The Medicare Improvements for Patients and Providers Act (MIPPA): Effects and Continuing Concerns to the HME Industry

About This Presentation

Title:

The Medicare Improvements for Patients and Providers Act (MIPPA): Effects and Continuing Concerns to the HME Industry

Description:

The Medicare Improvements for Patients and Providers Act (MIPPA): Effects and Continuing Concerns to the HME Industry Program Summary: Section 154 of the MIPPA ... – PowerPoint PPT presentation

Number of Views:627

Avg rating:3.0/5.0

Slides: 101

Provided by: EmilyA69

Category:

more less

Transcript and Presenter's Notes

Title: The Medicare Improvements for Patients and Providers Act (MIPPA): Effects and Continuing Concerns to the HME Industry

1
The Medicare Improvements for Patients and
Providers Act (MIPPA) Effects and Continuing
Concerns to the HME Industry
2
Presented by

Mark J. Higley Vice President/Development
VGM Group, Inc.

3
Program Summary

Section 154 of the MIPPA "delays and reforms the
Medicare Competitive Acquisition Program". While
the great majority of stakeholder reactions were
positive in this "severely flawed" program, many
providers suggest concerns remain. This session
will explain in straightforward terms the Act's
provisions and changes to the competitive bidding
program and the current status of Round 1.2
(the re-bidding of the original nine U.S. metro
areas).

4
Program Summary

Of equal concern is Section 144, which
repealed the oxygen transfer of title and
maintained a 36-month rental cap but does not
allow payments for non-routine maintenance,
service, and repair. Discussions will focus on
how to comply with the new rules and will address
concerns including accepting assignment, provider
services and charges, delivery of contents, and
traveling patients.

We will also review the requirements of DMEPOS
suppliers to obtain and maintain a surety bond
and examine events that may trigger the guarantee
obligation. The session will end with an update
of accreditation deadlines and the final supplier
standards.

6
Learning Objectives

Discuss the implications of the rebidding to
providers servicing the area, as well to
providers servicing non-bid and/or rural areas
Review a variety of billing and reimbursement
scenarios with regard to oxygen patients who have
capped.
Recognize the limitations as to traveling, moving
or changing providers that the patient will face
with this law, and also learn various procedures
to mitigate these situations
Review surety bond procedures, the accreditation
deadlines and the final supplier standards

7
So lets get started

As providers are most aware, The Medicare
Improvements for Patients and Providers Act
(MIPPA) of 2008 was enacted on July 15, 2008.
This law delayed the Medicare DMEPOS Competitive
Bidding Program and severely revamped the oxygen
benefit.
Directly or indirectly, MIPPA affects all HME
providers. This morning I will explain why

Part 1 CMS-1403-FC
Section 144(b) Repeal of Transfer of Title for
Oxygen Equipment

MIPPAs Section 144 repealed the transfer of
oxygen equipment to beneficiaries required by the
DRA.
The title transfer was currently set to take
effect Jan. 1, 2009.
After the 36th continuous month during which
payment is made for oxygen equipment, the
supplier will continue to maintain ownership of
the equipment.
Payments for oxygen contents only will be made
after the 36th month.

10
The supplier that provides oxygen equipment to
the patient in the 36th month must

Continue to provide the equipment to the patient
at no additional charge during any period of
medical need for the remainder of the useful life
of the equipment, including periods that may
occur after a 60-day break in service

Continue to provide oxygen contents to the
patient for the remainder of the useful life of
the equipment.
Supplier is reimbursed for contents.
Arrange for oxygen equipment and oxygen contents
with another supplier if the patient relocates
outside the suppliers service area. The original
supplier must continue to bill Medicare and
contract directly with a new supplier to care for
the patient.

The supplier is responsible for, and will not be
paid for, maintenance, servicing, and repair of
oxygen equipment, with the exception that for
calendar year 2009 only.
Medicare will pay for 30 minutes of labor once
every 6 months (beginning 6 months after the
36-month cap) for routine maintenance and service
actually performed on oxygen concentrators or
transfilling equipment in the patients home.
No payment is available for repair or servicing
of gaseous or liquid oxygen equipment. CMS
expects that maintenance/servicing takes place
during contents deliveries.

