On the evening of October 27, 2020, the Centers for Medicare & Medicaid Services (CMS) released the unpublished version and fact sheet of its proposed CY 2021 Durable Medical Equipment, Prosthetics, Orthotics, & Supplies (DMEPOS) rule, which updates DMEPOS coverage and payment policy for CY 2021:

Classifies/establishes payment amount for continuous glucose monitors (CGMs) as DME under Part B;
Fee schedule methodologies for items furnished after COVID-19 public health emergency (PHE);
Codifies HCPCS Level II code application evaluation and procedures;
Establishes procedures for benefit category & payment determinations for new DME under Part B;
Updates the Competitive Bidding Program to include only two product categories for 2021; and
Revises interpretation of the “appropriate for use in the home” requirement for certain external infusion pumps.

Provisions on the proposed rule are not expected to have a major fiscal impact against the FY 2021 President’s Budget baseline. The proposed rule was subsequently published in the Federal Register on November 4, 2020.

The effective date for most provisions in the rule is April 1, 2021 or end of the PHE, whichever is later. Comments are due January 4, 2021.

All CGMs to be Covered and Paid under Medicare Part B

Therapeutic CGMs have been classified as DME under the Medicare Part B benefit since the Administrative Ruling published in January 2017.[1] According to this Ruling, all other CGMs deemed as non-therapeutic were not considered DME and therefore, not covered by Medicare. Non-therapeutic or adjunctive CGMs are defined as CGM devices that require verification of CGM glucose readings with a blood glucose monitor. CMS states that it is now revisiting the Ruling as the coverage of therapeutic CGMs as DME has not before been addressed in notice and comment rulemaking.

Under the five requirements of the definition of DME, CMS proposes that the receiver component of both the adjunctive and non-adjunctive CGMs: (1) can withstand repeated use; (2) meet expected life of at least three years; (3) used primarily to serve a medical purpose; (4) generally not useful to a person in absence of an illness; and (5) appropriate for use in the home. Therefore, CMS states that both adjunctive and non-adjunctive CGMs should be covered as DME.

CMS proposes to reverse its previous decision that adjunctive CGMs are not customarily used to serve a medical purpose, specifically because adjunctive CGMs can provide information about potential changes in glucose levels while a beneficiary is sleeping and not using a blood glucose monitor. CMS also cites several district court cases where adjunctive CGMs have been determined to be primarily used to serve a medical purpose, in contrary to CMS’ original Ruling.[2]^,[3]

Existing Smartphone Policy Included in the Proposed Rule

CMS also includes for the first time in notice and comment rulemaking its policy on the use of smartphones to view CGM data. Restating its existing policy for therapeutic CGMs[4], CMS proposes that both therapeutic and non-therapeutic CGMs meet the definition of DME when used in conjunction with a smartphone if the beneficiary also uses the durable CGM receiver.

Separate Fee Schedules Established for Adjunctive and Non-Adjunctive CGM Supplies

The fee schedule amounts for CGM receivers will continue to be based on the updated 1986-1987 average reasonable charges for blood glucose monitors. Class III CGM receivers will continue to be paid at a slightly higher rate ($231.77 to $272.63 in 2020) than Class II receivers ($208.76 to $245.59 in 2020). However, CMS proposes separate payment categories for CGM supplies and accessories based on the three types of CGMs currently on the market:

Non-adjunctive/therapeutic CGMs:
Current payment will remain and increase by 2021 update factor.
Adjunctive/non-therapeutic CGMs:
Establish fee schedule amounts for supplies and accessories based on supplier prices for the sensors and transmitters minus the fee schedule amount for the average quantity and types of blood glucose monitoring supplies used by insulin-treated beneficiaries (calculated as monthly allowance of $34.35). Payment amounts would increase by the 2021 update factor.
Manual non-adjunctive CGMs:
These devices do not automatically transmit glucose readings to the CGM receiver and only require disposable batteries and sensors as supplies.

