiguous areas, would be replaced with a new rule that adjusts the
fee schedule amounts for non-contiguous areas based on the higher of
120 percent of the average of the SPAs for the item or service in CBAs
outside the contiguous U.S. (currently only Honolulu, Hawaii), or the
national average price determined under Sec. 414.210(g)(1)(ii).
b. Establish Additional Phase-In Period for Fully Adjusted Fee Schedule
Amounts for Rural Areas and Non-Contiguous Areas
We considered proposing an alternative fee schedule adjustment
methodology that would establish an additional transition period to
allow us to determine the impact of the new SPAs and monitor the impact
of adjusted fee schedule amounts. Under this alternative, we considered
adjusting the fee schedule amounts for items and services furnished in
rural areas and non-contiguous non-CBAs based on a 75/25 blend of
adjusted and unadjusted rates for the 3-year period from April 1, 2021,
or the date immediately following the duration of the emergency period
described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-
5(g)(1)(B)), whichever is later, through December 31, 2023. Such a
phase-in would bring the fee schedule payment amounts down closer to
the fully adjusted fee levels and allow for a 3-year period to monitor
the impact of the lower rates on access to items and services in these
areas before potentially phasing in the fully adjusted rates in 2024.
c. Extend Current Fee Schedule Adjustments for Items and Services
Furnished in Non-CBAs, CBAs, and Former CBAs That Were Included in
Product Categories Removed From Round 2021 of the CBP
CMS recently announced that it will only award Round 2021 CBP
contracts to bidders in the OTS back braces and OTS knee braces product
categories. CMS will not award Round 2021 CBP contracts to bidders that
bid in any other product categories that were included in Round 2021 of
the CBP, therefore, CMS will not have any new SPAs for these items and
services. As a result, under this alternative, we are seriously
considering whether to simply extend application of the current fee
schedule adjustment rules for all of the items and services that were
included in Round 2021 of the CBP but have essentially been removed
from Round 2021 of the CBP. Specifically, for items and services
included in product categories that have essentially been removed from
Round 2021 of the CBP, CMS would consider extending the transition
rules at Sec. 414.210(g)(9)(iii) and (v) for items and services
furnished in non-CBAs and the fee schedule adjustment rules at Sec.
414.210(g)(10) for items and services furnished in CBAs or former CBAs
until such product categories are competitively bid again in a future
round of the CBP. Under this alternative, we would consider adjusting
the fee schedule amounts for items and services furnished in areas
other than rural areas and non-contiguous non-CBAs in accordance with
Sec. 414.210(g)(9)(v) based on 100 percent of the adjusted rates
beginning on April 1, 2021 or the date immediately following the
duration of the emergency period described in section 1135(g)(1)(B) of
the Act (42 U.S.C. 1320b-5(g)(1)(B)), whichever is later, through the
date immediately preceding the effective date of the next round of CBP
contracts. The fee schedule amounts for items and services removed from
the CBP and furnished in rural and non-contiguous non-CBAs would
continue to be adjusted based on a 50/50 blend in accordance with Sec.
414.210(g)(9)(iii) through the date immediately preceding the effective
date of the next round of CBP contracts. For items and services
included in product categories that have essentially been removed from
Round 2021 of the CBP, the fee schedule amounts for items and services
furnished in CBAs or former CBAs would continue to be adjusted in
accordance with Sec. 414.210(g)(10) through the date immediately
preceding the effective date of the next round of CBP contracts. In
contrast, for items and services that are included in Round 2021 of the
CBP, CMS would adjust the fee schedule amounts for such items and
services in accordance with the adjustment methodologies outlined in
this proposed rule; CMS would pay the 50/50 blended rates in rural and
non-contiguous non-CBAs, and 100 percent of the adjusted payment amount
established under
[[Page 70373]]
Sec. 414.210(g)(1)(iv) in non-rural non-CBAs in the contiguous U.S.
We are seeking comments on these alternative methodologies and our
proposed methodologies. For instance, we would be interested to learn
if there are benefits or downsides to our proposals that we did not
consider or discuss in this proposed rule.
III. DMEPOS Fee Schedule Adjustments for Items and Services Furnished
in Rural Areas From June 2018 Through December 2018 and Exclusion of
Infusion Drugs From the DMEPOS CBP
On May 11, 2018 we published an interim final rule (83 FR 21912) in
the Federal Register entitled ``Medicare Program; Durable Medical
Equipment Fee Schedule Adjustments To Resume the Transitional 50/50
Blended Rates To provide Relief in Rural Areas and Non-Contiguous
Areas'' (which we will refer to as the ``2018 Interim Final Rule''). We
solicited comments on the 2018 Interim Final Rule, but because we have
not yet responded to the comments we received, we are signaling our
intent to do so in the final rule.
Section 5004(b) of the Cures Act amended section 1847(a)(2)(A) of
Act to exclude drugs and biologicals described in section 1842(o)(1)(D)
of the Act from the DMEPOS CBP. In the 2018 Interim Final Rule, we made
conforming changes to the regulation to reflect the exclusion of
infusion drugs, described in section 1842(o)(1)(D) of Act, from items
subject to the DMEPOS CBP.
As discussed in section II. of this rule, in the 2018 Interim Final
Rule, we also expressed an immediate need to resume the transitional,
blended fee schedule amounts in rural and non-contiguous areas, noting
strong stakeholder concerns about the continued viability of many
DMEPOS suppliers, our finding of a decrease in the number of suppliers
furnishing items and services subject to the fee schedule adjustments,
as well as the Cures Act mandate to consider additional information
material to setting fee schedule adjustments based on information from
the DMEPOS CBP for items and services furnished on or after January 1,
2019 (83 FR 21918). We amended Sec. 414.210(g)(9) by adding Sec.
414.210(g)(9)(iii) to resume the fee schedule adjustment transition
rates for items and services furnished in rural and non-contiguous
areas from June 1, 2018 through December 31, 2018. We also amended
Sec. 414.210(g)(9)(ii) to reflect that for items and services
furnished with dates of service from January 1, 2017 to May 31, 2018,
fully adjusted fee schedule amounts would apply (83 FR 21922). We also
added Sec. 414.210(g)(9)(iv) to specify that fully adjusted fee
schedule amounts would apply for certain items furnished in non-CBAs
other than rural and non-contiguous areas from June 1, 2018 through
December 31, 2018 (83 FR 21920). We explained that we would use the
extended transition period to further analyze our findings and consider
the information required by section 16008 of the Cures Act in
determining whether changes to the methodology for adjusting fee
schedule amounts for items furnished on or after January 1, 2019 are
necessary (83 FR 21918 through 21919). We intend to respond to the
comments we received on these issues in the final rule.
IV. Healthcare Common Procedure Coding System (HCPCS) Level II Code
Application Process
A. Background
1. Origin and Purpose of HCPCS
Section 1833(e) of the Act provides that no payment shall be made
to any provider of services or other person under Medicare Part B
unless there has been furnished such information as may be necessary in
order to determine the amounts due such provider or other person under
that part. In order to process claims and determine payment for items
and services under Medicare, we need a way to appropriately identify
the items and services billed. As discussed later in this section, we
have established certain codes for providers and suppliers to use to
identify items and services on claims. Medicare receives over 1 billion
electronic claims per year.
The Healthcare Common Procedure Coding System (HCPCS) is a
standardized coding system used to identify particular items and
services on claims submitted to Medicare, Medicaid, and other health
insurance programs in a consistent and orderly manner. The HCPCS is
divided into two principal subsystems, referred to as Level I and Level
II of the HCPCS. Level I is comprised of Current Procedural Terminology
(CPT[supreg]) codes.\13\ The HCPCS Level II code set is used primarily
to identify items, services, supplies, and equipment that are not
identified by CPT[supreg] codes. The HCPCS Level II codes were
originally created for use by government insurers including
Medicare.\14\ On August 17, 2000, HHS published a final rule (65 FR
50312) in which it adopted HCPCS Level II codes as the standard code
set to be used by all payers for, among other things, health care
equipment and supplies not described by CPT[supreg] codes, for use in
Health Insurance Portability and Accountability Act of 1996 (HIPAA)
transactions (45 CFR 162.1002).\15\ The HCPCS Level II coding system
was selected as the standard code set, in part, because of its wide
acceptance among both public and private insurers. With few
exceptions,\16\ HCPCS Level II codes are maintained by CMS, which is
responsible for making decisions about additions, revisions, and
discontinuations to the codes. CMS maintains the code set for Medicare
but, because HCPCS Level II is a standard code set designated for use
under HIPAA by all payers, CMS also considers the needs of other
payers, including both government and private insurers, in establishing
and maintaining codes.
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\13\ The CPT[supreg] is a uniform coding system consisting of
descriptive terms and identifying codes that are used primarily to
identify medical services and procedures furnished by physicians and
other health care professionals. Decisions regarding the addition,
deletion, or revisions of CPT[supreg] codes are made and published
by the American Medical Association (AMA) through the CPT[supreg]
Editorial Panel. More information on CPT[supreg] codes can be found
at www.ama-assn.org/about/cpt-editorial-panel/cpt-code-process.
\14\ The code set was previously called the HCFA (Health Care
Financing Administration) Common Procedure Coding System, after the
previous name of the Agency, before it became known as the
Healthcare Common Procedure Coding System as it is known today.
\15\ Through subtitle F of Title II of the Health Insurance
Portability and Accountability Act of 1996 (HIPAA) (Pub. L. 104-
191), Congress added to Title XI of the Social Security Act a new
Part C, entitled ``Administrative Simplification.'' HIPAA requires
the Secretary to adopt standards for code sets for the electronic
transactions, including health care claims transactions, for which
the Secretary has adopted a standard.
\16\ The Code on Dental Procedures and Nomenclature (CDT[supreg]
code) represents a separate medical code set adopted under HIPAA.
See 45 CFR 162.1002. Based on alpha-numeric format, they are
considered HCPCS Level II series D-codes but are maintained,
copyrighted, licensed and published separately by the American
Dental Association. More information on CDT[supreg] codes can be
found at https://www.ada.org/en/publications/cdt.
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The procedures by which the public submits and CMS evaluates
external code applications to modify the HCPCS Level II code set have
been primarily included in guidance documents released on the CMS
website at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo. We
update and release the HCPCS Level II dataset files to our contractors
and the public via our website on a quarterly basis. Although the HCPCS
Level II code set is a coding system used to identify categories of
items and services, it is not a methodology or system for making
coverage or payment determinations for individual items and services,
and the existence or absence of a code does not, of itself, determine
coverage or non-
[[Page 70374]]
coverage for the corresponding item or service.
HCPCS Level II codes are alpha-numeric codes that begin with an
alphabetical letter followed by four numeric digits. Currently, there
are almost 8,000 HCPCS Level II codes that represent categories of like
items and services. Each code includes a text descriptor (code text)
that identifies the category of items and services encompassed in the
code. HCPCS Level II codes are generally organized into lettered
categories that loosely describe the types of codes under that letter;
\17\ however the lettered categories are not dispositive, meaning that
they are not all inclusive of the types of items and services described
in the heading for each lettered category.
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\17\ A-codes: Transportation Services, Medical and Surgical
Supplies, Miscellaneous; B-codes: Enteral and Parenteral Therapy; C-
codes: Hospital Outpatient Prospective Payment System; D-codes:
Dental Procedures; E-codes: Durable Medical Equipment; G-codes:
Temporary Codes for Procedures and Professional Services; H-codes:
Rehabilitative Services; J-codes: Drugs Administered Other Than Oral
Method, Chemotherapy Drugs; K-codes: Medicare National Codes for
DMEPOS; L-codes: Orthotics, and Prosthetics; M-codes: Medical
Services; P-codes: Pathology and Laboratory Services; Q-codes:
Medicare National Codes; R-codes: Diagnostic Radiology Services; S-
codes: Non-Medicare National Codes; T-codes: State Medicaid Agency
Codes; U-codes: Clinical Laboratory Tests; and V-codes: Vision and
Hearing Services.
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2. External HCPCS Level II Code Applications
Interested parties seeking to modify the HCPCS Level II code set
may submit an application, as available on CMS' website, that requests
to add a code, revise an existing code, or discontinue an existing
code. The types of items and services subject to the external HCPCS
Level II code application procedures and evaluation processes proposed
in this rule are described in section IV.B. of this proposed rule. The
information collection activity is approved under OMB control number
0938-1042. In recent years, approximately 150 code applications
typically have been submitted to CMS annually from the public. As part
of our external HCPCS Level II code application process, we establish
deadlines for when code applications need to be submitted by the public
and post those deadlines on CMS' HCPCS website.
Section 531(b) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554)
requires the Secretary to establish procedures for coding and payment
determinations for new DME under Part B of Title XVIII of the Act that
permit public consultation in a manner consistent with the procedures
established for implementing coding modifications for ICD-9-CM (which
has since been replaced with ICD-10-CM as of October 1, 2015). In
November 2001, we issued a notice announcing the establishment of
public meetings for making coding and payment determinations for new
DME beginning in 2002 (66 FR 58743 through 58745). We also issued a
notice on March 25, 2005, stating that the public meeting process
previously limited to DME was expanded to include all new public
requests for revisions to the HCPCS Level II codes (70 FR 15340). This
change was intended to provide more opportunities for the public to
become aware of and provide comment on code applications and changes
under consideration, as well as opportunities for CMS to gather public
input. Given the expansion of the public meeting process, we scheduled
additional annual public meetings for 2005 and subsequent years.
Public meetings have provided a forum for interested parties to
make oral presentations and to submit written comments in response to
preliminary HCPCS Level II coding recommendations \18\ for new DME, as
well as for other items and services included in the public meeting.
The dates for the public meetings are announced in the Federal
Register. Agenda items for the meetings are published in advance of the
public meeting. The public meeting agendas generally have included
descriptions of the coding requests under consideration, the applicant,
the name of the item or service, our preliminary HCPCS Level II coding
recommendations and rationale, as well as preliminary Medicare payment
recommendations.\19\ We publish the public meeting agendas on CMS'
HCPCS website at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/HCPCSPublicMeetings.
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\18\ CMS has also previously referred to preliminary
recommendations as preliminary decisions. Hereinafter, in section
IV. of this proposed rule, we will use the term preliminary
recommendation.
\19\ Preliminary Medicare payment recommendations (also referred
to as preliminary Medicare payment determinations) are discussed in
more detail in section V.A.2. of this proposed rule.
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Prior to 2020, CMS received and reviewed HCPCS Level II code
applications and typically made related coding changes annually,
including releasing updated coding files. However, CMS' quarterly
systems release process gave CMS the flexibility to review applications
and make codes effective quarterly in response to claims processing
needs, which it used in very limited circumstances. In November 2019,
we announced updates to our HCPCS Level II coding procedures to enable
shorter and more frequent HCPCS Level II code application cycles
beginning in January 2020 as part of our initiative to facilitate
launching new products into the marketplace for providers and
patients.\20\ Specifically, we implemented a process whereby HCPCS
Level II code applications for DMEPOS and other non-drug, non-
biological items and services are submitted and reviewed no less
frequently than bi-annually; and HCPCS Level II code applications for
drugs and biological products are submitted and reviewed no less
frequently than quarterly (hereinafter also referred to as bi-annual
and quarterly coding cycles, respectively).\21\
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\20\ HCPCS--General Information. Announcement of Shorter Coding
Cycle Procedures, Applications, and Deadlines for 2020. Available
at: https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo.
\21\ HCPCS--General Information. Announcement of Shorter Coding
Cycle Procedures, Applications, and Deadlines for 2020, available
at. https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo; Healthcare
Common Procedure Coding System (HCPCS) Level II Coding Procedures,
Rev. September 16, 2020, available at: https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/2018-11-30-HCPCS-Level2-Coding-Procedure.pdf.
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Prior to 2020, we included code applications for drugs and
biological products in the HCPCS public meeting process, even though
not required under section 531(b) of BIPA. In order to achieve the
additional time savings necessary to implement coding for the majority
of drugs and biological products for which we receive code applications
on a quarterly cycle, in November 2019, we updated our HCPCS Level II
coding procedures such that beginning January 1, 2020, we no longer
conduct public meetings as part of our HCPCS Level II code application
process for drugs and biological products.\22\ Although code
applications for drugs and biological products are no longer included
in the public meetings, the 2020 coding procedures provide an
opportunity for applicants to resubmit a code application for a drug or
biological product in a subsequent quarterly coding cycle, which offers
individual applicants who are dissatisfied with our coding decisions in
one quarterly cycle an opportunity to reapply in the next or a
subsequent quarterly cycle.
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\22\ Healthcare Common Procedure Coding System (HCPCS) Level II
Coding Procedures, revised November 26, 2019.
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We also announced that beginning in 2020, consistent with
implementing shorter and more frequent HCPCS
[[Page 70375]]
coding cycles, we will release decisions on coding actions on a
quarterly basis in the same format as we previously announced annual
decisions.\23\ These actions are available on the CMS website at
https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo. We note that each
payer effectuates the changes to the code sets on its own timeframes.
For Medicare, unless otherwise announced or specified, Table 4 sets
forth the coding timeframes for the 2020 coding cycles. We refer
readers to the CMS website at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo for the most recent updates and revisions to these
timeframes.
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\23\ Healthcare Common Procedure Coding System (HCPCS) Level II
Coding Procedures, Rev. September 16, 2020, available at: https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/2018-11-30-HCPCS-Level2-Coding-Procedure.pdf.
Table 4--2020 Schedule for HCPCS Level II Coding Cycles
--------------------------------------------------------------------------------------------------------------------------------------------------------
Coding
Application Preliminary Final decision changes
Application topic Coding cycle deadline recommendation Public meeting publication effective
publication date
--------------------------------------------------------------------------------------------------------------------------------------------------------
DMEPOS and Other Non-Drug, Non- Bi-annual 1.......... 1/06/2020 May 2020............. June 1 and 2, 2020 ** July 2020............ 10/01/2020
Biological Items and Services.
DMEPOS and Other Non-Drug, Non- Bi-annual 2.......... 6/29/2020 Approximately 2 weeks Fall 2020............ January 2021 or 4/01/2021
Biological Items and Services. prior to the Public earlier.
Meeting in Fall 2020.
Drugs and Biological Products..... Q1................... 1/06/2020 N/A *................ N/A *................ April 2020........... 7/01/2020
Drugs and Biological Products..... Q2................... 4/06/2020 N/A *................ N/A *................ July 2020............ 10/01/2020
Drugs and Biological Products..... Q3................... 6/29/2020 N/A *................ N/A *................ October 2020......... 1/01/2021
Drugs and Biological Products..... Q4................... 9/21/2020 N/A *................ N/A *................ January 2021 or 4/01/2021
earlier.
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** Announced in the Federal Register at 85 FR 21859.
* As further explained, although we previously included code applications for drugs and biological products in our HCPCS public meeting processes, we
are not doing so in 2020 in order to achieve the additional time savings necessary to implement coding for the vast majority of drugs and biological
products on a quarterly cycle.
As explained in more detail in section IV.B.2. of this proposed
rule, there are three types of modifications to the HCPCS Level II code
set that can be requested by the public under this process using the
application form available on CMS' website: (1) The addition of a HCPCS
Level II code; (2) a revision to the long descriptor language (code
text) of an existing HCPCS Level II code; and (3) the discontinuation
of an existing HCPCS Level II code. The current HCPCS Level II code
application and instructions can be found on the CMS HCPCS website at
https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Application_Form_and_Instructions.\24\ Anyone may submit an
application. We outline procedures we use to make coding decisions for
certain items and services that are coded in the HCPCS Level II code
set in a document entitled ``Healthcare Common Procedure Coding System
(HCPCS) Level II Coding Procedures,'' available on our website at
https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/2018-11-30-HCPCS-Level2-Coding-Procedure.pdf.\25\ Summaries of external HCPCS
code applications with our final coding decisions and rationale are
made available on our website at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo. Separately, Quarterly Update releases of the full
HCPCS Level II code set are made available on our website at https://www.cms.gov/Medicare/Coding/HCPCSReleaseCodeSets.
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\24\ Updated September 2020.
\25\ Updated September 2020.
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B. Proposals for HCPCS Level II Coding Procedures
To increase transparency and gather stakeholder input, we are
proposing in this proposed rule to codify certain policies and
procedures regarding the submission and evaluation of external HCPCS
Level II code applications. Consistent with our current practices, the
proposed external HCPCS Level II code application process applies to
products paid separately as drugs or biologicals (defined later in the
section and in proposed 42 CFR 414.8(a)(2)),\26\ and non-drug, non-
biological items and services (defined later in the section and in
proposed 42 CFR 414.8(a)(1)).\27\
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\26\ Note, in prior code documents on our website, we used the
reference ``drugs and biological products'' (see ``Healthcare Common
Procedure Coding System (HCPCS) Level II Coding Procedures,''
available at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/2018-11-30-HCPCS-Level2-Coding-Procedure.pdf).
\27\ Note, in prior code documents on the website, we used the
reference ``DMEPOS and other non-drug, non-biological items and
services'' in our ``Healthcare Common Procedure Coding System
(HCPCS) Level II Coding Procedures,'' available at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/2018-11-30-HCPCS-Level2-Coding-Procedure.pdf.
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For purposes of section IV.B. of this proposed rule, the term
``products paid separately as drugs or biologicals'' refers to products
that are separately payable by Medicare under Part B (and potentially
by other payers, such as private insurers) as drugs or biologicals as
that term is defined in section 1861(t) of the Act. These products
typically fall into one or more of the following three categories: (1)
Products furnished incident to a physician's services under sections
1861(s)(2)(A) and (B) of the Act, excluding products that are usually
self-administered (for example, tablets, capsules, oral solutions,
disposable inhalers); (2) products administered via a covered item of
DME; and (3) other categories of products for which there is another
Part B benefit category as specified by statute or regulations (for
example, drug or biological products described elsewhere in section
1861(s) of the Act, such as immunosuppressive drugs (at section
1861(s)(2)(J) of the Act); hemophilia blood clotting factors (at
section 1861(s)(2)(I) of the Act); certain oral anticancer drugs (at
section 1861(s)(2)(Q) of the Act); certain oral antiemetic drugs (at
section 1861(s)(2)(T) of the Act); pneumococcal pneumonia, influenza
and hepatitis B vaccines (at section 1861(s)(10) of the Act)). For ease
of reference, when discussing products paid separately as drugs or
biologicals in this proposed rule, we will generally refer to these as
``drug or biological products.'' The proposed code application and
evaluation processes for drug or biological products are described in
section IV.B. of this proposed rule.
For purposes of the proposals regarding HCPCS Level II coding
procedures in section IV.B. of this proposed rule, the term ``non-drug,
non-
[[Page 70376]]
biological items and services'' refers to items and services that
Medicare (and potentially other payers, such as private insurers)
typically pay separately \28\ and that are described in the following
list,\29\ as well as certain items and services that are not covered
under Medicare (as described in the following list):
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\28\ Items and services that are separately payable would not be
included in a bundled payment. We discuss this in more detail in
section IV.B.2 of this proposed rule.
\29\ The statutory citations and corresponding definitions are
not intended to be strict definitions of the items and services in
these categories or the categories themselves, but are intended for
purposes of describing the types of non-drug, non-biological items
and services that are subject to the HCPCS Level II code application
process.
---------------------------------------------------------------------------
Medical and surgical supplies, such as splints and casts
described in section 1861(s)(5) of the Act and therapeutic shoes
described in section 1861(s)(12) of the Act.
Dialysis supplies and equipment such as those described in
section 1861(s)(2)(F) of the Act.\30\
---------------------------------------------------------------------------
\30\ Beginning January 1, 2011, all renal dialysis services
defined under 42 CFR 413.171 are paid under the ESRD PPS, and
therefore, we do not pay separately for most dialysis supplies and
equipment. However, the transitional drug add-on payment adjustment
(TDAPA) and the transitional add-on payment adjustment for new and
innovative equipment and supplies (TPNIES), available under the ESRD
PPS (42 CFR 413.234 and 413.236), require separate coding for
certain items and services that are eligible for a payment
adjustment.
---------------------------------------------------------------------------
Ostomy and urological supplies such as those described in
section 1861(s)(8) of the Act.
Surgical dressings such as those described in section
1861(s)(5) of the Act.
Prosthetics (artificial legs, arms, and eyes) such as
those described in section 1861(s)(9) of the Act and prosthetic devices
such as those described in section 1861(s)(8) of the Act.
Orthotics (leg, arm, back, and neck braces) such as those
described in section 1861(s)(9) of the Act.
Enteral/parenteral nutrition such as those described in
section 1842(s)(2) of the Act.
Durable Medical Equipment (and related accessories and
supplies other than drugs), such as oxygen and oxygen equipment,
wheelchairs, infusion pumps, and nebulizers such as those described in
sections 1861(s)(6) and 1861(n) of the Act.
Vision items and services, such as prosthetic lenses
described in section 1861(s)(8) of the Act.
Other items and services that are statutorily excluded
from Medicare coverage for which CMS or other government or private
insurers have identified a claims processing need for a HCPCS Level II
code, such as hearing aids which are excluded from coverage by section
1862(a)(7) of the Act.
We note that these are the general categories of non-drug, non-
biological items and services currently listed in the HCPCS Level II
code application \31\ on our website. For purposes of this proposed
rule, the term non-drug, non-biological items and services does not
include drugs covered under the DME benefit as supplies put directly
into DME, such as a nebulizer or infusion pump, to achieve the
therapeutic benefit of the DME (such drugs, as noted previously, are
considered ``drug or biological products'' under this proposed rule),
but does include gaseous or liquid oxygen put into oxygen equipment
(tanks or other containers).
---------------------------------------------------------------------------
\31\ HCPCS Code Application, Question #3.
---------------------------------------------------------------------------
The proposed code application procedures and evaluation processes
in section IV.B of this proposed rule would not apply to other items
and services described in procedural codes for oral health and
dentistry that begin with the letter ``D'' (CDT[supreg] codes), which
are published, copyrighted, and licensed by the American Dental
Association (ADA) and are not maintained by CMS, nor items and services
coded by CMS internally that are not based on an external application
request and are based exclusively on Medicare claims processing needs.
1. Proposed HCPCS Level II Coding Cycles and Related Policies
As discussed in section IV.A.2. of this proposed rule, beginning in
January 2020, the following coding cycles for HCPCS Level II code
applications apply: (1) For non-drug, non-biological items and
services, coding cycles begin no less frequently than bi-annually; and
(2) for drug or biological products, coding cycles begin no less
frequently than quarterly. As discussed in more detail later in the
section, we propose to codify these coding cycles and certain related
policies for code applications for non-drug, non-biological items and
services, and for drug or biological products. We propose to add new
sections Sec. Sec. 414.8 and 414.9 to set forth these proposed
policies.
a. Coding Cycles for Non-Drug, Non-Biological Items and Services
We propose that for HCPCS Level II code applications for non-drug,
non-biological items and services, we would continue to begin a new
coding cycle for such code applications no less frequently than bi-
annually. Subject to the exceptions proposed and explained later in
this section, we also propose that for each coding cycle for non-drug,
non-biological items and services, we would continue to: (1) Establish
a deadline for submitting code applications in or around January or
June each year (depending on the cycle) on the CMS website or in
another manner; (2) issue preliminary recommendations (a preliminary
recommendation may also include questions or requests for additional
information that could help CMS in reaching a final decision) on code
applications that will be addressed at the public meeting on the CMS
website or in another manner prior to the relevant public meeting; (3)
hold public meetings to provide the public with an opportunity to
become aware of and provide input on code applications and preliminary
recommendations under consideration for that coding cycle; and (4)
issue final coding decisions on the CMS website or in another manner
within approximately 6 months of the code application deadline.
Consistent with our current practice, coding changes would become
effective approximately 3 months after issuance of the final coding
decision. We propose to add new Sec. 414.8(b), (c), (d) and (e) to set
forth these proposed procedures.
We currently post all of our final coding decisions on the CMS
website at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo. We
believe these proposed bi-annual coding cycles for non-drug, non-
biological items and services allow us sufficient time to issue
preliminary recommendations in advance of the public meetings and to
meet the statutory requirement under section 531(b) of BIPA that we
permit public consultation on coding determinations for new DME (which
we currently accomplish through our public meetings), while also being
responsive to previous stakeholder feedback requesting faster coding
decisions. We note that even though section 531(b) of BIPA requires
procedures for coding determinations for new DME that permit public
consultation, as explained in section IV.A.2. of this proposed rule, we
previously expanded public meetings to include all new HCPCS Level II
code applications because we believe it is helpful to obtain public
input on code applications for as many items and services as possible.
Therefore, we are proposing at Sec. Sec. 414.8(d) and 414.8(b), to
continue to include not only code applications for new DME items and
services in the public meetings, but also code applications for all
non-drug, non-biological items and services and to
[[Page 70377]]
follow the bi-annual coding cycle schedule for them.
We also considered proposing coding cycles of no less frequently
than quarterly for non-drug, non-biological items and services. While
quarterly cycles for non-drug, non-biological items and services could
provide for faster coding decisions on these items and services and
would align with our proposal for quarterly coding cycles for drug or
biological products, as further discussed in section IV.B.1.b. of this
proposed rule, we believe quarterly coding cycles would not allow us
sufficient time to evaluate the applications for all non-drug, non-
biological items and services, issue preliminary recommendations, hold
public meetings, and issue final coding decisions. All of these
activities would require more than 3 months to complete. As described
earlier in this section, we are proposing to continue seeking public
input at our public meetings on preliminary recommendations issued for
all non-drug, non-biological items and services under consideration in
a given bi-annual coding cycle, and not just for new DME items and
services. In addition, in our experience, applications for non-drug,
non-biological items and services tend to be more complex or require
more research and review time than code applications for drug or
biological products, and therefore we typically need more than 3 months
for their evaluation. For example, non-drug and non-biological items
and services may not be regulated by the Food and Drug Administration
(FDA) and therefore, the manufacturer may not conduct clinical studies
and in that case we may not receive clinical studies with the HCPCS
Level II code application. Thus, applications for such items and
services would require independent review and research by CMS to
evaluate, for example, whether the item or service has functional or
clinical differences compared to other similar items and services
already described in the code set and thus, we would need more time to
gather such information, if available, and review the code application.