13
Problems/Comments Issues

Medicares oxygen rule states that it will make
virtually no payment for maintenance, service or
necessary supplies for a period of two years
after the 36-month rental/service cap is reached.
The oxygen provider must arrange continued care
for a patient on oxygen therapy who moves out of
the oxygen providers service area, including
moves to a distant region of the country, after
monthly payments cap beginning on January 1,
2009.

Medicare provides inadequate payment for routine
maintenance and service of the oxygen system,
which ensures that the system is working at an
optimal level.
The CMS rule allows for only two thirty (30)
minute maintenance checks per year allowing only
between 15-30 per visit

Medicare provides no payment for non-routine
maintenance and service after the 36 month rental
cap. CMS does not recognize any costs associated
with visiting patients who require episodes of
unscheduled emergency services.
Any unscheduled visits to the beneficiarys home
between months 37 to 60 are covered by the
monthly rental/service rate paid to the provider
between months 1 to 36.

Medicare will not pay for supplies such as oxygen
tubing, face masks, or cannulas required for
oxygen patients between months 37 and 60.
Similar to maintenance, CMS states that any
medically necessary supplies provided between
months 37 and 60 are covered by the monthly
rental/service rate paid to the provider between
months 1 and 36
These onerous rules are in addition to the 9.5
percent payment reduction for oxygen therapy that
will take effect on January 1, 2009 and a long
series of additional cuts to oxygen dating back
more than 10 years.

A second but related issue caused by the
imposition of the 36th month cap is that
beneficiaries who are approaching the 36th month
cap and who are moving or want to select a
different oxygen provider are having difficulty
finding a new home oxygen provider.
This is because the new oxygen provider will only
be paid the remaining months of the 36-month cap
window or nothing at all if the patient has been
on oxygen therapy for more than three years.

18
Furnishing of Equipment

The supplier that furnishes the equipment during
the 36 month period must continue to do so after
the 36 month period. The supplier is required to
continue to furnish the equipment during any
period of medical need for the remainder of the
reasonable useful lifetime of the equipment.
The useful lifetime of the equipment is
determined based on when equipment is first
delivered, not the age of the equipment.

The five year obligation continues even if the
beneficiary relocates outside the suppliers
service area. In this case, the supplier must
make arrangements for the beneficiary to receive
the oxygen services at his/her new residence.
This responsibility cannot be transferred to
another supplier. The suppliers responsibility
is also not affected by a break in medical need,
through the five-year useful life of the
equipment.

After the five-year useful life period, the
beneficiary may elect to obtain new equipment
at that point and a new 36 month rental period
will begin, and a new five year useful life
period will begin.
Note CMS has clarified that brand new
equipment is not required. Providers may deliver
tested, refurbished and/or recertified
equipment if they elect.
It should also be noted that the patient election
is between new equipment and no equipment. The
suppliers has fulfilled its obligations and need
not continue furnishing equipment after the
60-month period has ended.

While all beneficiaries 36-month rental period
began January 1, 2006, the start of the
reasonable useful lifetime period remains at the
date of initial delivery.
Therefore, for those beneficiaries who were on
oxygen prior January 1, 2006, the equipments
useful life ended or will end at a point during
or after the 36 month period.
You have the ability to restart the 36-month
rental period 60 months from date of initial
delivery and will not have to wait 2 years for
those patients who began service prior to
1/1/2006.

22
Example

If Mrs. Jones began her oxygen therapy on May 1,
2004, the 36-month cap began counting on January
1, 2006, and the 36 month period ended January
2009. The five year useful life period, however,
began counting when Mrs. Jones began oxygen
therapy in January 2004, and the five year useful
life period ended for Mrs. Jones on April 2009.

Therefore, Mrs. Jones can elect to obtain new
equipment in May 2009, and a new 36-month rental
cycle will begin. A new five year useful life
cycle will also begin.
Note It is the beneficiarys election, not the
suppliers, to choose to obtain new equipment.
However, the supplier is not obligated to
continue serving the beneficiary after the five
year useful life expires.

24
Current Provider Procedure

We are informing patients that our service
obligations have ended at 60 months and to
continue to provide new O2 service we need to
start a new rental transaction, with signature
verifying their understanding of same. Of course,
the patient always has choice to elect another
provider.
A sample patient letter is available from VGM.

25
Switching of Equipment

The beneficiary protection provision generally
prohibiting switching of equipment prior to 36
month rental cap is being extended to the period
of medical need after 36 months.
There are exceptions to this general rule,
specifically if the physician prescribes
different equipment, the beneficiary chooses
different equipment, or the equipment is lost,
stolen or irreparably damaged.

