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Dedicated to Lymphedema Patients and the Therapists Who Treat Them
LymphActivist's Site
Dedicated to Lymphedema Patients and the Therapists Who Treat Them
Durable Medical Equipment (DME) Minimum Lifetime Reaffirmed as 3 Years. Policy for New Medicare Items Clarified
On July 8, 2013 CMS published a Proposed Rule CMS-1526-P in the Federal Register that would "clarify" the definition of routinely purchased durable medical equipment (DME). Of particular relevance, it would clarify the "durability" requirement by reaffirming a 3-year minimum lifetime requirement (MLR) for all newly-approved DME that was originally introduced in CMS Final Rule CMS-1577-F on November 10, 2011 and effective January 1, 2012.
The Final Rule CMS-1526-F effective on January 1, 2014, clarifies the grandfathering provision related to the 3-year minimum lifetime requirement (MLR) for Durable Medical Equipment (DME), and how CMS will apply the 3-year MLR set forth at §414.202, which must be satisfied for an item or device to be considered.
The following are excerpts from CMS-1526-F that are relevant to DME used in the treatment of lymphedema.
V. Clarification of the 3-year Minimum Lifetime Requirement (MLR) for DME
DME is covered by Medicare based, in part, upon section 1832(a) of the Act, which describes the scope of benefits under the supplementary medical insurance program (Medicare Part B), to include "medical and other health services," which is further defined under section 1861(s) (6) of the Act to include DME. In addition, section 1861(m) (5) of the Act specifically includes DME in the definition of the term "home health services." In accordance with section 1861(n) of the Act, the term "durable medical equipment" includes iron lungs, oxygen tents, hospital beds, and wheelchairs used in the patient's home whether furnished on a rental basis or purchased. The patient's home includes an institution used as his or her home other than an institution that meets the requirements of section 1861(e)(1) or section 1819(a)(1) of the Act. Besides being subject to this provision, the coverage of DME must meet the requirements of section 1862(a)(1)(A) of the Act, which in general excludes from payment any items or services that are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member, and section 1862(a)(6) of the Act, which (except for certain specified exceptions) precludes payment for personal comfort items.
Section 414.202 defines DME as equipment furnished by a supplier or a home health agency that meets the following conditions: (1) can withstand repeated use; (2) effective with respect to items classified as DME after January 1, 2012, has an expected life of at least 3 years; (3) is primarily and customarily used to serve a medical purpose; (4) generally is not useful to an individual in the absence of an illness or injury; and is appropriate for use in the home. Prior to 2012, the definition for DME did not contain a 3-year minimum lifetime requirement (MLR) although Section 110.1 of chapter 15 of the Medicare Benefit Policy Manual (CMS-Pub. 100– 02) provided further guidance with regard to the definition of DME and durability of an item that is when an item is considered durable.
On November 10, 2011, CMS issued a final rule in which it revised the definition of DME at §414.200 by adding a 3-year MLR effective January 1, 2012, that must be met by an item or device in order to be considered durable for the purpose of classifying the item under the Medicare benefit category for DME (76 FR 70228 (November 10, 2011)). Specifically, an additional condition under §414.200 is that DME must be equipment furnished by a supplier or a home health agency that, effective with respect to items classified as DME after January 1, 2012, has an expected life of at least 3 years. The change to the regulation was designed to further clarify the meaning of the term "durable" and provide an interpretation of the statute generally consistent with the DME payment and coverage provisions, including, Medicare program guidance at section 280.1 of chapter 1, part 4 of the Medicare National Coverage Determinations Manual (Pub. 100-03) which specifies that an item can withstand repeated use means that the item could normally be rented and used by successive patients. The 3-year MLR is intended to specify that durable equipment is equipment that can withstand repeated use over an extended period of time. Since the vast majority of items covered under the DME benefit over the years last for 3 or more years, the MLR is intended to clarify the scope of the DME benefit primarily for new items coming on the market or in the process of being developed. The standard set forth in regulations gives manufacturers and the public a clear understanding of how long an item would need to withstand repeated use in order the meet the durability requirement for DME. The rule also provides clear guidance to CMS and other stakeholders for making consistent informal benefit category determinations (BCDs) and national coverage determinations (NCDs) for DME.
The 3-year MLR is designed to represent a minimum threshold for a determination of durability for a piece of equipment. The 3-year MLR is not an indication of the typical or average lifespan of DME, which in many cases is far longer than 3 years. The 3-year MLR does not apply to disposable supplies or accessories covered for use with DME such as masks, tubing, and blood glucose test strips. The 3-year MLR is prospective only and does not apply to equipment classified as DME before the regulation was effective, that is, January 1, 2012.
