CMS Proposal Would Cut $7 Billion in DMEPOS Payments

The Centers for Medicare & Medicaid Services (CMS) has proposed a rule that would cut Medicare reimbursements for durable medical equipment (DME), prosthetics, orthotics and supplies (DMEPOS) by more than $7 billion from 2016 to 2020. 

The proposed rule would create significant changes to Medicare coverage and payment policies for DMEPOS, including a methodology for adjusting DMEPOS fee schedule payment amounts.

The proposed methodology seeks to make national price adjustments based on data gathered from the Medicare DMEPOS Competitive Bidding Program. This data would then be used to adjust fee schedule amounts for DME in areas where competitive bidding programs are not implemented, CMS writes in an overview of the rule. 


The regional prices would be limited by a national ceiling, 110% of the average of regional prices, and a floor, 90% of the regional average price. Under the CMS proposal, this national ceiling would be used as an adjusted fee for states that are predominantly rural or sparsely populated. 

“It is estimated that these adjustments would save over $7 billion for the 5-year period beginning January 1, 2016, and ending December 30, 2020,” CMS writes in its proposal. “The estimated savings are primarily derived from price reductions for items. It is expected that most of the economic impact would result from reduced payment amounts.”

CMS also suggests various other rules in its recent proposal including modifying competitive bidding change of ownership and termination of contract rules; clarifying qualifications for providing custom-fitting services for orthotics; and revising Medicare hearing aid coverage policy. These provisions were part of a broader proposal to update policies and payment rates for end-stage renal disease providers for 2015. 


To read the proposal, click here. For the CMS fact sheet, click here

Written by Emily Study

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