Medicare and Medicaid Programs; Calendar Year 2026 Home Health Prospective Payment System (HH PPS) Rate Update; Requirements for the HH Quality Reporting Program and the HH Value-Based Purchasing Expanded Model; Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program Updates; DMEPOS Accreditation Requirements; Provider Enrollment; and Other Medicare and Medicaid Policies

Because CGMs and insulin infusion pumps are subject to rapid technological change, requiring frequent and substantial servicing, we proposed to reclassify all CGMs and infusion pumps under the frequent and substantial servicing payment category at section 1834(a)(3) of the Act, as implemented under Sec. [thinsp]414.222(a). CMS would pay for all CGMs and insulin infusion pumps on a monthly rental basis under both the DMEPOS CBP, and in non-CBAs under the fee schedule payments. The monthly rental payments would include payment for any necessary supplies and accessories. As further discussed later in this section, this would be a departure from how these items are currently paid under the Medicare DMEPOS fee schedule. Under the Medicare DMEPOS fee schedule, we typically pay for the purchase of CGMs, which are classified as routinely purchased equipment. Payment for insulin pumps is made on a capped rental basis, with beneficiaries taking over ownership of the pump after rental payments are made for 13 months of continuous use. In addition, we proposed to allow contract suppliers to bill for up to 3 months of rental for these items in advance.

Class III devices are statutorily excluded from the DMEPOS CBP per section 1847(a)(2)(A) of the Act. Because certain brands of insulin infusion pumps are used in conjunction with class III CGMs, we proposed that insulin infusion pumps used in conjunction with class III CGMs would also be excluded from the DMEPOS CBP. We want to avoid a situation where Medicare payments for class III CGMs and insulin infusion pumps used in conjunction with class III CGMs are grossly excessive compared to Medicare payments for class II CGMs and insulin pumps that are not used in conjunction with class III CGMs. To avoid this, we proposed that once class II CGMs and insulin infusion pumps are phased into the DMEPOS CBP, if the rental fee schedule amounts for class III CGMs and insulin infusion pumps used in conjunction with class III CGMs are more than 15 percent higher than the SPAs established for class II CGMs and insulin infusion pumps under the DMEPOS CBP, then we proposed that we would adjust the fee schedule amounts for class III CGMs and insulin infusion pumps used in conjunction with class III CGMs to be equal to the SPAs established for class II CGMs and insulin infusion pumps under the DMEPOS CBP in accordance with the process described in 42 CFR 405.502.

We solicited comments on these proposals. 1. Background

The Medicare Part B benefit for DME is primarily a benefit for rental of durable medical equipment such as wheelchairs, hospital beds, oxygen equipment, and ventilators for use in the beneficiary's home, including certain institutions used as the beneficiary's home. Various statutory payment provisions that added an option to purchase certain DME in lieu of rental or that cap total rental payments after a certain number of months or when total payments equal the purchase price for the equipment were phased in beginning in 1968. These statutory rules were intended to save money for the beneficiary and the Medicare program in cases where DME

is needed on a long-term basis. However, we are concerned that two types of DME--CGMs and insulin infusion pumps--are classified under statutory provisions that limit beneficiary choice and access to newer technology, thereby limiting options for beneficiaries to improve their health and not accounting for the frequent and substantial servicing these devices require.

Medicare payment for CGM receivers can be made on a lump sum purchase basis or a monthly rental basis, although most Medicare beneficiaries receive the items on a purchase basis. Medicare pays for CGM receivers classified by the Food and Drug Administration (FDA) as class II or class III devices under the Federal Food, Drug, and Cosmetic Act. CGM systems can only be classified under class II if they can meet the requirements to be an integrated CGM system in accordance with Federal regulations at 21 CFR Sec. 862.1355. Class III CGMs are not accurate enough to be classified as an integrated CGM system.

