CMS PROPOSES MEDICARE PART B TO COVER ALL CGMs
Diabetes is a major illness in the U.S. According to a study by the Center for Disease Control (CDC), over 9 million Americans over the age of 65 have diabetes.[1] Another 24.2 million adults older than 65 years of age suffer from prediabetes.[2] The total direct and indirect of cost of diabetes in the U.S. in 2017 was estimated at $327 billion. Although Medicare Part B defrays part of this cost, each year Medicare beneficiaries pay a substantial out-of-pocket sum for managing and treating their diabetes for uncovered Medicare Part B services.
One cost that Medicare Part B does not cover includes payment for purchase/rental and supplies and accessories of non-therapeutic continuous glucose monitors (CGMs). If Medicare beneficiaries use these non-therapeutic devices, they must bear the costs of using them. Center for Medicare & Medicaid Services (CMS) only covers the cost of CGMs if they are considered durable medical equipment (DME). However, under the current classification, CMS does not consider non-therapeutic CGMs DME, because these devices depend on blood glucose monitors to verify their glucose reading. CMS only considers DME and covers the costs for CGMs that Food and Drug Administration (FDA) has approved for diagnosing, managing, or treating diabetes without reliance on other devices such as blood glucose monitors. Notwithstanding the non-coverage of these devices by Medicare Part B, many diabetic patients continue to use the non-therapeutic CGMs to control their diabetes, thus incurring high monthly expenses for purchase/rental and the supplies and accessories of the devices.
In a Proposed Rule, dated November 4, 2020, CMS has proposed to reclassify all non-therapeutic CGMs as DME, thus, qualified for Medicare Part B benefit payment. This minor classification change may not seem significant; however, it will result in substantial cost savings for many Medicare beneficiaries and proves a win for device manufacturers, alike.
Classification of CGMs
There are two types of CGMs: Automatic and manual. In automatic CGMs, the sensor reports the glucose levels from inside the body by automatically sending glucose reading signals to a receiver in the device. The receiver in turn translates the glucose reading signals to glucose measurements and displays them in a graph illustration. In the manual CGM systems the glucose reading signals are transmitted from the sensor on another device (e.g., smartphone) that the patient manually holds over the sensor.
CGMs systems use disposable glucose sensors. When inserted in the skin, a coating that covers the glucose sensor hides it from the body’s immune system. In the current models, the coating lasts about 7 to 14 days requiring periodic disposal and replacement of the sensor.
Under FDA regulations, CGMs are either Class II or Class III devices. Newer CGM models classify as Class II devices and do not require premarket approval by FDA. Class III devices, which require FDA premarket approval, cover older CGM systems.
For purposes of Medicare Part B coverage, CMS separately classifies CGMs under two distinct categories[3]: (a) Therapeutic or non-adjunctive; and, (b) non-therapeutic or adjunctive. Therapeutic/non-adjunctive CGMs qualify as DME (i.e., can be used without relying on readings of a blood glucose monitor (BGM)). Non-therapeutic or adjunctive CGMs require reading verification by BGMs, and thus are not considered covered DMEs.
The DME designation is important because for CMS to pay for devices, they must first be considered DME. Under CMS-1682-R, a CGM system is considered a DME if the equipment:
Is approved by FDA for use in place of a blood glucose monitor for making diabetes treatment decisions (for example, changes in diet and insulin dosage);
Generally is not useful to the individual in the absence of an illness or injury;
Is appropriate for use in the home; and
Includes a durable component (a component that CMS determines can withstand repeated use and has an expected lifetime of at least 3 years) that is capable of displaying the trending of the continuous glucose measurements.
Some CGMs are also considered multicomponent devices, comprising of three main components: a disposable glucose sensor, a receiver, and a display. Multicomponent devices generally comprise of durable and non-durable components. For determining whether a CGM multicomponent device satisfies the definition of DME, such as meeting the minimum lifetime of 3 years requirement (MLR), the component which performs the medically necessary function of the device must be durable. If the component that performs the medically necessary function is nondurable, the device does not meet the definition of DME, even if other device components are durable.