By contrast, as described in section IV.B.1.b. of this proposed rule,
drug or biological products are regulated by the FDA and code
applications for approved drug or biological products include detailed
FDA documentation, which typically include clinical information and
studies that assist us in evaluating the application. Thus, typically
we require less time to assess such applications than many of the
applications for non-drug, non-biological items and services. As a
result, while we are proposing quarterly coding cycles for drug or
biological products, we believe bi-annual cycles are more appropriate
for applications for non-drug, non-biological items and services.
We also propose at Sec. 414.8(e)(3), consistent with our current
practice, that in circumstances where code applications for non-drug,
non-biological items or services raise complex or significant issues or
considerations and we determine that additional time is needed to
evaluate such applications, we may delay issuing a preliminary
recommendation and therefore delay the final coding decision. We note
that a decision to delay a preliminary recommendation would have the
effect of pushing the code application to the next coding cycle for
further determination. In addition, after issuing a preliminary
recommendation, we may delay issuing the final coding decision. These
delays may be for one or more coding cycles (depending on the nature
and timing of the issues raised). While we make every effort to
complete our review and issue final coding decisions for all timely and
complete code applications within the applicable coding cycle, there
are occasions where additional time and evaluation are necessary to
fully assess certain applications because the code application raises
complex or significant issues or considerations. These circumstances
would include, but are not limited to, situations where the code
application involves a significant policy consideration (for example, a
unique issue related to a specific item or service or group of items or
services, such as appropriate coding for combination products that
include a drug and a service component), involves a significant claims
processing consideration (for example, operational issues arising from
a coding action requiring significant revisions to the claims
processing system, such as re-tooling to add another character to the
price field to accommodate higher prices than contemplated when the
system was established, including determining whether the claims
processing system change could be made, and in what timeframe, to
ensure that the coding solution would be viable, or whether an
alternative solution needs to be implemented before publishing new
codes), or requires in-depth clinical or other research.
We note that under our current process, we also may delay issuing
preliminary recommendations and final coding decisions on code
applications because we need additional time to evaluate the
applications. We note that this occurs infrequently, and we believe it
is important to continue this practice to allow us sufficient time to
evaluate and determine appropriate coding actions on certain
applications. While we expect to make a final coding decision within
the next coding cycle in most instances where we determine such delays
are necessary, we may further delay issuing a preliminary
recommendation and final coding decision, or a final coding decision
after a preliminary recommendation, to subsequent coding cycles. We
expect extended delays would be rare and would only occur if necessary
due to significant complexities arising from an application that
requires additional consideration and time to come to a preliminary
recommendation or final coding decision. We believe the ability to
extend our evaluation of an application in limited circumstances for
more than one bi-annual coding cycle may be necessary to account for
potential significant complexities presented by individual
applications, particularly in light of the proposed bi-annual coding
cycles, so that we can continue to ensure we have sufficient time as
well as information needed to determine the most appropriate coding
action. Therefore, we propose that, where additional time and
evaluation are necessary to fully assess an application (including in
the circumstances described earlier), we may delay issuing a
preliminary recommendation, and therefore, the final coding decision,
or after making a preliminary recommendation, we may delay issuing a
final coding decision alone, on the application for one or more coding
cycles. We propose to add new Sec. 414.8(e)(3) to set forth this
proposed policy. We note that prior to a final coding decision,
miscellaneous codes are available for assignment by insurers, if they
deem appropriate, to allow suppliers to begin billing for an item or
service as soon as it receives FDA marketing authorization for those
items and services that require such marketing authorization, or as
soon as it begins marketing for those items and services that do not
require FDA marketing authorization, including during the HCPCS code
application review process.
In cases in which we determine that we need additional time to make
a preliminary recommendation, we propose that we would continue our
current practice of issuing a determination that additional time is
needed to evaluate a particular
[[Page 70378]]
application, either on the CMS website or in another manner, at the
same time that we issue preliminary recommendations for other items and
services included in that coding cycle (see proposed Sec.
414.8(e)(3)(iii)). We also may seek additional information from the
applicant or other sources or both as we continue to consider the
application, which is consistent with our current practice.
In cases in which a preliminary recommendation is issued, but we
later determine that we need additional time to come to a final coding
decision, we propose to continue our current practice of issuing a
determination that additional time is needed to evaluate a particular
application, either on the CMS website or in another manner, at the
same time that we issue final coding decisions for other items and
services included in that coding cycle (see proposed Sec.
414.8(e)(3)(iii)). In such cases, we propose to continue to evaluate
that application in the next coding cycle and note that per proposed
Sec. 414.8(e)(3) it could be delayed into additional subsequent
cycles. We may seek additional information from the applicant or other
sources or both as we continue to consider the application.
b. Coding Cycles for Drug or Biological Products
We propose that for HCPCS Level II code applications for drug or
biological products, we would continue to begin new coding cycles for
such code applications no less frequently than quarterly. Subject to
the exceptions proposed and explained later in this section, we also
propose that for each coding cycle for applications for drug or
biological products, we would continue to: (1) Establish (on the CMS
website or in another manner) a deadline for submitting code
applications, which would occur in or around January, April, June, or
September each year depending on the cycle; and (2) issue final coding
decisions on the CMS website or in another manner, within approximately
3 months of the code application deadline. Coding changes would become
effective approximately 3 months after issuance of the final coding
decisions. We currently post summaries of the applications with our
final coding decisions on the CMS website at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo. We propose to codify these procedures
at proposed Sec. 414.8(b), (c)(2), and (e).
The proposed quarterly coding cycles for drug or biological
products are responsive to previous stakeholder feedback requesting
faster coding cycles for such products. We also believe that faster
coding cycles may facilitate and expedite claims processing and
launching new products into the marketplace for providers and patients.
We believe that quarterly cycles are appropriate for most drug or
biological product applications because it is our experience that drug
or biological product applications tend to be more straightforward and
take less time to assess than many of the applications for non-drug,
non-biological items and services. Most separately paid Part B drugs
are paid using the methodology in section 1847A of the Act, and the
code evaluation process for many drug or biological products is based
on Medicare statutory requirements consistent with section 1847A of the
Act. Specifically, section 1847A of the Act requires different payment
methodologies for single source drugs, multiple source drugs, and
biological products (including biosimilar biological products), which,
in turn, necessitates separate codes for purposes of facilitating
separate payment amounts. The use of separate codes for this purpose is
discussed further in subregulatory guidance published in 2007 (https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/051807_coding_annoucement.pdf). In most cases, information pertaining
to the need for separate payment amounts for drug or biological
products under section 1847A is driven by factors such as the FDA
approval pathway (for example, a Biologics License Application (BLA),
New Drug Application (NDA), or Abbreviated New Drug Application (ANDA))
as well as Therapeutic Equivalence ratings as provided in section
1847A(c)(6)(C). Information on these factors is easy to obtain using
public sources such as Daily Med (https://dailymed.nlm.nih.gov/dailymed/index.cfm), the Orange Book (https://www.accessdata.fda.gov/scripts/cder/ob/), and the Purple Book (https://purplebooksearch.fda.gov/). In addition, the FDA approval processes for
drug or biological products, and the accompanying documentation
provided with external HCPCS Level II code applications for those
products, which includes clinical data, information relevant to the
safety profile, clinical indications for use, contraindications, and
appropriate use or dosing intervals and other information, helps us
evaluate those applications faster and tends to allow CMS to make final
coding decisions about the program need for a code and the information
required for a code descriptor without the need for public input. The
proposed procedures for evaluating drug or biological product code
applications are discussed in more detail in section IV.B.2. of this
proposed rule. For situations where more detailed information may be
required to support coding decisions pertaining to an external code
application, for example if we are not able to immediately establish
whether the drug is separately payable under Part B, we may delay the
final coding decision to a subsequent coding cycle as proposed later in
this section.
Furthermore, except for code applications that are resubmitted for
reevaluation as provided in proposed Sec. 414.9(b), and code
applications where a decision is delayed under proposed Sec.
414.8(e)(3) that present program, policy, or implementation concerns or
complexities, or otherwise raise questions that public input could help
to address (see proposed Sec. 414.8(d)(4)(ii)), we propose that,
consistent with our current procedures, we would not hold public
meetings or issue preliminary recommendations for drug or biological
product code applications. Because of the additional time needed to
prepare for and hold the public meetings, we believe it would not be
feasible to include public meetings within the quarterly cycles. We
note that there is no statutory requirement for public consultation on
drug or biological product coding determinations. We propose to set
forth this proposed policy at new Sec. 414.8(d)(4). We refer readers
to section IV.B.1.d. of this proposed rule where we propose to add drug
or biological product applications to a bi-annual public meeting agenda
if an applicant is dissatisfied with a prior final coding decision and
submits an application for reevaluation. We refer readers to later in
this section where we propose that we may add drug or biological
product applications to a bi-annual public meeting if the code
applications are delayed and present program, policy, or implementation
concerns or complexities, or otherwise raise questions that public
input could help to address.
We also considered coding cycles of no less frequently than bi-
annually for applications for drug or biological products, which would
align with our proposal for bi-annual coding cycles for non-drug, non-
biological items and services discussed in section IV.B.1.a. of this
proposed rule and enable us to include all drug or biological product
applications in the public meeting process. While we understand there
is value in providing an opportunity for the public to submit input and
for CMS to consider public input on all applications, we also believe
that by
[[Page 70379]]
expediting coding decisions for drug or biological products and the
incorporation of such products in the claims processing system,
quarterly coding cycles for drug or biological product applications may
facilitate patient and provider access to new products. In addition, as
explained previously, we believe that generally, we can make well-
informed HCPCS Level II coding decisions for drug or biological
products based on the information contained in the code applications
without a public meeting given that applications for such products are
largely evaluated based on Medicare statutory requirements consistent
with section 1847A of the Act, and the code applications include
detailed FDA documentation, as discussed earlier in this section. Given
these considerations, we believe that more expeditious coding for these
products outweighs the benefit of including such applications in the
public meeting process.
As noted, the trade-off for conducting public meetings for
applications for drug or biological products would be longer coding
cycles, such as bi-annual cycles, to accommodate the time required to
prepare preliminary recommendations and conduct public meetings,
evaluate public input received from the public meetings, and reach
final coding decisions for such applications. We seek comments on
whether it would be appropriate or preferable to instead adopt coding
cycles of no less frequently than bi-annually for drug or biological
product code applications, which would enable us to issue preliminary
recommendations and solicit public input at public meetings on all such
products for a given coding cycle.
For applications for drug or biological products, we propose at
Sec. 414.8(e)(3) that, consistent with our current practice, in
circumstances where the code application raises complex or significant
issues or considerations and we determine that additional time is
needed to evaluate the code application, we may delay issuing a final
coding decision by one or more coding cycles. While we will make every
effort to complete our review of all timely and complete code
applications within the applicable coding cycle, there will be
occasions where additional time and evaluation are necessary to fully
assess certain applications because the application raises complex or
significant issues or considerations. These circumstances would
include, but are not limited to, situations where the code application
involves a significant policy consideration (for example, a unique
issue related to a specific drug or biological product or group of drug
or biological products), or a significant claims processing
consideration (for example, operational issues arising from a coding
action requiring significant revisions to the claims processing
system); or the code application requires in-depth clinical or other
research (for example, if we are not able to immediately establish
whether the drug is separately payable under Part B). Based on coding
experience with Part B drugs since the implementation of section 1847A
of the Act, we anticipate that these situations would be particularly
rare for drug or biological product applications, which tend to be more
straightforward than applications for non-drug, non-biological items
and services, as explained earlier in this section. While in most
instances where we determine such a delay is necessary we expect to
make a final coding decision within the next coding cycle, we propose
that in certain circumstances, we may further delay issuing a final
coding decision into a subsequent coding cycle. We expect this would be
a rare occurrence, and would only be done if necessary due to
significant complexities arising from an application that requires
additional consideration and time to come to a final coding decision.
We believe the ability to extend our evaluation of an application in
limited circumstances for more than one coding cycle may be necessary
to account for potential significant complexities presented by
individual applications, particularly in light of the proposed shorter
coding cycles, so that we can continue to ensure we have sufficient
time, as well as information needed, to determine the most appropriate
coding action. We propose to set forth this proposed policy at new
Sec. 414.8(e)(3). As is our current practice, we also propose that we
would continue to issue a determination that additional time is needed
to evaluate a particular application on the CMS website or in another
manner at the same time that we issue final coding decisions for drug
or biological products included in that coding cycle, in the same way
as described in section IV.B.1.a. of this proposed rule for non-drug,
non-biological items and services (see proposed Sec.
414.8(e)(3)(iii)). We reiterate that we believe such delays would occur
infrequently, and we would make every effort to complete our review and
issue final coding decisions for all timely and complete code
applications within the applicable coding cycle.
Additionally, in some of these situations where we delay a final
coding decision we propose at Sec. 414.8(d)(4)(ii) that we may also
add the application to the agenda for a public meeting, in order for
CMS to obtain further input and public discussion of the application.
We would add an application for a drug or biological product to a
public meeting agenda only when we believe that an individual
application requires additional consideration because it presents
program, policy, or implementation concerns or complexities, or
otherwise raises questions that public input could help to address,
such as where we believe we may need input from other external sources
such as clinicians or other users of the product. For example, we
believe it may be helpful to gather public input when a request to code
a new drug that is similar to other drugs categorized within existing
HCPCS Level II codes would involve modifying, discontinuing existing
codes, or replacing those existing codes with new ones. In these types
of circumstances, gathering public input through the public meeting
process could facilitate our review of the application and assist in
reaching an appropriate coding decision. If an application is put on a
public meeting, we propose that we would issue a preliminary
recommendation prior to that public meeting. In order to provide
sufficient time to prepare for the public meeting, we would not be able
to include the application on a public meeting in the quarter in which
it is submitted, even if regular bi-annual public meetings were held in
that quarter. In other words, if an application for a drug or
biological product is included in a public meeting it would need to
follow the bi-annual cycle schedule and would also be subject to the
proposals that allow for delay of preliminary recommendations and final
coding decisions for one or more cycles under new Sec. 414.8(e)(3).
Given that including a drug or biological product code application on a
public meeting agenda could result in delaying a final coding decision
more than one quarterly cycle given the bi-annual public meeting
timelines, we would weigh the benefit of and need for receiving public
input with the interests of making final coding decisions as quickly as
possible when deciding whether to put a drug or biological product code
application on a public meeting agenda. For instance, while we may
determine that we need to delay a final coding decision on an
application for a drug or biological product to consider complexities
or other concerns internally, if we do not
[[Page 70380]]
believe public input is needed, we may decide not to place the
application on a public meeting agenda, which would give flexibility to
potentially come to a final coding decision in the next quarterly
coding cycle. For example, if an application is submitted by the
deadline in the second quarterly coding cycle, which has an application
deadline around April, and we decide to delay the final decision, if we
also decide to put the application on a public meeting agenda, the
earliest public meeting it could be placed on would be the public
meeting for the second bi-annual cycle, which would necessarily delay
the final decision at least two quarterly cycles. However, if the final
decision is delayed but it is not placed on a public meeting agenda it
may be possible to come to a final decision within the next quarterly
cycle, depending on the circumstances. Our goal is to make every
attempt to make final coding decisions as quickly as possible and avoid
unnecessary delays. We note that any determination to include an
application in a public meeting would be initiated by CMS based on the
considerations described in this section and would not be granted based
on requests from an applicant.
We also seek public comment on whether there may be other
circumstances under which it may be appropriate for CMS to decide to
include a drug or biological product application in a public meeting
(for example, when an applicant requests to add such an application to
the public meeting process; or other particular circumstances where a
public meeting would be important). However, we note that unless the
addition of an application for drug or biological product to a public
meeting agenda is a rare occurrence, we believe that the operational
burden of accommodating public meetings for these products could make
it infeasible for CMS to carry out a quarterly coding review cycle for
drug or biological product applications. Consequently, if stakeholders
favor public meetings for the review of applications for drug or
biological products on other than a very infrequent basis, it is likely
that we would need to consider implementing bi-annual coding cycles for
all drug or biological product applications, including a public meeting
component.
As an alternative to including the code applications described at
proposed Sec. 414.8(d)(4)(ii) in a public meeting, we considered
soliciting public input for such applications through the CMS website
(rather than a public meeting). We considered that such a web-based
public input process would occur bi-annually, as the public meetings
do, and would include posting on CMS' HCPCS website either a
preliminary HCPCS coding recommendation, one or more coding options for
which we are seeking feedback, one or more questions, or other requests
for comment or information that would help CMS formulate a coding
decision. We considered that this process could be applied to the same
types of code applications we propose at Sec. 414.8(d)(4)(ii) to
include in a public meeting, that is, where we determine to delay a
decision on a code application and we determine the application
requires additional consideration because it presents program, policy,
or implementation concerns or complexities, or otherwise raises
questions that public input could help to address. We considered that a
15-calendar day period for public input could be applied under such a
process, with the comment window beginning on the date that the public
would be invited to comment on the CMS website. We note that a 15-
calendar day period is approximately the same amount of time we
currently provide for submitting public input on preliminary
recommendations issued for non-drug, non-biological code applications
in the public meeting agenda (which is generally posted approximately
two weeks prior to the associated public meeting), including written
and oral comments related to public meetings, if received by the end of
the public meeting at which the relevant application is discussed.
Similar to the proposal to add select drug or biological product
applications to the public meeting process, in order to provide
sufficient time to prepare either a preliminary HCPCS coding
recommendation, one or more coding options for which we are seeking
feedback, one or more questions, or other requests for comment or
information that would help CMS formulate a coding decision, we believe
that we would not be able to put an application through such a web-
based public input process in the same quarter in which the application
is submitted and would need to follow the bi-annual cycle schedule. We
considered that we would also similarly weigh the benefit of and need
for receiving public input through such a web-based process with the
interests of making final coding decisions as quickly as possible when
deciding whether to put a drug or biological product code application
through such a web-based public input process, given the potential that
a final decision may be delayed more than two quarters depending on the
timing of the bi-annual public input periods. While we are not
proposing in Sec. 414.8(d)(4)(ii) a web-based public input process for
drug or biological product code applications described in that proposed
provision, we seek comment on the alternative we considered (as
discussed previously) to solicit public input for such drug or
biological product applications through the CMS website (rather than in
a public meeting). We also seek comment on whether there may be other
specific circumstances in which public input via such a web-based
public input process may be useful, considering that under the shorter
coding cycles only a limited number of applications could be
accommodated.
c. Proposed Requirements for Applications To Be Considered in a Coding
Cycle
Consistent with our current procedures and requirements for HCPCS
Level II code applications, we propose at new Sec. 414.9(a) that to be
considered in a given coding cycle, an application must be timely and
complete. We further propose that an application that is not timely and
complete would be declined by CMS but may be submitted by the applicant
in a subsequent coding cycle. We propose at new Sec. 414.9(a)(1) that
an application is timely if it is submitted to CMS by the applicable
code application submission deadline specified by CMS for each coding
cycle, which CMS posts on its website or in another manner, or as
specified in proposed Sec. 414.9(a)(3). We propose at new Sec.
414.9(a)(2)(i) that an application would be considered complete if it
includes, by the applicable code application submission deadline, the
applicable information and documentation required in proposed Sec.
414.9, and meets the administrative elements as specified by the
application instructions issued by CMS and posted on the CMS website
(for example, it includes answers to all of the application questions,
includes required FDA documentation, and is within the page limit). We
also propose at new Sec. 414.9(a)(2)(ii) that, consistent with our
current practice, for an application to be complete, the applicant
provide FDA documentation of the item's current classification, as
applicable, as well as FDA marketing authorization documentation, or
provide the regulation number under 21 CFR parts 862 through 892 for a
device exempted from the premarket notification requirement. If a
device exceeds the limitations to the exemptions under 21 CFR parts 862
through 892 of the device
[[Page 70381]]
classification regulations, the appropriate marketing authorization
documentation must be submitted to CMS as part of the application. We
propose that FDA documentation of the item's current classification, as
applicable, and FDA marketing authorization documentation, or the
regulation number under 21 CFR parts 862 through 892 for a device
exempted from the 510(k) requirement would be required to be submitted
with the code application by the relevant HCPCS Level II code
application deadline, for an application to be complete.
Additionally, for biosimilar biological products, we propose to
allow a 10-business day extension past the application deadline to
provide a complete application, including FDA marketing authorization
documentation, if the proposed criteria discussed later in this section
are met. Under the annual coding cycle prior to 2020, for drug or
biological product code applications, we provided a 3-month extension
for submission of FDA marketing authorization documentation and to
provide updates to the application based on the FDA marketing
authorization documentation. However, the shorter quarterly coding
cycles for drug or biological product applications cannot accommodate a
3-month extension for submission of FDA marketing authorization
documentation and to update the application based on that
documentation, as was previously offered under the annual coding cycle,
and thus, beginning in 2020, we eliminated the 3-month extension to
enable the quarterly coding cycles for drug or biological products.
Therefore, currently, in order for an application to be complete, code
applications must be submitted by the application deadline with the
aforementioned FDA documentation. Under the shorter quarterly coding
cycles, applicants who are unable to submit a complete application,
including the required FDA marketing authorization documentation, by
the application deadline for a given coding cycle would be able to
submit the application and required FDA marketing authorization
documentation for the next quarterly cycle, provided the application is
complete by the next coding cycle's application deadline. We note that
under our previous annual coding process prior to 2020, the next
opportunity to submit was the next annual coding cycle.
Our recent changes to the coding cycles were designed to facilitate
more rapid coding, which could be frustrated if required FDA
documentation is unavailable for a large number of applications at the
deadline because the items have not yet received FDA marketing
authorization, or if a lengthy extension is allowed in order to provide
such documentation. We have concerns about the impact of extending the
submission deadline for required FDA marketing authorization
documentation and the impact that not having the documentation would
have on the ability to provide complete information in the rest of the
application and how that could further compress the amount of time
available to process applications. We also have concerns about allowing
deadline extensions for all drug or biological product code
applications given our resources and the compressed review timeframe
under shorter quarterly coding cycles. If we were to consider
extensions to accommodate submission of required FDA documentation for
all drug or biological product code applications, we believe that this
would potentially strain our resources and possibly hinder our ability
to thoroughly evaluate applications and issue final coding decisions in
a timely manner. Therefore, we do not believe an extension for the
submission for required FDA documentation would be feasible for all
drug or biological product applications. However, we recognize that
there may be instances in which an extension to accommodate the
submission of required FDA documentation past the quarterly application
deadline for certain items and services could serve broader Medicare
programmatic goals, particularly where expedited coding could
facilitate and expedite claims processing, without straining our
resources and possibly hindering our ability to thoroughly evaluate and
issue final coding decisions for all the applications we receive in a
given coding cycle.
Stakeholders have mentioned biosimilar biological products as a
type of product that might warrant an extension for submitting required
FDA documentation beyond the code application deadline while still
allowing a coding decision to be made within a particular coding cycle
to facilitate faster coding for such products. A biosimilar biological
product is a biological product that is highly similar to and has no
clinically meaningful differences in terms of safety, purity, and
potency from an FDA-approved biological reference product.\32\ In the
Revisions to the Payment Policies under the Physician Fee Schedule and
Other Revisions to Part B for CY 2018 final rule (CY 2018 PFS and Other
Revisions to Part B final rule) (82 FR 53186) we finalized a policy to
separately code and pay for biosimilar biological products under
Medicare Part B. In that final rule, we noted that we were persuaded
that there is a program need for assigning Part B biosimilar biological
products into separate HCPCS codes, and specifically that the policy
would address concerns about a stronger marketplace, access to these
drugs in the United States marketplace, provider and patient choice and
competition. As stated in the CY 2018 PFS and Other Revisions to Part B
final rule (82 FR 53186), we believe that the change in policy
encourages the innovation needed to bring more products to the market
by encouraging greater manufacturer participation in the marketplace
and the introduction of more biosimilar biological products, thus
creating a stable and robust market, driving competition and decreasing
uncertainty about access and payment. Additionally, we stated we
believe that the policy provides physicians with greater certainty
about biosimilar payment and that, in turn, that will affect
utilization of biosimilar biological products, creating more demand
that would help increase competition (82 FR 53186). We also anticipated
greater access to biosimilar biological products and that more price
competition between more products would occur. Finally, as stated in
the CY 2018 PFS and Other Revisions to Part B final rule (82 FR 53186),
we believed the change in policy could lead to additional savings for
Medicare and its beneficiaries over the long-term by increasing the
utilization of products that are less expensive than reference
biologicals. We believe that providing a code application deadline
extension for biosimilar biological products to accommodate the
submission of required FDA documentation past the application deadline
would similarly support the goal of a competitive market because it
will facilitate faster assignment of a separate HCPCS code, which we
believe will increase the availability of and access to biosimilar
biological products. We also believe that providing an extension for
submitting the required FDA documentation for biosimilar biological
products will help further the President's initiative to promote access
to generics and biosimilar biological products in order to lower
prescription drug costs for all Americans.\33\ We believe this 10-
[[Page 70382]]
business day extension would be helpful for manufacturers of biosimilar
biological products seeking a HCPCS Level II code who receive their FDA
marketing authorization just after the deadline for submitting an
application in a given coding cycle, and because we do not currently
receive many applications for biosimilar biological products, we do not
believe this extension would impact our ability to review all the
applications and issue final coding decisions in a particular coding
cycle. We do not believe an extension longer than 10-business days
would be feasible given the number of applications we receive in a
coding cycle and the resources for evaluating those applications. We
note that if we were to begin receiving a large number of applications
for biosimilar biological products within the 10-business day extension
period in a coding cycle, and the number of applications negatively
impacted our timely review of all of the applications we received, we
might decide to reconsider this proposed policy, if finalized.
---------------------------------------------------------------------------
\32\ See section 351(i)(2) of the Public Health Service Act.
\33\ See ``Increasing Access to Generics and Biosimilars in
Medicare'' (Feb. 5, 2020) available at https://www.cms.gov/blog/increasing-access-generics-and-biosimilars-medicare.
---------------------------------------------------------------------------
Thus we propose to add a new policy at new Sec. 414.9(a)(3) that
would establish a 10-business day extension past the code application
deadline for submitting a complete application, including FDA marketing
authorization documentation, for biosimilar biological products. We
propose that this extension would apply only if the following proposed
criteria are met: (1) The marketing authorization documentation is
dated between the first day of the extension period and no later than
the last day of the extension period; and (2) the applicant submits a
complete application to CMS by the last day of the extension period. We
believe these proposed limitations are necessary to limit the deadline
extension only to those applicants that receive marketing authorization
after the regular quarterly application deadline and before the end of
the extension period. We believe a 10-business day extension would be
an adequate and reasonable amount of time for applicants, given the
proposed shorter quarterly coding cycles, while still allowing enough
time for CMS to evaluate the code application and generally make a
final coding decision within the quarterly coding cycle. We also
considered an extension of up to 3 weeks. Because there are only a
limited number of days in the quarterly coding cycle to evaluate the
applications and because we are usually already heavily involved in
application review by that point, we believe it would be very difficult
for us to provide an extension beyond 10 business days and still be
able to make a final coding decision in the quarterly coding cycle.
Given implementation of shorter, quarterly coding cycles, we believe it
is reasonable to have applicants submit a full and complete application
in the next coding cycle when complete documentation cannot be
submitted by the 10-business day extension after the code application
deadline. We also considered extensions shorter than 10 business days,
but we believe shorter extensions might not make a meaningful
difference for applicants to receive an FDA decision and submit the
required documentation to CMS.
Also, while we do not believe an application deadline extension to
accommodate later submission of required FDA documentation would be
feasible for all drug or biological product applications given our
resources and the compressed review timeframe under shorter coding
cycles, we seek comment on other potential circumstances that could
warrant such a deadline extension within the quarterly coding cycles
(for example, for particular drugs or drug classes). We note however
that our ability to accommodate any extension is based on our
expectation that the extension would impact only a limited number of
applications. If the number of applications that are submitted to CMS
within an extension period becomes too large, we may need to reevaluate
the policy, if finalized. We also seek comment on the appropriate
length of an extension for those circumstances, taking into
consideration that one possible approach to address requests for more
lengthy extensions, or a higher volume of applications submitted within
an extension period, may be a longer coding cycle (for example, a bi-
annual coding cycle) for all drug or biological product applications.
We also seek comment on the impact of product launch delays for
biosimilar biological products once they are approved by the FDA. A
number of biosimilar biological products have not been launched
immediately after their approval by the FDA, thus we seek comment on
whether a 10-day deadline extension is necessary.
Consistent with current practice, we also propose at new Sec.
414.9(a)(2)(iii) that in order for applications for non-drug, non-
biological items or services that are not subject to marketing
authorization under the Federal Food Drug & Cosmetic Act (FD&C Act) or
Public Health Service Act (PHSA) to be considered complete, the
application must include evidence that the item or service is available
in the U.S. market for use and purchase at the time of the relevant
HCPCS Level II code application submission deadline specified by CMS.
