Association for Tennessee Home Oxygen & Medical Equipment Services

1. Association for Tennessee Home Oxygen & Medical Equipment Services Representing DMEPOS & CRT Providers

2. TennesseeMedicaid Landscape

3. Issues with SPA set to follow Medicare Rates • Competitive Bidding established rates with flawed bidding program • No Binding Bids • Suicide Bidders • Competitive Bidding Rates Rolled out to areas not intended for CB Program • Cuts of up to 70% on DME Items • Medicare and Medicaid Fee Schedule Comparison

4. HME Supplier Market Since CB Program Implementation • 33.1% of unique HME suppliers nationwide have gone out of business or been purchased since CB Program began. • 30.9% of DMEPOS locations have closed since CB Program.

5. HME Supplier Market in Tennessee • 25% of unique HME suppliers in Tennessee have gone out of business or been purchased since 2013. • 26.8% of DMEPOS locations have closed since 201

6. 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. • ATS Peer Review Study Shows similar results

7. 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.

8. 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.

9. 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 on May 9, 2018 eliminated 2nd cut to Rural rates. • New Fee Schedule Published for Dates of Service 6/1/2018-12/31/2018 • HR 4229-Protecting HOME Access Act of 2017-102 153 Co-Sponsors

10. Legislative Landscape on Medicare Rates • End Stage Renal Disease Proposed Rule published July 11, 2018 • Creates 3 Medicare fee schedules for DMEPOS • CB Areas • Non Rural Areas • Rural Areas • Rural Area Relief established in IFR will continue through 12/31/2020. • Established competitive bidding reform to begin in next round of bidding. No bid windows established.

11. 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.

12. 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

13. State Responses on CURES • 11 States changing rates to Medicare • 6 States already at Medicare rates • 13 States Not Changing Rates and will complete reconciliation • 10 States Analyzing Decision • 1 State Accepted Proposal of limited codes

14. State Responses on CURES CURES Medicaid Implemenation Analysis States Already At Or Below Medicare Rates (6) DC – Mississippi – Nevada [will be reducing to 2018 rates] – Virginia – West Virginia - California States Changing Rates to Medicare (11) Vermont [all HCPCS] – Montana [ll HCPCS but CRT] – Washington [all HCPCS but CRT] – Colorado [CURES codes only] – Kentucky [Cures codes only] -Alabama [CURES codes only] – North Dakota [CURES codes only] – Connecticut [CURES codes only] – Maine [need information on which codes] – Massachusetts [need Information on which codes] - Tennessee [Cures codes directive to MCO plans] States Not Changing Rates (13) Florida – Georgia – Hawaii – Michigan – Minnesota – North Carolina – Ohio – Pennsylvania – South Carolina – Iowa – Texas – Indiana – Rhode Island States Currently Analyzing Fee Schedule and Data (10) Oregon – Illinois – Kansas – New York – Oklahoma – New Hampshire – Wisconsin – Nebraska – South Dakota - Alaska **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 July 9, 2018

15. 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

16. 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

17. Stakeholders Request • Eliminate mandate to MCO plans to change reimbursement rates for Durable Medical Equipment.