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[Federal Register Volume 77, Number 123 (Tuesday, June 26, 2012)]
[Notices]
[Pages 38067-38070]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-15425]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1445-N]

Medicare Program; Public Meeting Regarding Inherent 
Reasonableness of Medicare Fee Schedule Amounts for Non-Mail Order 
(Retail) Diabetic Testing Supplies

ACTION: Notice of meeting.

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SUMMARY: This notice announces a public meeting that provides an 
opportunity for CMS to consult with representatives of suppliers and 
other interested parties regarding options to adjust the Medicare 
payment amounts for non-mail order diabetic testing supplies. This 
meeting will provide the public an opportunity to offer oral and 
written comments.

DATES: Meeting Date: The public meeting will be held on Monday, July 
23, 2012, 9 a.m. to 1 p.m. eastern daylight time (e.d.t.).
    Deadline for Attendees that are Foreign Nationals (reside outside 
the U.S.) Registration: Prospective attendees that are foreign 
nationals (as described in section V. of this notice) are required to 
identify themselves as such, and provide the necessary information for 
security clearance (as described in section V. of this notice) by 5 
p.m. e.d.t. Thursday, July 5, 2012.
    Deadline for All Other Attendees: All other individuals who plan to 
attend the public meeting must register by 5 p.m. e.d.t. Monday, July 
16, 2012.
    Deadline for Requesting Special Accommodations: Persons attending 
the meeting who are hearing or visually impaired, or have a condition 
that requires special assistance or accommodations, are asked to 
contact the persons as specified in the FOR FURTHER INFORMATION CONTACT 
section of this notice no later July 9, 2012, 5 p.m., e.d.t.
    Deadline for Submission of Written Comments: Written comments must 
be received at the address specified in the ADDRESSES section of this 
notice by 5 p.m. e.d.t., Monday, July 30, 2012. Once submitted, all 
comments are final.

ADDRESSES: Meeting Location: The public meeting will be held in the 
main auditorium of the central building of the Centers for Medicare and 
Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    Submission of Written Comments: Written comments may either be 
emailed to DMEPOS@cms.hhs.gov or sent via regular mail to Elliot Klein, 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Mail 
Stop C5-03-17, Baltimore, MD 21244-1850.
    Registration and Special Accommodations: Individuals wishing to 
participate or who need special accommodations or both must register by 
completing the on-line registration located at http://www.cms.gov/apps/events/upcomingevents.asp or by contacting one of the persons listed in 
the FOR FURTHER INFORMATION CONTACT section of this notice.

FOR FURTHER INFORMATION CONTACT: Hafsa Vahora at (410) 786-7899 or 
Hafsa.Vahora@cms.hhs.gov
    Elliot Klein at (410) 786-0415 or Elliot.Klein@cms.hhs.gov

SUPPLEMENTARY INFORMATION:

I. Background

A. Process for Using Inherent Reasonableness Authority

    In the December 13, 2005 Federal Register (70 FR 73623), we 
published a final rule entitled ``Medicare Program; Application of 
Inherent Reasonableness Payment Policy to Medicare Part B Services 
(Other Than Physician Services)'' that finalized a process for 
establishing a realistic and equitable payment amount for Medicare Part 
B services (other than physicians' services) when the existing payment 
amounts are inherently unreasonable because they are either grossly 
excessive or grossly deficient. In that December 2005 final rule, we 
define grossly excessive and deficient payment amounts and provide the 
criteria for using valid and reliable data in making an inherent 
reasonableness determination.
    Sections 1842(b)(8) and (9) of the Act and our regulations at 42 
CFR 405.502(g) and (h) set forth the steps that the Secretary must 
follow in determining whether a payment amount is grossly excessive and 
in setting a special payment limit. Those steps are as follows:
     Factors Considered In Determining Whether Payment Amount 
is Grossly Excessive or Deficient. When making a determination that a 
payment amount is grossly excessive, we take into account several 
factors. Factors that may result in grossly excessive or deficient 
payment amounts include, but are not limited, to the following:
    ++ The marketplace is not competitive.
    ++ Medicare and Medicaid are the sole or primary sources of payment 
for a category of items and services.
    ++ The payment amounts for a category of items and services do not 
reflect changing technology, increased facility with that technology, 
or changes in acquisition, production, or supplier costs.
    ++ The payment amounts for a category of items or services in a 
particular locality are grossly high or lower than payment amounts in 
other comparable localities for the category of items or services.
    ++ Payment amounts for a category of items and services are grossly 
higher or lower than acquisition or production