Table 1. 2021 Monthly Payment Amounts for Supplies Used with Different Types of CGM Systems

CGM Type	Monthly Payment Amount*
	Class II devices	Class III devices
Non-adjunctive/therapeutic CGM supplies	$222.77	$259.20
Adjunctive/non-therapeutic CGM supplies	$175.62	$198.77
Manual non-adjunctive CGM supplies	$46.86	$52.01

The proposed monthly amounts will be updated by the 2021 fee schedule update factor (not yet available) and become effective April 1, 2021.

Current Fee Schedule Amounts to Remain Through the PHE

CMS proposes to establish revised DMEPOS fee schedule adjustment methodologies for items furnished in non-competitive bidding areas on or after April 1, 2021 or the date immediately following the end of the COVID-19 PHE, whichever is later. If the PHE ends prior to April 1, 2021, the current methodology established by The Coronavirus Aid, Relief, and Economic Security (CARES) Act will continue until April 1, 2021. The CARES Act – enacted on March 27, 2020 – increased payment rates for certain DME and enteral nutrients, supplies and equipment furnished in non-rural areas based on 75/25 blended payment rate and continued CMS’ policy of paying 50/50 blended rates for items furnished in rural, non-contiguous, non-competitive bidding areas for the duration of the PHE. CMS finalized these changes in its May 8, 2020 interim final rule with comment period.[5]

CMS proposes a policy of paying the 50/50 blend of adjusted and unadjusted rates in rural non-CBAs and in non-contiguous non-CBAs. In all other non-rural, non-CBAs, CMS proposes that fee schedule amounts be equal to 100 percent of the adjusted payment amount.

The 2021 fee schedule update factor has not yet been determined.

CMS Codifies Current HCPCA Application Procedures

CMS uses the HCPCS is the coding system to identify items and services on claims submitted to Medicare, Medicaid, and other health insurance programs. Level I of the HCPCS is comprised of Current Procedural Terminology (CPT) codes. The HCPCS Level II code set is used to identify items, services, supplies, and equipment that are not identified by CPT codes.

In November 2019, CMS announced updates to the HCPCS Level II coding procedures to enable shorter and more frequent application cycles beginning in January 2020. HCPCS Level II code applications for DMEPOS and other non-drug, non-biological items and services would be submitted and reviewed bi-annually while HCPCS Level II code applications for drugs and biological products are submitted and reviewed quarterly. CMS set forth the coding timeframes in the table below for 2020 coding cycles.

In this proposed rule, CMS proposes to codify these existing processes, continuing the new bi-annual coding cycle for DMEPOS and non-drug and non-biological items and services. CMS will continue the January and June deadline for submitting code applications, issuing preliminary recommendations, holding public meetings, and issuing final coding decision within six months of the code application deadline for non-drug and non-biological items.

The new quarterly coding cycles for drug or biological products will also continue. CMS proposes that the HCPCS Workgroup continue to establish deadlines for submitting applications and issue final coding decisions on the CMS website without holding public meetings on these applications.

CMS also proposes application resubmission and evaluation processes that are consistent with the HCPCS Workgroup’s current practice.

No Competitive bidding for Round 2021, Except for Over-The-Shelf Back and Knee Braces

CMS announces that Round 2021 of the competitive bidding program (CBP) would only include two of the fifteen product categories due to a failure to reach the predicted savings in these categories. As such, over the shelf (OTS) back and knee braces are the only two remaining product categories in Round 2021 of the CBP. CMS is not proposing any changes to the payment methodologies for OTS back and knee braces in CBAs.

CMS will not award any contracts to supply any of the following: enteral nutrition; hospital beds; nebulizers; negative pressure wound therapy pumps; continuous positive airway pressure devices and respiratory assist devices; oxygen and oxygen equipment; patient lifts and seat lifts; standard manual wheelchairs; standard power mobility devices; support surfaces; transcutaneous electrical nerve stimulation devices; walkers; commode chairs; and as of April 9, 2020, non-invasive ventilators.

