Since last year’s arrival of Administrator Mark McClellan, MD, PhD, CMS has become more action and results oriented. CMS has impacted respiratory manufacturers and providers by:

• devoting resources to implementing facets of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA);
• publishing a record number of regulations in which the respiratory industry has participated (by submitting comments);
• implementing committees that affect the respiratory industry (Program Advisory and Oversight Committee [PAOC] and Council on Technology and Innovation [CTI]);
• and communicating through “open door forums” for such sectors as durable medical equipment, medical devices, and home health agencies.

The respiratory industry also has shown that effective advocacy works since many organizations who have met with CMS over the years have recently gained important successes such as modernizing the HCPCS coding system and gaining appropriate reimbursement for inhalation drugs. The industry will still need continued advocacy on these and other critical issues to the industry.

Competitive Bidding
A section of the MMA that directly impacts the respiratory industry is the one that establishes competitive acquisition for DMEPOS. CMS acted quickly by establishing the PAOC committee, which has already held its first three meetings. These meetings should be important to the respiratory industry since it is highly probable that many respiratory devices (oxygen, nebulizers, CPAP, and respiratory assist devices) may be included since they are some of the highest Medicare expenditures within DME.

The implementation timeline is aggressive with CMS establishing a notice of proposed rulemaking in the spring of 2005, holding a public comment period in summer 2005, publishing a final rule in spring 2006, and initiating competitive bidding in January 2007.

Marcia Nusgart

The PAOC has addressed such subjects as existing competitive bidding programs, program design options, program categories, and selection of items after listening to the contractor provide background and options for the subjects. While it is important that CMS has commissioned this advisory committee, there are concerns: 1) Since this is solely an advisory committee, CMS does not need to take into account any of the opinions or concerns raised at the meeting. However, once CMS drafts the processes, there will still be a comment period; 2) While there is discussion among the PAOC members about the topics, it has not been the charge of the PAOC to reach consensus or even conclusions at the end of each topic. Therefore, unlike other advisory panels that Congress has created, it does not appear that this one will publish a report with conclusions; and 3) The composition of the PAOC seems weighted more toward the wheelchair industry than other DMEPOS areas. In fact, noting the inequities, many associations have written again to CMS to place respiratory consumers and providers on the committee.

These are public meetings and the public does have an opportunity to comment at them. More information about the meetings (including agendas and summaries) can be found at: http://www.cms.hhs.gov/suppliers/dmepos/compbid/paoc.asp-meeting.

Another committee (established by CMS) that has an impact on respiratory manufacturers and providers is the Council on Technology and Innovation. One of its first initiatives was to launch a working group on effective innovation to develop ways to improve the timeliness and efficiency of coverage, coding, and payment processes. CMS used this working group to implement changes in the HCPCS coding process, which mirrored recommendations that the Coalition of Respiratory Care Manufacturers had made to CMS staff over the past few years in their many meetings with them. The Coalition advocated a HCPCS coding process that would be open, understandable, and transparent.

The important changes include the following:

• Revision of the HCPCS coding deadline to January 3 from April 1
• Expansion of public meetings to include all DMEPOS and not just DME
• Implementation of appeals process in 2007 (which is extremely critical and long overdue)
• Public notice of preliminary and public coding decisions
• Revision of the HCPCS coding application form
• Elimination of the requirement for marketing data for drugs
• Reduction in marketing data for DMEPOS from 6 to 3 months
• Consideration of national Medicaid program operating needs

While these changes are good first steps, there are still many issues that need to be resolved. The Coalition of Respiratory Care Manufacturers will address these issues with senior CMS staff. Some of these issues include: 1) Ensuring that the composition of the HCPCS decision-making body reflects the clinical expertise and interests of key stakeholders; 2) Addressing the importance of the responsibility for the Agency to publish the established criteria used by the CMS HCPCS Workgroup to deny or issue a HCPCS code. (Currently, there are no published criteria and applicants can only guess what these criteria are.)

Another achievement for the industry, in addition to getting CMS to modernize the HCPCS coding system, was the advocacy work done in gaining appropriate reimbursement for inhalation drugs. New codes are now in effect in several areas of home care. For inhalation drug therapies in 2005, Medicare announced that code G0371 applies to the pharmacy dispensing fee of $57 for inhalation drugs, per 30 days. Code G0374 applies to the pharmacy dispensing fee for inhalation drugs, per 90 days.