26
Billing Issues

If your patient has been on O2 for 36 months
(i.e. has capped) but has not been on Medicare
reimbursed O2 for at least 60 months, you cannot
start a new 36 month billing cycle regardless of
any change of equipment you provide.
You can change the equipment (per physician
order), but you are still responsible for
providing whatever the patient needs, and
whatever O2 equipment the physician orders,
regardless of patient (re)location, without
additional payment for the balance of the 60
months.

At the end of 60 months you can renew or change
equipment with patient request or physician order
and re-start a new 36 month billing period.
You may also discharge the patient to another
company, as your obligations to Medicare end at
60 months.
The only exceptions to a billing re-start
between 36 and 60 months (or prior) are if the
Medicare patient switches to or from an HMO and
maintains that status for at least 60 paid days,
the equipment is lost, stolen or irreparably
damaged, or if there is an interruption in
medical necessity of greater than 60 days

28
Interruption Details

Note that there are three
contingencies covered by the rule
(1) break in service less than 60 days plus the
days remaining in the last paid rental month
(2) break in service with break in need and
greater than 60 days plus the days remaining in
the last paid rental month and
(3) break in service with no break in need and
greater than 60 days plus the days remaining in
the last paid rental month.
Note these contingencies occur before the 36
month cap.

29
Break in service less than 60 days

Example Beneficiary goes into a hospice or a
skilled nursing facility for one month and has
had 20 months of prior home service.
Medical necessity is presumed to have continued
during this time and the count of continuous
rental months would pick up at month 21 once the
supplier submits the claim for the next rental
month.

30
Same with break in need

For breaks in need (beneficiary no longer needs
or uses the equipment) of less than 60 days plus
the days remaining in the last paid rental month,
the period of continuous use does not start over
and so the count of continuous months picks up
where it left off before the break. For example,
if the last paid rental month is month 31 and
there is a 50 day break in need, the next paid
rental month would be month 32.

31
Break in service with break in need and greater
than 60 days

Assuming the need for the equipment resumes at a
later date, a new period of continuous use, a new
36-month payment period, and a new reasonable
useful lifetime period would begin provided that
providers submit the following

New medical necessity documentation (i.e., a new
CMN and retesting) for oxygen and oxygen
equipment and/or portable oxygen equipment and
A narrative explanation describing the reason for
the interruption which shows that medical
necessity in the prior episode ended.
When submitting claims electronically for
replacement of oxygen equipment, you may use, for
the narrative explanation, loop 2400 (line note),
segment NTE02 (NTE01ADD) of the ASC X12, version
4010A1 professional electronic format. If you
are billing using the Form CMS-1500 paper claim,
you may report this information in item 19 of the
claim form.
Do not use modifier RA on these claims.

33
Break in service with no break in need and
greater than 60 days

Example The beneficiary is hospitalized for 70
days but continues to use oxygen equipment during
the hospital stay.
This DOES NOT constitute a break in need, and
therefore, a new period of continuous use DOES
NOT begin. In these situations, the count of
continuous months picks up where it left off
before the break.

34
CO-176 Denials for Oxygen Equipment after the
36-Month Cap

If a claim is billed with a date of service
beyond the original 36-month period and not all
36 months have been paid, you may receive a
CO-176 denial (just as you would for a regular
capped rental item billed beyond the 13-month
rental period). If you are billing beyond the
original 36-month period, you must submit a
narrative on the claim asking to "extend the
rental period."
Example A beneficiary initially receives an
E1390 on 1/8/2006. The beneficiary goes into a
SNF stay for two months during the 36-month
period and then resumes using the equipment after
discharge. The original 36-month period ends on
1/7/2009, but only 34 months have been paid. In
order to have date of service 1/8/2009 processed
for payment, you would include a narrative asking
to extend the rental period.

35
Participating/Notification of Assignment Issues.

As a participating provider, you are required to
accept assignment on all Medicare claims.
As a non-participating provider, you can choose
whether or not to accept assignment on a
claim-by-claim basis. You are not obligated to
continue accepting assignment on claims for all
your existing Medicare patients.
CMS suggests the supplier should give the
Medicare beneficiary at least 30 days prior
written notice that it will no longer accept
assignment on the beneficiarys claims for the
specified items or services, in order to allow
the beneficiary the opportunity to find another
supplier that will accept assignment.

