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Help Us Prevent a 30% Decline in DME Reimbursement for 2024

August 14, 2023 VGM & Associates
Industry Matters - Powered by VGM
Help Us Prevent a 30% Decline in DME Reimbursement for 2024
Show Notes

In today’s episode, VGM’s Craig Douglas and Ronda Buhrmester talk about the importance of taking action to pass Bill S. 1294 which would extend the 75/25 blended rate from the Cares Act. Listen as they explain why this is necessary and what you can do to help!
Understanding the 75/25 Blended Rate and Why We Need Legislative Action!

In 2020, amidst the challenges posed by the COVID-19 pandemic, the healthcare industry witnessed the introduction of the 75/25 blended rate through the passage of the CARES Act. This rate adjustment, named after its 75% and 25% allocation model, aimed to protect access to DME products and services in non-rural, non-competitive bid areas by temporarily increasing Medicare reimbursement rates for providers serving those areas. Craig Douglas, VP of Payer and Member Relations, and Ronda Buhrmester, Sr. Director of Reimbursement and Payer Relations, recently released a podcast going into a deep explanation of the 75/25 blended rate and why keeping them in place is so important to the industry. In this article, we will highlight some of the key points around the 75/25 blended rate, its significance, its implications for the industry, and the ongoing legislative efforts to extend its benefits. 

Origins of the 75/25 Blended Rate 

The 75/25 blended rate emerged as a response to the COVID-19 pandemic with the enactment of the CARES Act in early 2020. This legislative action was designed to ensure that medical equipment suppliers could continue providing essential services despite the challenges posed by the pandemic. The "75/25" in its name refers to the proportion of reimbursement rates calculated from two different periods: 75% from the post-competitive bidding rates and 25% from the unadjusted fee schedule in place before competitive bidding. This blended rate was implemented to counter the decline in reimbursement rates experienced in the years leading up to the CARES Act. 

Understanding the Blended Rate Calculation 

To grasp the concept of the 75/25 blended rate, let's consider an illustrative example with a CPAP device (HCPCS code: E0601). Prior to competitive bidding and rate adjustments, the reimbursement for this device was approximately $100. Through various rounds of competitive bidding, the reimbursement rate saw a substantial reduction to around $40 by 2020. The blended rate calculation takes 75% of the lower 2020 rate (75% of $40) and 25% of the pre-competitive bidding rate ($100), yielding a blended rate of approximately $55 for most non-rural areas. 

Extension Efforts: Senate Bill S.1294 

The 75/25 blended rate significantly impacted the reimbursement landscape for specific medical equipment codes, particularly those that experienced substantial decreases due to competitive bidding. This adjustment aimed to ensure that suppliers could continue providing essential medical equipment to patients while maintaining financial sustainability. 

However, the 75/25 rates are not permanent; they are currently slated to end on 12/31/2023. When this happens, those rates will revert to what was in place prior to the implementation of the 75/25 blend, adjusted for inflation. This will mean a decrease in reimbursement of up to 40% for many DME products provided to non-rural, non-CBA beneficiaries. Click here to view a chart with examples of what the impact will look like for several high-utilization products.

Click here for more information on MLNs in this CMS article.

For more information and to take action read this article.