The 2025 average Medicare fee schedule amount for purchase of a new, class II CGM receiver is $286.03. In addition to receiving payment for the purchase of the CGM receiver, suppliers are allowed to bill for replacement supplies necessary for the operation of the CGM every 90 days for a payment of $803.76 for supplies used with class II CGMs, with total payments for the ongoing replacement of supplies accounting for over 98 percent of the total CGM costs over 5 years. CMS issued program instructions on October 19, 2023 (Transmittal 12303; Change Request 13397) instructing Medicare Administrative Contractors (MAC) to allow CGM supplies to be billed in 90 day increments to align with longstanding practices in place for blood glucose monitors. In addition, the DME MAC Local Coverage Determinations for external infusion pumps allow suppliers to dispense up to 3 months of supplies at a time: https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?LCDId=33794.

Medicare payment for insulin infusion pumps is made on a capped rental basis, with beneficiaries taking ownership of the pump after rental payments are made for 13 months of continuous use. The rental payments over 13 months add up to $5,702.34 for insulin pumps furnished in nonrural areas (metropolitan statistical areas) and $5,926.87 for insulin pumps furnished in other, rural areas and non-contiguous areas of the United States (Alaska, Hawaii, Puerto Rico, etc.). In addition to receiving payment for rental of the insulin pump, suppliers are allowed to bill for replacement supplies necessary for the operation of the insulin pump every 90 days for a payment of approximately $403.68 for nonrural areas and $447.06 for rural and non-contiguous areas, with total payments for the ongoing replacement of supplies accounting for 60 percent of the total insulin pump costs, not including the cost of insulin, over 5 years.

In accordance with the payment rules for DME under section 1834(a) of the Act, DME items are classified under six different payment classes with different payment rules under section 1834(a)(2) through (7) of the Act, added by section 4062(b) of the Omnibus Budget Reconciliation Act (OBRA) of 1987 (Pub. L.100-203). In accordance with section 1834(a)(2)(A)(ii) of the Act and regulations at 42 CFR 414.220(a)(2), equipment that was acquired by purchase on a national basis at least 75 percent of the time during the period July 1986 through June 1987 is considered routinely purchased equipment and can be paid on a rental or lump-sum purchase basis in accordance with the rules at section 1834(a)(2) of the Act and regulations at 42 CFR 414.220, but total payments for the equipment cannot exceed the purchase price for the item. Therefore, if the equipment is rented, the rental payments would cap at the point where total rental payments equal the Medicare fee schedule amount for purchase of the item. Although Medicare did not start covering CGMs until 2017, blood glucose monitors, predecessors to the CGM, were acquired by purchase on a national basis more than 90 percent of the time during the period July 1986 through June 1987. As part of the final rule entitled “Medicare Program; Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Policy Issues, and Level II of the Healthcare Common Procedure Coding System (HCPCS); DME Interim Pricing in the CARES Act; Durable Medical Equipment Fee Schedule Adjustments To Resume the Transitional 50/50 Blended Rates To Provide Relief in Rural Areas and Non-Contiguous Areas,” published on December 28, 2021, CGMs were classified as routinely purchased equipment (86 FR 73900).

Since Medicare did not start covering insulin infusion pumps until 1994, they also were not acquired by purchase on a national basis at least 75 percent of the time during the period July 1986 through June 1987. Other types of external infusion pumps that were covered as DME during the period July 1986 through June 1987 were not acquired by purchase on a national basis at least 75 percent of the time. Therefore, insulin infusion pumps are not classified as routinely purchased equipment in accordance with the statute and regulations and are not inexpensive equipment which can be paid in accordance with the rules at section 1834(a)(2) of the Act and regulations at 42 CFR 414.220. As such, insulin infusion pumps are classified as other covered items of DME and paid for in accordance with the capped rental payment rules at sections 1834(a)(7) and (8) of the Act and regulations at 42 CFR 414.229. Medicare pays a monthly rental amount for capped rental items for a period not to exceed 13 months of continuous use. “Continuous use” is defined in regulations at 42 CFR 414.230. After the 13-month capped rental period is over, the title to the equipment transfers to the beneficiary. In the case of both CGMs and insulin infusion pumps, Medicare makes separate payments on a purchase basis for supplies necessary for the effective use of the CGM or insulin infusion pump using fee schedule amounts calculated in accordance with section 1834(a)(6) and (8) of the Act.