There is no limit to what a supplier can charge
for Medicare-covered items on a non-assigned
basis. The limiting charge provisions that
prohibit charges in excess of 115 of the
Medicare fee schedule do not apply to DMEPOS
items provided by a supplier.
After the 36-month cap, a supplier can choose to
accept assignment on oxygen contents for some
beneficiaries and not accept assignment for
contents on other beneficiaries during the same
month.

However, if the supplier accepts assignment on
oxygen contents for a beneficiary, CMS states it
will prohibit billing the patient non-assigned
for additional oxygen contents provided during
that same month.
In other words, if you have accepted assignment
for contents for a patient, you have agreed to
provide all oxygen contents needed by that
patient for the Medicare allowable amount.

38
Q What are the exact 2009 O2 reimbursements?
39
Q. Are all O2 codes subject to the MIPPA 9.5
reduction?

No. There is an exception for HCPCS codes E1392
(the portable oxygen code used for portable
oxygen concentrators), K0738 (Portable gaseous
oxygen system), E0441, E0442, E0443 and E0444.
These 6 oxygen generating portable equipment
(OGPE) and oxygen contents codes will receive a
0 update for 2009 as the fees for these items
are not adjusted by the covered item update
specified in section 1834(a)(14) of the Social
Security Act, and therefore, are not reduced by
the -9.5, even though they are competitive bid
items.

Q. Post-36 months, can the provider deliver
multiple months oxygen contents at one time and
then bill for the subsequent months for which the
contents have already been delivered even though
no physical delivery was made during the
subsequent months?
A. CMS indicates you may deliver up to three (3)
months of oxygen and then bill each month,
referencing contents payments are for the
guarantee that the patient has their necessary
contents and not for the physical delivery.

Q. The patient is non-compliant in payment of the
20 co-insurance or deductible. Are we still
obligated to provide contents and supplies?
A. The supplier is responsible for continuing to
furnish the contents and supplies in has not made
their co-insurance and/or deductible payments.
This is a requirement of the regulation, and the
supplier should deal directly with the
beneficiary regarding these payments but cannot
stop furnishing contents or supplies.

Q Can we tell customers they have to come by and
pick up their oxygen supplies and tanks? If they
want them delivered or mailed, can we charge
customer?
A You can never charge for delivery. After the
cap you may charge for contents (and, if
applicable, at the nonassigned/ usual and
customary amount). You cannot demand that
patients always come by and pick up supplies.
You may restrict the delivery however. One
provider recently commented we offer assigned or
non-assigned oxygen patients Monday deliveries.
If that is unacceptable to them, they must stop
by our facility

Q What about patients needing to change their
equipment after 36 months based on a change in
medical need?
A. CMS staff recently retracted verbal guidance
provided on a conference call about patients
needing to change their equipment after 36 months
based on a change in medical need, stating
Medicare will not pay for replacement equipment
even if there is a change (for example) from four
liters to five liters, based on medical need,
which necessitates different equipment. A change
in medical need is not a reason for paying for
replacement equipment, according to CMS staff.

44
Official CMS Statement

If there is a change in oxygen equipment
modalities (e.g., from a concentrator to a
stationary liquid oxygen system) prior to the end
of the reasonable useful lifetime period, this
does not result in the start of a new reasonable
useful lifetime period or a new 36 month payment
period.
In addition, if you have to replace oxygen
equipment that is not functioning properly prior
to the end of the reasonable useful lifetime
period, this does not result in the start of a
new reasonable useful lifetime period or a new 36
month payment period.

Finally, if the beneficiary switches to a new
supplier and new equipment prior to the end of
the reasonable useful lifetime period, this does
not result in the start of a new reasonable
useful lifetime period or a new 36 month payment
period.