Reasons and Justifications for Reclassification of CGMs
The idea that therapeutic CGMs are covered DME was settled in CMS-1682-R. CMS-1682-R further addressed the calculation of the fee schedule amounts for therapeutic CGMs as DME. In the Proposed Rule, CMS revisits the question of whether CGMs (both therapeutic and non-therapeutic) qualify as covered DME, with the focus on proving that non-therapeutic CGMs, and their accessories and supplies satisfy the five requirements of the definition of DME under 42 CFR 414.202.
According to CMS, beneficiaries increasingly are using non-therapeutic CGMs to help manage their diabetes, and are paying large out-of-pocket sums for this use. Beneficiaries are also submitting claims for reimbursement for the use of this equipment and its related supplies and accessories. Although, CMS continues to deny these claims in accordance with the current classification of non-therapeutic CGMs as non-DME, in court cases, CMS has not been successful in maintaining the argument that non-therapeutic devices are not primarily and customarily used to serve a medical purpose.
Therefore, a combination of increased use and high cost of purchase/rent, supplies and accessories of these devices combined with court rulings that non-therapeutic devices meet the DME definition, CMS was prompted propose a review of the current classification of CGMs as covered DME.
CMS Application of DME Definition to CGMs[4]
According to CMS, both therapeutic and non-therapeutic CGM systems satisfy the first requirement of the DME definition (i.e., ability to withstand repeated use). This is because the receiver components in both therapeutic and non-therapeutic CGMs perform the primary medical function of self-monitoring glucose levels and is capable of repeated use. CMS pointed to the fact that the receiver can withstand repeated use, because CGMs can be rented and used by successive patients to monitor the trending of glucose levels that are either transmitted to the device using disposable sensors or are read or received by the device when the patient holds the device near the sensor.
CMS also concluded that both therapeutic and non-therapeutic CGM systems satisfy the second requirement of the DME definition (i.e., expected life of at least 3 years). The receiver, according to CMS, is the component which performs the medically necessary function in both CGM classes II and III and lasts at least 3 years, according to a reliability analysis data the receiver component of one manufacturer CGM system.
One important change in this Proposed Rule is CMS’s position on whether non-therapeutic CGM systems meet the third prong of the DME definition (i.e., primarily and customarily used to serve a medical purpose). Previously, under CMS-1682-R, CMS had determined that non-therapeutic CGMs are not primarily and customarily used to serve a medical purpose, because they rely on a secondary device for verification of glucose level readings. Beneficiaries have successfully challenged this notion in the courts[5] by showing that non-therapeutic CGMs are used to alert patients about potentially dangerous glucose levels while they sleep. When patients sleep, they do not use a blood glucose monitor. Further, CMS now agrees that these CGMs serve a medical purpose by helping patients to avoid potential episodes of hypoglycemia or hyperglycemia, despite the fact that fingerstick blood glucose verification is still required for use in making diabetes treatment decisions.[6]
With respect to the fourth prong of the DME definition (generally not useful to a person in the absence of an illness or injury), CMS maintains that both therapeutic and non-therapeutic CGM systems are generally not useful to a person in the absence of an illness or injury. CMS had previously concluded that therapeutic CGMs that connect with smartphones satisfy the definition of DME because the durable receiver, used as backup, was not useful to a person in the absence of an illness or injury. Of course, Medicare Part B would not cover the smartphone, but only the CGM device. In this Proposed Rule, CMS extends the same argument to non-therapeutic CGM systems.
Finally, with respect to the fifth requirement of the DME definition (appropriate for use in the home), CMS maintains that FDA approval of both devices for use at home is sufficient to satisfy this prong.
Medicare Coverage of CGMs
Since 2017, Medicare Part B has covered the cost of purchase/rental and supplies and accessories of therapeutic CGMs. In this Proposed Rule, CMS proposes to fully cover the cost of purchase/rental of non-therapeutic CGMs while only “partially” covering the cost of their respective supplies and accessories. Although only a partial coverage, the Proposed Rule offers reimburses of a substantial portion of the costs for supplies and accessories of non-therapeutic CGMs.
In determining payment for purchase/rental of CGMs (not including supplies and accessories), CMS treats the devices as merely newer versions of BGMs. Because CGMs are merely newer version of BGMs and patients employ them in managing and treating diabetes, for purchase and rent of devices, CMS applied the same payment methodology to CGM as it has applied to BGM systems.