Prior to 2020, we had a requirement for 3 months of marketing activity
at the time of the application deadline to create or revise a code for
non-drug items, although an insurer could assign a miscellaneous code
for use until such time as a coding decision is made.\34\ Beginning in
2020, we adjusted the marketing criteria to only require evidence that
the item or service is available in the U.S. market for use and
purchase at the time of the relevant HCPCS Level II code application
submission deadline, to improve the speed of beneficiary access to new
items and services, and applied this policy to non-drug items that are
not regulated by the FDA. We believe it is important that non-drug,
non-biological items not subject to marketing authorization under the
FD&C Act or PHSA be available in the U.S. market for use and purchase
at the time of the relevant HCPCS Level II code application submission
deadline as some measure of assurance that the item is available for
prescription or use and thus is ready to receive a HCPCS Level II code.
We believe this minimizes the chance of adding unnecessary codes or
making updates to the code set that may not be useful, thus promoting
administrative simplification and minimizing burden on insurers,
providers, coders, and other users of the HCPCS code set. As discussed
in more detail in section IV.B.2. of this proposed rule, a major goal
of an effective code set is to strike a balance between sufficiently
identifying and differentiating items and services and producing a
manageable system and set of codes for users to efficiently submit and
process claims. When a new code is added, updates
[[Page 70383]]
must be disseminated, policies and coding manuals revised, and medical
records, billing software, and other systems changes are necessary to
accommodate the new and revised codes. In addition, coders, providers,
and suppliers have to be educated on and prepared for changes in codes
to ensure they are accurately utilizing the appropriate code that best
describes a specific item or services. By contrast, given the rigorous
FDA marketing authorization processes, requirements for clinical data,
and the user fees generally associated with the FDA marketing
authorization processes, CMS believes that manufacturers of items that
are subject to FDA marketing authorization intend to market the product
that is the subject of the code application and as such we do not
require evidence that these items are available in the U.S. market for
use and purchase at the time of the relevant code application deadline.
We note however that even if an item or service that is subject to FDA
marketing authorization is not available on the U.S. market at the time
of the application submission deadline, as noted in proposed Sec.
414.9(a)(2), all such code applications must include the applicable FDA
documentation and other information outlined in Sec. 414.9(a)(2), to
be complete.
---------------------------------------------------------------------------
\34\ HCPCS Level II codes include ``miscellaneous/not otherwise
classified'' codes. Historically, these codes have been used when a
supplier is submitting a bill for an item or service for which there
is no existing code that adequately describes the item or service
being billed. If a supplier or manufacturer has been advised to use
a miscellaneous code (also known as unlisted code, unclassified
code, or not otherwise specified code) because there is no existing
code that describes the item or service but the supplier or
manufacturer believes that a new code is needed, then the supplier
or manufacturer may submit an application to add a new HCPCS Level
II code. Significantly, miscellaneous codes allow suppliers to begin
billing immediately for a service or item as soon as it is allowed
to be marketed by the FDA in the absence of a specific HCPCS code--
including during the period when a request for a new code is being
considered under the HCPCS code review process. In addition, to
avoid the inefficiency and administrative burden of assigning
distinct codes, miscellaneous codes also may be used for items or
services that are rarely furnished or for which few claims are
expected to be submitted.
---------------------------------------------------------------------------
As described earlier in this subsection and at proposed Sec.
414.9(a), we are proposing to decline applications received after the
applicable deadline or that are incomplete. Applications that are
declined because they are not submitted by the applicable deadline or
are incomplete may be submitted in a subsequent coding cycle provided
they are timely and complete by the applicable deadline for the
subsequent coding cycle. We also considered allowing applicants to
supplement incomplete applications after the application deadline for
minor deficiencies or missing information that is insubstantial, such
as a missing brochure or clinical study that is referenced by the
applicant but not included as an attachment to the application. We
weighed the benefits of accommodating the submission of such
supplemental information within a coding cycle in cases where there are
minor deficiencies, against the need for applicants to submit timely,
complete applications. Given the shorter coding cycles we currently
implement (which we propose to continue, as previously discussed), we
believe it would be difficult to follow-up with numerous applicants
within a cycle for missing information, and thus, we propose that an
application must be timely and complete, in accordance with the
criteria described earlier in this section, in order for the
application to be considered and reviewed in a coding cycle. However,
we seek comment on whether we should allow certain supplemental
information to be submitted after the application deadline and in what
circumstances (including requirements or timeframes we should impose
for accepting additional information), recognizing that CMS would only
have a limited amount of time and resources for following up about and
obtaining missing information from applicants and may also have limited
opportunities to consider supplemental information in the course of the
coding review cycle. Please note that we would continue to allow
applicants to supplement a complete application with additional
materials up to the time of close of business on the date of the public
meeting at which the application is discussed, as is our current
policy.
d. Proposed Application Resubmission and Reevaluation
As outlined in the HCPCS Level II Coding Procedures document posted
on our website at: https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/HCPCSCODINGPROCESS, we currently allow any applicant who is
dissatisfied with our final coding decision to resubmit an application
for a previously considered item or service in a subsequent coding
cycle for us to reevaluate the final coding decision. Under our current
policy, we allow applicants to resubmit HCPCS Level II code
applications without limitation for items and services on which we
previously reached a final coding decision. Although we have stated in
our past guidance that previously unavailable information, additional
explanations, or significant new information that supports such a
reevaluation request may be helpful in informing CMS about why the
prior decision should be changed, many resubmitted applications do not
contain new information or specify a clear basis for us to reevaluate
the previously submitted information or reconsider the prior final
coding decision. As a result, we have spent time and resources
reviewing applications that are resubmitted with substantially similar
information, without a clear understanding of whether there is
something new or whether aspects of the information previously
submitted should be considered differently, such that it would warrant
a change to our prior final coding decision. We are proposing to
continue to allow applicants to resubmit code applications for
reevaluation of prior final coding decisions. However, in the interest
of reaching an appropriate coding decision and supporting efficient and
expeditious review of all code applications that are resubmitted, we
are proposing certain limitations and additional policies related to
reevaluations of coding decisions.
We propose at new Sec. 414.9(b)(1) that an applicant who is
dissatisfied with a final coding decision on an initial code
application may resubmit their application for reevaluation by CMS no
more than two times. We propose that any application resubmitted for
reevaluation must be timely and complete as specified in proposed Sec.
414.9(a) and must include--(1) a description of the previous
application submission(s); (2) a copy of the prior final coding
decision(s); and (3) an explanation of the applicant's reason for
disagreement with the prior final coding decision(s). The first time an
applicant resubmits an application for reevaluation by CMS, we would
not require, but would strongly encourage, that the applicant submit
new information with the application. As we state in our current
guidance, previously unavailable information, additional explanations,
or significant new information that supports such a reevaluation
request may be helpful in informing CMS about why the prior decision
should be changed.
In addition, at proposed Sec. 414.9(b), we propose that if an
applicant is dissatisfied after our initial reevaluation of our prior
final coding decision, we would allow one additional opportunity for
the applicant to resubmit the application for reevaluation of the first
resubmission decision. For a second application resubmission and
reevaluation, we propose at Sec. 414.9(b)(2) that, in addition to the
information and documentation required to be submitted with both
resubmissions under proposed Sec. 414.9(b)(1), the application also
must include the following: (1) Significant new information, defined as
information that was not previously submitted to CMS with respect to
the application that directly relates to the reason for the prior final
coding decision(s) and could potentially change the final coding
decision, and (2) an explanation of how the significant new information
addresses and directly relates to the reason(s) for the previous final
coding decision(s) and supports the request for a different coding
decision. By significant new information, we mean information not
previously submitted to CMS (for example, it was not included in the
[[Page 70384]]
prior application, and not submitted as a supplement to the prior
application or in response to a preliminary recommendation issued for a
prior public meeting up to the time of close of business on the date of
the CMS HCPCS public meeting at which the application is discussed),
and that directly relates to the reason for the prior final coding
decision(s) (for example, significant new information could be a newly
published relevant clinical study that supports a claim of a
significant therapeutic distinction made, but unsupported, in the prior
code application, or additional information that supports a claim in an
initial application that the product performs a significantly different
clinical function not captured in the current code set). The nature of
the prior final coding decisions also would be relevant in determining
whether the new information submitted would be considered significant
new information within the meaning of this proposal. As in the example
described previously, a new or additional clinical study may be
considered significant new information if the previous final coding
decision(s) directly relates to an unsupported claim of significant
therapeutic distinction. If significant new information is not
submitted with the second resubmission, or if the applicant does not
provide the other information required to be provided with both
resubmissions (as set forth at proposed Sec. 414.9(b)(1) and (2)), we
would decline to reevaluate the application. We note that for an
application to be considered for reevaluation it must be for the same
item or service originally submitted, and it must be based on the same
request made in the initial code application. For example, if an item
receives a new indication that was not a part of the original
application, a new and separate application would be required if the
applicant seeks to address the new indication because the review of
such an application would require new and different considerations.
We believe that requiring applicants to include significant new
information (and satisfy the additional requirements at proposed Sec.
414.9(b)(1) and (b)(2)) when an application is resubmitted for a second
reevaluation balances our desire to afford applicants another
opportunity to seek a reevaluation when they believe a final coding
decision should be changed and the recognition that it takes time and
resources to reevaluate applications that are submitted multiple times,
especially when those applications are submitted without a clear
indication of whether there is new information that should impact CMS's
decision, or whether aspects of the information previously submitted to
CMS may be considered differently. We believe that requiring
significant new information and other information, as outlined in
proposed Sec. 414.9(b)(1) and (b)(2), would enhance the accuracy of
our coding decisions and would enable us to focus our limited resources
on maintaining continued efficiency and speed in processing
applications.
We believe our limitation on the number of times an application can
be resubmitted for reevaluation of a final coding decision is
reasonable. In the past under the annual coding cycles, applicants have
resubmitted applications multiple times in subsequent coding cycles for
reevaluation. We believe that this could happen even more often under
the shorter more frequent coding cycles, especially for drug or
biological product code applications, given the shorter coding cycles.
However, we do not believe it would be necessary or appropriate to
allow for more than two resubmissions of a code application for
reevaluation, especially since under our proposal, resubmissions would
include additional information and materials as required by proposed
Sec. 414.9(b)(1) and (b)(2) (as previously discussed in this section)
and the applications would go through a public meeting process with
opportunity to comment on resubmissions (as discussed later in this
section). Allowing further opportunities for applicants to resubmit
applications after multiple evaluations of the prior coding decision(s)
for the same item or service would strain our resources and is unlikely
to result in a different decision (especially given that for the second
resubmission, the applicant would be required to provide us with
significant new information for our consideration). Therefore, we
believe it is important to apply a reasonable limit to the number of
times a code application for the same item or service can be
resubmitted that takes into account prior opportunities for evaluation,
conserves limited resources, and supports successful and timely
implementation of shorter and more frequent coding cycles. We also
believe that our proposal to place a limit on the number of
resubmissions would encourage applicants to fully consider and robustly
address the reason for the prior denial of their coding request before
resubmitting. It also would decrease the likelihood of resubmission of
applications without significant new information that could potentially
change the prior coding decision. Therefore, we propose to limit the
number of times an applicant may resubmit a code application for the
same item or service for reevaluation by CMS to two resubmissions. This
limitation would apply to resubmissions of applications for the same
item or service with the same FDA marketing authorization submitted
with the original application and would continue to apply to a code
application for that item or service regardless of whether the
applicant or manufacturer undergoes a change of ownership, a new
manufacturer begins manufacturing the item or service at issue, there
is a change of or new supplier of that item or service, or the item or
service is renamed.
In addition, in order to ensure that we have the opportunity to
receive and consider additional input that may be helpful for
reevaluations, at proposed Sec. 414.9(b)(3), we are proposing to
include an application submitted for reevaluation on an agenda for a
bi-annual public meeting and to issue a preliminary recommendation
(provided the resubmitted application is timely and complete and meets
all other proposed criteria and requirements for consideration under
the HCPCS Level II external code application process). We note that
this policy would also apply to resubmitted applications for drug or
biological products as well as for non-drug and non-biological items
and services. For resubmissions of code applications for drug or
biological products, we propose at Sec. 414.9(b)(3)(i) that the
resubmitted application would not be included in a public meeting or
receive a final decision in the quarterly cycle in which the
application is submitted. Even if a public meeting falls within the
quarterly cycle in which such an application was resubmitted, we would
not include the application in a public meeting agenda or issue a
preliminary recommendation on such application until at least the
following bi-annual cycle. We believe this is necessary because we
would need more than approximately 1-month to prepare the preliminary
recommendation before including an application on a public meeting
agenda. For example, if a drug or biological product application were
submitted for reevaluation for the second quarterly cycle of the year
(application deadline around April), the preliminary recommendation for
the public meeting that falls in that cycle would need to be prepared
for May, which we believe would not allow us sufficient time to
complete a preliminary recommendation. In
[[Page 70385]]
addition, consistent with the policy that would apply to initial code
applications, we propose at Sec. 414.9(b)(3)(ii) that preliminary
recommendations and final decisions for applications that are
resubmitted for reevaluation may be delayed as described in Sec.
414.8(e)(3).
We seek comments on the proposals discussed in this section.
2. Proposed Evaluation of HCPCS Level II Code Applications
As explained earlier in section IV.A.2. of this proposed rule,
interested parties seeking to modify the HCPCS Level II code set may
submit an external HCPCS Level II code application, as available on
CMS' website, that requests to add a code, revise an existing code, or
discontinue an existing code. An application to add a code may be
submitted when the applicant believes it is appropriate for the item or
service that is the subject of the code application to be separately
identified by a new HCPCS Level II code. An applicant may submit an
application to revise an existing code if the applicant believes that
the descriptor of an existing HCPCS Level II code does not adequately
describe the subject item or service, and that a modification to the
long descriptor language (code text) would provide a more appropriate
description of the category of items or services represented by the
code. An application to discontinue an existing code may be submitted
when the applicant believes that an existing HCPCS Level II code is
duplicative of another code or has become obsolete and should be
removed from the HCPCS Level II code set. Consistent with these
procedures, we propose at Sec. 414.10(b) that an applicant may submit
an external HCPCS Level II code application to request the addition of
a code, revision of an existing code, or discontinuation of an existing
code.
We propose at Sec. 414.10(c) that our evaluation of a code
application would be based on information contained in the application
and supporting material, any comments received through the public
meeting process as applicable, any information obtained from and
evaluations conducted by federal employees or CMS contractors, and any
additional research or information we may obtain independently that may
support or refute the claims made by or the evidence provided by the
applicant. Our evaluation of a code application may result in a coding
decision that reflects the applicant's coding request in whole, in
part, or with modification. CMS may also deny the coding request. CMS's
coding action would be set forth in the final coding decision. We
propose at Sec. 414.10(h) to continue these procedures. Examples of
prior years' CMS HCPCS Level II coding decisions are publicly available
on our HCPCS website at: https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo.
As set forth at proposed Sec. 414.10(a), the code application
evaluation procedures proposed in Sec. 414.10 and described in this
section would apply to CMS' evaluation of external HCPCS Level II code
applications for drug or biological products and non-drug, non-
biological items and services, as described in proposed Sec. 414.8. In
this section, we propose the processes by which we would evaluate code
applications, depending on the subject of the application and type of
modification to the code set requested. Our evaluation of all code
applications, however, involves careful consideration of CMS's
objectives of maintaining a code set that is manageable for users and
that meets the claims processing needs of Medicare, as explained in
more detail in this section.
A major goal of an effective code set is to strike a balance
between sufficiently identifying and differentiating items and services
and producing a manageable system and set of codes for the efficient
submission and processing of claims. The HCPCS Level II code set is not
intended to be a universal listing of all items and services at a
granular, product-specific level. Rather, the HCPCS Level II code set
currently contains almost 8,000 separate categories of like items or
services that encompass products from different manufacturers. Thus, a
code category is generally intended to describe the item or service
provided in a way that is general enough so as not to be manufacturer
specific. Categorizing items and services in this manner simplifies the
submission and processing of claims with a manageable number of codes
and thus promotes the goals of administrative simplification and burden
reduction as previously discussed.
In striking a balance between sufficiently identifying and
differentiating items and services and producing a manageable system
and set of codes for the efficient submission and processing of claims,
throughout the proposed evaluation process for code applications, we
consider CMS' objective of maintaining a code set that allows for the
efficient and timely processing of Medicare claims in accordance with
the Medicare statute and regulations that are specific to the items and
services for which a code is being requested. As explained in section
IV.A.1. of this proposed rule, prior to its adoption under HIPAA as the
standard medical data code set for reporting certain items and services
not identified by CPT[supreg] codes in HIPAA standard transactions,
HCPCS Level II codes were developed by CMS, then known as HCFA, to
standardize the coding systems used to facilitate claims processing and
payment for items and services primarily for Medicare. The HCPCS Level
II coding system was selected as a standard medical data code set for
use in HIPAA standard transactions in part because of its wide
acceptance among both public and private payers. We maintain the HCPCS
Level II code set primarily to support the claims processing needs of
Medicare, recognizing that other payers use HCPCS Level II codes as
well.
When we use the term ``claims processing need'' we are referring to
evaluating HCPCS applications in a manner that sufficiently identifies
and differentiates items and services but produces a manageable system
and set of codes for the efficient submission and processing of
Medicare claims in accordance with the Medicare statute and regulations
that are specific to the items and services for which a code is being
requested. The granularity of what falls within code categories in the
HCPCS Level II code set is deeply tied to Medicare's ``claims
processing need.'' Similarly, reaching a judgment about whether any two
items that fall within the code set are sufficiently different so as to
require distinct codes is also always tied to ``claims processing
need.'' Several of the more specific proposed criteria for evaluating
HCPCS Level II code applications, as described later in this proposed
rule, can be understood to encompass an assessment of Medicare ``claims
processing need.'' Sometimes a Medicare ``claims processing need'' is
driven by Medicare program integrity concerns. A Medicare program
integrity need may drive a need to add a HCPCS Level II code to
identify an item or service that would otherwise fall outside the scope
of the HCPCS Level II code set or may drive a need for a more specific
code in order to make it efficient for CMS to distinguish and deny
corresponding claims. In general, CMS has a ``claims processing need''
for each code within the HCPCS Level II taxonomy to adequately describe
a corresponding item or service, such that when a related claims form
is filed, CMS can understand what the Medicare beneficiary actually
received from the provider or supplier, but without the code being
overly specific and thereby causing undue administrative burden
[[Page 70386]]
for CMS (or for other users of the code set, for that matter). In other
words, when we review applications for HCPCS Level II coding requests,
we evaluate the information offered by the applicant that articulates
the reasons why the applicant believes a specific code is warranted,
against the information CMS believes is needed to process a claim
effectively for a specific item or service, including the information
needed to describe that item or service in order to apply Medicare
coverage and payment policies, and to minimize program integrity risks.
We invite the public to comment on the term ``claims processing need''
as we use it here and throughout this proposed rule, including in the
context of specific provisions of this rule describing the proposed
evaluation standards for the review of HCPCS Level II code
applications.
a. Proposed Evaluation Process for Applications To Add a Code
In this section, we propose the processes by which we would
evaluate code applications to add a code.
(1) Proposed Evaluation Process for Non-Drug, Non-Biological
Applications To Add a Code
(a) Proposed Threshold Factors for Evaluating Non-Drug, Non-Biological
Applications To Add a Code
As a threshold matter, when an applicant requests to add a code for
a non-drug, non-biological item or service, as defined in section IV.B
of this proposed rule, we believe it is important to first consider
whether the item or service that is the subject of the application is
appropriate for inclusion in the HCPCS Level II code set and whether
there is a claims processing need on the part of Medicare to identify
the item or service in the HCPCS Level II code set. Consistent with our
current practice, we propose at Sec. 414.10(d)(1)(i)-(iii) that we
would first determine whether, as a threshold matter, the subject item
or service is appropriate for inclusion in the HCPCS Level II code set
by assessing whether: (1) The item or service is not appropriate for
inclusion in or already coded in a different HIPAA standard medical
data code set, such as CPT[supreg], ICD, or CDT[supreg]; (2) the item
or service is primarily medical in nature; and (3) if applicable, the
item has the appropriate marketing authorization from FDA, or is exempt
from premarket notification requirements. Consistent with our current
practice, we propose at Sec. 414.10(d)(1)(iv) that we would also
determine whether, as a threshold matter, there is a claims processing
need on the part of Medicare to identify the item or service in the
HCPCS Level II code set.
As discussed in section IV.A. of this proposed rule, not all items
and services are appropriate for inclusion in the HCPCS Level II code
set maintained by CMS. This is because HIPAA mandated the adoption of
certain medical data code sets to standardize the way various types of
data are reported during routine transmission of electronic claims,
with the HCPCS Level II code set specifically adopted to identify
particular items and services, such as healthcare equipment and
supplies not described by CPT[supreg] codes (45 CFR 162.1002). The
adoption of standard national medical data code sets helps to avoid
duplication and burden (65 FR 50361). Therefore, as a threshold matter,
we believe it is important to determine whether the subject item or
service is not appropriate for inclusion in or already coded in a HIPAA
standard medical data code set other than the HCPCS Level II code set
maintained by CMS, such as CPT[supreg], ICD, or CDT[supreg]. For
example, although technically part of the HCPCS Level II code set, the
CDT[supreg] code set was adopted under HIPAA as the standard national
medical data code set to be maintained by the American Dental
Association, for reporting dental items and services supplied to or
used by dentists, oral and maxillo-facial surgeons, prosthodontists,
and periodontists. Therefore, these items and services are not
appropriate for inclusion in the HCPCS Level II code set maintained by
CMS.
When we evaluate whether an item or service is appropriate for
inclusion in the HCPCS Level II code set, we also take into account the
type of item or service, the setting in which it is furnished or used,
by whom it is used, and how it is used. For example, an item or service
exclusively used or administered in the inpatient hospital setting
would not be appropriate for inclusion in the HCPCS Level II code set.
Procedures performed during an inpatient stay are identified by ICD-10-
PCS codes. In addition, the setting in which the item or service is
used or administered and by whom it is used or administered may be
considered together when considering whether the item or service is
appropriate for inclusion in the HCPCS Level II code set. For example,
we consider whether an item or service is typically physician-
administered in a physician's office versus self-administered by the
patient in the home. Procedures performed by physicians or other health
care professionals when performed in a physician's office are typically
described by CPT[supreg] codes. We also note that an item or service
that is the subject of a HCPCS Level II code application could already
be captured by a specific code or a comprehensive code used to identify
a group of related items and services in another code set such as
supplies that are used during an already coded procedure. As part of
this assessment, we consider whether a particular item or service, or a
component of an item or service, is included in a bundled payment \35\
and coded in a different HIPAA standard medical data code set because
separate reporting and billing of a bundled item or service could be
duplicative.
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\35\ A bundled payment methodology involves the combining or
``bundling'' items and services together for single rate or payment
amount (an all-inclusive payment amount), such that individual items
and services are not billed and paid for individually. This is
common in many Medicare prospective payment systems, though the
constellation of bundled items and services and underlying payment
methodologies vary (for example, a bundled payment may be based on
expected costs of the items and services furnished to a beneficiary
during an episode of care). When bundled payment methodologies
apply, we must ensure that duplicate payment is not made by Medicare
(that is, that items and services are not ``unbundled'' and billed
and paid for separately).
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Consistent with our current practice, we also propose to assess, as
a threshold consideration, whether the subject item or service is
primarily medical in nature. The HCPCS Level II code set is a standard
medical data code set adopted under HIPAA for describing and
identifying healthcare equipment and supplies in electronic healthcare
transactions (45 CFR 162.1002). The HCPCS Level II code set is not
intended to be a universal or exhaustive listing of all items and
services on the market, and is generally reserved for medical items and
services, since HCPCS Level II codes generally represent categories of
like healthcare items and services for health insurer claims processing
purposes. As such, we believe it is important to evaluate whether the
item or service for which an applicant is requesting coding action is
primarily medical in nature. For purposes of this proposed threshold
factor, an item or service would be considered ``primarily medical in
nature'' when it is primarily and customarily used to serve a medical
(diagnostic or therapeutic) purpose, and is generally not useful in the
absence of an illness or injury. If the primary or customary use of an
item or service is not for a medical (diagnostic or therapeutic)
purpose, then it would not be considered primarily medical in nature,
even if the item or service could be used in a healthcare setting or in
a way that assists a patient. For example,
[[Page 70387]]
while an air conditioner may have a remote medical (therapeutic) use of
lowering room temperature to reduce fluid loss in a cardiac patient and
to maintain the proper fluid balance, the primary and customary use of
the air conditioner is for a non-medical purpose--that is, the item is
generally used by anyone, regardless of an existing medical condition,
to stay cool in a way that is not for the diagnosis or treatment of an
illness or injury. Furthermore, an air conditioner is useful in the
absence of an illness or injury, and thus, an air conditioner would not
be considered ``primarily medical in nature'' for purposes of this
proposed threshold factor. Other examples of items that may be used by
a person with a medical disease or condition, but that we would not
consider primarily medical in nature for purposes of this proposed
threshold factor due to their common usage for non-medical purposes
include: Mirrors used for self-examination; drinking straws (including
elongated straws) used to assist with reach; and wearable garments,
such as shirts, pants, headbands and belts, even if the styling of the
garment permits easier access to IV insertion sites or dialysis shunts,
or keeps a body part dry when worn in the shower or swimming pool. The
information that applicants include in the code application facilitates
our assessment of this proposed threshold factor; applicants describe
how the item or service is primarily and customarily used to serve a
medical purpose and explain whether the item or service is useful in
the absence of an illness or injury.
Consistent with our current practice, we also propose to assess, as
a threshold consideration, whether the item that is the subject of the
code application has the appropriate marketing authorization from FDA,
or is exempt from premarket notification requirements, if applicable.
We believe it would be inappropriate and premature to consider
potential coding action for an item that does not yet have the
appropriate marketing authorization from FDA or a claimed exemption
from such requirements. We require applicants to provide documentation
of marketing authorization by FDA at the time the application is
submitted, and also request information regarding the date the item was
granted such marketing authorization, at the time the application is
submitted. We also require applicants to explain the basis for any
claimed exemptions from FDA premarket notification requirements, with
specific citations to the regulation number under 21 CFR parts 862
through 892 as appropriate. Our assessment of this proposed threshold
factor involves verifying that the documentation and information
provided by the applicant matches the item or service that is the
subject of the code application. We seek input from FDA should we have
any questions about the documentation and information provided by the
applicant.
Consistent with our current practice, we also propose to assess, as
a threshold matter, whether there is a claims processing need on the
part of Medicare to identify the item or service in the HCPCS Level II
code set. Given our objective, as explained earlier in section IV.B.2.
of this proposed rule, of maintaining a code set that meets the claims
processing needs of Medicare, we believe it is important to first
ensure that Medicare has a claims processing need to identify the
subject item or service with a HCPCS Level II code.
The determination of whether a HCPCS Level II code to identify the
subject item or service is needed for claims processing purposes would
depend on the individual facts and circumstances presented by each
application. As we stated previously, we propose at Sec. 414.10(c)
that our evaluation of a code application would be based on information
contained in the application and supporting material, any comments
received through the public meeting process as applicable, any
information obtained from and evaluations conducted by federal
employees or CMS contractors, and any additional research or
information we may obtain independently that may support or refute the
claims made or the evidence produced by the applicant. Consistent with
current practice, this includes information obtained from and
evaluations conducted by federal employees comprising a team generally
known as the CMS HCPCS Workgroup. This is an internal workgroup
composed of federal government officials representing the major
components of CMS, as well as other employees from pertinent Federal
agencies, including the Department of Veterans Affairs and the Defense
Health Agency, which includes policy, product, and claims processing
experts. The Workgroup discusses whether coding requests warrant a
change to the HCPCS Level II code set, and informs CMS' decisions
relative to the claims processing needs of Medicare. We also take into
consideration any pertinent information that may have been received
from code applicants and their representatives and other stakeholders,
including government insurers and the general public, through HCPCS
public meetings.
Consistent with our current practice, we propose at Sec.
414.10(d)(1) that if we determine that the subject item or service
satisfies all the factors at proposed Sec. 414.10(d)(1)(i) through
(iv), discussed previously, we would further evaluate the applicant's
coding request under the process proposed in Sec. 414.10(d)(4) and
discussed later in section IV.B.2.a.(1)(b) of this proposed rule, to
determine whether it would be appropriate to add a code for the item or
service.
Furthermore, given our objective of maintaining a code set that
meets the claims processing needs of Medicare, we propose at Sec.
414.10(d)(2) that if one or more of the proposed factors under Sec.
414.10(d)(1)(i)-(iii) are not met but the proposed factor in Sec.
414.10(d)(1)(iv) is met, we would further evaluate the applicant's
coding request under the process proposed in Sec. 414.10(d)(4). We
believe it would be premature to deny the application when a Medicare
claims processing need exists. For instance, Medicare may need to
separately identify a non-covered, previously non-coded item or service
that has been frequently miscoded using an existing specific or
miscellaneous HCPCS Level II code, which could result in inappropriate
payment. As an example, we created code A4467 (``Belt, strap, sleeve,
garment, or covering, any type'') to identify certain items that were
not found to be primarily medical in nature and thus not appropriate
for inclusion in the HCPCS Level II code set, but that had been
miscoded under miscellaneous or other existing HCPCS Level II codes for
DME, resulting in erroneous payment. To ensure the accuracy of Medicare
claims, code A4467 was established to separately identify these
particular items in order to prevent them from being inappropriately
reported through the use of other existing HCPCS Level II codes. In
this way, separately identifying these items clarifies to coders that
the particular item is not described by a different existing HCPCS
Level II code. As another example, we may need a code to distinguish
items statutorily excluded under Medicare, such as certain contact
lenses, similarly to avoid miscoding and ensure more accurate claims
processing. Thus, consistent with our current practice, we believe it
is appropriate to propose the exception at proposed Sec. 414.10(d)(2).