We also determined that the 3-year MLR should not apply to equipment classified as DME before the effective date to allow for continued coverage of such equipment that healthcare industry and beneficiaries have come to rely on, regardless of whether those items met the 3-year MLR set forth at 42 CFR 414.202 (76 FR70288). Given that reliance, we indicated we did not intend to reopen those prior decisions and reclassify the equipment in light of the 3-year standard. We believe that continuing Medicare coverage for items that qualified as DME prior to the effective date helps avoid disrupting the continuity of care for the beneficiaries that received such items for medical treatment prior to January 1, 2012.
Beneficiaries have been relying on these items for their treatment to the extent that the items have been covered as DME under Medicare. Furthermore, we believed that a vast majority of the categories of items that were classified as DME before January 1, 2012, did function for 3 or more years. We also noted that the 3-year durability rule would only apply to new products, and, to the extent that a modified product is not a new product, the 3-year MLR would not be applicable.
In response to the public comments that requested further clarification on the application of the grandfathering provision for the 3-year MLR, we noted that we would consider issuing additional guidance to provide further clarification, if necessary (76 FR 70290). For purposes of providing additional guidance on the scope of the grandfathered items under the provision, we invited public comments on this issue.
Under §414.202, effective with respect to items classified as DME after January 1, 2012, an item is not considered durable unless it has an expected life of at least 3 years. Therefore, the 3-year MLR applies to new items after January 1, 2012, and does not apply to items covered under the DME benefit on or prior to January 1, 2012. Items classified as DME on or before January 1, 2012, are considered "grandfathered items" for the purpose of this requirement, regardless of whether they meet the 3-year rule.
For the purpose of providing further guidance on the scope of the 3-year MLR, in the proposed rule (78 FR 40877), we provided clarification about how we would regard grandfathered items covered as DME prior to the effective date and we requested comments on that clarification. We proposed that if the product is modified (upgraded, refined, reengineered, etc.) after January 1, 2012, the item would still be classified as DME as a grandfathered item unless the modified product now has an expected life that is shorter than the expected lifetime for the item covered as DME prior to January 1, 2012. In this case, we would consider the item, as modified, to be a new item that is subject to the 3-year MLR. For example, equipment covered prior to January 1, 2012, and described by code X has a life of at least 2 years. If, after January 1, 2012, that item is modified such that it is less durable, such that it no longer lasts for the 2 year period, that modification would render the item "new" and it would be subject to the 3-year MLR. Therefore, since the new (modified) product does not last 3 years, it would not meet the definition of DME under the regulation and could not be covered or be billed using the code that described the item before it was modified.
We sought comments on this proposed clarification.
We received approximately 13 comments on the proposed regulation (78FR 40876- 40877) regarding clarification of the grandfathering provision of the 3-year MLR for DME. Commenters included medical device manufacturers, suppliers, advocacy groups and coalitions.
Comment: Most commenters acknowledged and appreciated that CMS proposed the clarification of the grandfathering provision of the 3-year MLR for DME.
Response: We thank the commenters for their input and support. We note that the clarification regarding grandfathered items that are modified relates to the durability of the item under the definition, and in particular, whether the modified item has a shorter useful life than the expected lifetime for the items covered prior to January 1, 2012.
Comment: Two commenters supported our clarification in the proposed rule of the grandfathering provision of the 3-year MLR for DME. The commenters believed that the proposed clarification to continue to cover grandfathered items if modified as long as the modification did not shorten its useful life was reasonable and encouraged CMS to adopt it.
Response: We thank the commenters for their support. However, we wish to clarify that the proposed rule addressed how we would regard grandfathered items covered as DME prior to the effective date. We proposed that if a grandfathered product is modified (upgraded, refined, reengineered, etc.), the item would still be classified as a grandfathered item unless the product has been modified to be less durable, such that it now has an expected life that is shorter than the expected lifetime for the item covered as DME prior to January 1, 2012. In this case, we would consider the item, as modified, to lose its grandfathered status and thus it would be treated as a new item that is subject to the 3-year MLR.
