CMS REVISES PAYMENT CLASSIFICATION OF CERTAINRESPIRATORY ASSIST DEVICES

CHANGE WILL IMPROVE PAYMENT ACCURACY AND REDUCEBENEFICIARY COSTS

The cost of certain medical devices to help Medicare patients breathe will be reduced as a result of actions taken today by the Centers for Medicare & Medicaid Services (CMS). 

Under a final rule issued today, certain respiratory assist devices (RADs) will no longer be considered durable medical equipment (DME) requiring frequent and substantial servicing for payment purposes, but will be reclassified as capped rental DME items effective April 1, 2006.  The rule applies to those RADs that have a backup rate feature that delivers air pressure whenever the user’s spontaneous breathing efforts are insufficient.  With this action, Medicare beneficiaries will be paying less out-of-pocket for the use of the equipment.

Currently, beneficiaries must pay up to $128 per month in coinsurance for as long as the respiratory device is being used.  Under the new rule, that coinsurance amount will decrease to $96 a month, beginning with the fourth month of rental.  After 13 months of rental the beneficiary may take over ownership of the device and will no longer have to pay any coinsurance on the rental of the device.

The Medicare program will also save under this rule, in that the monthly rental payments will be reduced with the fourth month of rental and will stop altogether after 13 months when title for the equipment transfers from the supplier to the beneficiary.

Since 1992, RADs that have a backup rate feature have been paid by Medicare on a continuous monthly rental basis for as long as the beneficiary uses this device.  The Health and Human Services Inspector General found that the RADs do not require frequent service to justify continuous rental payments.  Under the new rule, beneficiaries using RADs may elect to take over ownership of the equipment after renting it for 13 months.  The rule also allows for a transition period for devices which are currently being rented to Medicare beneficiaries so that rental months paid prior to April 1, 2006 will not count toward the rental payment cap.

“Medicare is committed to paying the right amount for the devices and equipment provided to its beneficiaries,” said CMS Administrator Mark B. McClellan, M.D., Ph.D.  “We are helping people with Medicare get the highest quality care and treatments at lower costs, ultimately lowering the costs for the Medicare programs.”

RADs are used by patients who have difficulty breathing.  The RAD delivers variable levels of air pressure to help spontaneous respiratory efforts and supplement the volume of air in a patient’s lungs.  RADs with a back-up rate feature also deliver the air pressure whenever sufficient spontaneous inhalation fails to occur.  Maintaining a RAD generally requires replacing masks, changing filters, and other routine tasks, rather than the frequent and substantial servicing, which may include dismantling, cleaning and recalibrating equipment by skilled technicians.  Under the Medicare law, all RADs are excluded from the DME payment category that pays indefinite rental payments for items that require frequent and substantial servicing.  Medicare will continue to pay 80 percent and the beneficiary will pay 20 percent of the Medicare allowed payment amount for maintenance for the equipment after the rental payments ends.

While other types of RADs have been paid correctly as capped rental devices, the RADs with a timed backup feature were incorrectly categorized and paid under the payment category for items that require frequent and substantial servicing.  As a result, both Medicare and the beneficiary have been liable for rental payments and copayments long after the total payments surpassed the purchase price of the device.  However, Medicare still pays more than cost for these devices. 

This final rule, which will be published in the January 27, 2006 Federal Register, will apply to claims received on or after April 1, 2006.  In the cases where beneficiaries received these items prior to April 1, 2006, only the rental payments for months after the effective date will count toward the 13 month cap.

Note: For more information, see the CMS website: www.cms.hhs.gov.