Effective January 1, Medicare will pay one dispensing fee for inhalation drugs furnished through DME for each 30- or 90-day period, regardless of the number of shipments or drugs dispensed during the supply period. Medicare includes the cost of compounding drugs in the dispensing fees. Both the drug and the dispensing fee must be billed on the same claim. See the article at www.cms.hhs.gov/medlearn/matters/.  

In addition, there are new codes for albuterol unit dose, J7613; ipratropium bromide, J7644; and albuterol compound solution, J7616. Details on coding and pricing are on the DMERC’s Web site at www.cms.hhs.gov/providers/drugs/asp.asp.  

Respiratory in the Crosshairs
Unfortunately, another regulatory agency, the Office of Inspector General (OIG), is impacting the respiratory industry by once more targeting oxygen both in its 2004 study and in its 2005 OIG work plan. In its September 2004 study, “Medicare Payment Rates for Home Oxygen Equipment,” CMS concurred with the OIG that it use the pricing information to reduce rates Medicare pays for home oxygen equipment in 2005—and to use home oxygen as one of the categories of DME included in the first round of competitive bidding. The study can be found at: http://www.oig.hhs.gov/oei/reports/oei-09-03-00160.pdf.

In the 2005 OIG work plan, the OIG will compare Medicare payment rates for certain DMEPOS with the rate for other federal and state health programs as well as wholesale and retail prices. Oxygen is included in this.

In early January, CMS stated that Medicare claims for oxygen, oxygen equipment, and portable oxygen equipment furnished on or after January 1, 2005, would be held by the Medicare contractors until the 2005 fee schedule amounts can be computed based on the OIG information. Both the oxygen and oxygen equipment monthly payment amounts (E0424, E0439, E1390, and E1391) and portable oxygen equipment add-on fees (E0431 and E0434) would be affected by this provision.

However, this was rescinded in mid January when CMS recognized that the agency would not be receiving the OIG information by January 15, 2005; therefore, they decided to stop holding oxygen claims and to begin paying claims with 2005 dates of service based on the 2004 Medicare fee schedule amounts. These are the rates that would have otherwise been in effect.

CMS did state that once the OIG information is received and the 2005 fee schedule amounts are calculated, all claims received with dates of service on or after January 1, 2005, would be paid using the 2005 fee schedule amounts. The agency also stated that claims with dates of service on or after January 1, 2005, that were paid using the 2004 fee schedule amounts will not be retroactively adjusted after the 2005 fee schedule amounts are implemented. More information on this subject can be found on the CMS Web site at: http://www.cms.hhs.gov/suppliers/dmepos/oxygen_011305.pdf.  

In-home Sleep Testing
Respiratory manufacturers and providers were hopeful that CMS would make a favorable coverage decision on in-home sleep testing. In April 2004, CMS received a request from Dr Terrence Davidson to review its national coverage decision regarding the diagnosis of obstructive sleep apnea (OSA) requiring CPAP therapy. CMS was asked to modify its decision to include the use of portable multichannel home sleep testing devices as an alternative to facility-based polysomnography in evaluation of OSA. CMS asked for public comments and the issue was referred to the Medicare Coverage Advisory Committee (MCAC).

The MCAC held its meeting on September 28, 2004, and CMS posted its proposed decision memorandum on January 7, 2005, as follows: “The evidence is not adequate to conclude that the use of unattended portable multi-channel sleep testing with a minimum of 7 monitored channels including EEG, EOG, EMG, ECG or heart rate, airflow, respiratory effort, and oxygen saturation (Type II Devices based on the 1994 ASDA classification) is reasonable and necessary in the diagnosis of OSA and these tests will remain noncovered for this purpose. CMS is requesting public comments on this proposed decision memorandum pursuant to Section 731 of the Medicare Modernization Act. After considering the public comments and any additional evidence, we will make a final determination and issue a final coverage decision memorandum.”

Our Voice
It is more important than ever to be an effective advocate for respiratory issues since no one knows more about your issues than you! Since CMS is more active in tackling issues important to the respiratory industry, it is critical that your voice is heard. This can be done by joining your professional association on a national and/or state level and be involved in submitting comments to CMS or engaging in one of CMS’ open door forums. While we may not always get the results that we want (but sometimes we do!), it is imperative to speak up for you, your customers, and your patients.

Marcia Nusgart, RPh, is president of Nusgart Consulting LLC, a lobbying and consulting firm that advises the medical device and pharmaceutical industry on regulatory and legislative issues. She can be reached via e-mail: marcia@nusgartconsulting.com.