	Background

		DME Items Subject to Adjusted FFS Payment Rates

CMS used payment information from the CBP to adjust payment rates for  393 Healthcare Common Procedure Coding System (HCPCS) codes  (generally referred to as “items” in this report) in non-bid areas. Because the retroactively applied 50/50  blended rates were based on newly available information from the CBP  round 2 recompete that went into effect on July 1, 2016, the adjusted  rates for the second half of 2016 may have differed from the adjusted  rates for the first half of 2016. Inquiries to 1-800-MEDICARE. CMS officials told us they closely monitor changes  in the number of suppliers furnishing items subject to adjusted rates in  non-bid areas as well as changes in beneficiary utilization of rate- adjusted items. Payment Rate Reductions Were Generally Significant but Varied, and Number of Suppliers Continued a Trend of Annual Decreases

		FFS Payment Rate Reductions Were Generally Significant but Varied By Product Category and DME Item

The payment rate reductions for DME items in non-bid areas were  generally significant. Table 3 shows 2015 non-adjusted and 2017 fully adjusted rates and the  percentage reduction in these rates for the rate-adjusted item in each  product category with the largest share of 2016 total expenditures. In 2016, Number of Suppliers Furnishing Rate- Adjusted Items in Non-Bid Areas Continued a Trend of Annual Decreases

The number of suppliers furnishing any of the 393 rate-adjusted items to  beneficiaries in non-bid areas in 2016—the first year that CMS adjusted  payment rates in non-bid areas—decreased 8 percent compared to 2015. 3.) Trends for 2010 through 2016 were generally  similar. 6.) 7.) This  is consistent with what we have previously reported. Available Evidence Indicates No Widespread Access Issues in the First Year of Reduced Durable Medical Equipment Payment Rates in Non-Bid Areas CMS’s Health Status Monitoring Tool Indicates that Beneficiaries in Non- Bid Areas Have Not Experienced Changes in Health Outcomes

CMS has reported that data from its health status monitoring tool indicate  the reduced payment rates have not resulted in changes in access to  DME items or health outcomes in non-bid areas in 2016 as compared to  2015. We found that the trends in mortality and hospital admissions rates  for this cohort were generally consistent with the cumulative trends  displayed in CMS’s monitoring tool. We did not find a change in health  status between 2015 and 2016 related to the reduced payment rates. Several Stakeholder Groups Reported Anecdotal Examples of Specific Beneficiary Access Concerns, But Did Not Have Evidence That Issues Were Widespread

We interviewed representatives from one state hospital association, three  beneficiary advocacy groups, and four DME industry trade organizations  who provided anecdotal examples of varying degrees of beneficiary  access issues in non-bid areas. Because there is only limited  experience on changes in the number of DME suppliers and utilization of  DME based on the first year that adjusted rates have been in effect, some  effects may take longer to appear, and it is possible that trends could  differ in 2017 or subsequent years. This underscores the importance of  CMS’s continued monitoring activities. HHS provided  technical comments, which were incorporated as appropriate. At that time, we will send copies of this report to the  Secretary of Health and Human Services and appropriate congressional  committees. Appendix I: The Centers for Medicare & Medicaid Services’ Phase-In of the Competitive Bidding Program and Other Antifraud Initiatives, 2008 through 2019

The Centers for Medicare & Medicaid Services (CMS) has implemented  several antifraud efforts that affect durable medical equipment (DME)  suppliers. In addition to the CBP, CMS  has also implemented several other broader initiatives.
Why GAO Did This Study

To achieve Medicare DME savings, Congress required CMS to implement a CBP in certain geographic areas for certain DME items. Beginning in 2011, CMS began implementing the CBP in several phases. The agency estimates that the CBP will save the Medicare program $19.7 billion between 2013 and 2022.The Patient Protection and Affordable Care Act required CMS to use CBP information to adjust fee-for-service payment rates for certain DME items in non-bid areas. On January 1, 2016, adjusted rates for 393 items went into effect in non-bid areas. CMS estimated these adjustments will save the Medicare program about $3.6 billion between fiscal years 2016 and 2020.
GAO was asked to review the potential effects of reduced payment rates for DME in non-bid areas. In this report, GAO examines (1) payment rate reductions and any changes in the number of suppliers; (2) any changes in the utilization of rate-adjusted items; and (3) available evidence related to potential changes in beneficiaries' access to rate-adjusted items.
GAO compared non-adjusted 2015 fee-for-service payment rates to adjusted 2016 and 2017 rates and reviewed Medicare claims data from 2010 through 2016. GAO also reviewed CMS's monitoring activities and interviewed CMS officials. In addition, GAO interviewed select beneficiary advocacy groups and DME industry trade organizations.

What GAO Found

The Centers for Medicare & Medicaid Services (CMS) implemented a competitive bidding program (CBP) for certain durable medical equipment (DME), such as wheelchairs and oxygen, in 2011 that is currently operating in 130 designated U.S. areas. On January 1, 2016, CMS used information from the CBP to start adjusting Medicare fee-for-service payment rates for certain DME throughout the country in areas that had previously not been subject to the CBP (known as non-bid areas). For the first year adjusted rates were in effect in non-bid areas, GAO found:
Reductions in payment rates were generally significant but varied by category of DME item. The unweighted average reduction in payment rates for the five rate-adjusted DME items with the highest expenditures in 2016 within each DME category was 46 percent.
Changes in the number of suppliers furnishing rate-adjusted items were generally consistent with the years before adjusted rates went into effect. GAO found that the number of suppliers furnishing rate-adjusted items in non-bid areas in 2016 decreased 8 percent compared to 2015.
GAO's review of Medicare claims data found that beneficiary utilization of rate-adjusted items in non-bid areas in 2016 showed little change compared to 2015. GAO also found that CMS's activities to monitor beneficiary access, including changes in health outcomes, showed little change between 2015 and 2016.
GAO interviewed several stakeholder groups that reported anecdotal examples of specific beneficiary access concerns they attributed to the rate adjustments, but stakeholders could not provide evidence to substantiate that the access issues were widespread. GAO's findings are consistent with CMS's monitoring results, which indicate that there were no widespread effects on beneficiary access in the year after the adjusted rates went into effect. However, some effects may take longer to appear, underscoring the importance of CMS's continued monitoring activities.
The Department of Health and Human Services provided technical comments on a draft of this report, which GAO incorporated as appropriate.