Payment for BGMs has a long evolutionary history and it parallels the technological advances in the BGM systems and their availability for home use. Looking back, CMS began covering BGMs for type I diabetes in early 1980’s. Omnibus Budget Reconciliation Act of 1987 was the first set of regulations that solidified reimbursement of devices as DME. And it was not until 1997 that coverage was expanded for type II diabetes.
The Omnibus Budget Reconciliation Act (OBRA)[7] of 1987 set forth special payment rules for DME furnished on or after January 1, 1989.[8] The new special payment rules, which still govern payment for items and services furnished in areas that are not included in the competitive bidding program, classified DME between six different categories. Pursuant to sections 1834(a)(2)(i) and (ii) of the special payment rule, Medicare pays for the rent or purchase of an inexpensive equipment having a price not exceeding $150 or a “routinely purchased equipment” – one which was acquired by purchase on a national basis at least 75 percent of the time during the period of July 1986 through June 1987.[9] BGMs were considered expensive equipment within the meaning of sections 1834(a)(2) of the Act but “routinely purchased equipment” during the period of 1986 through June 1987.
The current Medicare payment rules for blood glucose monitors and other DME are located at section 1834(a) of the Social Security Act (the Act) and mandate payment on the basis of fee schedule amounts beginning in 1989. For instance, to calculate payment amounts for blood glucose monitors, classified as “routinely purchased equipment” subject to the payment rules for inexpensive and routinely purchased DME[10], CMS first determines a base fee schedule and then adjusts the fee schedule on an annual basis according to the factors in section 1834(a)(14) of the Act. In 1995, CMS revised the fee schedule amounts relating to blood glucose monitors using special payment limits established in accordance with the “inherent reasonableness” authority at section 1842(s)(8) of the Act.[11]
In determining coverage for CGMs, CMS’s piggybacks on the already established BGM payment methodology and proposes to continue applying the fee schedules established in CMS-1628-R based on the updated 1986/87 average reasonable charges[12] related to BCGs. Accordingly, CMS considers CGMs as routinely purchased equipment subject to reasonable charge data for BGM. It should be noted that CMS does not use the 1995 revised fee schedules, because the special payment limits established in 1995 were based on specific pricing information on the cost of blood glucose monitors which do not apply to CGM pricing. As it stands in the 2020 fee schedule, reimbursement for class III therapeutic CGM receivers is from $231.77 to $272.63, and payment for class II therapeutic CGM receivers is from $208.76 to $245.59. CMS now proposes to apply this fee schedule to purchase/rental of all non-therapeutic CGMs, as well.
With respect to supplies and accessories of CGMs, however, CMS takes a different view and maintains that the cost, lifetimes, and types of supplies and accessories used by CGMs are significantly different from those of BGMs. Namely, some sensors last for 7 days while others last for 14 days, some CGM systems require certain additional accessories such as transmitters or additional supplies such as calibration supplies while others do not. Additionally, the market cost of supplies and accessories of CGMs vary greatly depending on the three types of CGM currently in the market: therapeutic CGMs, automatic non-therapeutic CGMs and manual non-therapeutic CGMs. Because of the foregoing differences, in covering supplies and accessories for CGM systems, CMS would not apply the 1986/87 average reasonable charges methodology.
The current 2020 monthly fee schedule for supplies and accessories for therapeutic CGM systems covers payments of $222.77 for supplies and accessories of class II, and $259.20 for supplies and accessories of class III CGMs. However, this fee schedule was developed based on cost of supplies and accessories of therapeutic class II and III CGMs and should be applied to cover supplies and accessories of non-therapeutic CGMs.
CMS has determined a completely different 2020 monthly fee schedule for supplies and accessories of non-therapeutic CGMs based on supplier invoices and other prices for supplies and accessories used with class II or class III non-therapeutic CGMs. For automatic non-therapeutic CGMs, CMS proposes a 2020 monthly fee schedule payment of $209.97 for supplies and accessories of class II and $233.12 for class III devices. For manual non-therapeutic CGMs, CMS proposes a 2020 monthly fee schedule payment of $46.86 for class II and $52.01 for class III devices.
