CMS Final Rule on the Clarification of The Definition of Routinely Purchased DME

CMS Final Rule on the Clarification of The Definition of Routinely Purchased DME


Recently CMS issued a final rule which confirmed their intentions to reclassify a number of DME items out of their current classification of “inexpensive or routinely purchased” and into the classification of “capped rental”.  Of particular concern to us is the inclusion of certain complex rehab items such as adult manual tilt-in-space wheelchairs(E1161), pediatric manual wheelchairs (E1232 – E1238), push-rim power assists (E0986),as well as a number of wheelchair accessories such as power seating, alternative drive controls and motor, gear box and controller replacements. CMS has gone forward with this rule despite comments from over 170 individuals and organizations expressing concern and feedback during a comment period after the original proposal. So how and why is CMS doing this? To understand fully, we must first look at a little history.


Back in 1987 the OBRA Act added a section to the Social Security Act that divided DME into different classes of items (by HCPCs code) with different payment rules.Two of these classes were “inexpensive and routinely purchased DME” and “capped rental DME”.  To determine whether an item (HCPCs code) would be classified and paid as a rental or a purchase, Medicare instructed their carriers to determine which payment method was more economical by counting the number of beneficiaries who purchased the item vs those who only rented it during the period 7/1/86 – 6/30/87. Based on these results, the definition of routinely purchased equipment was established as “equipment that was acquired by purchase on a national basis at least 75% of the time during the period July 1986 through June 1987”.


Now,back to the present.  CMS recently found some items (codes) classified as inexpensive or routinely purchased that were added after 1989 that they felt were not consistent with the definition.  Some were codes for expensive, durable accessories used with base equipment, such as wheelchairs. Others were classified as routinely purchased based on the fact that other payers were routinely purchasing them. And still others were classified as routinely purchased based on requests from manufacturers. CMS felt that these classifications did not comply with their definition of routinely purchased and defeated the purpose of the capped rental payment methodology, which is to avoid paying the full purchase price of expensive equipment that will only be used for a short time.


For the items in question, they looked back at data from the 1986/1987 period and identified how the item had been paid. Anything that had not been purchased at least 75%of the time would be reclassified as capped rental. The one exception is if the item is an accessory and it is being used with a complex rehab wheelchair.  In these cases, the purchase option can still apply.


How does CMS justify their use of archaic data from 1986/1987 to classify today’s technology?  Their response is that they are following their interpretation of that particular section of the Social Security Act and its definition of routinely purchased.They point out that despite numerous amendments to the section over the years, there has never been a revision of this definition and that items must be classified in accordance with the rules of the statute and regulations.


How does CMS justify using the data from 1986/1987 to classify technology that was not even in existence back then, such as the E1161 tilt-in-space and the current array of pediatric wheelchairs?  CMS argues that it is exactly because the E1161’s didn’t exist in 1986-87 that it should be classified as capped rental; that is, there is no data to support that it was routinely purchased at least 75% of the time, so according to regulation it cannot be classified as routinely purchased and should be reclassified as capped rental. Of course, with these items there is also no data to support the fact that it was rented more than 25% of the time,but that did not factor into the reclassification. They also report that claims for all manual wheelchairs for the 1986/1987 time period were purchased only 30% of the time. However, they make no concessions for the fact that there is no comparison between the technology and number of choices available 27 years ago and those available today. And they respond that claims for “youth wheelchairs”submitted as E1091 during the 1986/1987 time period were purchased only 25% of the time, therefore pediatric wheelchairs E1232 – E1238 must be classified as capped rental. Again, they fail to take into consideration the fact that the pediatric wheelchairs of today have no similarity at all to the “youth wheelchairs” of 1986.

CMS also responded to concerns of the commenters that it is unrealistic for a supplier to rent an accessory and then have to take it back and potentially disable patient owned equipment if the beneficiary suddenly no longer meets coverage criteria (i.e., goes into the hospital or a nursing home). CMS replied that the statute does not differentiate between base equipment versus replacement parts for base equipment and therefore the same rules must apply to both. They also pointed out the “advantage” that if the wheelchair or the accessory is rented for less than 13 months for one individual, you can provide it to other individuals and receive additional payments. You could in reality receive significantly more than 105% of the purchase price if the item is used by multiple individuals none of whom need it for the full 13 months. However, they fail to consider that these items are most often needed by individuals with complex disabilities who will need the equipment fora life time.And even if it were not needed for the full 13 months, there is little probability that an individually fit, configured and adjusted complex tilt-in-space orpediatric wheelchair would meet the specific needs of any other individual never mind multiple individuals. They also apparently do not see theimpracticality (impossibility?) of re-issuing something like a sip and puff breath tube kit!


In response to concerns regarding the financial burden of being paid over 13 months for potentially very costly equipment, CMS does agree that some items may have a higher cost because they are individually configured and not mass produced. However, they feel this is accounted for in the higher fee schedule amounts for these items. They note that the fee schedules for the pediatric and adult tilt-in-space wheelchairs are more than double, and in some cases triple,the fee schedule amounts established for other manual wheelchairs.


For the time frame for implementation of this final rule, CMS has established 3 different dates depending on whether or not the item is included in Round 2 or Round 1 Re-compete competitive bidding programs.  The implementation dates are as follows:


·April 1, 2014 if the item is not included in either Round 2 or Round 1 Re-compete


·July 1, 2016 if the item is included in Round 2 but not Round 1 Re-compete or if it is included in Round 1 Re-compete but is being provided in an area other than one of the 9 Round 1 Re-compete areas


·January 1, 2017, if the item is included in Round 1 Re-compete and is being provided in one of the nine Round 1 Re-compete areas.


According to CMS, this will allow items to be moved to capped rental at the same time in all areas of the country without disrupting any of the competitive bidding programs currently underway.


When asked, CMS did not feel that any delay in implementation is necessary since suppliers and practitioners will have more than 3 months to prepare for the change in classification, with the first implementation date set at April 1, 2014.  They also claim that they are committed to carefully monitoring beneficiary access using real-time claims data to ensure that there is no adverse impact.


At this point the industry is regrouping to identify what might be the next best course of action.  It may be that in order to rectify this it will take a change in the definition of “routinely purchased” and the methodology to classify an item as such (requiring legislative action).In the meantime, since many of these items are complex rehab technology products, it is critical to continue to garner support from our legislators for the Ensuring Access to Complex Rehabilitation Technology Act (H.R. 942 and S. 948).This law would separate CRT products from DME within the DMEPOS benefit category and protect them from rulings such as this.