46
Q. May I limit oxygen refills? Medicare
guidelines are for use within the home!!

Based on comments made by CMS Joel Kaiser,
providers will be required to continue all
necessary oxygen for ambulation in and out of the
house. He stated that there is no limit to the
distance a patient may leave their concentrator
using portable oxygen.
Thus, a participating supplier should consider
becoming non-participating during the enrollment
period in order to charge the patient for oxygen
contents at its usual and customary charge
rather than having to take the Medicare allowable
(currently at 77.45 per month, regardless of the
number of cylinders furnished)

47
Use of Non-assignment

During a 2009 Ask the Contractor
Teleconference with NHIC, we asked a question
regarding non-assigned claims for oxygen
contents. The question was may a supplier take
post-36 contents claims non-assigned and, in
turn, bill the patient per tank? For example,
the supplier would bill the patient 15.00 per
tank, regardless of the number of tanks
delivered. The representative from NHIC
responded by stating that this would be an
acceptable practice under todays guidelines, but
did warn that excessive charges would likely
draw scrutiny from CMS.

48
Several suppliers report they are initiating the
following procedures

Capped patients who elect to move out of the
normal coverage area of the original supplier
must be (according to CMS) billed by that
original supplier. The supplier will again bill
non-assigned. The supplier then coordinates the
service and fee schedule with an appropriate
supplier in the area where the patient has
relocated. The original supplier bills the
patient an amount equal to the fee schedule or a
usual and customary rate.

These suppliers also commented the procedures may
mitigate the concern that national or large
regional suppliers would maintain an advantage
due to the regulations within CMS-1403-FC with
regard to continued servicing and no restrictions
on contents amount (e.g., due to their multiple
locations and/or being able to absorb less
reimbursement).

Q. A patient has only a concentrator (no
portable system) for gt36 months. The patient's
doctor now prescribes portability. The
concentrator has capped. Does the supplier begin
billing immediately for contents, assuming
contents are delivered for portability?
A. Yes, the supplier can bill immediately for
portable contents in addition to the monthly
portable rental amount up to the sixtieth month
or end of useful life of the concentrator.

51
Example

Patient is prescribed portable equipment in month
40 (concentrator has been capped for four
months). You may immediately bill for contents
(77.45 - E0441) AND for portable equipment
(28.77 E0431) thru month 60. At that point,
assuming medical need continues, you would begin
a new 36-month rental period and bill 204.56
(E1390 E0431).

52
Part 2 MIPPA SEC. 154 and CMS-1561-IFC. DELAY
IN AND REFORM OF MEDICARE DMEPOS COMPETITIVE
ACQUISITION PROGRAM.
53
Quick review

On March 20, 2008, CMS announced the winning bid
prices for the first round of competitive
bidding, with reimbursement averaging 26 percent
below Medicare fee schedule amounts.
On May 19, 2008, CMS released the names of the
316 suppliers that had signed contracts with
Medicare to provide competitively bid DMEPOS
items in the first round of competitive bidding,
effective July 1, 2008.

54
(No Transcript)
55

318 bidders were offered contracts
316 returned a signed contract
Only about 5 of the eligible small providers
were offered a contract, and about 16 of large
providers
A total of 1,254 contracts were accepted

56
There were widespread concerns about the way the
bidding process was handled

Including confusing and contradictory guidance
provided to suppliers during the bidding process
The questionable disqualification of numerous
suppliers due to missing financial data
The awarding of contracts to suppliers without
established businesses in the particular
geographic region (since technically a supplier
did not have to be located in the CBA to submit a
bid)
The adequacy of beneficiary and supplier
education efforts, and
The potential negative impact of the program on
beneficiary access to DMEPOS.

57
Bottom line

These concerns prompted Congress to intervene to
delay implementation of the first round of the
program and make a series of changes to improve
the process in the future.

58
MIPPA delayed Rounds One and Two of the bid
program for 18 to 24 months

Terminated contracts awarded under Round One and
restarts the contracting process in those areas
in 2009.
The Round Two contracting process would begin in
2011.

59
Interesting Fact

MIPPA provided 20 million in funding for the
DMEPOS bidding provisions last year (2008) and
25 million in each of FYs 2009 through 2012

60
The industry paid for the delay

While MIPPA delayed implementation of the bidding
program, stakeholders incurred a 9.5
across-the-board cut in the fee schedule for
these bid items.
The "bidding program" was begun and contracts
were awarded for two weeks last July before the
program was delayed by Congress. Numerous
anecdotes of implementation problems and errors
were reported.

CMS acknowledges, based on Round One experiences,
that less than 400 entities are expected to be
awarded contracts following the 2009 contracting
period.

