Bundling: the non-surprise surprise?

I was as surprised as the next person to see this week's advance notice of proposed rule making from CMS detailing its plans to not only spread bid pricing to non-bid areas (I guess we knew that one was coming), but also possibly change the game entirely by bundling payments for certain HME like CPAP devices.

That's “bigger than competitive bidding itself,” one provider told me.

CMS says about the move: “We believe it may be appropriate to modify the Medicare payment structure for certain DME under the competitive bidding program by requesting a single bid for furnishing all related items and services needed on a monthly basis (that is, rented equipment, replacement of supplies and accessories, repair or rented equipment, etc.).”

Sticking with CPAP, that means the CPAP device rental, masks, tubing, humidifier, maintenance and servicing.

Bundling payments, CMS argues, could make the bid program more streamlined—for providers, for beneficiaries and for the agency. By way of example, CMS had this to say about capped-rental items:

Suppliers: “The suppliers would no longer have to worry about counting rental months to determine when they might be losing title to certain items in their inventory.”

Beneficiaries: “These changes could also benefit patients who would no longer have to arrange for repair of patient-owned equipment or worry about servicing patient-owned equipment for which a manufacturer no longer makes replacement parts available.”

CMS: “From a program standpoint, the payment rules for capped rental items are complicated and onerous to administer. The program must keep track of separate payment, coverage, medical necessity, and other rules for hundreds of related codes for replacement supplies and accessories used with the base equipment as well as labor and parts associated with repairing patient-owned equipment. In addition, claims processing systems must count rental months and contractors must identify when legitimate breaks in continuous use occur and can result in the start of new capped rental periods. This leads to costly and complicated claims processing systems and edits for processing millions of claims for these items and services.”

Bundling, as you know, has become a bit of a trend in health care. First, there are the managed care companies to whom an increasing number of state Medicaid programs pay a lump sum per patient for managing care, regardless of the services provided.

Then there's CMS's Bundled Payments for Care Improvement (BPCI) Initiative. Under the initiative, healthcare organizations enter into payment arrangements that include financial and performance accountability for episodes of care. The goal: higher quality, more coordinated care at a lower cost to Medicare. Episodes currently being tested under this initiative include COPD, diabetes, and various respiratory conditions.

Industry stakeholders are skeptical.

“Is their whole goal just to reduce payment levels, which is what you always suspect,” Invacare's Cara Bachenheimer told Managing Editor Theresa Flaherty for a story that will appear in the HME Newswire on Monday.

Stakeholders also worry about the logistics, from a business perspective, of such a different payment model.

“How do I know how long this person is going to need this equipment or how many supplies they will need,” Brown & Fortunato's Denise Leard told Theresa.

CMS seeks comments on all of this—and I'm sure it will get its fair share.