For items and services no longer included in Round 2021 of CBP and furnished after the end of the PHE or April 1, 2021, whichever is later, CMS proposes to extend the current payment methodology, which is a blended rate of 50 percent of the adjusted fee schedule and 50 percent of the unadjusted fee schedule in rural, non-contiguous areas, and non-CBAs and at 100 percent of the adjusted payment fee schedule amount in non-rural, non-CBAs in the contiguous 48 states.

Additionally, CMS proposes to redefine “item” previously defined by the competitive bidding program in 2013^[6] to no longer include power wheelchairs, complex rehabilitative manual wheelchairs, and certain manual wheelchairs defined by HCPCS codes E1235, E1236, E1237, E1238, and K0008.

CMS Outlines Process for Determining Medicare Benefit Category in Regulation

Whether or not an item or service falls under a Medicare benefit category is a necessary step in determining whether an item may be covered under the Medicare program and what statutory and regulatory payment rules apply to the items and services. In an effort to promote transparency, CMS proposes to codify the process for making benefit category determinations (BCDs) 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.

CMS proposes to codify in regulation its current biannual HCPCS application process for making BCDs and payment determinations for new items and services. The process includes:

An analysis is performed by CMS to determine if the item or service is statutorily excluded from coverage under Medicare or if the item or falls under a defined Medicare benefit category.
If a preliminary determination is made by CMS that the item or service falls under a benefit category for items and services paid for in accordance with 42 CFR 414[7], CMS will make a preliminary payment determination 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.
The preliminary benefit category and payment determinations are posted on CMS.gov 2-weeks prior to the public meeting at which CMS receives public feedback on the preliminary benefit category and payment determination.

CMS Proposes Expanded Interpretation of DME “Appropriate for Use in the Home”

CMS proposes that external infusion pumps used to administer certain drugs or biologicals in the home 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.

Congress defines “home infusion drugs” at section 1861(iii)(3)(C) of the Social Security 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,” excluding insulin pump systems and self-administered drugs or biologicals on a self-administered drug exclusion list.

Under CMS’ proposed interpretation, an external infusion pump would be considered “appropriate for use in the home” if:

The Food and Drug Administration (FDA) label requires the drug to be prepared immediately prior to administration or to be administered by a health professional or both;
A qualified home infusion therapy supplier administers the drug or biological in a safe and effective manner in the patient’s home; and
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.

Additionally, 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.

If the proposal is finalized, the beneficiary would have the opportunity to select the home or outpatient setting for infusion. Beneficiaries would have continued access to the drugs or biologicals under the DME benefit, and Medicare would pay for them using the same methodology regardless of the setting in which they are administered. However, the beneficiary would be responsible for larger portion of the cost if the beneficiary chooses to receive home infusion rather than infusion in an outpatient setting.

[1] (CMS-1682-R) https://www.cms.gov/Regulations-and-Guidance/Guidance/Rulings/Downloads/CMS1682R.pdf

[2] Whitcomb v. Hargan. http://dparrishlaw.com/wp-content/uploads/2017/11/Decision-10-26-17.pdf

[3] Lewis v. Azar. https://casetext.com/case/lewis-v-azar-1

[4] https://www.cms.gov/Center/Provider-Type/Durable-Medical-Equipment-DME-Center

[5] CMS-5531-IFC https://www.cms.gov/files/document/covid-medicare-and-medicaid-ifc2.pdf

[6] 42 CFR Ch. IV (10–1–13 Edition) https://www.govinfo.gov/content/pkg/CFR-2013-title42-vol3/pdf/CFR-2013-title42-vol3-

[7] 42 CFR 414. https://www.govinfo.gov/app/details/CFR-2011-title42-vol3/CFR-2011-title42-vol3-part414