[[Page 38068]]

costs for the category of items and services.
    ++ There have been increases in payment amounts for a category of 
items or services that cannot be explained by inflation or technology.
    ++ The payment amounts for an item or service are grossly higher or 
lower than the payment amounts made for the item or service by other 
purchasers in the same locality.
    ++ A new technology exists which is not reflected in the existing 
payment allowances.
     Factors Considered in Establishing a Payment Limit. In 
establishing a payment limit for a category of items or services, we 
consider the available information that is relevant to the category of 
items or services and establish a payment amount that is realistic and 
equitable. The factors we consider in setting a payment include, but 
are not limited to the following:
    ++ Price markup.
    ++ Differences in charges.
    ++ Costs.
    ++ Use.
    ++ Payment amounts in other localities.
     Use of Valid and Reliable Data. In determining whether a 
payment amount is grossly excessive or deficient and in establishing an 
appropriate payment amount, we use valid and reliable data. To ensure 
that valid and reliable data are used, we must meet the criteria set 
forth at 42 CFR 405.502(g)(4)(i) through (xi), to the extent 
applicable.
     Impact Analysis. We consider the potential impact of the 
payment adjustments on quality, access, beneficiary liability, 
assignment rates, and participation of suppliers.
     Supplier Consultation. Before making a determination that 
a payment amount is not inherently reasonable, we consult with 
representatives of the supplier industry likely to be affected by the 
change in payment amounts.
     Publication of Proposed Determination. We publish a 
proposed notice in the Federal Register that--
    ++ Provides the proposed payment amount or method proposed to be 
established with respect to the item or service;
    ++ Explains the factors and data considered in determining that the 
payment amount was grossly excessive or deficient;
    ++ Explains the factors and data considered in determining the 
payment amounts or methodology, including the economic justification 
for a uniform fee or payment limit if it is proposed;
    ++ Explains the potential impact of the payment adjustments and;
    ++ Allows at least 60 days for public comment.
     Publication of Final Determination. We publish a final 
notice in the Federal Register containing our final determination with 
respect to the payment amount to be established for the item or 
service, explaining the factors and data considered in making the final 
determination, and responding to public comments.

B. Mandate To Phase In Competitive Bidding Programs for Diabetic 
Testing Supplies

    Sections 1847(a)(1)(A) and (a)(2)(A) of the Act mandate the 
implementation of competitive bidding programs for durable medical 
equipment (DME) and medical supplies, including diabetic testing 
supplies. Under these programs, contracts are to be awarded to 
suppliers for furnishing DME and medical supplies throughout the United 
States at reduced payment amounts. Diabetic testing supplies are 
supplies necessary for the effective use of durable blood glucose 
monitors and include test strips, lancets, spring-powered lancet 
devices, calibration solution/chips, and replacement batteries. In 
2011, annual Medicare Part B allowed charges for these items were 
approximately $1.6 billion, of which approximately $552 million (over 
one-third) was attributed to claims for non-mail order items.
    Section 1847(a)(1)(B)(ii) of the Act provides authority for phasing 
in items and services under the competitive bidding programs, starting 
with the highest cost and highest volume items and services or those 
items and services determined to have the largest savings potential. 
The majority of Medicare beneficiaries receive their diabetic testing 
supplies on a mail order basis, and the competitive bidding program was 
phased in first for supplies furnished via this delivery method as part 
of the Round One Rebid of the competitive bidding program. In 2011, 
Medicare-allowed payment amounts for a box of 50 mail order test strips 
were reduced by 55 percent on average in 9 local metropolitan areas as 
a result of these programs.

