Medicare covers items such as hospital beds, wheelchairs, and blood glucose monitors under its DME benefit because they are specifically included in the Medicare statute’s definition of DME. Other items are covered under the Medicare DME benefit based on CMS’s interpretation of the statute, which does not elaborate on the meaning of “durable.” By regulation, CMS has defined DME as equipment that (1) can withstand repeated use; (2) has an expected lifetime of at least 3 years; (3) is used primarily to serve a medical purpose; (4) is not generally useful in the absence of an illness or injury; and (5) is appropriate for use in the home. Most Medicare beneficiaries enroll in Medicare Part B, which provides coverage for DME if the devices are medically necessary and prescribed by a physician. Medicare beneficiaries typically obtain DME from suppliers, who then submit claims for payment to Medicare on behalf of beneficiaries. CMS contracts with DME MACs to process these claims and ensure proper administration of the DME benefit. Medicare uses three different processes to set the amount it pays for DME. First, the payment amounts for some types of DME are set in a fee schedule that is based on the average charges Medicare allowed during a 12-month period ending June 30, 1987, subject to national floors and ceilings. These historical fee schedule amounts have been updated in some years by a measure of price inflation and a measure of economy- wide productivity. Second, the payments for some DME are set through a competitive bidding program. In that program, qualified DME suppliers with the lowest bids are competitively selected to furnish certain DME product categories to Medicare beneficiaries in designated competitive bidding areas. Third, when CMS classifies a new device on the market as DME, CMS may set the price using the price of a comparable item. If there is no comparable item, then CMS may set the price using the gap- fill methodology. This method takes supplier price lists for the new item and applies a deflation factor to calculate the base-year price—the price for the 12-month period ending June 30, 1987, on which the original fee schedule was based. To then calculate the payment amount, CMS takes the median deflated price and increases it to the current date using the update factors that were applied to the original fee schedule. Similar to the fee schedule, the final price is subject to floors and ceilings. Typically, when a Medicare beneficiary receives DME in conjunction with home health care, the devices are covered, and payments are made, under the DME benefit. However, prior to January 2017, the home health benefit covered disposable negative pressure wound therapy that may substitute for DME as part of the bundled rate CMS pays home health agencies—a single rate for providing treatment and certain related items or services during a 60-day care episode. Beginning in January 2017, the Consolidated Appropriations Act, 2016, unbundled certain disposable negative pressure wound therapy devices that may substitute for DME under the Medicare home health benefit. The act provides for a separate payment for disposable negative pressure wound therapy— meaning it is not part of the bundled payment amount—and sets the reimbursement rate for disposable negative pressure wound therapy equal to the rate used in an outpatient setting, where the device is covered. Furthermore, the act provides separate payment for the disposable negative pressure wound therapy only to beneficiaries who are receiving home health services. We identified a limited number of disposable medical devices that could potentially substitute for DME, based on our literature review and interviews with industry stakeholders. These devices do not necessarily represent a complete list of available disposable devices. Specifically, we identified eight devices that could potentially substitute for DME. These devices fall into existing DME categories used by Medicare—infusion pumps, including insulin pumps; blood glucose monitors; sleep apnea devices; and nebulizers. These disposable DME substitutes vary in life expectancy. For example, some of the substitutes are intended to last a day, while others a year or two. A few of the disposable DME substitutes we identified have been on the market for more than a decade; a couple have become available more recently, in the past 3 to 5 years. We also identified a disposable DME substitute that is currently in development. Infusion pumps. These devices deliver fluids, including medication, into a patient’s body in a controlled manner. In general, a trained technician programs this device, using built-in software, to deliver fluids at specific rates through disposable tubing connected from the device to the patient via a needle. We identified two examples of disposable devices that could potentially substitute for DME—the ambulatory infusion pump and the elastomeric pump. The disposable ambulatory infusion pump has the same characteristics as the DME version, such as being able to deliver fluid at a controlled rate and using a disposable infusion set that is discarded after a single use. However, unlike the durable