We propose at Sec. 414.10(d)(3) that if the application satisfies
neither proposed Sec. 414.10(d)(1) nor Sec. 414.10(d)(2), we would
not further evaluate the applicant's coding request under the process
proposed in Sec. 414.10(d)(4) and thus would not
[[Page 70388]]
modify the HCPCS Level II code set in response to the coding request.
If we determine that the subject item or service is only appropriately
coded in a code set other than the HCPCS Level II code set, such as
CPT[supreg], ICD, or CDT[supreg], we would, where appropriate, redirect
the applicant to the other code set.
(b) Proposed Process for Further Evaluating Non-Drug, Non-Biological
Applications To Add a Code
If the application satisfies proposed Sec. 414.10(d)(1) or (d)(2),
the focus of our evaluation then shifts from whether the subject item
or service is appropriate for inclusion in the HCPCS Level II code set
to the appropriate placement within the HCPCS Level II code set. Under
this proposed evaluation process, we would further evaluate an
applicant's coding request by assessing the functional and clinical
differences of the subject item or service compared to other similar
items or services already described in the HCPCS Level II code set, and
determine based on our assessment of those differences, whether it
would be appropriate to take coding action to add a new code to
identify the subject item or service or revise the descriptor of an
existing code category to clarify that the subject item or service is
captured by the existing code category, or to take no coding action due
to the availability of an existing code category that adequately
describes the subject item or service. As explained in more detail in
this section, we assess these differences due to the nature of HCPCS
Level II codes, which generally represent categories of like items or
services, grouped together at the broadest level, on the basis of
performing the same or similar function for a patient. This is because,
as previously noted in this section, the HCPCS Level II code set is not
intended to be a universal listing of all items and services at a
granular, product-specific level. Additionally, the information
submitted by the applicant in the code application facilitates our
determination of appropriate coding action. In the code application,
applicants describe the item or service that is the subject of the code
application, such as what the item or service does, how it is used, the
patient population for which the item or service is clinically
indicated; the medical benefit of the item or service to the patient,
such as the clinical outcome resulting from the use of the item or
service; and the reason why the applicant believes existing codes do
not adequately describe the item or service.
As explained in more detail later in this section, we propose at
Sec. 414.10(d)(4) to assess: (1) Whether the subject item or service
performs a significantly different clinical function compared to other
items or services described by the HCPCS Level II code set; and (2)
whether the use of the subject item or service results in a significant
therapeutic distinction compared to the use of other similar items or
services described by the HCPCS Level II code set. Furthermore, as
discussed later in this section, we propose to consider whether a new
HCPCS Level II code to separately identify the subject item or service
is needed by Medicare to facilitate claims processing. These proposed
factors balance our desire to facilitate patient access to innovative
items or services with our consideration of CMS' objectives of
maintaining a code set that is manageable for users and that meets the
claims processing needs of Medicare.
(i) Significantly Different Clinical Function
As previously discussed, codes generally represent categories of
like items and services, grouped together at the broadest level, on the
basis of performing the same or similar clinical function for a
patient. In order to evaluate what code category is appropriate for an
item or service, we need to evaluate the clinical function performed
for the patient and how the item or service addresses their condition.
Therefore, our evaluation of applications to add a code begins with
identifying and assessing the clinical function of the item or service
that is the subject of the code application. Broadly speaking, the
clinical function performed by an item or service refers to what the
item or service does for a patient. It can also be understood as the
general function of the item or service in the body, or the intended
purpose of the item or service in the delivery of care. Clinical
function can also refer to the overall treatment provided to a patient
through the use of the item or service. For example, the clinical
function of positive airway pressure is respiratory ventilation, and
the clinical function of an electrode is to conduct electricity. As
explained earlier, applicants are requested to provide information to
facilitate our assessment of clinical function, such as fully
explaining what the subject item or service does, how it is used, and
the patient population for which the item or service is clinically
indicated.
In most cases, items and services are developed in a way that is
evolutionary or iterative--that is, they are developed in a way that
results in new items or services that still retain similar features or
functionalities as those performed by previous iterations or versions,
such that they may not be so different from those already described by
the code set. When evaluating whether a new code is appropriate for the
subject item or service, we look to see if an existing code adequately
captures the clinical function of the item or service, or whether the
clinical function of the item or service is so distinct or dissimilar
from the clinical functions performed by other items or services
currently described by the HCPCS Level II code set that it cannot be
categorized in an existing code category with other items or services.
We believe a new code may be warranted if we determine that the subject
item or service performs a clinical function that is not performed by
any other items and services currently categorized in the HCPCS Level
II code set--that is, a clinical function that is considered first-of-
kind for purposes of HCPCS Level II coding. Because the clinical
function would not be performed by other items or services already
categorized in the code set, there would be no existing HCPCS Level II
code to describe such an item or service. Thus, consistent with our
current practice, we propose at Sec. 414.10(d)(4)(i) that we would
evaluate whether the item or service that is the subject of the code
application performs a significantly different clinical function as
compared to other items and services described by the HCPCS Level II
code set, and that an item or service is considered to perform a
significantly different clinical function if it performs a clinical
function that is not performed by any other item or service currently
described by the code set. If we determine that an item or service
performs a significantly different clinical function, we further assess
whether there is a claims processing need on the part of Medicare to
identify that particular item or service based on its clinical function
with a new code on a HIPAA standard claim. Thus, we propose at Sec.
414.10(d)(5)(i) that a new code would be warranted if we determine that
the item or service that is the subject of the code application
performs a significantly different clinical function as compared to
other items and services described by the HCPCS Level II code set, and
we find there is a claims processing need to separately identify the
item or service with a new code to facilitate payment under Medicare.
An example of this can be shown by code Q0480, ``Driver for use
with pneumatic ventricular assist device, replacement only,'' which at
the time a
[[Page 70389]]
code was requested, was an item performing a first-of-kind clinical
function not previously captured by the code set and for which there
was a demonstrated claims processing need. This device was the first
mechanical heart pump with replaceable external components authorized
by FDA as a destination therapy so the patient would not have to remain
in the hospital while awaiting a transplant, and we issued a new code
to identify this device.
(ii) Significant Therapeutic Distinction
Codes represent categories of similar items or services, grouped
together at the broadest level, on the basis of performing the same or
similar clinical function. Items or services identified in the same
code may differ in some respects, for example in the mechanism of
operation. We recognize that differences between items or services that
perform the same or similar clinical function, such as a difference in
mechanism of operation, may result in a significantly improved medical
benefit or significantly different medical benefit for patients. We
believe it is important for insurers to be able to differentiate and
separately identify such items and services to facilitate claims
adjudication. As such, and subject to CMS finding there is a claims
processing need under proposed Sec. 414.10(d)(5)(i), we believe that
when the item or service that is the subject of the code application
operates differently than other similar items or services described in
existing codes, and that difference in operation results in a
significantly improved or significantly different medical benefit for
patients (as defined later in the section), the difference between the
subject item or service and other similar items or services would be
meaningful enough to warrant a differential coding based on significant
therapeutic distinction. Differential coding on the basis of
significant therapeutic distinction also reflects our desire to
facilitate patient access to the advantages and benefits of innovative
items or services by ensuring codes are available to providers and
suppliers to use.
Under current guidance,\36\ a significant therapeutic distinction
is shown when the subject item or service results in an improved
medical benefit (for example, a significantly improved medical outcome
or a significantly superior clinical outcome) when compared with the
use of other similar items or services that would otherwise share an
existing code category. Requests for modifications to the HCPCS Level
II code set based on claims of significant therapeutic distinction are
reviewed on a case-by-case basis, taking into consideration clinical
information provided by the applicant and others that may support or
refute the claim(s) made by the applicant. An applicant should provide
the best available information in support of the claim(s). Greater
weight is given to more methodologically rigorous and scientifically
reliable evidence. Process indicators, such as improved compliance,
convenience, and personal preference are considered significant
therapeutic distinctions only to the extent that they result in
demonstrably improved clinical outcomes.
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\36\ See ``HCPCS Decision Tree For External Requests to Add or
Revise Codes,'' available at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/HCPCS_Decision_Tree_and_Definitions.pdf.
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The application seeks information from the applicant to enable us
to assess whether the subject item or service results in a significant
therapeutic distinction. Applicants are requested to identify currently
coded items or services that perform the same or similar medical
function as the subject item or service. Applicants are then requested
to identify the differences between the subject item or service or its
operation and the currently coded items or services, which would result
in a significantly improved medical outcome or significantly superior
clinical outcome.
In this proposed rule, we are proposing to broaden opportunities to
identify a significant therapeutic distinction by also considering
whether the use of the subject item or service results in a
significantly different medical benefit, when compared with the use of
other similar items or services described in the HCPCS Level II code
set. Thus, we propose at Sec. 414.10(d)(4)(ii) that a significant
therapeutic distinction is shown when the use of that item or service
results in a significantly improved or significantly different medical
benefit when compared with the use of other similar items or services
described in the HCPCS Level II code set.
We propose at Sec. 414.10(d)(4)(ii)(A) that we would determine
that the use of an item or service results in a significantly improved
or significantly different medical benefit when compared with the use
of other similar items or services described in the HCPCS Level II code
set if we find that it meets any of the criteria at proposed Sec.
414.10(d)(4)(ii)(A), as further described later in the section. We note
that proposed Sec. 414.10(d)(4)(ii)(A) sets forth a framework that is
based on the same general criteria that CMS currently uses for
determining substantial clinical improvement for purposes of the
Inpatient Prospective Payment System (IPPS) New Technology Add-On
Payment (NTAP) (42 CFR 412.87(b)(1)), subject to modifications that we
are proposing for purposes of evaluating a significant therapeutic
distinction claim for a HCPCS Level II code application. We believe
that the same general framework used to evaluate whether a service or
technology represents a substantial clinical improvement for purposes
of the NTAP, as modified here, may also reasonably be used to evaluate
whether the use of an item or service results in a significantly
improved or significantly different medical benefit for the purpose of
evaluating HCPCS Level II code applications. In both the HCPCS Level II
context and the NTAP context, the framework allows for reaching a
comparative determination about the therapeutic effect of a designated
item or service, and whether this represents an advance over other
items and services.
While we believe the same framework used for determining
substantial clinical improvement for purposes of the IPPS NTAP would be
generally appropriate for determining significant therapeutic
distinction (significantly improved or significantly different medical
benefit) in the context of evaluating a HCPCS Level II code
application, we are seeking comment, as indicated in the bullet points
later in the section, regarding whether certain factors would
appropriately apply in the context of evaluating HCPCS Level II code
applications, or whether they should be modified or eliminated for the
purpose of determining significant therapeutic distinction. As
reflected in proposed Sec. 414.10(d)(4)(ii)(A), CMS would determine
that the use of an item or service results in a significantly improved
or significantly different medical benefit, when compared with the use
of other similar items or services described in the HCPCS Level II code
set, if it finds any of the following:
The item or service that is the subject of the code
application offers a treatment option for a patient population
unresponsive to, or ineligible for, currently available treatments (for
purposes of determining significant therapeutic distinction, this may
include, for example, persons for whom currently available treatments
may be contraindicated, such as persons who may be allergic to those
treatments or for whom those treatments may be toxic or harmful based
on compromised renal or liver function or other co-morbid condition; or
for specific populations for whom a currently
[[Page 70390]]
available treatment or dosage is contraindicated, based on FDA-approved
labeling, related to age, comorbid condition or concurrent treatment
that could impact the results of the treatment; or for whom other
treatments must be first tried and failed, as per FDA-approved
labeling).
The item or service that is the subject of the code
application offers the ability to diagnose a medical condition in a
patient population where that medical condition is currently
undetectable, or offers the ability to diagnose a medical condition
earlier in a patient population than allowed by currently available
methods and there must also be evidence that use of the item or service
to make a diagnosis affects the management of the patient. We are
seeking public comment regarding whether and under what circumstances
this factor might be appropriately applied to HCPCS Level II code
applications. We note that diagnostic tests and lab tests are generally
not coded in the HCPCS Level II code set. Diagnostic tests and lab
tests are not typically administered in patients' homes; and when
administered in a physician's office, they are included in the
procedure, and would not be separately payable using HCPCS Level II
codes, and therefore a HCPCS Level II code would not be needed for
Medicare claims adjudication.
A demonstration of one or more of the following outcomes.
++ A reduction in at least one clinically significant adverse
event, including a reduction in mortality or a clinically significant
complication.
++ A decreased rate of at least one subsequent diagnostic or
therapeutic intervention.
++ A decreased number of future hospitalizations or physician
visits.
++ A more rapid beneficial resolution of the disease process
treatment including, but not limited to, a reduced length of stay or
recovery time.
++ An improvement in one or more activities of daily living.
++ An improved quality of life.
++ A demonstrated greater medication adherence or compliance. With
regard to this factor in particular, we are seeking comment regarding
whether it is useful or appropriate to include improved medication
adherence or compliance as a factor in evaluating HCPCS Level II code
applications for non-drug, non-biological items and services for the
purposes of determining significant therapeutic distinction. We note
that medication adherence or compliance, by itself, is an interim
measure, and not a clinical end point. While greater adherence or
compliance might potentially lead to a clinical end point, those end
points are already identified earlier in the list of outcomes. If CMS
decides to adopt this factor as proposed, it would substantially modify
the current standard CMS uses to evaluate whether the use of a non-
drug, non-biological item or service demonstrates a significant
therapeutic distinction. Generally, process indicators (such as
improved compliance) have been considered significant therapeutic
distinctions only to the extent that they result in demonstrably
improved clinical outcomes (for example, improved mortality or
morbidity).
The totality of the information otherwise demonstrates
that the use of the item or service results in a significantly improved
or a significantly different medical benefit, when compared with the
use of other similar items or services described in the HCPCS Level II
code set.
When determining whether the use of the item or service results in
a significantly improved or a significantly different medical benefit
when compared with the use of other similar items or services described
in the HCPCS Level II code set, we propose at Sec. 414.10(d)(4)(ii)(B)
that we may consider instances where the use of the item or service may
substantially improve or substantially change the medical benefit
realized by a specific subpopulation of patients with the medical
condition for whom the item or service is used, based on a common
characteristic shared by the subpopulation (for example, allergic
sensitivity to a currently available alternative treatment item) that
impacts the medical benefit of the subject item or service. To offer
another example, a significantly improved or significantly different
medical benefit may be demonstrated where the use of an item or
service, when compared to a currently available alternative item or
service that is currently described in the HCPCS code set, provides a
differential benefit to a subset of patients, based on patient
characteristics typically needed to use the item or service (such as
strength, functionality, and cognitive ability) and the manner in which
the item or service is typically used. For example, certain prosthetics
or orthotics, such as a heavy prosthetic leg with features that enable
quicker gait, use on rough terrain, or on steep inclines might
potentially be suitable for a strong patient, but may be more than a
frail elderly patient could use or might need. A finding of
significantly different medical benefit for such a prosthetic or
orthotic item might be supported on the basis that the item provides a
differential benefit for strong patients.
In determining whether the use of item or service results in a
significantly improved or a significantly different medical benefit
when compared with the use of other similar items or services described
in the HCPCS Level II code set, we propose at Sec. 414.10(d)(4)(ii)(C)
that we would make this determination without regard to the prevalence
among Medicare beneficiaries of the underlying medical condition
treated or diagnosed by the item or service that is the subject of the
code application. In particular, we would not consider a low prevalence
rate for the underlying medical condition as a factor weighing against
an item or service that is the subject of the code application, for the
purpose of our evaluating whether there is a significantly improved or
significantly different medical benefit associated with use of the item
or service.
Additionally, when determining whether the item or service would
meet the criterion of conferring a significant therapeutic distinction,
we propose at Sec. 414.10(d)(4)(ii)(D) that an item's designation
under the FDA Breakthrough Devices Program and marketing authorization
for the indication that received such designation will be given
substantial weight in the consideration. Under this voluntary program,
FDA evaluates certain devices and device-led combination products that
``provide for more effective treatment or diagnosis of life-threatening
or irreversibly debilitating human disease or conditions.''
37 38 When FDA grants a designation under the Breakthrough
Devices Program, FDA has considered whether or not the underlying
device (or device-led combination) meets one of several additional
criteria, including the criterion of offering ``significant advantages
over existing approved or cleared alternatives,'' as by ``reduc[ing] or
eliminat[ing] the need for hospitalization, improv[ing] patient quality
of life, facilitat[ing] patients' ability to manage their own care
(such as through self-directed personal assistance), or establish[ing]
long-term clinical efficiencies.'' \39\ In sum, we believe that when an
FDA Breakthrough Devices designation has been granted, this strongly
suggests that use of the device results in a significantly
[[Page 70391]]
improved medical benefit as compared to the use of other items and
services for the purpose of meeting the significant therapeutic
distinction factor under the HCPCS Level II code evaluation process.
Therefore, proof that a device has received an FDA Breakthrough Devices
designation will be given substantial weight as CMS considers whether
the device meets the significant therapeutic distinction factor under
the HCPCS Level II code evaluation process. As such, we propose at
Sec. 414.10(d)(4)(ii)(D) that when an application to add a code
relates to a device that has already received an FDA Breakthrough
Device designation and marketing authorization for the indication for
which the device was granted FDA Breakthrough Device designation, then
proof of that FDA designation and authorization will be given
substantial weight as CMS considers whether the device meets the
significant therapeutic distinction factor proposed at Sec.
414.10(d)(4)(ii). The aim of this proposal is to recognize that an FDA
Breakthrough Device designation offers supporting evidence that can
help to strengthen a claim of significant therapeutic distinction.
---------------------------------------------------------------------------
\37\ 21 U.S.C. 360e-3.
\38\ FDA, Final Guidance, Breakthrough Devices Program: Guidance
for Industry and Food and Drug Administration Staff (December 18,
2018). Available at: https://www.fda.gov/regulatory-information/search-fda-guidance-documents/breakthrough-devices-program.
\39\ Ibid.
---------------------------------------------------------------------------
We propose at Sec. 414.10(d)(4)(ii)(E) that if an applicant seeks
a new code on the basis that the use of the item or service results in
a significant therapeutic distinction, the application must contain
sufficient information and supporting documentation to support a claim
of significant therapeutic distinction. We further propose at Sec.
414.10(d)(4)(ii)(E) that CMS would consider the totality of the
circumstances when making a determination that the use of an item or
service results in a significantly improved or a significantly
different medical benefit when compared with the use of other similar
items or services described in the HCPCS Level II code set. It is
important that applicants provide sufficient information and
documentation so that we can understand the scientific basis for the
applicant's claim of significant therapeutic distinction and perform an
adequate, evidence-based assessment regarding whether this factor is
met. Applicants should provide the best available information to
support their claim of significant therapeutic distinction, including
copies of all articles that result from systematic analysis of the
available literature, as well as any unfavorable articles with
appropriate rebuttal or explanation.
Published or unpublished information from sources from within the
United States or elsewhere may be submitted by the applicant to help
substantiate their claim that the use of an item or service results in
a significantly improved or a significantly different medical benefit,
when compared with the use of other similar items or services described
in the HCPCS Level II code set. Although we are not proposing to
require specific types of support, greater weight will be given to more
methodologically rigorous and scientifically reliable evidence.
Information sources may include the following: Clinical trials, peer
reviewed journal articles, study results, meta-analyses, consensus
statements, white papers, patient surveys, case studies, reports,
systematic literature reviews, letters from major healthcare
associations, editorials and letters to the editor, public comments,
and other appropriate information sources.
Some examples of past findings that a claim of significant
therapeutic distinction is not substantiated include where the
applicant specified a clinical indication for, or associated a clinical
indication with, the item or service that was not cleared, approved, or
otherwise given marketing authorization by FDA, or that is not
scientifically supported. Other examples of unsubstantiated claims of
significant therapeutic distinction include claims for which the
evidence provided is inconclusive or weak (anecdotal, or not
methodologically rigorous or reliable); the supporting information
provided does not include the actual product or service that is the
subject of the code application; the supporting documentation or the
applicant's claim is not specifically addressed in or conflicts with
other information found in the information packet submitted for review;
or the supporting information addresses interim measures and not
clinical end points.
We propose at Sec. 414.10(c), our evaluation of an application to
add a code would be based on information contained in the application
and supporting material, any comments received through the public
meeting process as applicable, any information obtained from and
evaluations conducted by federal employees or CMS contractors, and any
additional research or information we may obtain independently that may
support or refute the claims made or the evidence provided by the
applicant.
We propose at Sec. 414.10(d)(5)(i) that if we determine that (1)
the item or service that is the subject of the application performs a
significantly different clinical function when compared to other items
or services described in the HCPCS Level II code set (as specified
under Sec. 414.10(d)(4)(i)), or the use of the item or service results
in a significant therapeutic distinction when compared to the use of
other similar items or services described by the HCPCS Level II code
set (as specified under Sec. 414.10(d)(4)(ii)), and (2) there is a
claims processing need to separately identify the item or service with
a new code to facilitate payment under Medicare, we would create a new
code to identify the item or service.
We also propose at Sec. 414.10(d)(5)(ii) that if the conditions in
Sec. 414.10(d)(5)(i) are not met, we would not create a new code.
Further, we propose at Sec. 414.10(d)(6) that if we find that
revisions to the descriptor of an existing code category are
appropriate to account for minor distinctions between the subject item
or service and other items or services described by the existing code
category and to clarify that the subject item or service is included in
the existing code category, then we would revise the descriptor rather
than add a new code.
As proposed in Sec. 414.10(h), our evaluation of the applicant's
code application may result in a coding decision that reflects the
applicant's coding request in whole, in part, or with modification; or
a denial of the coding request. Any coding action taken on an
applicant's request would be set forth in the final coding decision.
(2) Proposed Evaluation Process for Drug or Biological Product
Applications To Add a Code
There is no HIPAA standard medical data code set designated for
reporting drug or biological products for non-retail pharmacy
transactions--that is, as described previously, products that are paid
separately as drugs or biologicals. In non-retail pharmacy
transactions, the choice of code set for drugs or biologicals is
governed by specific payer needs. Drug or biological products for which
providers or suppliers seek payment that is separate from payments for
procedures or other bundled services might be reported on claims in
non-retail pharmacy transactions using the National Drug Code (NDC)
set, HCPCS Level II code set, or both, however the Medicare Part B
claims payment system utilizes HCPCS level II codes to pay these
claims. As stated in section IV.B. of this proposed rule, for the
purposes of section IV of this proposed rule, the term ``products paid
separately as drugs or biologicals'' refers to products that are
separately payable under Medicare Part B (and potentially by other
payers) as drugs or biologicals as that term is defined in section
1861(t) of the Act. These products typically fall into one or more of
the following three categories: (1) Products furnished incident to a
physician's services under sections
[[Page 70392]]
1861(s)(2)(A) and (B) of the Act, excluding products that are usually
self-administered (for example, tablets, capsules, oral solutions,
disposable inhalers); (2) products administered via a covered item of
DME; and (3) other categories of products for which there is another
Part B benefit category as specified by statute or regulations (for
example, drug or biological products described elsewhere in section
1861(s) of the Act, such as immunosuppressive drugs (at section
1861(s)(2)(J)); hemophilia blood clotting factors (at section
1861(s)(2)(I)); certain oral anticancer drugs (at section 1861(s)(2)(Q)
of the Act); certain oral antiemetic drugs (at section 1861(s)(2)(T) of
the Act); pneumococcal pneumonia, influenza and hepatitis B vaccines
(at section 1861(s)(10) of the Act). As described previously, for ease
of reference, when discussing products paid separately as drugs or
biologicals in this rule, we will generally refer to these as ``drug or
biological products.''
Similar to applications for non-drug, non-biological items or
services, we believe it is important for CMS to first consider whether
the drug or biological product that is the subject of an application to
add a code is appropriate for the HCPCS Level II code set. Consistent
with our current practice, we propose at Sec. 414.10(e)(1) that we
would first determine whether, as a threshold matter, the subject drug
or biological product is appropriate for the HCPCS Level II code set by
assessing whether: (1) The product is not appropriate for inclusion or
already coded in a different HIPAA code set, such as CPT[supreg]; (2)
the product is primarily medical in nature; (3) if applicable, the
product has the appropriate marketing authorization from FDA; and (4)
there is a claims processing need on the part of Medicare to identify
the item or service in the HCPCS Level II code set.
CPT[supreg] codes and codes from other code sets do not frequently
describe drug or biological products paid under Medicare Part B. Few
CPT[supreg] codes are listed in the Medicare payment files, such as the
ASP Drug Pricing files, where CPT[supreg] codes typically describe
vaccines (influenza, pneumococcal pneumonia, and hepatitis B vaccines)
that are paid under Part B based on their average wholesale price (AWP)
per requirements in section 1842(o) of the Act. When CPT[supreg] codes
do not adequately describe drug or biological products, HCPCS Level II
codes have been developed and are used to bill for them, particularly
when there is a Medicare program need for such codes. Also, CPT[supreg]
codes that may describe drug or biological products may not be
sufficiently precise to distinguish between situations where separate
payment for a drug or biological product is necessary, such as certain
hepatitis B immune globulin products approved under separate BLAs, that
require separately calculated payment allowances under section 1847A of
the Act (as operationalized by the program instruction that is
discussed in the next paragraph). Separate billing and payment codes
allow for the products approved under different BLAs to be paid
separately, consistent with section 1847A of the Act. Also, in general,
the CPT[supreg] code set focuses primarily on services, like
procedures, rather than separately payable drugs that are used in
Medicare Part B settings.
Payment for most drug or biological products under Medicare Part B
is described in section 1842(o) of the Act. This provision provides for
payments based on the average wholesale price (AWP) for products such
as vaccines, as well as payments based on section 1847A of the Act.
Section 1847A of the Act includes payments based on the average sales
price (ASP), and most Medicare Part B drugs are paid based on the ASP.
Section 1847A of the Act defines terms such as multiple source drugs,
single source drugs, and biologicals, and specifies how payment for
each of them is to be determined, and also authorizes CMS to assign
individual drug or biological products (for example products identified
at the National Drug Code level) to billing and payment codes so that
code-specific payment amounts may be assigned. Section 1847A is
implemented by regulation at 42 CFR 414.904. However, section
1847A(c)(5)(C of the Act) also permits the use of program instruction
for the implementation of section 1847A of the Act, notwithstanding any
other provision of law. In 2007, CMS issued a program instruction
explaining how coding and pricing of multiple source drugs, single
source drugs, and biologicals has been operationalized (https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/051807_coding_annoucement.pdf).
Section 1847A of the Act and its corresponding regulations and
program instructions have driven a claims processing program need for
using HCPCS Level II codes to report Part B drug or biological products
where CPT[supreg] codes do not exist or are insufficiently precise to
be used for this purpose. CMS has made payment determinations for Part
B drug or biological products identified in external coding
applications on a case by case basis in accordance with statutory
requirements, such as those in section 1847A(b) of the Act, that
specify different payment amounts for single source drugs, multiple
source drugs, and biologicals (including biosimilar biological
products), and CMS has also made coding determinations to facilitate
implementation of separate pricing of drug or biological products, as
necessary, as discussed in the 2007 program instruction. For example,
in that program instruction, CMS stated that ``the payment limit under
Section 1847A for that biological product . . . will be based on the
pricing information for products produced or distributed under the
applicable FDA approval.'' Thus, a biological product with its own
unique BLA that is administered incident to a physician's services and
not bundled with payments for other services would typically be priced
and paid under its own HCPCS code, meaning that CMS would typically
assign NDCs associated with the product to a unique HCPCS code. Because
most Part B drugs are paid using the methodologies in section 1847A of
the Act, these provisions have driven Part B drug coding since the
implementation of the Medicare Modernization Act. However, other
statutory provisions, such as the requirement in Section
1842(o)(1)(A)(iv) to base payment for certain vaccines on AWP, also
create coding needs, for example the development of new codes or
revisions of existing codes when existing CPT[supreg] codes are
insufficiently precise for Part B payment.
Once we determine that the HCPCS Level II code set is the
appropriate code set for the product that is the subject of the
application, we then evaluate an application to determine the
appropriate HCPCS Level II coding action on the code application--that
is, whether it would be appropriate to take coding action to add a new
code to identify the subject product, or revise the descriptor of an
existing code category to clarify that the subject product is captured
by the existing code category, or to take no coding action due to the
availability of an existing code category that adequately describes the
subject product. We use the evaluation factors described in the bullet
points later in this section to determine whether separate payment for
the product may be made under Part B, how that payment is made (for
example, separate payment under a specific statutory requirement), and
the coding action appropriate to implement the payment (including
facilitating separate payment, if necessary) based on statutory
requirements, such as those in sections 1842(o) or 1847A of the Act,
applicable
[[Page 70393]]
regulations pertaining to Part B drug payment such as 42 CFR part 414
Subparts J and K, and program instructions pertaining to section 1847A
of the Act, such as the 2007 guidance cited in this proposed rule.
Consistent with our current practice, we propose at Sec.
414.10(e)(2) that if CMS determines that the factors set forth in Sec.
414.10(e)(1) are met, then CMS next determines, for purposes of claims
processing (and payment), whether an existing code adequately describes
a product, or whether a revision to the descriptor of an existing code
category is appropriate, or whether a new code is necessary. In making
this determination, we would consider applicable Medicare Part B
statutory and regulatory payment requirements, program instructions,
and information, such as the following: (1) Sections 1842(o) and 1847A
of the Act; (2) 42 CFR part 414 subparts J and K; (3) program
instructions implementing section 1847A of the Act; and (4) information
from the code application and other applicable sources such as FDA,
drug compendia, the manufacturer, and scientific literature. As noted
previously, consistent with our current practice, we propose at Sec.