Comment: Several commenters indicated that the proposed rule still leaves great uncertainty regarding which modifications will result in products that continue to be, or are no longer, grandfathered. Without specific vignettes or parameters that illustrate how CMS will address these matters when certain new products come onto the market, the guidance in the proposed rule will not resolve the questions that remain. Specifically,
Response: We thank the commenters for their input. As noted in the final rule (76 FR 70289, 70290 (November 10, 2011)), the 3-year MLR for DME is applied on a prospective basis. That is, the 3-year MLR only applies to new items, meaning items that were not covered as DME on or prior to January 1, 2012. We clarified in the proposed rule (78 FR 40877) that items paid for as DME on or before January 1, 2012, are considered "grandfathered items" for the purpose of the 3-year MLR for DME, regardless of whether they meet the 3-year rule. If a grandfathered item is modified (upgraded, refined, reengineered, etc.) after January 1, 2012, the item would still be considered a grandfathered item unless the item has been modified to be less durable, such that it now has an expected life that is shorter than the lifetime for the grandfathered item, which was covered as DME on or prior to January 1, 2012. Therefore, if application of new technology renders a product more effective but reduces its durability; then the product would lose its grandfathered status and the 3-year requirement would apply.
The change we made to the regulation to establish a 3-year MLR for DME was designed to further clarify the meaning of the term "durable." Based on our experience with the Medicare program, the vast majority of items covered as DME last for 3 years or longer; however, the purpose of the grandfathering provision is to ensure continued coverage for the items that were paid as DME before the effective date of the MLR requirement and , to avoid disruption of the continuity of care for the beneficiaries using such equipment. . . In response to the specific concerns of the commenters, the parameters of the grandfathering provision are:
Making individual determinations about whether a modified version of an item that was paid as DME on or prior to January 1, 2012, lasts as long as the item that was paid as DME on or prior to January 1, 2012, involves a case-by-case review of the relevant facts. Therefore, specific vignettes or parameters that illustrate how CMS will make these individual determinations could be misleading since it is not possible to illustrate every possible scenario addressing various items paid for as DME in the past and how they could be modified in the future. With regard to comments regarding HCPCS codes, there are a variety of coding changes. A code could be added for a completely new category of items that have never been paid for by Medicare and therefore these items would be subject to the 3-year MLR. Alternatively, a new code could be the result of a coding action whereby existing codes are revised to form a new code or codes. In these cases, the determination regarding whether an item is a grandfathered item not subject to the 3-year MLR will depend on whether the item was paid for as DME on or prior to January 1, 2012, under codes in effect on or prior to January 1, 2012.
Comment: Some commenters stated that the proposed rule does not provide clarity on what is a completely "new product" that would never be subject to the grandfathering provision.
Response: A new product is a product that was not paid for as DME on or prior to January 1, 2012, or a grandfathered item that loses its grandfathered status.
Comment: Some commenters indicated that it is unclear what would be considered a modified product that would be subject to the grandfathering provision provided that the modifications do not result in a reduced minimum lifetime of the product. Would a premarket approval product approved after January 1, 2012, that is similar in structure and function to grandfathered products be considered a modified version of the grandfathered products? Is newly cleared 510(k) product considered to be a modified version of the predicate device? It is unclear whether a new product cleared by the FDA through the Premarket Approval (PMA) process as opposed to a PMA supplement approved after January 1, 2012, can be considered to be a modification of a grandfathered product or whether a new product cleared by the FDA through the 510(k) process as substantially equivalent to other, previously cleared, predicate products is considered to be a modification of a predicate device.
Response: A grandfathered product is a specific product (make, manufacturer, model, model number, etc.) that was covered and paid for as DME on or prior to January 1, 2012. Any product that is not a grandfathered product or a grandfathered product that is modified so that it is less durable, such that it now has an expected lifetime that is shorter than the expected lifetime of the product covered as DME on or prior to January 1, 2012, is subject to the 3-year MLR. CMS will continue to consider these issues and provide additional guidance if necessary..
Comment: Several commenters voiced concerns that the final rule will serve as a major deterrent to future investments in new technologies. There may be desirable innovations made to a grandfathered product that would reduce the minimum lifetime of the product. If changes to a product that result in a different HCPCS code assignment or DME product category by definition do not fall within the grandfathering provision then manufacturers do not have the incentive to research and develop a grandfathered product's safety and effectiveness in treating. By eliminating reimbursement under Medicare DME benefit for modified grandfathered products containing innovations that are clinically beneficial to the patients but may reduce the minimum lifetime of those products, the proposed clarification discourages innovation of existing technologies.
Response: We believe that the 3-year MLR to clarify the term durable and the grandfathering provision are reasonable given the 5 year reasonable lifetime requirement, general DME payment rules and industry standards which support the fact that DME items should be able to withstand repeated use. We do not believe the rule is a deterrent. The rule is designed to clarify the grandfathering provision and ensure that such products are not modified to be less durable.