infusion pump, the ambulatory infusion pump has a life expectancy of 1 year. The disposable elastomeric pump is a single-use device that utilizes a stretchable balloon reservoir that relies on the pressure from the elastic walls of the balloon to deliver a single dose of medication before being discarded. (See fig. 1.) Insulin pumps. These devices are infusion pumps specifically used to deliver insulin to patients with diabetes. The DME version of an insulin pump consists of an insulin reservoir and a pumping mechanism that controls the release of insulin to the patient via a disposable infusion set. We identified two potential disposable substitutes—a completely disposable insulin pump and an insulin pump with both disposable and durable components. The completely disposable insulin pump consists of an adhesive patch containing an insulin reservoir and needle. This patch is attached to the patient’s skin, and a needle is inserted into the skin when a button is pressed, allowing insulin to be delivered throughout the day. This type of insulin pump is intended to last for 24 hours and then be discarded. The other device we identified has both disposable and durable components. This device’s disposable component contains the insulin reservoir, pumping mechanism, and a transmitter sensor in an adhesive patch that is intended to last for 3 days. Its durable component, which is expected to last for 4 years, includes a remote controller that transmits instructions programmed by the patient to the sensor in the patch, which in turn controls the release of insulin via the pumping mechanism. (See fig. 2.) Blood glucose monitor. These devices measure the blood glucose levels in patients. For patients with diabetes, this device provides them with information indicating when an insulin injection is needed. For the DME version of this device, a patient pricks his or her finger, touches the test strip to the blood, and waits for the durable monitor to display a reading on the patient’s blood glucose level. We identified one type of DME substitute. This disposable substitute includes a vial of 50 test strips with a small monitor on the lid. The entire unit is discarded when all of the test strips have been used. (See fig. 3.) Sleep apnea devices. Called continuous positive airway pressure (CPAP) machines, these devices use mild air pressure to keep a patient’s breathing airways open. The DME version of this machine includes a mask or other device that fits over the patient’s nose, and sometimes over the mouth. Straps hold the mask in position and a tube is connected to the machine’s motor, which blows air into the tube. We identified one potential disposable DME substitute on the market and another in development. The first is a disposable valve that fits into a patient’s nose with no mask or associated machine. It is intended to last for one night and then be discarded. The second device is a disposable micro-CPAP still under development. It involves a device that fits into a patient’s nostrils and is intended to last 8 hours and then be discarded. According to the manufacturer, the time limit of 8 hours is linked to the battery life of the device. (See fig. 4.) Nebulizers. These devices allow a patient to receive a drug via inhalation. Nebulizers change liquid medicine into fine droplets (in aerosol or mist form) that are inhaled through a mouthpiece or mask and used to treat conditions, such as asthma. Disposable nebulizers are generally smaller than the DME versions and may last for a year. (See fig. 5.) Over half of the 21 stakeholders we spoke with—including representatives from device manufacturers discussing their specific devices, Medicare beneficiary advocate groups, providers, and insurers— commented on the multiple benefits of substituting DME with disposable devices. The benefits can be categorized into three areas: (1) patient preference and/or improved quality of life, (2) better health outcomes, and (3) potential cost-savings. Specifically, 12 of the 21 stakeholders mentioned patient preference and/or improved quality of life as a benefit of using disposable substitutes. They said that disposable devices are, for example, often lighter and quieter than durable devices. Thus, in some cases, the substitutes may allow patients more freedom of movement and be more discreet. For example, the disposable insulin pumps do not require users to take additional supplies if they leave the house. Further, several stakeholders said that disposable devices are easier to use, such as the elastomeric pump, which one stakeholder explained had fewer opportunities for error. Additionally, 9 of the 21 stakeholders we spoke with said these devices can result in better health outcomes due, in part, to better compliance. For example, one stakeholder for a company that manufactures a disposable DME substitute to treat sleep apnea said the company specifically targeted its device to non-compliant users of the durable CPAP machine. This stakeholder said that while the durable CPAP machine is still considered the “gold standard” for treating obstructive sleep apnea, a significant proportion of patients do not comply with treatment over time.