414.10(c) that our evaluation of a code application would be based on
information contained in the application and supporting material, any
comments received through the public meeting process as applicable, any
information obtained from and evaluations conducted by federal
employees or CMS contractors, and any additional research or
information we may obtain independently that may support or refute the
claims made by or the evidence provided by the applicant. Consistent
with the foregoing and as proposed at Sec. 414.10(e)(2)(iv), such
research and information may be drawn from a range of outside sources
relevant to the application, such as FDA, drug compendia, the
manufacturer, and scientific literature. Based on such information and
the statutory and regulatory requirements and payment instructions
described in Sec. 414.10(e)(2), we would determine whether an existing
code adequately describes a product for the purpose of claims
processing (and payment), or whether a revision to the descriptor of an
existing code category is appropriate, or whether a new code is
necessary. This includes determining whether Medicare Part B billing
and payment for the product can be accomplished under existing codes,
whether revisions to existing codes are necessary, or whether new codes
are necessary.
As a whole, the information in the bullet points described later in
this section is used to determine appropriate coding action for the
product that is the subject of the code application. This information
is obtained from the code applications (and information and
documentation that is submitted with the code application) and from
other sources such as FDA, drug compendia, the manufacturer (or
applicant), and scientific literature. We propose at Sec. 414.10(e)(3)
to evaluate each application to determine: (1) Whether the product is
separately payable under Medicare Part B as a drug or biological
product; and (2) whether the product is a single source drug, multiple
source drug, biological, or biosimilar biological product for purposes
of section 1847A of the Act, or if other specific payment provisions
such as those in sections 1842(o)(1)(A) or (F) of the Act apply.
While there is some overlap between the information used to make
these determinations, the following paragraphs briefly describe how
certain factors, that is information in the groups of bullet points
later in this section, are used to make these determinations and
describe the framework for the decision-making process on external code
applications. Under this framework, the information in the groups of
bullet points is assessed as a whole to determine a coding action,
specifically whether to create a new code that would typically result
in separate payment for a product provided that the product is covered
under Part B, revise the descriptor of an existing code in response to
an application, for example to make clear that the product in the
application is described by an existing code or to better distinguish
existing codes from a new code resulting from an application.
Alternatively, we may decide to take no coding action, for example if
the product is never or rarely paid separately under Part B.
The following information is used primarily to determine whether
the product is separately payable as a drug or biological under
Medicare Part B, and is also used to begin the process of determining
the appropriate coding action on an application for a drug or
biological product:
The active ingredient(s) and drug name(s) of the product
and other potentially similar drug or biological products in existing
Level II HCPCS codes.
The product's labeling and description, including whether
there are differences between the product and previously coded
products, such as the salt form; whether the product includes any
additional ingredients when compared to previously coded products; and
the indications for which the product is used.
Prescribing information, setting-of-use and other
information found in FDA-required prescription drug labeling.
The active ingredient(s), drug name(s), product labeling, and
description assist CMS in first identifying the product. The active
ingredient(s), drug name(s), product labeling and description also help
to inform CMS's evaluation under Sec. 414.10 (e)(2), (e)(3) and
(e)(4), and this information guides CMS in determining whether there
are any comparable products that are described by existing Level II
HCPCS codes.
The prescribing information and setting of use information help CMS
to understand where the product is used and whether the product is
separately payable under Medicare Part B (and therefore whether a HCPCS
Level II code is appropriate for the product). Some products are used
in settings where drug or biological products generally are not
separately payable under Medicare Part B and a HCPCS Level II code is
not likely to be necessary. Examples of situations where a HCPCS Level
II code would not be necessary include: Products furnished exclusively
in an inpatient hospital and paid exclusively under Part A; products
furnished in retail pharmacy, such as a self-administered drug, like an
orally administered antihypertensive drug, that is not covered under a
Part B benefit category. Such products would not require a HCPCS Level
II code for separate payment under Medicare Part B. However, in cases
where the information provided in response to the bullet points
described previously is insufficient to allow CMS to determine whether
the product is separately payable as a drug or biological under
Medicare Part B, other information discussed later in the section, such
as the route and method of administration, dosage, and frequency, may
also be used by CMS to assist with a determination about whether the
product is separately payable under Medicare Part B. This additional
information may also potentially be used to distinguish the product
from other potentially similar products that are not paid separately
under Part B.
In addition to the information in the previous bullet point list of
items, the following information is used to help determine whether the
product is a single source drug, multiple source drug, biological
product, or biosimilar biological product for purposes of section 1847A
or if other specific
[[Page 70394]]
payment provisions, such as those in sections 1842 (o)(1)(A) or (F) of
the Act apply:
FDA approval, including the date of approval and how the
FDA regulates the product, for example whether it is approved as a
drug, biological product, or biosimilar biological product.
Therapeutic equivalence ratings as provided in section
1847A(c)(6)(C), if applicable.
Date of first sale in the United States.
Active ingredient(s) and labeling information.
Product information such as trade or brand name;
nonproprietary drug name(s) and National Drug Code (NDC) or other
applicable drug product identifier, if one exists.
Packaging and labeling that indicates how the drug is
supplied, including the How Supplied/storage and handling section in
prescribing information.
FDA approval information, therapeutic equivalence rating as
provided in section 1847A(c)(6)(C) (if applicable), and date of first
sale in the United States help us to determine whether the product may
be paid under section 1847A of the Act and whether the product
satisfies the definition of multiple source drugs, single source drugs,
and biological products as the definitions have been operationalized by
program instruction under the authority of section 1847A of the Act.
While this information primarily pertains to products paid under
section 1847A of the Act, it also helps us evaluate other products,
such as flu, pneumococcal, and hepatitis B vaccines, which are paid
based on AWP per section 1842(o) of the Act and to identify situations
where it would be appropriate to add a new code or revise an existing
code for such products to facilitate payment, for example if existing
codes (including CPT[supreg] codes used for Part B vaccines) are not
sufficiently clear or do not sufficiently distinguish between similar
products that have significant price or payment differences and thus
may be candidates for separate codes and payment determinations.
The active ingredients and labeling information, product
information such as trade or brand name(s); nonproprietary drug name(s)
and National Drug Code (NDC) or other applicable drug product
identifier, if one exists, and packaging and labeling that indicates
how the drug is supplied also help us to accurately identify a product
for the purpose of making a coding decision for that product. If a new
code is necessary, for example when a product is approved under a new
BLA, in most cases the active ingredient(s) will play a major role in
the development of a code descriptor, and other information, such as
packaging and other product information, can be used to refine the
descriptor and to help select an amount of drug for the descriptor, as
necessary. Also, all of this information can be used to determine if an
existing code adequately describes the product without further revision
or whether revisions would be necessary to the descriptor of an
existing code to accommodate the product. For example, if a product
that is the subject of a code application is described by an existing
biological drug code, is approved under the same BLA as other products
assigned to that code, and uses the same trade name, a new code would
probably not be necessary because the existing code could be used
without modification. However, at times a revision to the descriptor of
one or more existing codes may be made, for example, to include a new
trade name in the descriptor, to better distinguish between other
similar codes.
The following information is used to help CMS determine whether it
is appropriate to add a new code or revise an existing code in
situations where the information in the bullet points described
previously is not sufficient to allow CMS to make a coding
determination on an application. The following information is used to
further clarify the similarities and differences between the products
that are the subject of a code application and products described in
existing codes, to determine whether the product that is the subject of
a code application is adequately described by an existing code. The
information helps CMS to determine whether it is appropriate to add a
new code or revise an existing code(s) consistent with discussion in
the previous paragraph, for the purpose of claims processing and
facilitating payment under Medicare Part B:
Indications for use.
Mechanism of action.
Dosage, frequency, route, and method of administration.
Other drugs (including those with different proprietary
names) that are marketed with the same active ingredient(s) or use the
same drug name(s).
FDA labeling and compendia information (aspects not
already listed in previous bullet points, such as pharmacokinetics,
contraindications, warnings, drug interactions, and adverse reactions).
Billing information, like any third-party payers that pay
for the product; any codes that are currently being billed to those
payers for the product; and existing policies of third-party payers for
reporting the product (if available) to compare how other payers are
paying for the product.
Drawing on all of the foregoing information and considerations, and
consistent with our current review process, we propose at Sec.
414.10(e)(4) that after reviewing an application to add a HCPCS Level
II code for a drug or biological product, and after considering the
factors listed in Sec. 414.40(e)(1) through (e)(3), CMS will then make
a determination about whether the appropriate action is to add a code,
revise a code, or take no coding action, in response to that
application.
In addition, we propose at Sec. 414.10(e)(5) to continue to use
code descriptors with drug amounts that correspond to quantities of a
drug or biological product that are smaller than, for example, the
product's package size or usual adult dose, where appropriate. The
quantities of drug or biological products described by HCPCS Level II
code descriptors often vary. Some are based on the size of typical
adult doses of a drug or biological product. Many older HCPCS Level II
codes, particularly codes that became effective before the
implementation of ASP-based payments, have code descriptors reflecting
quantities that correspond to available package amounts, such as 500 mg
for cefazolin. Cefazolin is an injectable first generation
cephalosporin antibiotic that has been available for decades as an
inexpensive generic product and can be billed under HCPCS code J0690,
injection, cefazolin sodium, 500 mg. Dosage adjustments for typical
adult doses of cefazolin are often made in increments of 500 mg, so the
code descriptor quantity for cefazolin corresponds well to its
frequently used doses (and their multiples, such as 1 gram, 1.5 grams,
and 2 grams). However, many newer and much more expensive drug or
biological products, such as those used to treat cancer, require
weight-based dosing, and dosage adjustments for individuals are made in
much smaller increments, such as a milligram or a fraction of a
milligram. Thus, many newer HCPCS Level II codes have code descriptors
reflecting quantities that are less than the smallest available package
size. Decisions about the code descriptor quantities in these cases
generally have been based on the factors discussed in the preceding
bullet points, including indications, the active ingredient(s), dosage,
and route of administration, packaging, and how the
[[Page 70395]]
drug is supplied as indicated in labeling. We propose to continue to
use smaller quantities in the code descriptors for drug or biological
products, as appropriate and discussed in this paragraph, to facilitate
more accurate billing, particularly for products that must be dosed
based on the patient's weight, and for products where dosing must be
adjusted in small increments, due to factors such as age, a patient's
ability to metabolize or excrete a drug, toxicity, or response.
Improvements in billing accuracy by the use of smaller quantities in
descriptors will also facilitate the accurate tracking of payments for
discarded drugs (https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c17.pdf section 40). In situations where the
discarded drug policy does not apply, this approach can help minimize
out of pocket costs for drugs that are not administered. For example,
if the amount of drug or biological specified in the code descriptor
for a single HCPCS billing unit of a drug uses a quantity of 500 mg and
the patient is given 550 mg, that patient would be billed for two
billing units or 1,000 mg of the drug. The use of a smaller quantity in
the descriptor, such as 10 mg, would permit billing for exactly 550 mg.
b. Proposed Evaluation Process for Non-Drug, Non-Biological and Drug or
Biological Applications To Revise an Existing Code
An applicant may submit an application to revise an existing code
if the applicant believes that the descriptor of an existing HCPCS
Level II code does not adequately describe the item or service that is
the subject of the code application, and that a modification to the
long descriptor language (code text) would provide a better description
of the category of items or services represented by the code.
Applicants provide the language currently used in the descriptor of an
existing HCPCS Level II code and the language that the applicant
suggests to use as the descriptor.
When evaluating whether the requested revision provides a better
description of the category of items or services represented by a code,
we consider whether there is a Medicare claims processing need for the
requested revision. For example, a revision may be considered when a
claims processing need has been identified to improve the descriptor to
clarify that the existing code also describes a newer or different
version of an item or service which performs the same clinical function
as other items or services included in the existing code category.
When evaluating applications to revise an existing code, we also
consider whether the requested revision is appropriate given the nature
and purpose of the HCPCS Level II code set. For example, we do not
believe that a request to include information in the descriptor for the
purposes of tracking or data analysis would be appropriate unless there
is a Medicare claims processing need to do so, because the primary
purpose of HCPCS Level II code set is to facilitate efficient claims
processing. We also consider the nature of the code set, because HCPCS
Level II codes generally represent categories of similar items or
services, and are generally intended to describe an item or service
provided or performed in way that is general enough so as not to be
manufacturer specific. Where multiple like items or services are
grouped together in a single HCPCS Level II code category, the
corresponding descriptor uses language to describe the entire category
of items or services at the collective, rather than product-specific,
level. Thus, the suggested language should be applicable to the entire
category of items or services, rather than only to the item or service
that is the subject of the code application.
We propose at Sec. 414.10(c) that our evaluation of an application
to revise an existing code would be based on information contained in
the code application and supporting material, any comments received
through the public meeting process as applicable, any information
obtained from and evaluations conducted by federal employees or CMS
contractors, and any additional research or information we may obtain
independently that may support or refute the claims made by or the
evidence provided by the applicant. Consistent with our current
practice, we propose at Sec. 414.10(f) that if we determine that the
revised descriptor language suggested by the applicant would provide a
more appropriate description of the category of items or services, as
discussed earlier in this section, we would revise the descriptor
accordingly. As proposed in Sec. 414.10(h), our evaluation of the
applicant's code application may result in a coding decision that
reflects the applicant's coding request in whole, in part, or with
modification; or a denial of the coding request. Any coding action
taken on an applicant's request would be set forth in the final coding
decision.
c. Proposed Evaluation Process for Non-Drug, Non-Biological and Drug or
Biological Applications To Discontinue an Existing Code
To maintain a manageable and efficient coding system, HCPCS Level
II codes that are no longer needed may be removed from the code set. An
application to discontinue an existing code may be submitted when the
applicant believes that an existing HCPCS Level II code is duplicative
of another code or has become obsolete and should be removed from the
HCPCS Level II code set.
When evaluating applications to discontinue an existing code, we
determine whether the code is duplicative of another code in the code
set, or has become obsolete, and we have no further expectation that
the same or similar item or service will be marketed at a later date,
such that there is no longer a claims processing need to retain the
existing code. A code that is duplicative of another code because it is
superseded by a more specific code, for example, would no longer be
utilized to process claims. The presence of a duplicative code could
potentially result in erroneous billing.
We also consider whether a code has become obsolete by evaluating
the availability of the item or service, or category of items or
services, described by the code. In order to avoid removing a code
prematurely, we would first determine that each item or service
described by the code is no longer marketed, and that there does not
appear to be an intent to market. For example, before discontinuing a
code for a product that has been discontinued, we would first determine
that there is no remaining stock available--in other words, we would
determine that the stock has been depleted, with no expectation of the
stock being refilled, and thus there would be no need to retain the
code for future claims processing. We would make this determination
based on information provided by the applicant, as well as through
information we gather from our own market surveillance and claims
examination. Before making this determination or taking action on a
particular application to discontinue a code, we also consider the
possibility of the same or similar item or service reappearing on the
market at a later date by the same or different manufacturer, and we
may retain the code for a period of time for this reason.
We propose at Sec. 414.10(c) that our evaluation of an application
to discontinue an existing code would be
[[Page 70396]]
based on information contained in the application and supporting
material, any comments received through the public meeting process as
applicable, any information obtained from and evaluations conducted by
federal employees or CMS contractors, and any additional research or
information we may obtain independently that may support or refute the
claims made by or the evidence provided by the applicant. Consistent
with our current practice, we propose at Sec. 414.10(g) to discontinue
an existing code when we find that the code is duplicative of another
code or has become obsolete and we have no further expectation that the
same or similar item or service will be marketed at a later date. As
proposed in Sec. 414.10(h), our evaluation of the applicant's code
application may result in a coding decision that reflects the
applicant's coding request in whole, in part, or with modification; or
a denial of the coding request. Any coding action taken on an
applicant's request would be set forth in the final coding decision.
We seek comment on the proposed processes described in this section
for evaluating applications to add a code, to revise an existing code,
and to discontinue an existing code.
V. Benefit Category and Payment Determinations for Durable Medical
Equipment, Prosthetic Devices, Orthotics and Prosthetics, Therapeutic
Shoes and Inserts, Surgical Dressings, Splints, Casts, and Other
Devices Used for Reductions of Fractures and Dislocations
A. Background
1. Benefit Category Determinations
Medicare generally covers an item or service that--(1) falls within
a statutory benefit category; (2) is not statutorily excluded from
coverage; and (3) is reasonable and necessary for the diagnosis or
treatment of illness or injury or to improve the functioning of a
malformed body member as described in section 1862(a)(1)(A) of the Act.
We make benefit category determinations (BCDs) based on the scope of
Part B benefits identified in section 1832 of the Act, as well as
certain statutory and regulatory definitions for specific items and
services. Section 1832(a)(1) of the Act defines the benefits under Part
B to include ``medical and other health services,'' including items and
services described in section 1861(s) of the Act such as surgical
dressings, and splints, casts, and other devices used for reduction of
fractures and dislocations under paragraph (5), prosthetic devices
under paragraph (8), leg, arm, back, and neck braces, artificial legs,
arms, and eyes under paragraph (9), therapeutic shoes under paragraph
(12), and durable medical equipment (DME) under paragraph (6) and as
defined in section 1861(n) of the Act. The words ``orthotic(s)'' or
``orthosis(es)'' are used in various parts of the statute and
regulations instead of the word brace(s) but have the same meaning as
brace(s). For example, section 1847(a)(2)(C) of the Act refers to
``orthotics described in section 1861(s)(9)'' of the Act; however,
section 1861(s)(9) of the Act describes ``leg, arm, neck, and back
braces'' and does not use the word ``orthotics.'' Likewise, section
1834(h)(4)(C) of the Act specifies that ``the term `orthotics and
prosthetics' has the meaning given such term in section 1861(s)(9)'' of
the Act; however, section 1861(s)(9) of the Act describes ``leg, arm,
neck, and back braces'' and does not use the word ``orthotics.'' Also,
the word ``prosthetic(s)'' is used in various parts of the statute and
regulations to describe artificial legs, arms, and eyes referenced in
section 1861(s)(9) of the Act, but it is important to note that these
items are not the same items as the prosthetic devices referenced in
section 1861(s)(8) of the Act. While the statutory definition of DME in
section 1861(n) of this Act sets forth some items with particularity,
such as iron lungs, oxygen tents, hospital beds, wheelchairs, and blood
glucose monitors, whether other items and services are covered under
the Medicare Part B DME benefit is based on our interpretation of the
statute, which does not, for example, elaborate on the meaning of the
word ``durable'' within the context of ``durable medical equipment.''
Therefore, we further defined DME in the regulation at 42 CFR 414.202
as equipment that: (1) Can withstand repeated use; (2) effective with
respect to items classified as DME after January 1, 2012, has an
expected life of at least 3 years; (3) is primarily and customarily
used to serve a medical purpose; (4) generally is not useful to a
person in the absence of an illness or injury; and (5) is appropriate
for use in the home. In conducting an analysis of whether an item falls
within the DME benefit category, we review the functions and features
of the item, as well as other supporting material, where applicable.
For example, research and clinical studies may help to demonstrate that
the item meets the prongs of the definition of DME at Sec. 414.202.
For items to be considered DME, all requirements of the regulatory
definition must be met. Additional details on the Medicare definition
of DME are located in section 110.1 of the Medicare Benefit Policy
Manual (CMS 100-02). The Medicare definitions for surgical dressings,
splints, casts, and other devices used for reductions of fractures and
dislocations, prosthetic devices, orthotics and prosthetics, and
therapeutic shoes and inserts are located in sections 100, 120, 130,
and 140, respectively, of the Medicare Benefit Policy Manual (CMS 100-
02).
In situations where CMS has not established a BCD for an item or
service, the BCD is made by the MACs on a case-by-case basis as they
adjudicate claims. The MACs may have also addressed the benefit
category status of an item or service locally in a written policy
article. This proposed rule would apply to BCDs for all items and
services described in section 1861(s) of the Act such as surgical
dressings, and splints, casts, and other devices used for reduction of
fractures and dislocations under paragraph (5), prosthetic devices
under paragraph (8), leg, arm, back, and neck braces, artificial legs,
arms, and eyes under paragraph (9), therapeutic shoes under paragraph
(12), and DME under paragraph (6) and as defined in section 1861(n) of
the Act.
2. Section 531(b) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554)
Section 531(b) of BIPA mandated the establishment of procedures
that permit public consultation on coding and payment determinations
for new DME under Medicare Part B of title XVIII of the Act in a manner
consistent with the procedures established for implementing coding
modifications to ICD-9-CM. Accordingly, we host public meetings that
provide a forum for interested parties to make oral presentations and
to submit written comments in response to preliminary HCPCS coding and
Medicare payment determinations for new DME items and services. A
payment determination for DME items and services would include a
determination regarding which of the paragraphs (2) through (7) of
subsection (a) of section 1834 of the Act the items and services are
classified under as well as how the fee schedule amounts for the items
and services are established so that they are in compliance with the
exclusive payment rules under sections 1834(a) and 1847(a) and (b) of
the Act. The preliminary HCPCS coding and Medicare payment
determinations for new DME items and services are made available to the
public via our website prior to the public meetings. In addition,
although this type of forum and opportunity for obtaining public
consultation on preliminary HCPCS
[[Page 70397]]
coding and Medicare payment determinations for items and services other
than new DME items is not mandated by the statute, we expanded this
process for obtaining public consultation on preliminary coding and
payment determinations to all HCPCS code requests for items and
services in 2005, and since January 2005, we have been holding public
meetings to obtain public consultation on preliminary coding and
payment determinations for non-drug, non-biological items and services.
As discussed in section IV., we propose to continue holding these
public meetings for non-drug, non-biological items and services and, in
limited circumstances, for drug or biological products (as defined and
discussed in section IV of this proposed rule) that are associated with
external requests for HCPCS codes. External requests for HCPCS codes
are made by submitting a HCPCS application available on the CMS.gov
website at the following address: https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Application_Form_and_Instructions.
HCPCS Level II codes are used by Medicare, Medicaid, and other
public health insurance programs and private insurers for the purpose
of identifying items and services on health insurance claims. A code
identifies and describes a category of items and services and the HCPCS
Level II coding system and process is not used to make coverage or
payment determinations on behalf of any insurer. Once a code describing
a category of items and services is established, separate processes and
procedures are used by insurers to determine whether payments for the
item or service can be made, what method of payment, for example,
purchase or rental, will be used to make payment for the item or
service, and what amount(s) will be paid for the item or service.
Whether or not an item falls under one of the Medicare benefit
categories such as DME is a decision made by CMS or the MACs based on
statutory and regulatory definitions, separate from the HCPCS Level II
coding system and process for identifying items and services.
In order to make a Medicare payment determination for an item or
service, that is, to determine the statutory and regulatory payment
rules that apply to the item or service and how to establish allowed
payment amounts for the item or service, CMS must first determine
whether the item or service falls under a benefit category, for example
DME, and if so, which benefit category in particular. Therefore, since
2001, the procedures established by CMS to obtain public consultation
on national payment determinations for new DME items as mandated by
section 531(b) of BIPA have also in effect been procedures for
obtaining public consultation on national DME BCDs, or determinations
about whether an item or service meets the Medicare definition of DME.
Then in 2005, when these procedures were expanded to include requests
for HCPCS codes for all items and services, they became in effect
procedures for obtaining public consultation on BCDs and payment
determinations for all items and services.
B. Current Issues
In order to increase transparency and structure around the process
for obtaining public consultation on benefit category and payment
determinations for these items and services, we believe it would be
beneficial to set forth in our regulations the process and procedures
that have been used since 2001 for obtaining public consultation on
BCDs and payment determinations for new DME and since 2005 for requests
for HCPCS codes for items and services other than DME. As further
discussed in section IV.A.2. of this proposed rule, we recently revised
our coding cycle for requests for HCPCS Level II codes to implement
shorter and more frequent coding application cycles.\40\ Beginning
January 2020, for non-drug, non-biological items and services, we
shortened the existing annual coding cycle to conduct more frequent
coding cycles on a bi-annual basis and include public meetings to
obtain consultation on preliminary coding determinations twice a year
under these new bi-annual coding cycles. We believe that continuing to
establish payment determinations, which, as a condition precedent,
include BCDs, for new DME items and services and the other items and
services described previously at these same bi-annual public meetings
would be an efficient and effective way to address coding, benefit
category, and payment issues for these new items and services and would
prevent delays in coverage of new items and services.
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\40\ CMS, Announcement of Shorter Coding Cycle Procedures,
Applications, and Deadlines for 2020, HCPCS--General Information.
Available at: https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo.
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C. Provisions of the Proposed Regulation
We are proposing to set forth in regulations BCD and payment
determination procedures for new DME items and services described in
sections 1861(n) and (s)(6) of the Act, as well as the items and
services described in sections 1861(s)(5), (8), (9), and (12) of the
Act, that permit public consultation at public meetings. The payment
rules for these items and services are located in 42 CFR part 414,
subparts C and D, so we propose to include these procedures under both
subparts C and D. We are proposing that the public consultation on BCDs
and payment determinations would be heard at the same public meetings
where consultation is provided on preliminary coding determinations for
new items and services the requestor of the code believes are: DME as
described in sections 1861(n) and (s)(6) of the Act; surgical
dressings, splints, casts, and other devices as described in section
1861(s)(5) of the Act; prosthetic devices as described in section
1861(s)(8) of the Act; leg, arm, back, and neck braces (orthotics), and
artificial legs, arms, and eyes (prosthetics) as described in section
1861(s)(9) of the Act; or therapeutic shoes and inserts as described in
section 1861(s)(12) of the Act. This proposal generally reflects the
procedures that have been used by CMS since 2005, however, we are
proposing to specifically solicit or invite consultation on preliminary
BCDs for each item or service in addition to the consultation on
preliminary payment and coding determinations for new items and
services.
Accordingly, we are proposing procedures under new Sec. 414.114
for determining whether new items and services meet the Medicare
definition of items and services subject to the payment rules at 42 CFR
part 414 subpart C. This would include determinations regarding whether
the items and services are parenteral and enteral nutrition (PEN),
which are nutrients, equipment, and supplies that are categorized under
the prosthetic device benefit, as defined at section 1861(s)(8) of the
Act and covered in accordance with section 180.2 of Chapter 1, Part 3
of the Medicare National Coverage Determinations Manual (Pub. 100-03).
This would also include determinations regarding whether items and
services are intraocular lenses (IOLs) inserted in a physician's
office, which are also categorized under the prosthetic device benefit
at section 1861(s)(8) of the Act. We would also use the proposed
procedures to determine whether items and services are splints, casts,
and other devices used for reduction of fractures and dislocations at
section 1861(s)(5) of the Act. For the purpose of these proposed
procedures and Sec. 414.114, we are proposing to establish the
following definition:
[[Page 70398]]
Benefit category determination means a national determination
regarding whether an item or service meets the Medicare definition of a
prosthetic device at section 1861(s)(8) of the Act or is a splint,
cast, or device used for reduction of fractures or dislocations subject
to section 1842(s) of the Act and the rules of this subpart and is not
otherwise excluded from coverage by statute.
We are also proposing procedures under new Sec. 414.240 for
determining whether new items and services meet the Medicare definition
of items and services subject to the payment rules at 42 CFR part 414
subpart D. This would include determinations regarding whether the
items and services are in the DME benefit category as defined at
section 1861(n) of the Act and under 42 CFR 414.202. This would also
include determinations regarding whether the items and services are in
the benefit category for prosthetic devices that fall under section
1861(s)(8) of the Act other than PEN nutrients, equipment and supplies
or IOLs inserted in a physician's office. This would also include
determinations regarding whether the items and services are in the
benefit category for leg, arm, neck, and back braces (orthotics), and
artificial legs, arms, and eyes (prosthetics) under section 1861(s)(9)
of the Act. This would also include determinations regarding whether
the items and services are in the benefit category for surgical
dressings under section 1861(s)(5) of the Act or custom molded shoes or
extra-depth shoes with inserts for an individual with diabetes under
section 1861(s)(12) of the Act. For the purpose of these proposed
procedures and Sec. 414.240, we are proposing to establish the
following definition:
Benefit category determination means a national determination
regarding whether an item or service meets the Medicare definition of
durable medical equipment at section 1861(n) of the Social Security
Act, a prosthetic device at section 1861(s)(8) of the Social Security
Act, an orthotic or leg, arm, back or neck brace, a prosthetic or
artificial leg, arm or eye at section 1861(s)(9) of the Social Security
Act, is a surgical dressing, or is a therapeutic shoe or insert subject
to sections 1834(a), (h), or (i) of the Act and the rules of this
subpart and is not otherwise excluded from coverage by statute.
We are proposing that if a preliminary determination is made that a
new item or service falls under one of the benefit categories for items
and services paid in accordance with subparts C or D of 42 CFR part
414, then CMS will make a preliminary payment determination regarding
how the fee schedule amounts for the item or services would be
established in accordance with these subparts, and, for items and
services identified as DME, under which of the payment classes under
sections 1834(a)(2) through (7) of the Act the item or service falls.
We are proposing that the procedures for making BCDs and payment
determinations for new items and services subject to the payment rules
under subparts C or D of 42 CFR part 414 would be made by CMS during
each bi-annual coding cycle and the proposed procedures under new
Sec. Sec. 414.114 and 414.240 would include the following steps.
First, at the start of the coding cycle, an analysis is performed
by CMS to determine if the item or service is statutorily excluded from
coverage under Medicare under any of the provisions at section 1862 of
the Act, and, if not excluded by statute, the analysis looks to see if
the item or service falls under a Medicare benefit category defined in
the statute and regulations for any of the items or services subject to
the payment rules under subparts C or D of 42 CFR part 414. Information
about the item or service from several sources is considered as part of
this analysis such as the description of the item or service in the
HCPCS application, HCPCS codes used to bill for the item or service in
the past, product brochures and literature, information on the
manufacturer's website, information related to the FDA clearance or
approval of the item or service for marketing or related to items that
are exempted from the 510(k) requirements or otherwise granted
marketing authorization by the FDA. This step could take anywhere from
1- week to 1 or 2 months. For more complex items or services, the
process may take several months, in which case public consultation on
the benefit category and payment determinations would slip to a
subsequent coding cycle.