62
CMS-1561-IFC

CMS published this interim final rule for bidding
on January 16, 2009.
Unless bidding is again delayed, or eliminated,
the HME sector will have no choice but to deal
with this program.
CMS took comments during a 60-day comment period
(ending March 17)
The rule was implemented April 18, 2009

63
The PAOC

This June will be the first meeting of the new
PAOC members in 2009 and it follows the April 18
implementation of the competitive bidding interim
final rule.
Because of the expertise represented on the
PAOC, it should be an influential voice in
shaping the bidding program, said Tyler J.
Wilson, president of the American Association for
Homecare (AAHomecare). We hope that CMS and the
Obama administration will listen to the advice
and suggestions of the PAOC.

64
These are the metro areas that will again be
affected if Round 1.2 is implemented

Charlotte, NCCincinnati, OH.Cleveland,
OHDallas, TXKansas City, MOMiami,
FL.Riverside, CAOrlando, FLPittsburgh, PA.
MIPPA removed San Juan, PR from the bidding
program

65
Which areas will be affected in Round 1.2?

The Competitive Bidding Areas (CBAs) will be the
same, but updated for any ZIP code changes since
2007.
CBAs approximate but are not exactly the same
as - the counties that make up the official U.S.
Census Metropolitan Statistical Area (MSA).
CBAs are defined by ZIP codes. Providers may
review the ZIP codes affected from 2007 again
some minor changes are likely.
Some rural ZIPs (that would be included in the
official MSA) may be deemed non-competitive and
hence not included within the CBA. Conversely,
some competitive adjacent ZIPs may be included.

The Round 2 MSA bidding ZIPs were never posted.
Even with the 2011 delay, MIPPA requires these 70
metro areas do not change. You can begin to
review whether your patients reside in these
counties making up the MSA. You can find all
counties within your MSA via the U.S. Census
Bureau. Go to http//www.census.gov/population/es
timates/metro_general/List4.txt
CMS If a particular zip code has been split
into two new zip codes, we will include the new
zip codes in the CBA. We will not add any new zip
codes that would expand the geographic area of
the CBAs.

67
Example of a Round One CBA Charlotte-Gastonia-Conc
ord, NC-SC CBA
68

MIPAA requires the Round Two contracting process
to begin in 2011.
Providers can check now whether their patients
reside in counties included in Round 2 MSAs. You
can find all counties within any MSA via the U.S.
Census Bureau. Go to http//www.census.gov/popula
tion/estimates/metro_general/List4.txt

69
Providers.

Keep abreast of the release of the Round 1.2
Request for Bid (RFB) via information from
AAHomecare, State Associations, VGM, et al.
Should this occur (and recognizing no local MSAs
are affected in Round 1), monitor closely the
RFBs application requirements, procedures, etc.
As in 2007/2008, various industry stakeholders
will be offering bidding assistance, seminars,
etc. Stay prepared!

Important Section 154 Reforms from MIPPA and
CMS-1561-IFC

CMS cannot apply bid rates in non-bid areas until
Round Two is completed. This is very favorable
to HME/DME/Re-hab providers who serve patients in
the non-bid areas!
MIPPA excludes from bidding high-end wheelchairs
(complex rehabilitative power classified as group
3 or higher), along with related accessories when
furnished with the wheelchairs.

72
Require bidding process improvements

Requires CMS to notify bidders about paperwork
discrepancies and give suppliers the opportunity
to correct within a reasonable time frame.
Documents covered by this provision include
financial, tax, or other such documents relating
to supplier financial standards.
The provision does not require notification
regarding other documentation, such as the bid
itself or accreditation documentation.

Under this provision, if a supplier submits a bid
by the covered document review date, CMS must
inform the supplier if a required financial
document is missing within 45 days of the covered
document review date (or within 90 days in
subsequent rounds of bidding). The covered
document review date is defined as the later of
(1) 30 days before the bidding deadline or (2)
30 days after the beginning of the bidding
period.
In such cases, CMS may not reject the bid on the
basis of the missing documentation if all
documents identified in the notice to the bidder
are submitted within 10 business days after the
notice date.

74
Other Improvements

Provides CMS the authority to subdivide MSAs with
more than 8 million people.
Exempts rural areas and MSAs with a population of
less than 250,000 from competitive bidding for at
least five years.
Before using its authority to adjust prices in
non-bid areas, CMS must issue a regulation and
consider how prices set through competitive
bidding compare to costs for such items in
non-bid areas.
Requires HHS Office of Inspector General to
verify the calculations used to determine the
pivotal bid amount and winning bid amounts.