   Table 1--Comparison of 2011 Fee Schedule Amounts (Non-Mail Order and Mail Order) and Mail Order Competitive
                                                 Bidding Amounts
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                                                                   Fee schedule                     Competitive
                 Local competitive bidding area                    amount (non-    Fee schedule       bidding
                                                                       mail)       amount (mail)      amount
----------------------------------------------------------------------------------------------------------------
Charlotte-Gastonia-Concord, NC-SC...............................          $34.85           30.03           14.50
Cincinnati-Middletown, OH.......................................           38.74           33.39           15.22
Cleveland-Elyria-Mentor, OH.....................................           38.74           33.39           15.62
Dallas-Fort Worth-Arlington, TX.................................           36.24           31.24           14.25
Kansas City, MO-KS..............................................           34.35           29.60           13.94
Miami-Fort Lauderdale-Pompano Beach, FL.........................           38.75           33.40           15.20
Orlando, FL.....................................................           38.75           33.40           14.50
Pittsburgh, PA..................................................           38.75           33.40           14.50
Riverside-San Bernardino-Ontario, CA............................           38.75           33.40           13.88
Average of Nine Areas...........................................           37.55           32.36           14.62
National Average................................................           37.67           32.47  ..............
----------------------------------------------------------------------------------------------------------------

    A national DMEPOS competitive bidding program for mail order 
diabetic testing supplies is scheduled to take effect in 2013. For this 
competition, and future competitions for diabetic testing supplies, the 
definitions of mail order item and non-mail order item set forth in 42 
CFR 414.402 will be used to determine what items will be included in 
the competitions. These definitions are as follows:
     Mail Order Item--Any item shipped or delivered to the 
beneficiary's home, regardless of the method of delivery.
     Non-Mail Order Item--Any item that a beneficiary or 
caregiver picks up

[[Page 38069]]

in person at a local pharmacy or supplier storefront.
    Because annual allowed charges for non-mail order diabetic testing 
supplies are approximately $552 million, this category of items and 
services represents the highest volume category of items or services 
yet to be phased in under the DMEPOS competitive bidding programs. 
Also, based on the results of the competition for mail order diabetic 
testing supplies in nine Competitive Bidding Areas (CBAs) and a review 
of other pricing information for diabetic testing supplies in general, 
we believe the savings potential for non-mail order diabetic testing 
supplies is significant. Although we recognize that there are pricing 
differences between mail order and non-mail order diabetic testing 
supplies because of the delivery methods for these supplies, 
information about the prices of mail order diabetic testing supplies 
can inform the analysis of prices for non-mail order diabetic testing 
supplies because several key cost components are identical for both, 
such as product acquisition costs and administrative costs, including 
claims processing and paperwork costs. In addition to the significant 
program and beneficiary savings that can be generated by lowering the 
payment amounts for non-mail order diabetic testing supplies, adjusting 
the payment amounts for these items to bring them more in line with the 
allowed payment amounts for mail order diabetic testing supplies is 
important for a number of reasons, including the fact that maintaining 
a significant discrepancy between what Medicare pays for mail order 
supplies versus non-mail order supplies may encourage fraud and abuse 
such as billing for mail order supplies as if they were furnished on a 
non-mail order basis. The discrepancy also penalizes beneficiaries who 
choose to obtain their supplies on a non-mail order basis in the form 
of significantly higher coinsurance payments.