Second, if a preliminary determination is made by CMS that the item
or service is an item or service falling under a benefit category for
items and services paid for in accordance with subpart C or D of 42 CFR
part 414, a preliminary payment determination is made by CMS regarding
how the fee schedule amounts will be established for the item or
service and what payment class the item falls under if the item meets
the definition of DME. This step could take anywhere from 1-week to 1
or 2 months. For more complex items or services, the process may take
several months, in which case public consultation on the benefit
category and payment determinations would slip to a subsequent coding
cycle.
Third, approximately 4-months into the coding cycle, the
preliminary benefit category and payment determinations are posted on
CMS.gov 2-weeks prior to the public meeting described under Sec.
414.8(d) in which CMS receives consultation from the public on the
preliminary benefit category and payment determinations made for the
item or service. After consideration of public consultation on any
preliminary benefit category or payment determinations made for the
item or service, the benefit category or payment determinations are
established through program instructions issued to the Medicare
Administrative Contractors.
It is important to note that even though a determination may be
made that an item or service meets the Medicare definition of a benefit
category, and fee schedule amounts may be established for the item or
service, this does not mean that the item or service would be covered
for a particular beneficiary. After a BCD and payment determination has
been made for an item or service, a determination must still be made by
CMS or the relevant local MAC that the item or service is reasonable
and necessary for the treatment of illness or injury or to improve the
functioning of a malformed body member, as required by section
1862(a)(1)(A) of the Act.
We seek public comment on our proposed process and procedures for
making BCDs and payment determinations for new items and services paid
for in accordance with subpart C or D of 42 CFR part 414. We note that
our proposed approach does not affect or change our existing process
for developing National Coverage Determinations (NCDs), which we can
continue to use to develop NCDs both in response to external requests
and internally-generated reviews. We further note that we are not
limited to only addressing benefit categories in response to external
HCPCS code applications and could decide to use the proposed process to
address benefit categories in response to internally generated HCPCS
coding changes as well.
VI. Classification and Payment for Continuous Glucose Monitors Under
Medicare Part B
This section addresses classification and payment for CGMs under
the Medicare Part B benefit for DME. We are proposing to replace a
Ruling issued in January of 2017 (CMS-1682-R) with this new rule.
[[Page 70399]]
A. General Background
DME is a benefit category under Medicare Part B, section 1861(n) of
the Act defines ``durable medical equipment'' as including ``iron
lungs, oxygen tents, hospital beds, and wheelchairs (which may include
a power-operated vehicle that may be appropriately used as a
wheelchair, but only where the use of such a vehicle is determined to
be necessary on the basis of the individual's medical and physical
condition and the vehicle meets such safety requirements as the
Secretary may prescribe) used in the patient's home (including an
institution used as his home other than an institution that meets the
requirements of subsection (e)(1) of this section or section
1819(a)(1)) of the Act, whether furnished on a rental basis or
purchased, and includes blood-testing strips and blood glucose monitors
for individuals with diabetes without regard to whether the individual
has Type I or Type II diabetes or to the individual's use of insulin
(as determined under standards established by the Secretary in
consultation with the appropriate organizations) and eye tracking and
gaze interaction accessories for speech generating devices furnished to
individuals with a demonstrated medical need for such accessories;
except that such term does not include such equipment furnished by a
supplier who has used, for the demonstration and use of specific
equipment, an individual who has not met such minimum training
standards as the Secretary may establish with respect to the
demonstration and use of such specific equipment. With respect to a
seat-lift chair, such term includes only the seat-lift mechanism and
does not include the chair.''
In addition to this provision, in order to be covered, an item must
meet the requirements of section 1862(a)(1)(A) of the Act, which
precludes payment for any items and services that are not reasonable
and necessary for the diagnosis or treatment of illness or injury or to
improve the functioning of a malformed body member, and section
1862(a)(6) of the Act, which precludes payment for personal comfort
items.
The Medicare program was created as part of the Social Security
Amendments of 1965 (Pub. L. 89-97), and the Part B benefit payments for
DME were initially limited to ``rental of durable medical equipment,
including iron lungs, oxygen tents, hospital beds, and wheelchairs used
in the patient's home (including an institution used as his home)'' in
accordance with the definition of DME at section 1861(s)(6) of the Act.
The Social Security Amendments of 1967 (Pub. L. 90-248) amended the
statute to allow for payment on a purchase basis for DME in lieu of
rental for items furnished on or after January 1, 1968. Section 144(d)
of the Social Security Amendments of 1967 changed the language under
section 1861(s) of the Act to ``durable medical equipment, including
iron lungs, oxygen tents, hospital beds, and wheelchairs used in the
patient' home (including an institution used as his home), whether
furnished on a rental basis or purchased.'' Payments for purchase of
expensive items of DME were limited to monthly installments equivalent
to what would have otherwise been made on a rental basis, limited to
the period of medical need and not to exceed the purchase price of the
equipment.
In 1975, Medicare program instructions in section 2100 of chapter 2
of part 3 of the Medicare Carrier's Manual (HCFA Pub. 14-3) indicated
that expenses incurred by a beneficiary for the rental or purchase of
DME are reimbursable if the following three requirements are met: The
equipment meets the definition of DME in this section; and the
equipment is necessary and reasonable for the treatment of the
patient's illness or injury or to improve the functioning of his
malformed body member; and the equipment is used in the patient's home.
The instructions also indicated that payment may also be made under the
DME benefit category for repairs and maintenance of equipment owned by
the beneficiary as well as expendable and non-reusable supplies and
accessories essential to the effective use of the equipment. DME was
defined under these program instructions from 1975 as equipment meeting
four requirements (quoted later in the section verbatim and with text
underscored as in the original instructions):
Durable medical equipment is equipment which (a) can withstand
repeated use, and (b) is primarily and customarily used to serve a
medical purpose, and (c) generally is not useful to a person in the
absence of an illness or injury; and (d) is appropriate for use in the
home.
All requirements of the definition must be met before an item can
be considered to be durable medical equipment.
Additional detailed instructions were provided in 1975 describing
the underlying policies for determining whether an item meets the
definition of DME and specifically addressed what the terms ``durable''
and ``medical equipment'' mean. The instructions indicated that an item
is considered durable if it can withstand repeated use, that is, it is
the type of item that could normally be rented, and that medical
supplies of an expendable nature are not considered ``durable'' within
the meaning of the definition. In order to be considered DME, the item
must be able to be rented out to multiple patients and thus withstand
repeated use. The instructions indicated that medical equipment is
equipment primarily and customarily used for medical purposes and is
not generally useful in the absence of illness or injury. The
instructions indicated that in some cases information from medical
specialists and the manufacturer or supplier of products new to the
market may be necessary to determine whether equipment is medical in
nature. Additional instructions provide examples of equipment which
presumptively constitutes medical equipment, such as canes, crutches,
and walkers, and equipment that is primarily and customarily used for a
nonmedical purpose and cannot be considered DME even when the item has
some remote medically related use, such as air conditioners. Equipment
that basically serves comfort or convenience functions or is primarily
for the convenience of a person caring for the patient, such as
elevators, and posture chairs, do not constitute medical equipment.
Similarly, physical fitness equipment, first-aid or precautionary-type
equipment, self-help equipment, and training equipment are considered
nonmedical in nature. These program instructions from 1975 are still in
effect and are now located in section 110 of chapter 15 of the Medicare
Benefits Policy Manual (CMS Pub. 100-02).
The Social Security Amendments of 1977 (Pub. L. 95-142) amended the
statute to mandate a ``rent/purchase'' program or payment methodology
for DME; CMS would pay for each item furnished to each beneficiary on
either a rental or purchase basis depending on which method was
considered more economical. The decision regarding whether payment for
DME was made on a rental or purchase basis was made by the Medicare
Part B carrier (Medicare contractor) processing the claim. The rent/
purchase program was implemented from February 1985 through December
1988.
Section 2321 of the Deficit Reduction Act of 1984 (Pub. L. 98-369)
moved the definition of DME from section 1861(s)(6) of the Act to
section 1861(n) of the Act and included a more detailed definition of
DME.
Section 4062(b) of the Omnibus Budget Reconciliation Act (OBRA) of
[[Page 70400]]
1987 (Pub. L. 100-203) amended the statute to terminate the rent/
purchase program and add section 1834(a) to the Act with special
payment rules for DME furnished on or after January 1, 1989. DME items
were to be classified into different classes under paragraphs (2)
through (7) of section 1834(a) of the Act, with specific payment rules
for each class of DME. Section 1834(a) of the Act still governs payment
for items and services furnished in areas that are not included in the
competitive bidding program mandated by section 1847(a) of the Act.
Section 1834(a)(2) of Act indicates that payment is made on a rental
basis or in a lump sum amount for the purchase of an item the purchase
price of which does not exceed $150 (inexpensive equipment) or which
the Secretary determines is acquired at least 75 percent of the time by
purchase (routinely purchased equipment) or which is an item specified
under sections 1834(a)(2)(A)(iii) and (iv) of the Act. The term
``routinely purchased equipment'' is defined in regulations at 42 CFR
414.220(a)(2) as equipment that was acquired by purchase on a national
basis at least 75 percent of the time during the period July 1986
through June 1987.
Medicare began covering blood glucose monitors under the DME
benefit in the early 1980s and the test strips and other supplies
essential for the effective use of the glucose monitor were also
covered. Blood glucose monitors were expensive equipment within the
meaning of section 1834(a)(2) of the Act but were routinely purchased
(more than 75 percent of the time on a national basis) during the
period July 1986 through June 1987. Therefore, payment was made on a
fee schedule basis for blood glucose monitors based on the lower of the
supplier's actual charge for the item or a state-wide fee schedule
amount calculated for the item based on the average rental or purchase
payment for the item in the state for the 12-month period ending on
June 30, 1987. The rental and purchase fee schedule amounts are
increased on an annual basis based on the provisions set forth in
section 1834(a)(14) of the Act.
The special payment rules for DME mandated by section 1834(a) of
the Act were implemented via program instructions for all DME items
other than oxygen and oxygen equipment on January 1, 1989. CMS
established and implemented fee schedule amounts for inexpensive or
routinely purchased items, for payment on a rental basis, payment on a
lump sum purchase basis when the item is new, and payment on a lump sum
purchase basis when the item is used. We also promulgated rules
implementing the special payment rules for DME mandated by section
1834(a) of the Act. For more information, see the October 9, 1991 and
December 7, 1992 Federal Registers (56 FR 50821 and 57 FR 57675,
respectively), and a July 10, 1995 final rule (60 FR 35492).
We established a definition for DME items and services during this
time at 42 CFR 414.202, which simply mirrored the general definition of
DME established in 1975 via program instructions.
Section 1861(n) of the Act was revised by section 4105(b)(1) of the
Balanced Budget Act of 1997 (Pub. L. 105-33) to expand coverage of
blood glucose monitors and test strips to patients with type II
diabetes. As noted, these items had already been covered as DME
(glucose monitoring equipment) and disposable supplies (test strips)
since the early 1980s, but coverage was limited to patients with type I
diabetes.
We added to the definition of DME at 42 CFR 414.202 effective for
items furnished after January 1, 2012, to require that the item have a
minimum lifetime of 3 years in order to be considered DME. This 3 year
minimum lifetime requirement was established in a final rule published
in the November 10, 2011 Federal Register entitled: Medicare Program;
End-Stage Renal Disease Prospective Payment System and Quality
Incentive Program; Ambulance Fee Schedule; Durable Medical Equipment;
and Competitive Acquisition of Certain Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (76 FR 70228 and 70314). This
final rule included a discussion of how the 3-year minimum lifetime
requirement (MLR) is applied to multicomponent devices or systems
consisting of durable and nondurable components (76 FR 70291). In this
rule, we noted that a device may be a system consisting of durable and
nondurable components that together serve a medical purpose, and that
we consider a multicomponent device consisting of durable and
nondurable components nondurable if the component that performs the
medically necessary function of the device is nondurable, even if other
components that are part of the device are durable. In regards to the
3-year MLR, the component(s) of a multicomponent device that performs
the medically necessary function of the device must meet the 3-year MLR
(76 FR 70291).
In summary, DME is covered under Medicare Part B. DME is defined
under section 1861(n) of the Act and Medicare claims for DME are paid
in accordance with the special payment rules under section 1834(a) of
the Act or under the competitive bidding program mandated by sections
1847(a) and (b) of the Act. Rules related to the scope and conditions
of the benefit are addressed at 42 CFR 410.38. Under Sec. 414.202,
durable medical equipment means equipment which--
Can withstand repeated use;
Effective with respect to items classified as DME after
January 1, 2012, has an expected life of at least 3 years;
Is primarily and customarily used to serve a medical
purpose;
Generally is not useful to a person in the absence of an
illness or injury; and
Is appropriate for use in the home.
All requirements of the definition must be met before an item can
be considered to be DME.
B. Continuous Glucose Monitors
On January 12, 2017, CMS issued CMS-1682-R articulating the CMS
policy concerning the classification of continuous glucose monitoring
systems as DME under Part B of the Medicare program. CMS-1682-R is
available on the CMS.gov website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Rulings/CMS-Rulings.
CMS-1682-R classified continuous glucose monitoring systems as
``therapeutic continuous glucose monitors (CGMs)'' that meet the
definition of DME if the equipment--
Is approved by FDA for use in place of a blood glucose
monitor for making diabetes treatment decisions (for example, changes
in diet and insulin dosage);
Generally is not useful to the individual in the absence
of an illness or injury;
Is appropriate for use in the home; and
Includes a durable component (a component that CMS
determines can withstand repeated use and has an expected lifetime of
at least 3 years) that is capable of displaying the trending of the
continuous glucose measurements.
Under CMS-1682-R, in all other cases in which a CGM does not
replace a blood glucose monitor for making diabetes treatment
decisions, a CGM is not considered DME. CMS-1682-R also addressed the
calculation of the fee schedule amounts for therapeutic CGMs in
accordance with the rules at section 1834(a) of the Act and under
regulations at 42 CFR, part 414, subpart D.
CGMs are systems that use disposable glucose sensors attached to
the patient to monitor a patient's glucose level on a continuous basis
by either automatically transmitting the glucose readings from the
sensor via a
[[Page 70401]]
transmitter to a device that displays the readings (``automatic''
CGMs), or by displaying the glucose readings from the sensor on a
device that the patient manually holds over the sensor (``manual''
CGMs). Some CGMs are class III devices and require premarket approval
by FDA, while some newer CGM models are class II devices that do not
require premarket approval by FDA. The glucose sensor continuously
measures glucose values in the interstitial fluid, the fluid around the
cells (in contrast to blood glucose monitors which measure glucose
values using fingertip blood samples). The sensor is a small flexible
metal probe or wire that is inserted in the skin and has a coating that
prevents the body's immune system from detecting and attacking the
foreign probe. Once the coating wears off, which in current models
takes place in 7 to 14 days, the sensor must be replaced for safety
reasons. The glucose sensor generates a small electrical signal in
response to the amount of sugar that is present (interstitial glucose).
This electrical signal is converted into a glucose reading that is then
displayed on a dedicated receiver (or type of monitor), an insulin
infusion pump, or a compatible mobile device (smart phone, smart watch,
tablet, etc.). The receiver displays the glucose measurements in the
form of a graph so that the patient can visualize how their glucose
measurements are trending.
CMS-1682-R classifies CGM display devices as DME if they have been
approved by FDA for use in making diabetes treatment decisions, such as
changing one's diet or insulin dosage based solely on the readings of
the CGM, that is, without verifying the CGM readings with readings from
a blood glucose monitor. These CGMs are referred to as ``non-
adjunctive'' or ``therapeutic'' CGMs in CMS-1682-R. In contrast, CGMs
that a patient uses to check their glucose levels and trends that must
be verified by use of a blood glucose monitor in order to make diabetes
treatment decisions are not currently classified as DME. These CGMs are
referred to as ``adjunctive'' or ``non-therapeutic'' CGMs in CMS-1682-
R.
C. Current Issues
Beneficiaries are continuing to use adjunctive or ``non-
therapeutic'' CGMs to help manage their diabetes, and claims submitted
for this equipment and its related supplies and accessories are being
denied in accordance with CMS-1682-R. We believe classification of CGMs
in general is an important issue to address again in notice and comment
rulemaking. In this proposed rule we revisit the question of whether
CGMs (both adjunctive and non-adjunctive), and their accessories and
supplies meet the five requirements or prongs of the definition of DME
at 42 CFR 414.202.
1. Requirements of DME Definition
(a) Ability To Withstand Repeated Use
As discussed in CMS-1682-R, we view the receiver that converts the
glucose readings from the disposable sensors and displays the readings
in a graph showing the continuous change in the trend of glucose levels
as the CGM component that performs the primary medical function of
self-monitoring of glucose levels and that therefore, the receiver is
the component that must be durable or withstand repeated use in order
for the CGM as a whole to be classified as DME. The receiver for all
CGM systems (both adjunctive and non-adjunctive) can be rented and used
by successive patients to monitor the trending of glucose levels that
are either transmitted to the device using disposable sensors or are
read or received by the device when the patient holds the device near
the sensor. Therefore, we believe this equipment meets the requirement
to withstand repeated use; that is, equipment that could normally be
rented and used by successive patients.
(b) Expected Life of at Least 3 Years
This criterion under 42 CFR 414.202 further addresses the issue of
``durability'' and provides a clear minimum timeframe for how long an
item must last in order to meet the definition of DME. As noted
previously, for multicomponent equipment (that is, a system of durable
and nondurable components), the component that performs the medically
necessary function of the equipment must be durable in order for the
device to be considered DME. The blood glucose monitor reads the
glucose level on the test strip and displays the reading for the
patient. CGM receivers operate in a similar fashion and, unlike the
glucose sensor component, which must be replaced every 7 to 14 days, we
believe the receiver does meet the 3-year minimum lifetime requirement.
In the case of one manufacturer, reliability analysis data from an
engineering firm that evaluated the receiver component of the CGM
system predicted a lifetime of greater than 3 years for the receiver.
Therefore, we believe that the receiver, both for adjunctive and non-
adjunctive CGMs, has an expected life of at least 3 years.
(c) Primarily and Customarily Used To Serve a Medical Purpose
As noted previously, in CMS-1682-R, we concluded that adjunctive
CGMs are not primarily and customarily used to serve a medical purpose.
We are proposing to change our determination with regard to whether
adjunctive CGMs are primarily and customarily used to serve a medical
purpose. The agency's determination that devices like these are not
primarily and customarily used to serve a medical purpose has been
rejected by several district courts. The district courts hearing these
cases have rejected the determination that adjunctive CGMs are not
primarily and customarily used to serve a medical purpose. See, e.g.,
Finigan v. Burwell, 189 F. Supp. 3d 201 (D. Mass. 2016); Whitcomb v.
Hargan, Case No. 17-cv-14, 2017 U.S. Dist. LEXIS 216571 (E.D. Wis. Oct.
26, 2017); Lewis v. Azar, 308 F. Supp. 3d 574 (D. Mass. 2018).
CGMs are used by patients to monitor their glucose levels, which
can help them to manage their diabetes and make diabetes treatment
decisions such as determining what and when to eat and changes in
insulin dosage. We are proposing that CGM systems that have not been
approved by FDA for use in making these diabetes treatment decisions
without the use of a blood glucose monitor but can be used to alert the
patient about potentially dangerous glucose levels while they sleep,
are primarily and customarily used to serve a medical purpose. We now
believe that because adjunctive CGMs can provide information about
potential changes in glucose levels while a beneficiary is sleeping and
is not using a blood glucose monitor, these CGMs are primarily and
customarily used to serve a medical purpose. Specifically, these CGMs
serve a medical purpose by helping patients to avoid potential episodes
of hypoglycemia or hyperglycemia, despite the fact that fingerstick
blood glucose verification is still required for use in making diabetes
treatment decisions. Currently, Medicare does not cover adjunctive CGMs
because such CGMs are not DME, per CMS-1682-R. CMS is proposing to
change this policy issued under CMS-1682-R; all CGMs (adjunctive and
non-adjunctive) would be considered DME, effective April 1, 2021.
(d) Generally Not Useful to a Person in the Absence of an Illness
or Injury
CMS has determined that both adjunctive and non-adjunctive/
therapeutic CGM systems are generally not useful to a person in the
absence of an illness or injury because people who do not have diabetes
generally would
[[Page 70402]]
not find a monitor that tracks their glucose levels to be useful. Thus
far, Medicare's coverage policy for CGMs has supported the use of
therapeutic CGMs in conjunction with a smartphone (with the durable
receiver as backup), including the important data sharing function they
provide for patients and their families.\41\ CMS previously concluded
that therapeutic CGMs, when used in conjunction with a smartphone,
still satisfied the definition of DME because the durable receiver,
used as a backup, was generally not useful to a person in the absence
of an illness or injury, even if the smartphone might be. CMS is now
proposing that both therapeutic and non-therapeutic CGMs, when used in
conjunction with a smartphone, satisfy the definition of DME because
the durable receiver, used as a backup, is not generally useful to a
person in the absence of an illness or injury. Medicare does not cover
or provide payment for smartphones under the DME benefit. In order for
Medicare to cover disposable glucose sensors, transmitters and other
non-durable components of a CGM system, these disposable items must be
used with durable CGM equipment that meets the Medicare definition of
DME. If a Medicare beneficiary is using durable CGM equipment that
meets the Medicare definition of DME, but also uses a smartphone or
other non-DME device to display their glucose readings in conjunction
with the covered DME item as described previously, Medicare will cover
the disposable items since the beneficiary is primarily using their
covered DME item to display their glucose readings. However, if the
beneficiary is exclusively using a non-DME item like a smartphone to
display glucose readings from disposable sensors, transmitters or other
disposable CGM supplies, these disposable supplies cannot be covered
since there is no covered item of DME in this scenario.
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\41\ https://www.cms.gov/Center/Provider-Type/Durable-Medical-Equipment-DME-Center.
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(e) Appropriate for Use in the Home
FDA has cleared or approved CGM systems as safe and effective for
use by the patient in their homes similar to how blood glucose
monitoring systems have been used in the home for many years. Both
adjunctive and non-adjunctive CGMs are appropriate for use in the home
for the same purpose that a blood glucose monitor is used in the home.
2. Fee Schedule Amounts for CGM Receivers/Monitors and Related
Accessories
Medicare payment for DME was made on a reasonable charge basis
prior to 1989. The regulations related to implementation of the
reasonable charge payment methodology are found at 42 CFR part 405,
subpart E. The current Medicare payment rules for glucose monitors and
other DME are located at section 1834(a) of the Act and mandate payment
on the basis of fee schedule amounts beginning in 1989. Blood glucose
monitors are classified as routinely purchased items subject to the
payment rules for inexpensive and routinely purchased DME at section
1834(a)(2) of the Act, which mandate payment for routinely purchased
items on a purchase or rental basis using fee schedule amounts based on
average reasonable charges for the purchase or rental of the item for
the 12-month period ending on June 30, 1987, increased by the
percentage increase in the consumer price index for all urban consumers
(U.S. city average) for the 6-month period ending with December 1987.
These base fee schedule amounts are increased on an annual basis based
on the update factors located in section 1834(a)(14) of the Act, which
includes specific update factors for 2004 through 2008 for class III
devices described in section 513(a)(1)(C) of the Federal Food, Drug,
and Cosmetic Act. Routinely purchased equipment is defined in the
regulations at 42 CFR 414.220(a)(2) as ``equipment that was acquired by
purchase on a national basis at least 75 percent of the time during the
period July 1986 through June 1987.'' Section 1834(a)(1)(C) of the Act
states that ``subject to subparagraph (F)(ii), this subsection must
constitute the exclusive provision of this title [Title XVIII of the
Act] for payment for covered items under this part [Medicare Part B] or
under Part A to a home health agency.'' The fee schedule amounts for
blood glucose monitors were revised in 1995 using special payment
limits established in accordance with the ``inherent reasonableness''
authority at section 1842(s)(8) of the Act. The final notice (BPD-778-
FN) establishing special payment limits for blood glucose monitors was
published in the January 17, 1995 Federal Register (60 FR 3405), with
the payment limits updated on an annual basis using the DME fee
schedule update factors in section 1834(a)(14) of the Act.
Because certain CGMs have been granted marketing authorization by
FDA to replace blood glucose monitors for use in making diabetes
treatment decisions, we believe that CGMs represent a newer technology
version of glucose monitors paid for by Medicare in 1986 and 1987. In
addition, the CGM systems function similar to the blood glucose
monitors in using disposable supplies or accessories, such as test
strips or sensors, to measure glucose levels in a patient's body,
either from the patient's blood or interstitial fluid, and using
durable equipment to convert these glucose measurements in a way that
they can be displayed on a screen on the equipment. Therefore, we
believe that the CGM receivers/monitors must be classified as routinely
purchased DME since they are a technological refinement of glucose
monitors routinely purchased from July 1986 through June 1987. The
alternative would be to classify CGM receivers/monitors as other items
of DME under section 1834(a)(7) of the Act and pay for the equipment on
a capped rental basis. We also believe the average reasonable charge
data for blood glucose monitors from 1986 and 1987 can be used to
establish the fee schedule amounts for CGM receivers/monitors in
accordance with our regulations 42 CFR 414.238(b) since CGM receivers/
monitors are comparable to blood glucose monitors. We do not believe
that the special payment limits established in 1995 for blood glucose
monitors must apply to CGM receivers/monitors because these special
payment limits were based on specific pricing information on the cost
of blood glucose monitors. We therefore propose to continue using the
fee schedule amounts established in CMS-1682-R based on the updated
1986/87 average reasonable charges for blood glucose monitors as the
fee schedule amounts for CGM receivers/monitors. As noted, section
1834(a)(14) of the Act provides different annual update factors for
class III DME versus other DME items and so the fee schedule amounts
for class III CGM receivers are slightly higher (from $231.77 to
$272.63 in 2020) than the fee schedule amounts for class II CGM
receivers (from $208.76 to $245.59 in 2020).
With regard to the fee schedule amounts for supplies and
accessories for CGMs, we do not believe these supplies and accessories
are comparable to the supplies and accessories for blood glucose
monitors, and there is a significant difference in the cost, lifetimes,
and types of supplies and accessories used with the various types of
CGMs. Namely, some sensors last for 7 days while others last for 14
days, some CGM systems require certain additional accessories such as
transmitters or additional supplies such
[[Page 70403]]
as calibration supplies while others do not. We believe all CGM
receivers essentially serve the same purpose as a blood glucose monitor
in interpreting and displaying glucose levels from disposable supplies.
However, the disposable supplies for CGMs are very different from the
disposable supplies used with a blood glucose monitor, so we do not
believe that the 1986/87 average reasonable charges for supplies used
with a blood glucose monitor should be used to establish the fee
schedule amounts for supplies used with a CGM. In addition, the
supplies used with the three types of CGMs currently on the market are
also very different. For this reason, we are proposing to separate
payment for CGM supplies and accessories into three separate categories
of supplies and accessories with different fee schedule amounts for
each category. The current 2020 monthly fee schedule amounts of $222.77
and $259.20 for supplies and accessories for CGM systems apply to all
types of class II or class III CGMs, respectively, but were established
based on supplier price lists for only one type of CGM system approved
by FDA for use in making diabetes treatment decisions without the need
to use a blood glucose monitor to verify the results (non-adjunctive
CGMs). The supplier prices used to establish these fee schedule amounts
were for non-adjunctive CGM systems that use a combination of sensors
and transmitters to automatically send glucose measurements to the CGM
receiver without manual intervention by the patient. We refer to this
type of CGM system as a non-adjunctive system, or a system that both
replaces a blood glucose monitor for use in making diabetes treatment
decisions, and can alert the patient about dangerous glucose levels
while they sleep based on the automatic transmission of the glucose
readings to the receiver on a 24-hour basis. The fee schedule amounts
of $222.77 and $259.20 for supplies and accessories for class II and
class III CGMs, respectively, increased by the fee schedule update
factor for 2021, would continue to apply to the supplies and
accessories for automatic, non-adjunctive CGMs effective April 1, 2021.
As aforementioned, adjunctive and ``non-therapeutic'' CGMs also
work with disposable batteries, sensors, and transmitters to
automatically send glucose readings to the receiver on a 24-hour basis,
but have not been granted marketing authorization for use in place of a
blood glucose monitor. As such, if a beneficiary uses one of these
CGMs, the beneficiary and program would still incur expenses associated
with use of blood glucose monitors and supplies. To avoid a situation
where the beneficiary and program would pay twice for glucose
monitoring supplies needed to accurately assess glucose levels, we
propose to establish the fee schedule amounts for supplies and
accessories for adjunctive CGMs based on supplier prices for the
sensors and transmitters minus the fee schedule amounts for the average
quantity and types of blood glucose monitoring supplies used by
insulin-treated beneficiaries who would be more likely to qualify for
coverage of a CGM system based on a need to more closely monitor
changes in their glucose levels. The adjunctive CGM system is not
replacing the function of the blood glucose monitor and related
supplies and therefore only provides an adjunctive or added benefit of
alerting the beneficiary when their glucose levels might be dangerously
high or low. Since the adjunctive CGM system cannot function alone as a
glucose monitor for use in making diabetes treatment decisions, we are
proposing to reduce the payment for the adjunctive CGM system by the
amount that is paid separately for the blood glucose monitor and
supplies that are needed in addition to the adjunctive CGM system and
are not needed in addition to the non-adjunctive CGM systems.