75
Other Changes

MIPPA establishes a reporting requirement for
contracted suppliers regarding subcontractors.
Both must submit evidence of accreditation by a
CMS-designated accreditation organization. Both
contract suppliers and their subcontractors that
furnish items and services under the competitive
bidding program must do so in accordance with the
applicable supplier standards .

There is also an exemption for hospitals
furnishing DME items to their own patients.
Of the categories selected for Rounds 1.2 and 2,
only walkers qualify for this exemption.
CMS says it will soon issue additional
information about the program, including a
complete timetable of the Round One rebidding
process.
In the meantime, a projected timeline follows

77
Estimated () Round 1.2 Timeline

March 17, 2009 CMS-1561-IFC comment period
ended
End May, 2009 CMS-1561-F published
Late June, 2009 Request for Bid (RFB)
instructions, HCPC codes, weighting factors, etc.
available on official Web-site
August 1, 2009 60 day bidding window opens
September 30, 2009 Bidding window closes bid
review begins
November 30, 2009 Round 1.2 contract winners
announced
First Quarter, 2010 Program begins
() Please recognize various bidding delays and
extensions occurred in Round 1 these estimates
are for discussion purposes only

MIPPA is
budget neutral

MIPPA finances the delay in DMEPOS competitive
bidding by reducing standard fee schedule
payments by 9.5 percent nationwide for all items
covered by round one bidding program (including
related accessories if furnished with the
competitively-bid item), beginning January 1,
2009. The law clarifies that the fee schedule
reduction also applies to diabetic supplies, but
only if furnished through mail order.
Items that were not subject to competitive
bidding will receive an inflation update for 2009
equal to the percentage increase in the consumer
price index for all urban consumers (CPI-U) for
the 12-month period ending with June 2008.

For 2010 through 2013, fee schedules will be
increased annually to reflect the CPI-U increase
(although in areas where competitive bidding is
implemented, contract pricing will apply).
In 2014, the fee schedule for items not furnished
in a CBA will again be updated for inflation.
Additionally, the payment amounts for those items
included in round one and subject to the 9.5
percent cut in 2009 will be increased by 2
percent, unless the Secretary has otherwise
adjusted the rate for the item (under the
Secretarys authority to use payment information
obtained through the competitive bidding program
to adjust rates outside of a CBA), or if the item
is being furnished in a CBA.

81
Note to Rehab Providers

Complex rehab seating and other related
accessories will only be eligible for the 9.5
payment reduction when they are supplied to
Medicare-eligible beneficiaries using power
wheelchairs.
This is an important distinction, since it means
that seating and other accessories are not
subject to the reduction when supplied to users
of manual wheelchairs or other products not
included in the product categories that will see
an allowable reduction that began on January 1,
2009.

CMS-6006-F
Medicare Program - Surety Bond Requirement for
Suppliers of Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS)

83
Bottom line

On January 2, 2009 CMS published a final rule
imposing surety bond requirements on certain
DMEPOS suppliers.
Specifically, suppliers generally will be
required to post a 50,000 surety bond from an
authorized surety, unless (1) the supplier is a
high-risk supplier, in which case the bond amount
will be increased, or (2) the supplier qualifies
for an exemption from the surety bond
requirement.

A separate surety bond will required for each NPI
obtained for DMEPOS billing purposes.
With regard to high-risk suppliers, CMS requires
an elevated surety bond amount of 50,000 per
occurrence of an adverse legal action (e.g.,
revocation of Medicare billing number suspension
of a health care license by a state licensing
authority revocation or suspension of
accreditation felony conviction or federal or
state health care program exclusion or debarment)
within the 10 years preceding enrollment,
revalidation, or reenrollment.

85
Exceptions

CMS has adopted exceptions to the surety bond
requirement for physicians and nonphysician
practitioners (NPPs) furnishing the items to
their own patients as part of their professional
service.
Likewise, CMS has created an exception for the
provision of orthotics, prosthetics, and supplies
by (1) state-licensed orthotic and prosthetic
personnel and (2) state-licensed physical and
occupational therapists providing such items to
their own patients.