As it relates to supplies and accessories of non-therapeutic CGMs, CMS has further determined that Medicare will essentially incur duplicate charges if it covers the cost of supplies and accessories for non-therapeutic CGMs, which rely on a blood glucose monitor verification. The double charges are possible because if Medicare covers the entire cost of supplies and accessories of non-therapeutic CGMs, Medicare will essentially pay for supplies and accessories of non-therapeutic CGMs and then again pay for supplies and accessories of BGM. To avoid the duplicate coverages, CMS proposes to employ the fee schedule amounts for supplies and accessories of non-therapeutic CGMs but subtract the fee schedule amounts for the average quantity and types of blood glucose monitoring supplies used by qualified insulin-treated beneficiaries using non-therapeutic CGMs.
Illustrated in an example, assume a Medicare beneficiary uses a class II non-therapeutic device to manage her diabetes. Here, the patient will have to pay a monthly fee for supplies and accessories of a class II non-therapeutic CGM and supplies of a BGM to verity the readings of the CGM. In 2020, CMS pays a monthly allowance of $34.35 for insulin-treated diabetic beneficiary to cover the cost of supplies of a BGM. Under the new 2020 fee schedule for class II non-therapeutic CGM, the beneficiary is also eligible for receiving payment for the supplies and accessories of the class II CGM at $209.97 per month. In the instances where the beneficiary is utilizing both the CGM and a BGM, the monthly allowance for supplies of the class II non-therapeutic CGM will be subtracted by the monthly allowance for the BGM supplies: $209.97 - $34.35 = $175.62. Accordingly, the monthly allowance for class II non-therapeutic CGM supplies is $175.62.
Conclusion
All the advances in modern medicine make us forget our ancestral perils in diagnosing diabetes. Without fancy gadgets physicians relied on simple low-tech methods to diagnose diabetes, such as by utilizing a urine tasting chart. We are fortunate to exist at a time with significant technological advances in diagnosing and treating diabetes and government assistance to facilitate access to these advances.
Medicare began covering devices for diagnosis, monitoring and treatment of diabetes as early as the 1980s. This was merely 15 years after scientists developed the first blood glucose testing devices. Today, Medicare has swiftly moved to cover advanced blood glucose monitoring devices that are more effective in diagnosing and managing the treatment of diabetes, such as continuous glucose monitors (developed in 2017).
CMS’s current proposed reclassification of CGM systems continues to achieve the goal of access to effective technology and would relieve financial burden on many beneficiaries patients who use non-therapeutic CGMs to be reimbursed for the costs of purchase/rental and supplies and accessories of these life changing devices. These new changes, although negligible at first glance, can have significant impact in the financial situation of many patients who suffer with diabetes. In some instances, where patients are paying over $200 per month out-of-pocket, this slight reclassification may save Medicare Part B beneficiaries $175 per month, for a total saving of over $2000 per year.
[1] National Diabetes Statistics Report 2020: estimates of diabetes and its burden in the United States – downloaded on November 13, 2020 at https://www.cdc.gov/diabetes/pdfs/data/statistics/national-diabetes-statistics-report.pdf
[2] Id.
[3] See, CMS-1682-R: https://www.cms.gov/Regulations-and-Guidance/Guidance/Rulings/CMS-Rulings
[4] See, CMS-1738-P
[5] See, e.g., Finigan v. Burwell, 189 F. Supp. 3d 201 (D. Mass. 2016); Whitcomb v. Hargan, Case No. 17-cv-14, 2017 U.S. Dist. LEXIS 216571 (E.D. Wis. Oct. 26, 2017); Lewis v. Azar, 308 F. Supp. 3d 574 (D. Mass. 2018).
[6] See, CMS-1738-P
[7] Pub. L. 100-203
[8] Section 1834(a) to the Act
[9] 42 CFR 414.220(a)(2)
[10] See, section 1834(a)(2) of the Act
[11] See, the final notice (BPD-778-FN) published in the January 17, 1995 Federal Register (60 FR 3405)
[12] Since 1989, Medicare has paid for DME on a reasonable charge basis. See, 42 CFR part 405, subpart E for implementation of the reasonable charge payment methodology