Currently, Medicare is allowing coverage and payment for 135 test
strips and lancets per month for insulin-treated beneficiaries using
blood glucose monitors. Using the 2020 mail order fee schedule amounts
for 50 test strips, divided by 50 and multiplied by 135, plus the 2020
mail order fee schedule amounts for 100 lancets, divided by 100 and
multiplied by 135, plus the 2020 mail order fee schedule amounts for a
monthly supply of batteries, calibration solution, and lancet device,
plus the 2020 fee schedule amount for the blood glucose monitor divided
by 60 months (5-year lifetime) results in a 2020 monthly allowance of
$34.35, which reflects what Medicare currently pays per month for an
insulin-treated diabetic beneficiary. Based on supplier invoices and
other prices, a 2020 monthly price for supplies and accessories used
with class II or class III adjunctive CGMs would be calculated to be
$209.97 and $233.12 respectively. Subtracting the monthly cost of the
blood glucose monitor and supplies of $34.35 from the monthly cost of
the supplies and accessories for class II adjunctive CGMs results in a
net price of $175.62 ($209.97 - $34.35 = $175.62) for the monthly
supplies and accessories used with a class II adjunctive CGM after
backing out the cost of the separately paid blood glucose supplies.
Subtracting the monthly cost of the blood glucose monitor and supplies
of $34.35 from the monthly cost of the supplies and accessories for
class III adjunctive CGMs results in a net price of $198.77 ($233.12 -
$34.35 = $198.77) for the monthly supplies and accessories used with a
class III adjunctive CGM after backing out the cost of the separately
paid blood glucose supplies. Thus we are proposing 2020 fee schedule
amounts of $175.62 and $198.77 (to be increased by the 2021 fee
schedule update factor yet to be determined) for use in paying claims
in 2021 for the monthly supplies and accessories for use with class II
and class III adjunctive CGMs respectively. Reducing the payment amount
for supplies and accessories used with adjunctive CGMs by the average
monthly payment for the blood glucose monitor and supplies that
Medicare and the beneficiary will still have to pay for avoids a
situation where the beneficiary and the program pay twice for glucose
testing supplies and equipment.
Finally, a third type of CGM system currently on the market is non-
adjunctive but does not automatically transmit glucose readings to the
CGM receiver and therefore does not alert the patient about dangerous
glucose levels while they sleep. We refer to this as a manual, non-
adjunctive CGM system. We propose to establish 2020 fee schedule
amounts of $46.86 (for class II devices) and $52.01 (for class III
devices) for the monthly supplies and accessories for this third
category, which only uses disposable batteries and sensors, based on
supplier prices for the supplies and accessories for this category of
CGMs.
Again, we believe that the types of CGM supplies and accessories
used with the three different types of CGM systems currently on the
market warrants three separate fee schedule amounts for the different
monthly supplies and accessories for these three types of systems.
C. Provisions of the Proposed Rule
We are proposing to classify all CGM systems that use a receiver
that meets the definition of DME as DME. We are proposing that a CGM
system would need to be granted marketing authorization by FDA, but its
FDA-required labeling would not need to indicate that the CGM is
appropriate or indicated for use in place of a blood glucose monitor
for making diabetes treatment decisions in order to be classified as
DME. Therefore, we are now proposing to classify CGM systems
[[Page 70404]]
that are adjunctive and non-adjunctive as DME. We are also proposing to
establish Medicare fee schedule amounts for CGM receivers/monitors
using 1986/87 average reasonable charges for comparable blood glucose
monitors updated in accordance with section 1834(a)(14) of the Act.
Finally, we propose to establish separate monthly fee schedule amounts
for calendar year 2021 for the supplies and accessories used with the
three different types of class II and class III CGMs on the market as
of the date of publication of this proposed rule based on the following
amounts with the addition of the applicable update factors for 2021 to
be determined later this year: $222.77 (class II) and $259.20 (class
III) for supplies and accessories necessary for the effective use of
automatic, non-adjunctive CGMs; $175.62 (class II) and $198.77 (class
III) for supplies and accessories necessary for the effective use of
automatic, adjunctive CGMs; and $46.86 (class II) and $52.01 (class
III) for supplies and accessories necessary for the effective use of
manual, non-adjunctive CGMs.
VII. Expanded Classification of External Infusion Pumps as DME
In section 5012 of the 21st Century Cures Act, Congress amended
section 1861(s)(2) of the Act, and added subsections 1834(u) and
1861(iii) of the Act, to establish a new Medicare home infusion therapy
services benefit to cover certain professional services associated with
the provision of home infusion therapy. Congress defined ``home
infusion drug[s]'' at section 1861(iii)(3)(C) of the Act as ``a
parenteral drug or biological administered intravenously, or
subcutaneously for an administration period of 15 minutes or more, in
the home of an individual through a pump that is an item of durable
medical equipment (as defined in subsection (n)),'' excluding insulin
pump systems and self-administered drugs or biologicals on a self-
administered drug exclusion list. See 42 U.S.C. 1395x(iii)(3)(C).
In light of the new Medicare home infusion therapy services benefit
to cover certain professional services associated with the provision of
home infusion therapy, we propose to expand the scope of the Medicare
Part B benefit for durable medical equipment (DME) by revising the
interpretation of the ``appropriate for use in the home'' requirement
within the definition of DME at 42 CFR 414.202 specifically for certain
drugs or biologicals infused in the home using an external infusion
pump. It is important to note that the home infusion therapy benefit is
only available when a drug or biological is administered through an
external infusion pump that is an item of DME. In addition, drugs or
biologicals administered through an external infusion pump that is an
item of DME can be covered under the Medicare Part B benefit for DME as
supplies necessary for the effective use of the external infusion pump.
In order for an external infusion pump and associated supplies to
be covered under the Part B DME benefit, the pump must, among other
statutory and regulatory requirements, be ``appropriate for use in the
home.'' See 42 CFR 414.202. In practice, CMS has interpreted this
requirement within the definition of DME at 42 CFR 414.202 as limiting
coverable DME items to those items which can be used by a patient or
caregiver in the home without the assistance of a healthcare
professional. We propose to interpret this requirement to be met for an
external infusion pump if: (1) The Food and Drug Administration (FDA)-
required labeling requires the associated home infusion drug to be
prepared immediately prior to administration or administered by a
health care professional or both; (2) a qualified home infusion therapy
supplier (as defined at Sec. 486.505) administers the drug or
biological in a safe and effective manner in the patient's home (as
defined at Sec. 486.505); and (3) the FDA-required labeling specifies
infusion via an external infusion pump as a possible route of
administration, at least once per month, for the drug. We will use the
first requirement in our proposed standard to identify the drugs or
biologicals that a beneficiary or caregiver or both is unable to safely
and effectively administer in the home, per the FDA-required labeling.
The second requirement addresses the necessary services furnished by a
qualified home infusion therapy supplier, which are covered by Medicare
under the home infusion therapy benefit, and which would provide for
the safe and effective administration of the drug or biological in the
home. Our justification for the third requirement in our proposed
standard is based on our belief that the FDA-required labeling must
specify that a drug may be infused via an external infusion pump on a
regular basis or over a set period of time at prescribed intervals
because DME is a rental benefit. Medicare payment for an external
infusion pump classified as DME is typically made over the course of 13
months under a capped rental payment; title for the pump transfers to
the beneficiary after 13 months of continuous use. Medicare payment for
drugs or biologicals infused through an item of DME is typically made
consistent with section 1847A of the Act. Therefore, we propose that in
a situation in which a beneficiary or caregiver or both is unable to
safely and effectively administer certain drugs or biologicals, the
external infusion pump through which such drugs or biologicals are
administered could satisfy the definition of DME if all three of the
requirements described previously are met. The drug or biological could
then be covered as a supply under the DME benefit.
Related to the third requirement in our proposed standard, we are
seeking comment on our proposed plan to take into account whether the
FDA required labeling specifies infusion via an external infusion pump
as a possible route of administration, at least once per month, for the
drug; we welcome input on alternative standards or factors DME MACs
could use when making this determination.
If finalized, the proposed change would result in a greater number
of drugs or biologicals being covered as supplies under the DME
benefit. The proposed change could also affect home infusion therapy
services. We solicit comments on our proposal to reinterpret the
``appropriate for use in home'' requirement at 42 CFR 414.202, which
would expand beneficiary access to drugs or biologicals infused in the
home using and external infusion pump.
In particular, we solicit comment on whether our proposal would be
adequate to expand access to medically appropriate home infusion drugs
administered through external infusion pumps and home infusion therapy
furnished by qualified home infusion therapy suppliers. We note that in
order to receive services under the Medicare home infusion therapy
benefit, section 1861(iii)(2)(B) of the Act requires the individual to
be under a plan of care that describes the type, amount, and duration
of home infusion therapy services and such plan must be established and
reviewed by a physician in coordination with the furnishing of home
infusion drugs. Therefore, the patient's physician must coordinate, as
needed, with the DME supplier and a qualified home infusion therapy
supplier (if different from the DME supplier) when establishing and
reviewing the home infusion therapy plan of care. Additionally, we
solicit public comment with regard to whether there are any additional
issues that CMS should consider to ensure effective and safe delivery
of home infusion drugs
[[Page 70405]]
administered through an external infusion pump to beneficiaries in
their homes. We note that the DME and home infusion therapy benefit
categories are separate Medicare benefit categories defined by statute,
which may be quite different from how home infusion drugs administered
through external infusion pumps are covered, delivered, and paid for
under private insurance arrangements and private networks of providers.
We further note that Medicare beneficiaries generally have choices
regarding their site of care treatment options. If drug infusion
therapy in the home setting is an available option to a beneficiary,
coordination among physicians, home infusion therapy suppliers, and DME
suppliers is important to achieving positive health outcomes.
Increased access and choice for beneficiaries in need of home
infusion drugs is an important component of moving towards increased
value-based care. We request comment on whether the proposed change
would be adequate to further this objective.
We note that this proposal, if finalized, would necessitate updates
to the local coverage determinations for external infusion pumps by the
DME MACs. The DME MACs update local coverage determinations upon
receipt and review of an LCD reconsideration request. The DME MACs have
instructions about LCD reconsideration requests on their websites, and
we anticipate that manufacturers, suppliers, and others would approach
the DME MACs in this manner requesting that drugs or biologicals be
included in the LCDs for external infusion pumps. This proposal, if
finalized, should not be construed as CMS staff and Medical Officers
taking on the responsibility for evaluating requests and making
determinations on which drugs or biologicals satisfy the ``appropriate
for use in the home'' criteria in addition to or in lieu of DME MAC
process for updates to LCDs. Consistent with long standing practice,
the DME MACs are responsible for maintaining the list of eligible drugs
that can be infused using an external infusion pump. In summary, we
welcome comments on these issues and in particular--
On our proposal to interpret the ``appropriate for use in
home'' requirement at 42 CFR 414.202, which would expand beneficiary
access to drugs or biologicals infused in the home using an external
infusion pump;
On whether our proposal would be adequate to expand access
to medically appropriate home infusion drugs administered through
external infusion pumps and home infusion therapy furnished by
qualified home infusion therapy suppliers;
With regard to whether there are any additional issues
that CMS should consider to ensure effective and safe delivery of home
infusion drugs administered through an external infusion pump to
beneficiaries in their homes;
On whether the proposed change would further the objective
of moving towards increased value-based care; and
On our proposed plan to take into account whether the FDA-
required labeling specifies infusion via an external infusion pump as a
possible route of administration, at least once per month, for the
drug; we welcome input on alternative standards or factors DME MACs
could use when making this determination.
VIII. Exclusion of Complex Rehabilitative Manual Wheelchairs and
Certain Other Manual Wheelchairs From the DMEPOS CBP
The Further Consolidated Appropriations Act, 2020 (Pub. L. 116-94)
was signed into law on December 20, 2019. Section 106(a) of the Further
Consolidated Appropriations Act, 2020 (Pub. L. 116-94) amends section
1847(a)(2)(A) of the Act to exclude complex rehabilitative manual
wheelchairs, certain manual wheelchairs described by HCPCS codes E1235,
E1236, E1237, E1238, and K0008 or any successor codes, and related
accessories from the DMEPOS CBP. We are therefore proposing to make
conforming changes to the definition of ``item'' under Sec. 414.402 to
reflect that these wheelchairs and related accessories are excluded
from the DMEPOS CBP. We are proposing to edit the definition of item in
Sec. 414.402 to exclude ``power wheelchairs, complex rehabilitative
manual wheelchairs, manual wheelchairs described by HCPCS codes E1235,
E1236, E1237, E1238, and K0008, and related accessories when furnished
in connection with such wheelchairs''.
In addition, section 106(b) of the Further Consolidated
Appropriations Act, 2020 mandates that, during the period beginning on
January 1, 2020 and ending June 30, 2021, the adjustments to the
Medicare fee schedule amounts for certain DME based on information from
competitive bidding programs not be applied to wheelchair accessories
(including seating systems) and seat and back cushions furnished in
connection with complex rehabilitative manual wheelchairs (HCPCS codes
E1161, E1231, E1232, E1233, E1234 and K0005) and certain manual
wheelchairs currently described by HCPCS codes E1235, E1236, E1237,
E1238, and K0008. We are implementing the changes to the fee schedule
amounts for these items through program instructions based on the
discretion provided by the Further Consolidated Appropriations Act,
2020.
IX. Collection of Information Requirements
This document does not impose information collection requirements,
that is, reporting, recordkeeping or third-party disclosure
requirements. Consequently, there is no need for review by OMB under
the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.).
As stated earlier, this rule proposes to continue certain existing
code application policies and processes and proposes several new coding
policies and procedures. However, the new policies and procedures will
not have any effect on existing requirements and burden estimates.
Specifically, proposed Sec. 414.8, Sec. 414.9, Sec. 414.10, Sec.
414.114, and Sec. 414.240 all make reference to the Level II HCPCS
code application process. The information collection requirements
associated with the aforementioned proposed regulations are currently
approved under OMB control number 0938-1042 as part of the information
collection request ``Healthcare Common Procedure Coding System
(HCPCS)--Level II Code Modification Request Process (CMS-10224).
X. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
XI. Regulatory Impact Statement
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4),
Executive Order 13132 on Federalism (August 4, 1999), the Congressional
Review Act (5 U.S.C. 801-808), and Executive Order 13771
[[Page 70406]]
on Reducing Regulation and Controlling Regulatory Costs (January 30,
2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 year, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
A Regulatory Impact Analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any 1
year). These proposed regulations are not economically significant
within the meaning of section 3(f)(1) of the Executive Order.
However, OMB has determined that the actions are significant within
the meaning of section 3(f)(4) of the Executive Order. Therefore, OMB
has reviewed this proposed rule, and the Departments have provided the
following assessment of their impact.
A. Regulatory Review Cost Estimation
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this proposed rule, we
should estimate the cost associated with regulatory review. Thus, using
the 2019 wage information from the Bureau of Labor Statistics (BLS)
https://www.bls.gov/oes/current/oes119111.htm for medical and health
service managers (Code 11-9111), we estimate that the cost of reviewing
this rule is $111.00 per hour, including overhead and fringe benefits.
For manufacturers of DMEPOS products, DMEPOS suppliers, and other
DMEPOS industry representatives, we assume the same cost of reviewing
this rule. Assuming an average reading speed for those very familiar
with the topic matter, we estimate that it would take approximately 5
hours for the medical and health service managers or industry
representatives to review this proposed rule. For each entity that
reviews this proposed rule, the estimated cost is $555.00 (5 hours' x
$111.00 per hour.) Therefore, we estimate that the total cost of
closely reviewing this proposed rule is $360,750 ($550.00 x 650
reviewers).\42\ Due to the uncertainty involved with accurately
quantifying the administrative costs of reviewing this rule, we solicit
comments on this assumption.
---------------------------------------------------------------------------
\42\ 650 represents a little more than 2 percent of the 2018
number of DME suppliers.
---------------------------------------------------------------------------
We acknowledge that this assumption may understate or overstate the
costs of reviewing this proposed rule. It is possible that not all
commenters or DME suppliers will review this proposed rule in detail,
and it is also possible that some reviewers will choose not to comment
on the proposed rule. For these reasons, we anticipate that a little
more than 2 percent of the 2018 DME suppliers (650) may review the
proposed rule. We further assume that some DME entities will read
summaries from trade newsletters, trade associations, and trade law
firms within the normal course of staying up with current news,
incurring no additional cost. We solicit comments on this assumption.
B. Detailed Discussion of Impacts by Major Provisions
1. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Fee Schedule Adjustments
The Office of the Actuary has determined that the proposed
regulations would neither increase nor decrease spending from what is
assumed in the FY 2021 President's Budget. In November 2019 when the
budget baseline was estimated based on historic trends the same level
of spending in CBAs and also non-CBAs from 2021 onwards. In other
words, no explicit assumption for changing this provision was made in
the President's budget baseline.
In addition, we seek comments on three alternatives to our proposal
that would have fiscal impacts. The first alternative is to pay fully
adjusted fee schedule rates in all areas except super rural areas or
non-contiguous areas and pay 120 percent of the fully adjusted rates in
super rural areas and non-contiguous areas. The Office of the Actuary
estimates that this alternative would generate $2.4 billion in Medicare
savings and $0.2 billion in Medicaid savings over 5 years against the
FY 2021 President's Budget baseline assuming that the PHE ends by
January 2021. second alternative is to adjust fee schedule amounts for
items and services furnished in non-CBAs between 2021 and 2023 based on
a 75/25 blend of adjusted and unadjusted rates and phase in the full
fee schedule adjustments beginning January 1, 2024. The Office of the
Actuary estimates that this alternative would generate $1.8 billion in
Medicare savings and $0.1 billion in Medicaid savings over 5 years
against the FY 2021 President's Budget baseline assuming the PHE ends
by January 2021. The third alternative addresses a possible payment
methodology for certain product categories that were essentially
removed from Round 2021 of the CBP. Under this alternative, we would
continue the fee schedule adjustment transition rules at Sec.
414.210(g)(9) and fee schedule adjustment rules at Sec. 414.210(g)(10)
for items and services furnished in non-CBAs and CBAs or former CBAs,
respectively, for items and services that are essentially removed from
Round 2021 of the CBP. Under this alternative, the current fee schedule
adjustment methodologies would continue until the next time these items
and services are recompeted under the CBP. OACT has estimated that the
changes made to the CBP under previous rulemaking (83 FR 57020) would
have a minimal impact against the FY 2021 President's Budget baseline;
therefore, continuing to use rates set under previous rounds of the CBP
to adjust fee schedule amounts would likewise have a minimal impact
against the FY 2021 President's Budget baseline since those rates are
in line with what OACT assumed would be spent as a result of Round 2021
of the CBP.
The first two alternatives were not proposed primarily due to the
assumption that maintaining the current fee schedule adjustment
methodology will provide for better access to DMEPOS items. The third
alternative addresses a possible payment methodology for certain
product categories that are essentially removed from Round 2021 of the
CBP and the fee schedule amounts for such items and services furnished
in CBAs, former CBAs, and non-CBAs.
2. DMEPOS Fee Schedule Adjustments for Items and Services Furnished in
Rural Areas From June 2018 Through December 2018 and Exclusion of
Infusion Drugs From the DMEPOS CBP
No fiscal impact has been identified by the Office of the Actuary
in the
[[Page 70407]]
baseline of the FY 2021 President's Budget for these provisions
promulgated in 2018.
3. Healthcare Common Procedure Coding System (HCPCS) Level II Code
Application Process
This rule proposes to continue certain existing code application
policies and processes and proposes certain new coding policies and
procedures that are assumed to have no determinable fiscal impact when
measured against the FY 2021 President's Budget baseline.
4. Benefit Category and Payment Determinations for DME, Prosthetic
Devices, Orthotics and Prosthetics, Therapeutic Shoes and Inserts,
Surgical Dressings, Splints, Casts, and Other Devices Used for
Reductions of Fractures and Dislocations
This rule proposes to use the existing HCPCS public meeting process
for BCDs for new items and services that are DME, prosthetic devices,
orthotics and prosthetics, therapeutic shoes and inserts, surgical
dressings, or splints, casts, and other devices used for reductions of
fractures and dislocations with no additional administrative costs to
CMS and no fiscal impact when measured against the FY 2021 President's
Budget baseline. BCDs are necessary in order to make payment
determinations for these new items and services. As an aside, the
proposal to incorporate public consultation on BCDs and payment
determinations for these new items and services into the HCPCS public
meetings will not affect the ability of manufacturers to make these new
items and services. We are proposing to use an already established
process (HCPCS public meetings) that has been in use since 2001 for DME
and 2005 for other items and services.
5. Classification and Payment for Continuous Glucose Monitors Under
Medicare Part B
This rule proposes to classify all CGMs as DME and addresses the
payment for different types of CGMs. Because we do not anticipate
changes in CGM utilization, this proposal is assumed to have no overall
fiscal impact when measured against the FY 2021 President's Budget
baseline.
6. Expanded Classification of External Infusion Pumps as DME
This proposed rule would expand the scope of the Medicare Part B
benefit for DME by revising the interpretation of the ``appropriate for
use in the home'' requirement in the definition of DME at 42 CFR
414.202 specifically for certain drugs or biologicals infused in the
home using an external infusion pump if: (1) The Food and Drug
Administration (FDA)-required labeling requires the associated home
infusion drug to be prepared immediately prior to administration or
administered by a health care professional or both; (2) a qualified
home infusion therapy supplier (as defined at Sec. 486.505)
administers the drug or biological in a safe and effective manner in
the patient's home (as defined at Sec. 486.505); and (3) the FDA-
required labeling specifies infusion via an external infusion pump as a
possible route of administration, at least once per month, for the
drug. It is important to note that the home infusion therapy benefit is
only available when a drug or biological is administered through an
external infusion pump that is an item of DME. In addition, drugs or
biologicals administered through an external infusion pump that is an
item of DME can be covered under the Medicare Part B benefit for DME as
supplies necessary for the effective use of the external infusion pump.
The fiscal impact of this proposal against the FY 2021 President's
Budget is estimated to be a small savings to Medicare in CY 2021.
Beneficiaries have continued access in the outpatient setting to
the drugs or biologicals that would be covered as supplies under the
DME benefit if this proposal is finalized. Medicare pays for the drugs
or biologicals using the same methodology regardless of the setting in
which they are administered. However, Medicare would be responsible for
a smaller portion of the total costs of administration if this proposal
is finalized and a beneficiary chooses to receive home infusion rather
than infusion in an outpatient setting because the beneficiary would be
responsible for a larger portion of the total costs in the home
setting, since there is no cap on the beneficiary cost-sharing for DME
as there is in the hospital outpatient setting. The Medicare payments
for the external infusion pump, supplies, and professional services
(labor) in the home setting is higher than in the outpatient setting,
however, the overall impact on Medicare costs is a small savings if the
beneficiary chooses the home setting over the hospital outpatient
setting. In the outpatient setting, Medicare pays for the supplies,
including the costs associated with the use of an external infusion
pump, and the professional service in a single payment to the facility.
The pump is owned by the facility and not paid for separately by
Medicare. Under this proposal, our reinterpretation of the
``appropriate for use in the home'' requirement would result in more
external infusion pumps and supplies, including the drugs or
biologicals, being paid for under the DME benefit, while the
professional service component of home infusion would be paid under the
home infusion therapy services benefit. Medicare payment for an
external infusion pump classified as DME is typically made over the
course of 13 months under a capped rental payment; title for the pump
transfers to the beneficiary after 13 months of continuous use.
Medicare would continue to make a monthly payment for supplies (such as
tubing, catheters, and the infusion drugs) for the appropriate use of
the external infusion pump for as long as the beneficiary has a medical
need for such supplies.
The estimated impact of this proposed policy is based on current
utilization, by reviewing Medicare hospital outpatient claims, of the
only product known by CMS at this time that is available in the
outpatient setting through the use of an external infusion pump and
could also be prescribed by a physician for use in the home setting:
Patisiran. In 2019, 128 beneficiaries utilized this drug and total
Medicare payments to facilities for furnishing patisiran was roughly
$26 million. The number of beneficiaries that would shift settings, if
this proposal is ultimately finalized, is unknown but a reasonable
assumption is that 50 percent--or 64 beneficiaries--would shift
settings. CMS estimates that approximately $235,000 per year in
Medicare payment would be paid under the home infusion therapy benefit,
as CMS estimates home infusion therapy supplier claims would be paid at
the category 3 level for those drugs as described in the CY 2020 Home
Health Prospectve Payment System (HH PPS) final rule (84 FR 60618) for
the home visit. More specifically, CMS estimates that in 2021, a home
infusion therapy supplier would come to the home of each of the 64
beneficiaries for one initial visit at a category 3 level of $320 in
payment and 16 subsequent visits at a category 3 level of $266 in
payment per visit, in the first year, if this proposal is finalized.
CMS also estimates that $18 million would be paid to DME suppliers,
predominantly based on the costs of the drug and payment for the
external infusion pumps. The net impact to Medicare, accounting for
enrollment growth and projected payment updates, is estimated to be a
savings of roughly $3 million in CY 2021 if this proposal is finalized.
This savings is largely attributable to the differential in cost
sharing between the hospital outpatient setting and the home, as
described below. Please note
[[Page 70408]]
that this estimate reflects no assumption for induced utilization of
this product or for other products that could meet the definition of
DME currently or that may come to market in the future. CMS asks for
public comment on other products that could qualify under this proposed
revised interpretation of the definition of DME to further inform our
estimates.
We further note the impact on the beneficiary. The beneficiary, in
consultation with the physician that develops the plan of care, would
have the opportunity to select the home or outpatient setting for
infusion, if this proposal is finalized. A fiscal impact on a
beneficiary is that the Medicare payments for external infusion pump
rental occur in the first 13 months of treatment in the home setting,
which may increase up front outlays in cost-sharing for beneficiaries.
In addition, hospital outpatient cost sharing is capped at the
inpatient deductible, which is currently $1,408 per service line (which
in this case is for each administration of patisiran every 3 weeks).
DME, including DME supplies like the drug, and the home infusion
therapy benefit have a 20 percent cost sharing, which does not have a
cap (or maximum amount). We estimate that patisiran, for example, would
have cost sharing of more than $70,000 per year per beneficiary in the
home setting compared to approximately $24,000 in the hospital
outpatient setting. We note that many beneficiaries may have
supplemental coverage, like Medigap insurance, from a third-party payer
that may mitigate this cost sharing. Infusion of patisiran would also
continue to be available in an outpatient setting subject to the per
service cap at the inpatient deductible. CMS is also aware that
premedication drugs may be necessary to safely and effectively
administer certain infusion drugs, and that intravenous forms of the
premedication drugs are covered in the hospital outpatient payment. CMS
notes that premedication drugs would not be covered as supplies
necessary for the use of the external infusion pump under the DME
benefit, and therefore, if administered intravenously in the home, are
estimated to cost a beneficiary a total of $3-19 out of pocket per
treatment session. We note that some premedication drugs may also have
an oral form and could be covered under Part D or be over-the-counter
and non-covered by Medicare.
We seek public comment on the proposed policy, particularly in
regard to information about other infusion drugs or biologicals that
may be covered as supplies under the DME benefit if this proposal is
finalized. We also seek comment on the out-of-pocket costs for
beneficiaries who would elect to receive infusion drugs or biologicals
in the home rather than the outpatient setting.
7. Exclusion of Complex Rehabilitative Manual Wheelchairs and Certain
Other Manual Wheelchairs From the DMEPOS CBP
This rule proposes conforming changes to the regulations at 42 CFR
414.402 to revise the definition of ``item'' at 42 CFR 414.402 under
the CBP to exclude complex rehabilitative manual wheelchairs and
certain other wheelchairs from the CBP and is estimated to have no
fiscal impact and is considered in the baseline of the FY 2021
President's Budget.
C. Regulatory Flexibility Act (RFA)
This proposed rule does not impose a significant impact on small
entities or DMEPOS suppliers. As a result, the RFA does not apply to
this proposed rule. Nevertheless, the discussion later in this section
aims to describe why the proposed rule does not impose a significant
impact on small entities. The RFA requires agencies to analyze options
for regulatory relief of small entities, if a rule has a significant
impact on a substantial number of small entities. For purposes of the
RFA, we estimate that almost all DMEPOS suppliers are small entities as
that term is used in the RFA (include small businesses, nonprofit
organizations, and small governmental jurisdictions). The great
majority of hospitals and most other health care providers and
suppliers are small entities, either by being nonprofit organizations
or by meeting the Small Business Administration (SBA) definition of a
small business (having revenues of less than $8.0 million to $41.5
million in any 1 year).
According to the SBA's website at http://www.sba.gov/content/small-business-size-standards, DME suppliers may fall into either the North
American Industrial Classification System (NAICS) code 532291 and Home
Health Equipment Rental code 44610, Pharmacies and Drug Stores. The SBA
defines Pharmacies and Drug Stores as businesses having less than $30
million and Home Health Equipment Rental as businesses having less than
$35 million in annual receipts.
Table 5--DMEPOS Suppliers Size Standards
----------------------------------------------------------------------------------------------------------------
SBA size standard/small
NAICS (6-digit) Industry subsector description entity threshold Total small businesses
(million)
----------------------------------------------------------------------------------------------------------------
446110....................... Pharmacies and Drug Stores..... $30 18,526
532291....................... Home Health Equipment Rental... 35 673
----------------------------------------------------------------------------------------------------------------
Source: 2012 Economic Census.
Since we are uncertain of the DMEPOS suppliers' composition, we are
seeking comments from the public to aid in understanding the various
industries that supply DMEPOS products. So far, we have identified only
the two industries mentioned in Table 5.
table 6--DMEPOS Suppliers Concentration Ratios
[Pharmacies and drug stores and home healh equipment rental]
----------------------------------------------------------------------------------------------------------------
Firm size (by receipts) Firm count % of small firms Total Avg. Rev.