C. Use of Inherent Reasonableness Authority To Delay Phase-In of Items 
Under Competitive Bidding

    Rather than phasing in non-mail order diabetic testing supplies 
under the competitive bidding program at this time, we are considering 
an alternative for adjusting the payment amounts for non-mail order 
diabetic testing supplies in the short term using information obtained 
from the local Round One Rebid competitions for mail order supplies and 
other pricing information to establish special payment limits for non-
mail order diabetic testing supplies. We believe that this alternative 
would allow beneficiaries the greatest degree of choice in deciding 
where to obtain their non-mail order diabetic testing supplies as 
suppliers would not have to be awarded contracts to continue furnishing 
these items to Medicare beneficiaries. It also has the potential to 
reduce the significant discrepancy in payment amounts between mail 
order and non-mail order diabetic testing supplies and generate 
beneficiary and program savings sooner than could be achieved through 
competitive bidding. National reductions to the fee schedule amounts 
would reduce the savings potential that could result from application 
of competitive bidding. This would alter the standing of non-mail order 
diabetic testing supplies relative to other items in terms of level of 
priority for phase-in under the competitive bidding program. It is also 
possible that use of the inherent reasonableness authority over time to 
establish special payment limits for non-mail order diabetic testing 
supplies could mean that including these items under the competitive 
bidding program will not be necessary as significant savings would not 
be achieved.
    Because information generated from the local Round One Rebid 
competitions for mail order diabetic testing supplies and information 
about the cost of diabetic testing supplies is available, we believe we 
have the information necessary to determine whether payment amounts for 
non-mail order diabetic testing supplies are grossly excessive and 
should be adjusted using our inherent reasonableness authority. Use of 
the inherent reasonableness authority would delay or eliminate the need 
to have local pharmacies compete and win contracts in order to continue 
furnishing non-mail order diabetic testing supplies to Medicare 
beneficiaries, thereby maintaining the option of obtaining these items 
from any local, enrolled Medicare supplier. Again, given the high 
volume of expenditures for these items, competitive bidding for these 
items would need to be implemented in the near future if the savings 
potential for these items is not lowered through use of the inherent 
reasonableness authority.

II. Meeting Agenda

    The tentative agenda is as follows:
 Sign In
 Opening Remarks
 CMS Presentation Regarding Payment for Non-Mail Order Diabetic 
Testing Supplies
++ Mandate for Competitive Bidding
++ Establishing Special Payment Limits as a Means of Delaying 
Competitive Bidding for These Items
++ Steps of the Inherent Reasonableness Process
 Public Comments
 Closing Remarks

III. Meeting Registration

A. Required Information for Registration

    The following information must be provided when registering:
     Name.
     Company name and address.
     Direct-dial telephone and fax numbers.
     Email address.
     Special needs information.

    A CMS staff member will confirm your registration by email.

B. Registration Process

    All comments will be heard and accepted after the presentation by 
CMS staff is completed until the end of the public meeting. If there 
are comments after the meeting, we will accept written comments until 
the date specified in the DATES section of this notice.

C. Additional Meeting/Registration Information

    This public meeting is scheduled in order to fulfill the 
requirement of section 1842(b)(9)(A) of the Act to consult with 
representatives of suppliers or other individuals who furnish an item 
or service before making a determination under section 1842(b)(8)(B) of 
the Act with regard to that item or service.

IV. Comment Format

A. Oral Comments From Meeting Attendees

    Oral comments will be heard from the meeting attendees during the 
allotted time during the public meeting. Comments should last no longer 
than 10 minutes each to allow as much opportunity for comments from as 
many interested individuals as possible. There will be a sign up during 
the meeting to accommodate oral comments and speakers will be called in 
the order in which they sign up. We encourage anyone providing oral 
comments to also submit their comments in writing.

B. Written Comments From Meeting Attendees

    Written comments will be accepted from the general public and 
meeting registrants until the date specified in the DATES section. 
Comments must be sent to the address specified in the ADDRESSES section 
of this notice. Meeting attendees may also submit their written 
comments at the meeting.