Based upon our experience with the Medicare program, the vast majority of items covered as DME last for 3 years or longer. The purpose of the grandfathering provision is to continue the Medicare coverage for the items that were paid as DME on or prior to the effective date, in order to avoid disruption of the continuity of care for the beneficiaries that had received items for medical treatment on or prior to January 1, 2012.
Comment: A few commenters suggested that instead of using the MLR to determine whether modified DME is a "new" device, CMS should focus on whether the modified device has the same clinical application as the grandfathered DME. This criterion would be a better measure of whether the device is "new" than whether it meets what a few commenters characterized as an arbitrary MLR rule. CMS should instead establish reasonable parameters under which products should be considered comparable to existing DME products in order to be subject to the grandfathering provision-any modification, upgrade, redesign, improvement or new indication of an existing DME product that maintains the product's core clinical technology or mechanism of action should be eligible for reimbursement under the DME benefit category.
Response: We thank the commenters for their input. However, our proposal regarding the 3-year MLR with regard to the definition of DME was to clarify the issue of durability as it relates to grandfathering status. Our proposal centered on the lifetime of the product as a result modification (upgraded, refined, reengineered, etc.). We do not believe that issues such as core clinical technology or clinical application to determine whether a modified grandfathered item is a new DME as suggested by the commenters, speaks to the issue of durability with regard to our interpretation of the statutory DME provisions.
Comment: A few commenters expressed concerns that the proposed rule will require manufacturers to undertake expensive testing to demonstrate that their equipment continues to qualify under the grandfathering provision. They questioned whether there is a benchmark for deciding whether the modified device has an MLR that is shorter than the grandfathered device (e.g., is it an MLR that is a year shorter, 90 days shorter, or a day shorter than that of the grandfathered DME?). Commenters believe that, instead of providing clarity, CMS has injected even more subjectivity and ambiguity into the Medicare coverage and coding process and provides virtually no guidance when the minimum lifetime of a modified device does not conclusively meet the 3-year threshold. Commenters stated that, in the past, CMS has stated that it will base these decisions on a review of existing data, but the outcome in these cases ultimately will hinge on subjective interpretation of the data. The commenters note that this type of analysis will be useless in assessing new technologies, which typically are not included in independent comparative studies of the type CMS has said it plans to consult.
Response: We thank the commenters for their input but do not believe that the proposed regulation injects subjectivity and ambiguity into the Medicare coverage and coding process. We are not proposing a new process to determine whether a modified device has an expected life that is shorter than the original grandfathered device; therefore, no new types of tests are needed to make determinations regarding the expected lifetime of products. As discussed previously, we will continue to follow the current BCD process to determine on an individual consideration basis if a modified grandfathered item falls within the grandfathering provision. We will review information and evidence, which a supplier/manufacturer may submit, consistent with the current BCD process to determine the expected life of the equipment. As discussed previously, the BCD process typically involves reviewing information from various sources including but not limited to information related to FDA pre-market clearance, product manuals, operating guides, warranty documents, and standardized test results. The NCD process is available at
http://www.cms.gov/DeterminationProcess/Downloads/FR09262003.pdf.
See also, 68 FR 55638 (September 23, 2003). Additionally, we routinely collect information regarding durability of new products as part of the HCPCS editorial process in order to identify categories of new DME subject to the procedures established in accordance with the mandate of section 531(b) of the Medicare, Medicaid and SCHIP Benefit Improvement and Protection Act of 2000 (BIPA 2000), Public Law 106–554. Based on our experience with the program, this information has been readily available from the manufacturers of these items and other entities submitting requests for changes to the HCPCS. Information on the HCPCS Level II coding process is available at:
http://www.cms.gov/MedHCPCSGenInfo/Downloads/HCPCS_Application.pdf and
http://www.cms.gov/MedHCPCSGenInfo/08_HCPCSPublicMeetings.asp.
Comment: Some commenters argued that in this case, CMS' original concern about disrupting patient care continues to hold true. Commenters claim that the proposal to modify the grandfathering provision of §414.202 will disrupt the care of beneficiaries using the grandfathered DME. Beneficiaries who have been using the grandfathered DME will no longer have Medicare coverage for the medically necessary device they depend on. Physicians and other practitioners will be unable to order devices that have been proven therapeutically effective for the patients they treat. For these beneficiaries and providers, it will almost certainly be true that they will be left without an equally effective alternative for continuing their care.
