Specialty Pharmacy

CMS Omits Infusion Drugs from DMEPOS Competitive-Bidding Rule

Reprinted from the May 2007 issue of SPECIALTY PHARMACY NEWS, a monthly newsletter designed to help health plans, PBMs, providers and employers manage costs more aggressively and deliver biotechs and injectables more effectively.

A long-awaited CMS final rule has gotten mixed reactions within the specialty pharmacy and home infusion industries. On April 2, CMS released its final rule establishing a competitive-bidding program for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS).

Many in these industries were pleased that CMS excluded a couple of categories from the list that had been cause for concern: infusion therapies and diabetic supplies sold at retail pharmacies. Mail-order diabetic supplies, however, are included in the list, as are enteral nutrients, equipment and supplies.

DMEPOS items and services not on the list will be reimbursed based on the Medicare fee schedule, rather than at the lowest price that is bid.

According to CMS, the program, which is mandated by the 2003 Medicare reform law, will "reduce beneficiary out-of-pocket costs, improve the accuracy of Medicare's payments for certain [DMEPOS], help combat supplier fraud, and ensure beneficiary access to high quality DMEPOS items and services." CMS estimates that when the program is fully implemented in 2010, it will save Medicare $1 billion annually.

CMS has created a "limited exception" to allow "certain treating professionals" to furnish "certain specified items" without their participation in the program.

The program begins in 2008 and will initially operate in competitive-bidding areas within 10 of the largest metropolitan statistical areas (MSAs), excluding New York, Los Angeles and Chicago. It will expand into 70 additional MSAs in 2009, and will continue expanding after that.

The initial 10 categories included, as described by CMS, are:

(1) Oxygen supplies and equipment;

(2) Standard power wheelchairs, scooters, and related accessories;

(3) Complex rehabilitative power wheelchairs and related accessories;

(4) Mail-order diabetic supplies;

(5) Enteral nutrients, equipment, and supplies;

(6) Continuous positive airway pressure (CPAP) devices, respiratory assist devices (RADs), and related supplies and accessories;

(7) Hospital beds and related accessories;

(8) Negative pressure wound therapy (NPWT) pumps and related supplies and accessories;

(9) Walkers and related accessories; and

(10) Support surfaces (Group 2 and 3 mattresses and overlays).

Competitive bidding for support surfaces is effective only in Miami and San Juan, Puerto Rico, for the initial bidding cycle.

CMS will expand the program to additional items after 2009.

"While it is unfortunate that enteral nutrition therapy was included in the first round," says National Home Infusion Association Executive Director Russell Bodoff, "NHIA is pleased that CMS paid attention to our arguments as to why selection of infusion drug therapies would not be appropriate." According to NHIA, both enteral nutrition and infusion pumps and related drugs were ranked in the top 20 eligible DME policy groups for calendar year 2003, which were the data that CMS looked at in selecting the categories.

The association adds that it "has maintained a consistent position that infusion drug and enteral nutrition therapies are poorly suited to competitive bidding because they are clinically focused and involve an array of patient-related services."

Mary Ann Wagner, senior vice president, policy and pharmacy regulatory affairs, at the National Association of Chain Drug Stores, Inc., says, "We are pleased that CMS heard our concerns and was responsive to the needs of community pharmacy and to pharmacy patients."

However, those pharmacies that furnish diabetic testing supplies through mail order, among them many specialty pharmacies, will be directly impacted by this rule.

The Transplant Pharmacy Coalition (TPC) was among industry groups that spoke out against the proposed rule when it was published last May. In a June 2006 letter to CMS, TPC contended that "this accreditation is unnecessary for pharmacies that provide pharmaceuticals and diabetic testing strips but not DMEPOS." The coalition of eight specialty transplant pharmacies — Amber Pharmacy; BioScrip, Inc.; Echo Drugs; F&M Specialty Pharmacy; PharmaCare Management Services, Inc.; Skyemed Pharmacy; Transcript Pharmacy, Inc.; and Two Thousand Ten (2010) Pharmacy — also says that "many pharmacies serving diabetic patients provide testing strips to patients who receive diabetic medications...Some pharmacies only participate in the Medicare program through provision of diabetic testing supplies. If these pharmacies are required to become accredited just for this purpose, then some might not continue to provide these supplies."

Accreditation Cost Estimates Are High

Because of Medicare reimbursement, "these products are already supplied at a loss," said TPC, and this accreditation would increase costs. The National Community Pharmacists Association has estimated that initial accreditation will cost between $7,000 and $17,000 and take about 70 hours.

Suppliers that wish to bid under the program must be accredited or pending accreditation. Suppliers must also be accredited by one of 10 CMS-designated entities by Aug. 31 to be awarded a contract.

Initial registration for the program is open, and bidding is expected to start in late April. Bids must be submitted through an Internet application, and suppliers must complete initial registration to get a user ID and password in order to submit bids at https://applications.cms.hhs.gov.

Visit www.cms.hhs.gov/CompetitiveAcqforDMEPOS.

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