[[Page 38070]]

C. Summary Comments and Responses From Public Meeting

    The summarized comments and responses from the public meeting will 
be provided in the proposed notice for the adjustment of fee-schedule 
amounts for non-mail order diabetic testing supplies.

V. Security, Building, and Parking Guidelines

    The meeting is held within the CMS Complex which is not open to the 
general public. Visitors to the complex are required to show a valid 
U.S. Government issued photo identification, preferably a driver's 
license, at the time of entry. Participants will also be subject to a 
vehicular search before access to the complex is granted. Participants 
not in possession of a valid identification or who are in possession of 
prohibited items will be denied access to the complex. Prohibited items 
on Federal Property include but are not limited to, alcoholic 
beverages, illegal narcotics, dogs or other animals except Seeing Eye 
dogs and other dogs trained to assist the handicapped, explosives, 
firearms or other dangerous weapons (including pocket knives).
    Once cleared for entry to the complex participants will be directed 
to parking by a security officer. In order to ensure expedited entry 
into the building it is recommended that participants have their ID and 
a copy of their written meeting registration confirmation readily 
available and that they do not bring laptops or large/bulky items into 
the building. Participants are reminded that photography on the CMS 
complex is prohibited. CMS has also been declared a tobacco free campus 
and violators are subject to legal action.
    In planning arrival time, we recommend allowing additional time to 
clear security. Individuals who are not registered in advance will not 
be permitted to enter the building and will be unable to attend the 
meeting. The public may not enter the building earlier than 45 minutes 
before the convening of the meeting. Guest access to the complex is 
limited to the meeting area, the main lobby, and the cafeteria. If a 
visitor is found outside of those areas without proper escort they may 
be escorted out of the facility.
    Also be mindful that there will be an opportunity for comment and 
we request that everyone waits for the appropriate time to present 
their opinions. Disruptive behavior will not be tolerated and may 
result in removal from the meetings and escort from the complex. No 
visitor is allowed to attach USB cables, thumb drives or any other 
equipment to any CMS information technology (IT) system or hardware for 
any purpose at anytime. Additionally, CMS staff is prohibited from 
taking such actions on behalf of a visitor or utilizing any removable 
media provided by a visitor.
    We cannot assume responsibility for coordinating the receipt, 
transfer, transport, storage, set-up, safety, or timely arrival of any 
personal belongings or items used for demonstration or to support a 
comment. Special arrangements and approvals are required at least 2 
weeks prior to the public meeting in order to bring pieces of equipment 
or medical devices. These arrangements need to be made with the public 
meeting coordinator. It is possible that certain requests made in 
advance of the public meeting could be denied because of unique safety, 
security or handling issues related to the equipment. A minimum of 2 
weeks is required for approvals and security procedures. Any request 
not submitted at least 2 weeks in advance of the public meeting will be 
denied.
    CMS policy requires that every foreign visitor is assigned a host. 
The host/hosting official is required to inform the Division of 
Critical Infrastructure Protection (DCIP) at least 12 business days in 
advance of any visit by a foreign national visitor. Foreign National 
visitors will be required to produce a valid passport at the time of 
entry. Attendees that are Foreign Nationals need to identify themselves 
as such, and provide the following information for security clearance 
to the public meeting coordinator by the date specified in the DATES 
section of this notice:
     Visitor's full name (as it appears on passport).
     Gender.
     Country of origin and citizenship.
     Biographical data and related information.
     Date of birth.
     Place of birth.
     Passport number.
     Passport issue date.
     Passport expiration date.
     Dates of visits.
     Company name.
     Position/Title.
    Meeting participants should arrive early to allow time to clear 
security and sign-in. The meeting is expected to begin promptly as 
scheduled.

    Authority: Section 1842(b)(9) of the Act.

    Dated: June 19, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 2012-15425 Filed 6-22-12; 4:15 pm]
BILLING CODE 4120-01-P
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