A Medical Device Daily

Competitive bidding for durable medical equipment, prosthetics, orthotics and supplies (DME) has been piloted twice over the past decade, and the most recent pilot suggested that savings of as much as 26% for both taxpayer and beneficiary are possible. After intensive lobbying by DME companies, Congress scotched the first round of bidding last year (Medical Device Daily, July 11, 2008). However, the program lives yet, and the Centers for Medicare & Medicaid Services announced last week its next steps toward a full-fledged bidding program.

In a Jan. 15 announcement, CMS noted that its interim final rule "incorporates changes required by the Medicare Improvements for Patients and Providers Act of 2008," including "a special document review process and a requirement for contracted suppliers to report relationships with suppliers with whom they subcontract." The law also excluded certain DME items from bidding and exempted hospitals from bidding for some DME items furnished to their own patients.

Acting CMS Administrator Kerry Weems said in the statement that "when combined with Medicare's accreditation and quality standards efforts, the competitive bidding program will help to assure that high quality service and items continue to be available to beneficiaries who need medical equipment to use at home."

CMS also announced the inaugural members of its Program Advisory and Oversight Committee (PAOC), who will oversee the program. The members include Peter Amico of Prime Care Supplies (Holtsville, New York) and Kendra Betz of the Department of Veterans Affairs.

Weems said the agency "is excited about the expertise our new PAOC members bring to the table," adding that "their broad range of knowledge and practical, 'on the ground' experience will be invaluable as we move forward with the competitive acquisition program."

The Medicare Payment Advisory Commission supports DME bidding and lamented the latest delay in the program in a meeting late last year (MDD, Sept. 8, 2008). In that meeting, MedPAC staffer David Glass noted that a previous bidding demonstration, conducted between 1999 and 2002, suggested a potential savings of as much as 22% "with no significant quality or access problems."

As expected, the program has its opponents. Tyler Wilson, president of the American Association for Homecare (Arlington, Virginia), said in a Jan. 15 statement that the "flawed bidding rule, released in the very final hours of the Bush Administration, will have a negative impact on virtually every senior citizen and disabled homecare patient across America." Wilson added that the program is "a bad deal for every patient who opts to receive care in their homes instead of a nursing home or a hospital."

'Never' event non-coverage in force

CMS published a statement last week that spelled out its policy on hospital-acquired conditions (HACs), stating that Medicare will no longer pay in-patient rates for three HACs that also appear on the list of "never events" published by the National Quality Forum (NQF; Washington).

The three conditions for which CMS will not pay inpatient rates, effective immediately for discharges on or after Oct. 1, 2008, are aimed at operating room mistakes. The "never" events on the list are wrong surgeries on a patient, surgeries performed on the wrong body part, and surgeries performed on the wrong patient. Any services provided along with these procedures will also not be reimbursed, according to the Jan. 15 statement, which quotes Weems as saying "these policies have the potential to reduce causes of serious illness or deaths to beneficiaries and reduce unnecessary costs to Medicare."

The NQF list, which currently stands at 28 events, was prompted in part by the 1999 publication of the Institute of Medicine report titled To Err is Human: Building a Safer Health System, and CMS's efforts in this area were urged along by the Deficit Reduction Act of 2005 (DRA). CMS's regional reimbursement contractors typically declined to pay for such incidents prior to DRA, but the NCD formally codifies the policy. According to the statement, CMS is also "exploring the feasibility of adapting this policy to its other payment systems."

The statement also notes that the agency's use of a national coverage decision to address just these three surgical errors reflects a view that "not all conditions included on the NQF list of never events should be addressed by the HAC payment provision." HAC non-payments apply only to hospitals whereas NCD coverage decisions affect all providers.

HHS moves forward on ICD-10

The Department of Health and Human Services last week published a final set of codes and updates to electronic transaction standards rules to guide the transition from ICD-9 to ICD-10, but the Jan. 15 announcement indicates that providers have until Oct. 1, 2013, to migrate their systems to the newer standard.

According to the HHS statement, adoption of the ICD-10 code sets is expected to boost Medicare's value-based purchasing initiatives and anti-fraud activities "by accurately defining services and providing specific diagnosis and treatment information." The new code set should also "ensure more accurate payments for new procedures, fewer rejected claims, improved disease management, and harmonization of disease monitoring and reporting worldwide." The U.S. is one of only two nations in the West that still relies on ICD-9, the other being Israel.

Outgoing Secretary of Health and Human Services Mike Leavitt said in the statement that the regulations "will move the nation toward a more efficient, quality-focused healthcare system by helping accelerate the widespread adoption of health information technology." Leavitt also made the case that the transition "will fully support quality reporting, pay-for-performance, bio-surveillance, and other critical activities."

According to CMS, ICD-9 has only one code for angioplasty, whereas ICD-10 "provides 1,170 coded descriptions, with a granularity that pinpoints the location of the blockage and the device used for each patient." The newer diagnostic coding scheme also "includes separate codes for medication errors and other external causes of injury, which are reported separately from the actual condition."