A supplier must submit the surety bond with its
initial Medicare enrollment application or with
its revalidation or reenrollment application.
In addition, DMEPOS suppliers must submit a
surety bond when a change of ownership occurs or
when seeking to enroll a new location (unless the
DMEPOS supplier is a sole proprietorship).

87
Effective dates

The rule is effective March 3, 2009.
Existing suppliers must comply with the surety
bond requirement 9 months after enactment
(October 2, 2009).
New enrolling suppliers or suppliers seeking to
change ownership after the effective date had to
have met this requirement 120 days after the
effective date (May 4, 2009).

88
Requirements

This Final Rule requires that the surety bond
guarantee that the surety will, within 30 days of
receiving written notice from CMS (containing
sufficient evidence to establish the surety's
liability under the bond for unpaid claims, civil
monetary penalties (CMP), or assessments), pay
CMS a total of up to the full penal amount of the
bond in the following amounts
The amount of any unpaid claim, plus accrued
interest, for which the DMEPOS supplier is
responsible.
The amount of any unpaid claims, CMPs, or
assessments imposed by CMS or the Office of
Inspector General on the DMEPOS supplier, plus
accrued interest.

89
Events triggering the obligation

A supplier enrolling in the Medicare program,
making a change in ownership, or responding to a
revalidation or reenrollment request
A supplier that seeks to become an enrolled
DMEPOS supplier through a purchase or transfer of
assets or ownership interest and
A DMEPOS supplier enrolling a new practice
location.

90
Effects and reaction

The Agency also estimates that as many as 25,188
DMEPOS providers will exit Medicare due to the
combined costs of the surety bond and
accreditation requirements.

91
Universe of all DMEPOS Suppliers

lt 300,000

103,227
5,386
300K - 1M
1,322
1M - 3M
194
3M - 10M
gt10M
43
Source CMS, August 2008
92
Revised CMS-855S Enrollment Application

Effective June 1, 2009 DMEPOS suppliers
submitting applications to Medicare must use the
revised CMS-855S form. Applications submitted
after June first using the old 855-S form will be
rejected.
The revised CMS-855S adds a 26th Supplier
Standard - All DMEPOS suppliers must obtain a
surety bond in order to receive and retain a
supplier billing number - and includes a new
section for reporting surety bond information
(Section 12).

93
Section 12 CMS-855s
94
Section 12 CMS-855s
95
Accreditation Timeline

DMEPOS suppliers who were enrolled for the first
time with the NSC between January 1, 2008 and
February 29, 2008 had to submit an approved
accreditation to the NSC by January 1, 2009. The
NSC will revoke a DMEPOS suppliers billing
privileges if the DMEPOS supplier fails to obtain
and submit supporting documentation that the
DMEPOS supplier has been accredited.

Existing DMEPOS suppliers enrolled in the
Medicare program (prior to January 1, 2008) are
required to obtain and submit an approved
accreditation to the NSC by September 30, 2009.
CMS has required accreditation organizations to
prioritize their surveys of suppliers to accredit
suppliers who will be participating in the Round
1.2 Medicare DMEPOS Competitive Bidding Program.

97
Not yet accredited? Suppliers should note that

All surveys are performed on site at the supplier
location.
All surveys are unannounced.
Accreditation cannot be transferred upon merger,
acquisition or sale the NSC and the
Accreditation organization must be notified when
these events occur.
The Accreditation organization and the NSC will
be coordinating efforts so that the supplier
number shall be revoked when accreditation is
revoked.
Suppliers can contact the deemed accrediting
organizations directly based on the information
provided at the CMS website.

98
New supplier standards (effective October 1,
2009)

22. All suppliers must be accredited by a
CMS-approved accreditation organization in order
to receive and retain a supplier billing number.
The accreditation must indicate the specific
products and services, for which the supplier is
accredited in order for the supplier to receive
payment of those specific products and services
(except for certain exempt pharmaceuticals).
Implementation date- October 1, 2009. 23. All
suppliers must notify their accreditation
organization when a new DMEPOS location is
opened.

24. All supplier locations, whether owned or
subcontracted, must meet the DMEPOS quality
standards and be separately accredited in order
to bill Medicare. 25. All suppliers must
disclose upon enrollment all products and
services, including the addition of new product
lines for which they are seeking accreditation
26. Must meet the surety bond requirements
specified in 42 C.F.R. 424.57(c). Implementation
date- May 4, 2009 Effective Date October 2,
2009