The advance notice explores payment methodology revisions for durable medical equipment (DME) and enteral nutrition furnished both within Medicare’s competitive bidding program (CBP) as well as in non-competitive areas. First, CMS seeks comment on how to use pricing information from the DMEPOS CBP to adjust the fee schedule amounts for DME in non-competitive areas. Second, CMS may simplify the payment rules under CBPs for certain DME and enteral nutrition by paying suppliers a monthly bundled payment for all items and services associated with furnishing enteral nutrition or DME each month.

According to CMS analyses, the CBP saved Medicare and its beneficiaries more than $400 million in its first two years of operation and is projected to save an additional $17.2 billion for beneficiaries and $25.8 billion for the Medicare program over the next 10 years. These robust savings, derived from the CBP supplier bidding process, have resulted in significant pricing pressures for suppliers and manufacturers of drugs and devices within competitively bid product categories. Use of CBP data to inform payment methodologies in non-competitive areas, or establishment of CBPs in all areas of the country for certain high volume items, may further reduce margins for suppliers and manufacturers of these technologies. Additionally, while implementation of monthly bundled payments within CBPs may provide suppliers with some administrative relief, suppliers and life sciences companies may be challenged to operate under a further constrained payment environment.

Comments on the advance notice are due to CMS by March 28. CMS did not specify a timeframe for release of the proposed rule.

To view CMS’ advance notice, click here.