----------------------------------------------------------------------------------------------------------------
SMALL FIRMS............................................ 19,199 100.0 159,052,305
<100,000........................................... 808 4.2 93,936
100,000-499,999.................................... 2,267 11.8 570,733
500,000-999,999................................... 2,056 10.7 1,463,023
[[Page 70409]]
1,000,000-2,499,999............................... 5,915 30.8 3,341,895
2,500,000-4,999,999............................... 5,158 26.9 6,986,859
5,000,000-7,499,999............................... 1,654 8.6 11,667,724
7,500,000-9,999,999............................... 598 3.1 17,453,816
10,000,000-14,999,999............................. 444 2.3 22,420,998
15,000,000-19,999,999............................. 157 0.8 27,573,076
20,000,000-24,999,999............................. 71 0.4 20,211,074
25,000,000-29,999,999............................. 46 0.2 20,377,955
30,000,000-34,999,999.............................. 25 0.1 26,891,217
LARGE FIRMS:
Receipts >$35 Million.............................. 326 NA 2,962,532
----------------------------------------------------------------------------------------------------------------
SOURCE: 2012 County Business Patterns and 2012 Economic Census.
* Total average revenue data are not included for the Home Health Equipment Rentals (NAICS 532291) for firms
greater than 20,000,000 in receipts). Moreover, no revenue data are available for large firms in Home Heath
Equipment Rentals Industry.
As can be seen in Table 6, almost all DMEPOS suppliers are small
entities as that term is used in the RFA.\43\ Additionally, Table 6
shows the disproportionate impacts among firms, and between small and
large firms. In Table 6, both industries, Pharmacies and Drug Stores
and Home Health Equipment, Rental firm size (by receipts), firm count,
% of small firms, and total average revenue were aggregated to
determine the DMEPOS concentration ratios. Keep in mind, there are
missing data. See footnotes. Nevertheless, the great majority of DMEPOS
suppliers are small entities, either by being nonprofit organizations
or by meeting the SBA definition of a small business (having revenues
of less than $35 million (see the Small Business Administration's
website at http://www.sba.gov/content/small-business-size-standards).
---------------------------------------------------------------------------
\43\ Note, the entire population of DMEPOS suppliers is not
known at this time. However, based on our experience, the majority
of DMEPOS suppliers are covered in the two industries identified.
---------------------------------------------------------------------------
For purposes of the RFA, approximately 98 percent of pharmacies and
drugs stores and home health equipment rental industries are considered
small businesses according to the Small Business Administration's size
standards with total revenues of $35 million or less in any 1 year.
Individuals and states are not included in the definition of a small
entity.
This rule does not affect health care enterprises operated by small
government entities such as counties or towns with populations 50,000
or less. The Department of Health and Human Services generally uses a
revenue impact of 3 to 5 percent as a significance threshold under the
RFA. The RFA threshold analysis, therefore, indicates that there is not
a significant economic impact on a substantial number of small
entities. We do not believe that this threshold will be reached by the
requirements in this rule. Recall, the only cost presented is the
regulation review cost of $555 per reviewing firm, which is considered
to be a very insignificant cost for the firms.
Since we are uncertain if we have accounted for all the DMEPOS
suppliers, we are asking for public comments. We anticipate that
additional DMEPOS suppliers not accounted for in this rule are minimal;
hence, we do not believe that this regulation will result in a
significant impact on a substantial number of small entities.
Therefore, the Secretary certifies that this proposed rule will not
have a significant economic impact on a substantial number of small
entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 603 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a Metropolitan Statistical Area for Medicare
payment regulations and has fewer than 100 beds. We are not preparing
an analysis for section 1102(b) of the Act because we have determined,
and the Secretary certifies, that this rule will not have a significant
impact on the operations of a substantial number of small rural
hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2020, that
threshold is approximately $156 million. This rule will have no
consequential effect on state, local, or tribal governments or on the
private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a proposed rule (and subsequent final
rule) that imposes substantial direct requirement costs on state and
local governments, preempts state law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on state
or local governments, the requirements of Executive Order 13132 are not
applicable.
Executive Order 13771, entitled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017 and requires that the
costs associated with significant new regulations ``shall, to the
extent permitted by law, be offset by the elimination of existing costs
associated with at least two prior regulations.'' This proposed rule's
designation under Executive Order 13771 will be informed by comments
received.
In accordance with the provisions of Executive Order 12866, this
rule was reviewed by OMB.
List of Subjects in 42 CFR Part 414
Administrative practice and procedure, Biologics, Diseases, Drugs,
Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR Chapter IV as follows:
PART 414--PAYMENT FOR PART B MEDICAL AND OTHER SERVICES
0
1. The authority citation for part 414 continues to read as follows:
[[Page 70410]]
Authority: 42 U.S.C. 1302, 1395hh, and 1395rr (b)(l).
0
2. Section 414.8 is added to subpart A to read as follows:
Sec. 414.8 Healthcare Common Procedure Coding System (HCPCS) Level
II code application cycles and procedures.
(a) Scope. This section sets forth coding cycles and procedures for
external code applications requesting revisions to the HCPCS Level II
code set maintained by CMS for the following:
(1) Non-drug, non-biological items and services. For purposes of
Sec. Sec. 414.8, 414.9, and 414.10, non-drug, non-biological items and
services are items and services that Medicare (and potentially other
payers) typically pay separately, as well as certain items and services
that are not covered under Medicare, and that are described as the
following:
(i) Medical and surgical supplies, such as splints and casts
described in section 1861(s)(5) of the Act and therapeutic shoes
described in section 1861(s)(12) of the Act.
(ii) Dialysis supplies and equipment such as those described in
section 1861(s)(2)(F) of the Act.
(iii) Ostomy and urological supplies such as those described in
section 1861(s)(8) of the Act.
(iv) Surgical dressings, such as those described in section
1861(s)(5) of the Act.
(v) Prosthetics (artificial legs, arms, and eyes) such as those
described in section 1861(s)(9) of the Act and prosthetic devices such
as those described in section 1861(s)(8) of the Act.
(vi) Orthotics (leg, arm, back, and neck braces) such as those
described in section 1861(s)(9) of the Act.
(vii) Enteral/parenteral nutrition such as those described in
section 1842(s)(2) of the Act.
(viii) Durable Medical Equipment (and related accessories and
supplies other than drugs), such as oxygen and oxygen equipment,
wheelchairs, infusion pumps, and nebulizers such as described in
sections 1861(s)(6) and 1861(n) of the Act.
(ix) Vision items and services, such as prosthetic lenses described
in 1861(s)(8) of the Act.
(x) Other items and services that are statutorily excluded from
Medicare coverage for which CMS or other government or private insurers
have identified a claims processing need for a HCPCS Level II code,
such as hearing aids which are excluded from coverage by section
1862(a)(7) of the Act.
(2) Drug or biological products. For purposes of Sec. Sec. 414.8,
414.9, and 414.10, these are products that are separately payable by
Medicare under Part B as drugs or biologicals as that term is defined
in section 1861(t) of the Act.
(b) Coding cycles. HCPCS Level II coding cycles begin with the
submission deadlines for code applications described in paragraph (c)
of this section, followed by a preliminary recommendation and public
meeting as specified in paragraphs (d) and (e) of this section, and the
issuance of a final decision described in paragraph (e) of this
section. Coding cycles begin no less frequently than--
(1) Bi-annually for non-drug, non-biological items and services;
and
(2) Quarterly for drug or biological products.
(c) Code application deadlines. HCPCS Level II code application
submission deadlines are established on the CMS website or in another
manner and are --
(1) In or around January and June of each year for non-drug, non-
biological items and services; and
(2) In or around January, April, June, and September each year, for
drug or biological products.
(d) Public meetings. (1) Public meetings are held to provide the
public with notice of, and the opportunity for public input on code
applications and preliminary recommendations described in paragraph
(e)(1) of this section under consideration by CMS; and for CMS to
gather public input regarding these applications and preliminary
recommendations.
(2) Public meetings are held during each bi-annual coding cycle.
(3) Subject to paragraph (e)(3) of this section, public meetings
are held for all code applications for non-drug, non-biological items
and services.
(4) Subject to paragraph (e)(3) of this section, public meetings
are held for drug or biological product code applications only under
the following circumstances:
(i) The code application is one that was resubmitted for
reevaluation as provided in Sec. 414.9(b).
(ii) A decision on the code application is delayed under paragraph
(e)(3) of this section, and CMS determines it presents program, policy,
or implementation concerns or complexities, or otherwise raises
questions that public input could help to address.
(e) Preliminary recommendations, final decisions, and effective
dates.
(1) Preliminary recommendations. CMS issues preliminary
recommendations, which may include questions or requests for additional
information that could help in reaching a final decision, on code
applications for items and services included in the public meeting
agenda. Except as provided in paragraph (e)(3) of this section and
Sec. 414.9(b)(3)(i), preliminary recommendations are posted on the CMS
website or issued in another manner, prior to the public meetings
described in paragraph (d) of this section.
(2) Final decisions. Except as provided in paragraph (e)(3) of this
section, final decisions are posted on the CMS website or issued in
another manner within approximately--
(i) Six months of the application deadline for non-drug, non-
biological items and services; and
(ii) Three months of the application deadline for drug or
biological products.
(3) Delays in making preliminary recommendations or final
decisions. (i) CMS may delay a preliminary recommendation and therefore
a final decision, or delay a final decision alone, one or more times
into a subsequent coding cycle where a code application raises complex
or significant issues or considerations and CMS determines that
additional time is needed to evaluate the code application. Such
circumstances may include, but are not limited to, situations where the
code application involves a significant policy or claims processing
consideration, or requires in-depth clinical or other research.
(ii) For code applications (including code applications for drug or
biological products) that are resubmitted for reevaluation and placed
on a public meeting agenda in accordance with Sec. 414.9(b)(3), CMS
may also delay issuing a preliminary recommendation, a final decision,
or both into a subsequent quarterly coding cycle.
(iii) Decisions to delay a preliminary recommendation or final
decision are issued by CMS, either on the CMS website or in another
manner, at the same time that CMS issues the preliminary
recommendations or final decisions, as applicable, for other
applications during a coding cycle.
(4) Coding changes are effective approximately 3 months after the
issuance of the final coding decision.
0
3. Section 414.9 is added to subpart A to read as follows:
Sec. 414.9 HCPCS Level II code application requirements.
(a) Timely and complete applications. To be considered in a given
HCPCS Level II coding cycle specified in Sec. 414.8(b), a code
application must be timely and complete. Code applications that are not
timely and complete are declined by CMS but may be submitted
[[Page 70411]]
by the applicant in a subsequent coding cycle.
(1) Applications are timely if submitted to CMS by the applicable
code application submission deadline specified by CMS on its website or
in another manner, for a given application cycle identified in Sec.
414.8(c), or as provided in paragraph (a)(3) of this section.
(2) To be complete, an application must contain the following by
the applicable code application submission deadline:
(i) All applicable information and documentation specified in this
section, and meet all administrative elements specified by the
application instructions issued by CMS and posted on the CMS website.
(ii) FDA documentation of the item's current classification, as
applicable, as well as FDA marketing authorization documentation, or
the regulation number under 21 CFR parts 862 through 892 for a device
exempted from the premarket notification requirement. If a device
exceeds the limitations to the exemptions under 21 CFR parts 862
through 892 of the device classification regulations, the appropriate
marketing authorization documentation must be submitted as part of the
application.
(iii) For applications for non-drug, non-biological items or
services that are not subject to marketing authorization under the
Federal Food, Drug, and Cosmetic Act (FD&C Act) or Public Health
Service Act (PHSA) to be considered complete, evidence that the item or
service is available in the United States market for use and purchase
at the time of the relevant HCPCS Level II code application submission
deadline specified by CMS.
(3) For biosimilar biological products, CMS allows a 10-business
day extension past the code application deadline to provide a complete
application as specified in paragraph (a)(2) of this section. This
extension applies only if the following criteria are met:
(i) The marketing authorization documentation is dated between the
first day of the extension period and no later than the last day of the
extension period.
(ii) The applicant submits a complete application to CMS by the
last day of the extension period.
(b) Application resubmission and reevaluation. (1) An applicant who
is dissatisfied with a final coding decision on an initial code
application may resubmit their application for reevaluation by CMS no
more than two times. Any application resubmitted for reevaluation by
CMS must be timely and complete in accordance with paragraph (a) of
this section and must include the following:
(i) A description of the previous application submission(s).
(ii) A copy of the prior final code decision(s) with respect to the
application.
(iii) An explanation of the reason for disagreement with the prior
final coding decision(s).
(2) For applications resubmitted a second time for reevaluation by
CMS, in addition to the information and documentation required in
paragraph (b)(1) of this section, the application must include any
significant new information as described in paragraphs (b)(1)(i) and
(ii) of this section.
(i) Any significant new information which would include information
that was not previously submitted to CMS with respect to the
application that directly relates to the reason for the prior final
coding decision(s) and could potentially change the final coding
decision.
(ii) An explanation of how the significant new information
addresses and directly relates to the reason(s) for the prior final
coding decision(s) and supports the request for a different coding
decision.
(3) An application that is resubmitted for reevaluation under this
paragraph (b) is included on an agenda for a public meeting as
described in Sec. 414.8(d) and receives a preliminary recommendation
as described in Sec. 414.8(e)(1).
(i) An application for a drug or biological product that is
resubmitted for reevaluation will not be included in a public meeting
or receive a final decision in the quarterly cycle in which the
application is submitted.
(ii) Preliminary recommendations and final decisions for
applications that are resubmitted for reevaluation may be delayed as
described in Sec. 414.8(e)(3).
0
4. Section 414.10 is added to subpart A to read as follows:
Sec. 414.10 HCPCS Level II Processes for evaluating code
applications.
(a) Scope. This section sets forth the processes for evaluating
external HCPCS Level II code applications for drug or biological
products and non-drug, non-biological items and services, as described
in Sec. 414.8.
(b) Coding request. An applicant may submit an external HCPCS Level
II code application to request the addition of a code, revision of an
existing code, or discontinuation of an existing code.
(c) Sources of information. CMS' evaluation of a code application
is based on information contained in the application and supporting
material, any comments received through the public meeting process as
applicable, any information obtained from and evaluations conducted by
federal employees or CMS contractors, and any additional research or
information obtained independently by CMS that may support or refute
the claims made or the evidence produced by the applicant.
(d) Evaluation of non-drug, non-biological applications to add a
code.
(1) Except as provided in paragraph (d)(2) of this section, a
request to add a code is further evaluated under paragraph (d)(4) of
this section if CMS determines the following--
(i) The item or service is not appropriate for inclusion in or
already coded in a different HIPAA standard medical data code set, such
as CPT[supreg], ICD, or CDT[supreg];
(ii) The item or service is primarily medical in nature;
(iii) If applicable, the item has the appropriate marketing
authorization from FDA, or is exempt from premarket notification
requirements; and
(iv) There is a claims processing need on the part of Medicare to
identify the item or service in the HCPCS Level II code set.
(2) If paragraphs (d)(1)(i), (ii), or (iii) of this section are not
met, but paragraph (d)(1)(iv) of this section is met, a request to add
a code is further evaluated under paragraph (d)(4).
(3) If neither paragraph (d)(1) nor (2) of this section is met, CMS
does not further evaluate the application under paragraph (d)(4) and
does not modify the HCPCS Level II code set.
(4) If paragraph (d)(1) or (d)(2) of this section is met, CMS
determines if the item or service that is the subject of the code
application--
(i) Performs a significantly different clinical function compared
to other items or services described in the HCPCS Level II code set. An
item or service is considered to perform a significantly different
clinical function if it performs a clinical function that is not
performed by any other item or service currently described in the HCPCS
Level II code set; or
(ii) Results in a significant therapeutic distinction compared to
the use of other similar items or services described in the HCPCS Level
II code set. An item or service is considered to show a significant
therapeutic distinction when the use of that item or service results in
a significantly improved or a significantly different medical benefit
when compared with the use of other similar items or services described
in the HCPCS Level II code set.
(A) CMS determines that the use of the item or service confers a
[[Page 70412]]
significantly improved or significantly different medical benefit when
compared with the use of other similar items or services described in
the HCPCS Level II code set, if it finds any of the following:
(1) The item or service offers a treatment option for a patient
population unresponsive to, or ineligible for, currently available
treatments.
(2) The item or service offers the ability to diagnose a medical
condition in a patient population where that medical condition is
currently undetectable, or offers the ability to diagnose a medical
condition earlier in a patient population than allowed by currently
available methods and there must also be evidence that use of the item
or service to make a diagnosis affects the management of the patient.
(3) A demonstration of one or more of the following outcomes:
(i) A reduction in at least one clinically significant adverse
event, including a reduction in mortality or a clinically significant
complication.
(ii) A decreased rate of at least one subsequent diagnostic or
therapeutic intervention.
(iii) A decreased number of future hospitalizations or physician
visits.
(iv) A more rapid beneficial resolution of the disease process
treatment including, but not limited to, a reduced length of stay or
recovery time.
(v) An improvement in one or more activities of daily living.
(vi) An improved quality of life.
(vii) A demonstrated greater medication adherence or compliance.
(4) The totality of the information otherwise demonstrates that the
use of the item or service results in a significantly improved or a
significantly different medical benefit when compared with the use of
other similar items or services described in the HCPCS Level II code
set.
(B) In determining whether the use of the item or service results
in a significantly improved or significantly different medical benefit
when compared with the use of other similar items or services described
in the HCPCS Level II code set, CMS may consider instances where the
use of the item or service may substantially improve or substantially
change the medical benefit realized by a specific subpopulation of
patients with the medical condition for whom the item or service is
used, based on a common characteristic within the subpopulation that
impacts the medical benefit of the subject item or service.
(C) In determining whether the use of the item or service results
in a significantly improved or significantly different medical benefit
when compared with the use of other similar items or services described
in the HCPCS Level II code set, CMS makes this determination without
regard to the prevalence among Medicare beneficiaries of the underlying
medical condition treated or diagnosed by the item or service that is
the subject of the code application.
(D) An item's designation under the FDA Breakthrough Devices
Program and marketing authorization for the indication covered by the
FDA Breakthrough Devices designation are given substantial weight in
determining whether the item meets the significant therapeutic
distinction factor at paragraph (d)(4)(ii) of this section.
(E) An application must contain sufficient information and
supporting documentation to support a claim of significant therapeutic
distinction. The totality of the circumstances is considered when
making a determination that the use of an item or service confers a
significantly improved or a significantly different medical benefit
when compared with the use of other similar items or services described
in the HCPCS Level II code set.
(5)(i) If the item or service that is the subject of the code
application meets either of the two factors set forth in paragraph
(d)(4)(i) or (ii) of this section, and CMS determines there is a claims
processing need to separately identify the item or service with a new
code to facilitate payment under Medicare, then CMS creates a new code.
(ii) If the conditions in paragraph (d)(5)(i) of this section are
not met, CMS does not create a new code.
(6) If CMS finds that revisions to the descriptor of an existing
code category are appropriate to account for minor distinctions between
the subject item or service and other items or services described by
the existing code category and to clarify that the item or service is
included in the existing code category, then CMS revises the descriptor
rather than add a new code.
(e) Evaluation of drug or biological applications to add a code.
(1) When evaluating a request to add a code for a drug or biological
product, CMS first determines if--
(i) The product is not appropriate for inclusion or already coded
in a different HIPAA code set, such as CPT[supreg];
(ii) The product is primarily medical in nature;
(iii) If applicable, the product has the appropriate marketing
authorization from FDA; and
(iv) There is a claims processing need on the part of Medicare to
identify the item or service in the HCPCS Level II code set
(2) If CMS determines that the factors set forth in paragraph
(e)(1) of this section are met, then CMS next determines, for the
purpose of claims processing (and payment), whether an existing code
adequately describes a product, or whether a revision to the descriptor
of an existing code category is appropriate, or whether a new code is
necessary. In making the determination in this paragraph, CMS considers
applicable Medicare Part B statutory and regulatory payment
requirements, program instructions, and information such as the
following:
(i) Sections 1842(o) and 1847A of the Act.
(ii) 42 CFR part 414 Subparts J and K.
(iii) Program instructions implementing section 1847A of the Act.
(iv) Information from the code application and other applicable
sources such as FDA, drug compendia, the manufacturer, and scientific
literature.
(3) When evaluating a request to add a code for a drug or
biological product, CMS determines if the product that is the subject
of the code application --
(i) Is separately payable under Medicare Part B as a drug or
biological product; and
(ii) Is a single source drug, multiple source drug, biological, or
biosimilar biological product under section 1847A of the Act, or if
other specific payment provisions such as those in sections
1842(o)(1)(A) or (F) of the Act apply.
(4) After reviewing an application to add a code for a drug or
biological product, and after considering the factors listed in
paragraphs (e)(1) through (3) of this section previously, CMS will then
make a determination about whether the appropriate action is to add a
code, revise a code, or take no coding action, in response to the
application for that product.
(5) CMS may assign code descriptors with drug amounts that
correspond to smaller quantities of the product to facilitate more
accurate billing.
(f) Evaluation of non-drug, non-biological and drug or biological
applications to revise an existing code. If CMS determines that the
revised descriptor suggested by the applicant would provide a more
appropriate description of the category of items or services, CMS
revises the descriptor accordingly.
(g) Evaluation of non-drug, non-biological and drug or biological
applications to discontinue an existing code. If CMS determines that an
existing code is duplicative of another code, or has become obsolete
and CMS has no further expectation that the same or
[[Page 70413]]
similar item or service will be marketed at a later date, CMS
discontinues the code.
(h) Coding decision. CMS's evaluation of a code application may
result in a coding decision that reflects an applicant's coding request
in whole, in part, or with modification; or a denial of the coding
request. Any coding action taken on an applicant's coding request is
set forth in the final coding decision.
0
5. Section 414.114 is added to subpart C to read as follows:
Sec. 414.114 Procedures for making benefit category determinations
and payment determinations for new PEN items and services covered under
the prosthetic device benefit; splints and casts; and IOLs inserted in
a physician's office covered under the prosthetic device benefit.
(a) Definitions. For the purpose of this subpart:
Benefit category determination means a national determination
regarding whether an item or service meets the Medicare definition of a
prosthetic device at section 1861(s)(8) of the Act or is a splint,
cast, or device used for reduction of fractures or dislocations subject
to section 1842(s) of the Act and the rules of this subpart and is not
otherwise excluded from coverage by statute.
(b) General rule. The procedures for determining whether new items
and services addressed in a request for a HCPCS Level II code(s) or by
other means meet the definition of items and services that may be
covered and paid for in accordance with this subpart are as follows:
(1) At the start of a HCPCS coding cycle, CMS performs an analysis
to determine if the item or service is statutorily excluded from
coverage under Medicare under section 1862 of the Act, and, if not
excluded by statute, whether the item or service is parenteral or
enteral nutrients, supplies, and equipment covered under the prosthetic
device benefit, splints and casts or other devices used for reductions
of fractures or dislocations, or IOLs inserted in a physician's office
covered under the prosthetic device benefit.
(2) If a preliminary determination is made that the item or service
is parenteral or enteral nutrients, supplies, and equipment covered
under the prosthetic device benefit, splints and casts or other devices
used for reductions of fractures or dislocations, or IOLs inserted in a
physician's office covered under the prosthetic device benefit, CMS
makes a preliminary payment determination for the item or service.
(3) CMS posts preliminary benefit category determinations and
payment determinations on CMS.gov approximately 2 weeks prior to a
public meeting described under Sec. 414.8(d).
(4) After consideration of public consultation provided at a public
meeting described under Sec. 414.8(d) on preliminary benefit category
determinations and payment determinations for items and services, CMS
establishes the benefit category determinations and payment
determinations for items and services through program instructions.
0
6. Section 414.210 is amended by--
0
a. Revising paragraphs (g)(1)(v) and (g)(2); and
0
b. Adding paragraph (g)(9)(vi).
The revisions and addition read as follows:
Sec. 414.210 General payment rules.
* * * * *
(g) * * *
(1) * * *
(v) For items and services furnished before April 1, 2021, the fee
schedule amount for all areas within a state that are defined as rural
areas for the purposes of this subpart is adjusted to 110 percent of
the national average price determined under paragraph (g)(1)(ii) of
this section.
(2) Payment adjustments for areas outside the contiguous United
States and for items furnished on or after April 1, 2021 in rural areas
within the contiguous United States using information from competitive
bidding programs.
(i) For an item or service subject to the programs under subpart F,
the fee schedule amounts for areas outside the contiguous United States
(Alaska, Hawaii, and U.S. territories) for items and services furnished
from January 1, 2016 through December 31, 2020 are reduced to the
greater of--
(A) The average of the single payment amounts for the item or
service for CBAs outside the contiguous United States.
(B) 110 percent of the national average price for the item or
service determined under paragraph (g)(1)(ii) of this section.
(ii) For an item or service subject to the programs under subpart F
of this part, the fee schedule amounts for areas outside the contiguous
United States for items and services furnished on or after April 1,
2021, or the date immediately following the duration of the emergency
period described in section 1135(g)(1)(B) of the Act (42 U.S.C. 1320b-
5(g)(1)(B)), whichever is later, is adjusted to equal the sum of--
(A) Fifty percent of the greater of the average of the single
payment amounts for the item or service for CBAs outside the contiguous
United States or 110 percent of the national average price for the item
or service determined under paragraph (g)(1)(ii) of this section; and
(B) Fifty percent of the fee schedule amount for the area in effect
on December 31, 2015, increased for each subsequent year beginning in
2016 by the annual update factors specified in sections 1834(a)(14),
1834(h)(4), and 1842(s)(1)(B) of the Act, respectively, for durable
medical equipment and supplies, off-the-shelf orthotics, and enteral
nutrients, supplies, and equipment.
(iii) For an item or service subject to the programs under subpart
F of this part, the fee schedule amounts for rural areas within the
contiguous United States for items and services furnished on or after
April 1, 2021, or the date immediately following the duration of the
emergency period described in section 1135(g)(1)(B) of the Act (42
U.S.C. 1320b-5(g)(1)(B)), whichever is later, is adjusted to equal the
sum of--
(A) Fifty percent of 110 percent of the national average price for
the item or service determined under paragraph (g)(1)(ii) of this
section; and
(B) Fifty percent of the fee schedule amount for the area in effect
on December 31, 2015, increased for each subsequent year beginning in
2016 by the annual update factors specified in sections 1834(a)(14),
1834(h)(4), and 1842(s)(1)(B) of the Act, respectively, for durable
medical equipment and supplies, off-the-shelf orthotics, and enteral
nutrients, supplies, and equipment.
* * * * *
(9) * * *
(vi) For items and services furnished in all areas with dates of
service on or after April 1, 2021, or the date immediately following
the duration of the emergency period described in section 1135(g)(1)(B)
of the Act, whichever is later, based on the fee schedule amount for
the area is equal to the adjusted payment amount established under
paragraph (g) of this section.
* * * * *
0
7. Section 414.240 is added to subpart D to read as follows:
Sec. 414.240 Procedures for making benefit category determinations
and payment determinations for new durable medical equipment,
prosthetic devices, orthotics and prosthetics, surgical dressings, and
therapeutic shoes and inserts.
(a) Definitions. For the purpose of this subpart--
Benefit category determination means a national determination
regarding whether an item or service meets the Medicare definition of
durable medical equipment at section 1861(n) of the Act,
[[Page 70414]]
a prosthetic device at section 1861(s)(8) of the Act and further
defined under section 1834(h)(4) of the Act, an orthotic or leg, arm,
back or neck brace, a prosthetic or artificial leg, arm or eye at
section 1861(s)(9) of the Act, is a surgical dressing, or is a
therapeutic shoe or insert subject to sections 1834(a), (h), or (i) of
the Act and the rules of this subpart and is not otherwise excluded
from coverage by statute.
(b) General rule. The procedures for determining whether new items
and services addressed in a request for a HCPCS Level II code(s) or by
other means meet the definition of items and services paid for in
accordance with this subpart are as follows:
(1) At the start of a HCPCS coding cycle, CMS performs an analysis
to determine if the item or service is statutorily excluded from
coverage under Medicare under section 1862 of the Act, and, if not
excluded by statute, whether the item or service is durable medical
equipment, a prosthetic device as further defined under section
1834(h)(4) of the Act, an orthotic or prosthetic, a surgical dressing,
or a therapeutic shoe or insert.
(2) If a preliminary determination is made that the item or service
is durable medical equipment, a prosthetic device, an orthotic or
prosthetic, a surgical dressing, or a therapeutic shoe or insert, CMS
makes a preliminary payment determination for the item or service.
(3) CMS posts preliminary benefit category determinations and
payment determinations on CMS.gov approximately 2 weeks prior to a
public meeting described under Sec. 414.8(d).
(4) After consideration of public consultation provided at a public
meeting described under Sec. 414.8(d) on preliminary benefit category
determinations and payment determinations for items and services, CMS
establishes the benefit category determinations and payment
determinations for items and services through program instructions.
0
8. In Sec. 414.402, amend the definition ``Item'' by revising
paragraph (1) introductory text to read as follows:
Sec. 414.402 Definitions.
* * * * *
Item * * *
(1) Durable medical equipment (DME) other than class III devices
under the Federal Food, Drug and Cosmetic Act, as defined in Sec.
414.202, group 3 complex rehabilitative power wheelchairs, complex
rehabilitative manual wheelchairs, manual wheelchairs described by
HCPCS codes E1235, E1236, E1237, E1238, and K0008, and related
accessories when furnished in connection with such wheelchairs, and
further classified into the following categories:
* * * * *
Dated: July 23, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: August 19, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-24194 Filed 10-29-20; 4:15 pm]
BILLING CODE 4120-01-P