Proposed Rule on 'Durable' Definition Could Be Trouble

WASHINGTON — A proposed rule to redefine "durable" medical equipment could mean more trouble for the industry, according to attorneys with King & Spalding, who warn that it is "sweeping in scope" and could reduce the number of DME products CMS covers.

On July 1, the agency released a proposed rule that would require DME to have "an expected life of at least three years," which on its face, seems innocuous since DME is already generally expected to last for at least five years. The new requirement would apply only to items classified as DME after a final rule takes effect.

However, said Jeffrey S. Bucholtz, an attorney with King & Spalding's FDA and Life Sciences practice group, "I think the rule could be quite problematic for home medical equipment providers."

In an alert issued to its clients, the law firm said the rule "would establish a specific time component to the regulation that has not existed in the past. Arguably, the prospective universe of products that would meet the definition of 'durable' would narrow significantly under CMS' proposed rule."

For some months, the law firm noted, CMS has been evaluating DME categories to determine if they meet the definition of "durable." According to the alert, the agency "is using the proposed rule to redefine the term 'durable,' presumably in an attempt to address legal vulnerabilities arising from several Medicare contractor determinations made earlier this year."

The King & Spalding alert also pointed to other issues that could adversely affect the HME community:

• Existing technology and DME that meet the agency's old definition would presumably continue to be covered while virtually identical products classified as DME or approved/cleared by the Food and Drug Administration would be excluded.

• The proposed rule raises questions as to whether CMS will exclude additional devices as being non-durable prior to the final rule and whether it will overturn some of its recent DME decisions excluding from coverage certain devices deemed not to have long enough useful lives.

• CMS does not provide any details as to how it will handle products that evolve or improve their functionality.

"The proposed rule says it would be prospective only, but it's not clear how that would really work," said Bucholtz. "For example, if a manufacturer takes a covered product and makes modifications to improve it, does that mean it has to go through a new coverage determination under the new rules?"

Bucholtz said the proposed rule could be an attempt by CMS to cut back on the number of products for which it reimburses HME providers.

"CMS denies in the proposed rule that it is attempting to cut back on DME coverage — it says it's merely codifying the standard it has been applying all along — but that's not persuasive," Bucholtz said. "If that were really true, CMS probably wouldn't go to the trouble of promulgating a rule. In the real world, it seems clear that this proposal is part of an effort to cut back on coverage."

The Center for Regulatory Effectiveness, a Washington watchdog organization, also raised the question.

"Could CMS be undertaking rulemaking to try and exclude certain types of DME from Medicare altogether?" the CRE asked in a post on its website. "It's not clear. Nor is it clear what the implications would be for Medicare beneficiaries if any types of DME were excluded."

While the proposed rule does not "explicitly modify the coverage rules for 'attendant supplies' that are necessary for the use of DME," according to the King & Spalding alert, it does raise questions about devices that consist of both durable and non-durable components and whether they would be covered by Medicare.

The law firm said CMS has asked for comments on three specific options:

• 1. Applying the three-year lifetime standard to the component(s) that perform the entire medically necessary function of the device;

• 2. Applying the three-year lifetime standard to the component(s) that perform a vital part of the medically necessary function of the device; and

• 3. Considering a device/system to be durable only if the cost of the durable component(s) over a period of time (for example, five years) makes up greater than 50 percent of the overall cost of the device/system over the same period.

CMS is taking comments on the proposed rule until Aug. 30 and plans to issue a final rule Nov. 1.

Read the proposed rule