Kentucky Medical Equipment Suppliers Association

1. Kentucky Medical Equipment Suppliers Association Representing DMEPOS & CRT Providers

2. KentuckyMedicaid Landscape

3. CURES Legislation • Information based on collaborative meetings with CMS to influence guidance since September 2017 • Will limit the federal contribution for DMEPOS for 244 select E, K, and A codes. • States can still set their own payment rates to ensure access to care. • States do not have to do anything to be in compliance with this regulation. • States will have to complete annual reconciliation by 3/30/2019. • Primary Fee For Service Claims Only • No MCO • No secondary claims • Aggregate expenditure for HCPCS code listing only • Include area patient lives or reconciliation will occur to lowest Medicare allowable in the state • Medicare Rates Unsustainable Due to Flawed Competitive Bidding Program

4. Issues with SPA set to follow Medicare Rates-Kentucky Fee Schedule Changes • Current SPA reflects payment at Medicaid Set Fee Schedule • Has SPA been updated with CMS compliant language? • If no, reconciliation will have to occur by 3/30/19 • Fee Schedule Changes updated for 1/1/18 impact more than Cures HCPCS-Public Notice Required • Updated 150 HCPCS Codes-Only 74 on Cures HCPCS List • Fee Schedules Posted do not match Medicare rates • 32 Rentals Not at Medicare Fee Schedule-All but 1 more than Medicare fee schedule • 80 Purchase Prices Not at Medicare Fee Schedule-64 more than Medicare fee schedule • Cures only impacts 233 HCPCS on KY Medicaid Fee Schedule • 111 Rentals are Different than Medicare Allowable • 69 > Medicare, 42 < Medicare • 171 Sales are Different than Medicare Allowable • 89 > Medicare, 82< Medicare • Codes Under Medicare Allowable-will have to be adjusted up if Compliant State Plan Amendment Language is adopted • 6 MCO Plans Use Medicaid Fee Schedule with Discount off for processing claims

5. State Responses on CURES • 10 States changing rates to Medicare • 5 States already at Medicare rates • 11 States Not Changing Rates and will complete reconciliation • 9 States Analyzing Decision

6. State Responses on CURES States Already At Or Below Medicare Rates (5) DC – Mississippi – Nevada [will be reducing to 2018 rates] – Virginia – West Virginia States Changing Rates to Medicare (10) Vermont [all HCPCS] – Montana [ll HCPCS but CRT] – Washington [all HCPCS but CRT] – Colorado [CURES codes only] – Iowa [CURES codes only] – North Dakota [CURES codes only] – Connecticut [CURES codes only] – Maine [need information on which codes] – Massachusetts [need Information on which codes] –Kentucky [All Cures Codes plus additional codes] States Not Changing Rates (11) Florida – Georgia – Hawaii – Michigan – Minnesota – North Carolina – Ohio – Pennsylvania – South Carolina – Tennessee – Texas States Currently Analyzing Fee Schedule and Data (9) Alabama – Illinois – Indiana – Kansas – Missouri [discussions still occurring; MAMES presented proposal for limited rate changes; lobbying for additional funding] – New York – Oklahoma – Rhode Island – New Hampshire **Information based on meetings and/or discussions with state Medicaid plans or State Plan Amendments filed with CMS. Listing is subject to change as further analysis occurs. States not listed have not discussed their plans or filed State Plan Amendments. Updated March 24, 2018

7. HME Suppliers Since 2013, 41.8% of HME suppliers nationally have gone out of business or been purchased due to unsustainable rates.

8. HME Supplier Market in Kentucky • 17.2% of unique HME suppliers in Kentucky have gone out of business or been purchased since 2013. • 22.3% of DMEPOS locations have closed since 2013.

9. Impact of Competitive Bidding on Medicare Beneficiary Access to DME • The survey was completed by 428 patients, 358 case managers, and 266 suppliers. • 52% of beneficiaries reported problems. • 77.6% of case managers experienced difficulties with timeliness of discharge process due to HME access issues. • 89% of case managers report an inability to obtain DME in timely fashion.

10. Dobson Davanzo Cost Study: Proportion of Costs • Cost of goods represents the largest proportion of costs for DMEPOS providers, yet reflects less than 60 percent of costs overall. • -- As reflected in the Federal Register, this amount is the only cost that CMS takes into account when computing its CB pricing. • Indirect and direct costs are those costs that are incurred by providers in the course of patient service.

11. Study Findings: Median Percent of Costs Covered All DMEPOS HCPCS included in the survey were reimbursed at a median of 88% of overall cost. The median percent of costs covered for each DMEPOS product category under study is presented below.

12. Medicaid and Medicare Key Distinctions: • Distinct Populations and Diverse Missions • Community Verses Home Use • Pediatric Population Cost Differentials • Social Security Act Directive • Payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan.

13. Legislative Landscape on Medicare Rates • Legislative precedence for rate changes in Medicare program will create even more unstable reimbursement environment. - Cures Impact to July 1, 2016 fee schedule retroactive • Interim Final Rule-Published in OMB’s Fall Unified Agenda Listing • Retroactive to August 1, 2017 change of Medicare fee schedule to 50/50 blended rates • HR 4229-Protecting HOME Access Act of 2017-102 138 Co-Sponsors - Support to-date from Kentucky Congressional reps: Comer, Barr, Guthrie

14. Definition of HME-Industry Adopted • Delivery • Patient and/or home assessment to verify the appropriateness and safety of the prescribed item • Set-up • Instruction on: • Use and operation with return demonstration • Maintenance • How to seek assistance in the case of operational failure • How to report changes in medical conditions • Assistance in verifying insurance coverage and billing the patient’s insurance • Collecting needed documentation from physicians, hospitals, nursing homes, home health agencies and other healthcare professionals to support the medical necessity and coordinate care for such items • 24/7 availability of assistance for after hour and holiday services, where apropriate, including natural disaster or national emergencies (i.e. tornadoes, hurricanes, floods, blizzards, etc… which necessitate additional staff, time, equipment, and resources to help prepare, respond and recover from said events) • Acting as liaison between patient and clinician to assure appropriateness of service • Advocating on behalf of the patient where reimbursement was challenged by the insurance carriers

15. Complex Rehab Technology Facts • Complex Rehab Technology products and services are significantly different than standard Durable Medical Equipment • These specialized products are used by a small population of children and adults who have significant disabilities and medical conditions • The process of providing CRT products is done through a clinical model and is service intensive (like the provision of custom Orthotics and Prosthetics) • Due to significant operating costs and low profit margins there are only a small number of qualified providers that supply these specialized products and services • Congress and CMS have recognized the specialized nature of CRT and it has been excluded from the Medicare Competitive Bid Program

16. Stakeholders Request • Revert back to previous fee schedule. • Freeze rates for 2018 calendar year. • Work with CMS and Stakeholders to analyze spend verses Medicare allowables. • Provide Utilization Data to KMESA for evaluation by AAHomecare to determine if under or over aggregate spend • Accept Proposal by KMESA for any fee schedule changes necessary to be in compliance with legislation • CMS has agreed to perform initial and quarterly analysis to determine states risk. • Work on contract language to not allow MCO Plans to discount off Medicaid Fee Schedule