Medicare Payment for Durable Medical Equipment

Background
The methods HCFA currently uses to set out-patient payment levels for Durable Medical Equipment are in need of modernization because they may result in the use of procedure codes or the assignment of payment levels that are inadequate. To the degree that this is the case, these methods prevent "covered" technologies from being properly integrated into the Medicare program, they restrict beneficiary access to needed services, and they have a chilling effect on new technology innovation.

HIMA Position and Recommendations
HIMA supports the following reforms in the way HCFA makes decisions, in the way HCFA assigns procedure codes to DME products, and in the way HCFA sets payment levels:

• Open Decision-Making Process. HCFA should adopt coding and payment decision-making processes for DME products that are clear, predictable, and open, with the opportunity for public participation. These processes should also make clear the rationale and the reasoning for HCFA decisions.
• Opportunity for Administrative Appeal. HCFA should adopt an administrative appeals mechanism for DME products so that stakeholders can challenge decisions dealing with procedure code assignment or payment levels.
• Setting Payment Rates for New Technology. HCFA should adopt principled methodologies for new DME products that are designed to establish fair and appropriate payment levels.
• Review of Adequacy of Payment Levels. HCFA should adopt a review process for DME products where stakeholders can request (and be granted) a review of the adequacy of payment levels for specific procedure codes.
• Use of Market-Based Data. HCFA should make use of a payment decision-making process that relies on market data for setting and adjusting payment levels.

April 2000