Response: We thank the commenters for their input, but we do not agree with the above comment. We note that the proposed rule was designed to clarify the grandfathering provision. The proposed clarification of the grandfathering provision is designed to address how grandfathered products could be modified without losing their grandfathered status.. The commenters concerns that beneficiaries who have been using the grandfathered DME will no longer have Medicare coverage for the medically necessary device they depend on or that physicians will be unable to order devices that have been proven therapeutically effective for the patients are inaccurate. On the contrary, the purpose of the grandfathering provision for the 3- year MLR was to continue Medicare coverage for items that were classified as DME on or prior to the effective date, in order to avoid disruption of the continuity of care for the beneficiaries that had already received these items for medical treatment. . For the reasons stated above, we do not believe that the clarification of the grandfathering provision will disrupt the continuing care for beneficiaries that are using the grandfathered DME.
Comment: Some commenters urged CMS to convene a study panel to allow stakeholders to collaborate with the agency to examine a few central questions such as whether a modified item must fall within the same HCPCS code and/or DME product category as a grandfathered item in order for it to also fall within the grandfathering provision. Commenters asked CMS to consider convening a stakeholder meeting to solicit views from patients, healthcare providers, DME manufacturers and other health policy experts.
Response: We appreciate the comment. We established the 3-year MLR effective with respect to items classified as DME on or after January 1, 2012, via notice and comment rulemaking. We are clarifying the grandfathering provision for the 3-year MLR via notice and comment rulemaking. In addition, we will continue to follow the current processes including BCD, NCD, Local Coverage Determinations (LCD), and HCPCS codes to implement the 3-year MLR and the grandfathering provision. These processes include meetings with manufacturers in addition to the public where we seek input from the stakeholders. We will continue to receive input from stakeholders consistent with the BCD and NCD process when applying the 3-year MLR and the grandfathering provision. See 68 FR 55634 (September 26, 2003); and
http://www.cms.gov/Determination Process/Downloads/FR09262003.pdf.
See also, information on the HCPCS Level II coding process at:
http://www.cms.gov/MedHCPCSGenInfo/Downloads/HCPCS_Application.pdf.
http://www.cms.gov/MedHCPCSGenInfo/08_HCPCSPublicMeetings.asp#TopOfPage.
Comment: Some commenters stated that as other payers follow Medicare guidelines, it is important to revise ill-conceived Medicare policy now before regulations that harm people with disabilities and chronic conditions are replicated at the State level.
Response: This comment is outside the scope of the proposed rule.
Comment: One commenter stated that CMS proposes to clarify the scope and application of the MLR "grandfathering" provision by stipulating that products will lose the grandfather status if the modified product will have an expected life that is shorter than three years. In other words, the commenter believes the proposed rule would result in non-coverage of any grandfathered item that is modified.
Response: We thank the commenter for the input. However, the statement in the above comment that a modified product that has an expected life that is shorter than three years will no longer be grandfathered and therefore, lose coverage status is inaccurate. We proposed that a product covered as DME prior to 2012 that is modified would still be grandfathered as long as the expected lifetime of the product is equal to or greater than the lifetime of the product covered prior to 2012. Under this proposal, if the product lost grandfathered status (because the modification reduced the expected lifetime of the product covered prior to 2012), the product would be subject to the 3-year MLR. The application of 3-year MLR would determine whether product would be otherwise covered under the definition. For grandfathered items that have a lifetime shorter than 3-years, modifications that reduce such lifetime generally would result in the product no longer meeting the definition given the application of the 3-year MLR (because the grandfathered status was lost). However, for grandfathered products that have a lifetime greater than 3 years, modifications that shorten such lifetime may or may not result in noncoverage under the definition when the 3-year MLR is applied. For example, if a grandfathered product covered as DME prior to 2012 with a lifetime of four years is modified, resulting in a product with a lifetime of two and a half years (and thereby losing grandfathering status), the product would no longer meet the definition of DME, because the 3-year MLR is not met given that the lifetime of the modified product is less than three years. In the same example, if the modification resulted in a reduced lifetime of the product to 3.5 years, the product, even though it lost grandfathering status, would satisfy the 3-year rule, and continue meet the definition of DME.
After consideration of comments received on the proposed rule, we are finalizing the clarification of the grandfathering provision of the 3-year MLR for DME. The 3-year MLR applies, effective January 1, 2012, but does not apply to items covered under the DME benefit on or prior to January 1, 2012 ("grandfathered items"). However, effective April 1, 2014, if the grandfathered item is modified (upgraded, refined, reengineered, etc.), and the modified item now has an expected life that is shorter than the expected lifetime for the item covered as DME prior to January 1, 2012, the modified item will lose grandfathered status. In this case, we would consider the item, as modified, to be a new item that is subject to the 3-year MLR.