Other than customized items of DME paid for in accordance with section 1834(a)(4) of the Act and regulations at 42 CFR 414.224 and oxygen and oxygen equipment paid for in accordance with section 1834(a)(5) and (9) of the Act and regulations at 42 CFR 414.226, CMS may classify an item as DME requiring frequent and substantial servicing paid for in accordance with section 1834(a)(3) of the Act and regulations at 42 CFR 414.222 if the item requires frequent and substantial servicing in order to avoid risk to the patient's health. Payment for items falling under this class are made on a monthly rental basis, with rental payments continuing as long as coverage of the equipment under Part B continues and the equipment is being used in the home. The monthly rental amount includes payment for rental of the equipment, including maintenance and servicing of the equipment, and replacement of supplies and accessories necessary for the effective use of the DME. Separate payment is not allowed for supplies and accessories for items falling under this payment class.

We believe payment for CGMs and insulin infusion pumps should be on a continuous rental basis like other DME items requiring frequent and substantial servicing. The class of DME items requiring frequent and substantial servicing is described on page 392 of the House of Representatives Committee on the Budget Report 100-391 that

accompanied OBRA 87 as items “that are technologically sophisticated and require frequent monitoring or adjustment in order to make sure they are functioning properly or being properly utilized by the patient. They are also typically quite expensive to purchase and often subject to relatively rapid technological change.” As we discuss in greater detail later in this section, CGMs and insulin infusion pumps are subject to rapid technological change and require frequent servicing by the supplier. 2. Current Issues

While Medicare beneficiaries enrolled under Part B who use CGM equipment generally use it on a long-term basis, making purchase of the equipment seem more practical than rental, the ongoing need to purchase replacement supplies for the equipment continues, and, in accordance with current regulations at 42 CFR 414.210(f)(1), the beneficiary is not able to obtain new, replacement CGMs or insulin pumps for 5 years unless the equipment is lost, stolen, or irreparably damaged. The technology for CGMs and insulin infusion pumps is rapidly evolving to be more accurate and to work in tandem, with combination CGM/insulin pump systems that regulate the administration of insulin based on patient need and even in anticipation of a patient's need. The American Diabetes Association (ADA) has also noted that diabetes technology is rapidly changing, but there is no “one-size-fits-all” approach to technology use in people with diabetes. Per the ADA, insurance coverage can lag behind device availability, patient interest in devices and willingness to change can vary, and providers may have trouble keeping up with newly released technology.\78\

\78\ https://diabetes.org/sites/default/files/2023-09/dc22s007.pdf.

We believe that the technology for CGMs and insulin infusion pumps, which are often used in conjunction with CGMs, will continue to change very rapidly in future years. In the CY 2022 DMEPOS final rule, commenters noted the rapid pace in changes in technology for CGMs and diabetes equipment in general. We discussed how glucose monitoring technology is changing rapidly, and the Medicare fee schedule amounts for this equipment should not be limited solely to the technology that is currently on the market (86 FR 73901). Rickson et al. (2023) have noted that 17 new CGM devices have been introduced to the market during the past decade.\79\ Rickson et al. (2023) have also noted that the time between innovation and market launch for diabetes technologies is relatively short. New models with new features come onto the market often and physicians who treat patients with diabetes are frequently monitoring the patient's needs and whether they are properly utilizing their glucose monitoring and insulin infusion equipment. CGMs are used to alert the patient about dangerous glucose levels and to set insulin delivery rates or shut off insulin delivery via their infusion pumps, if necessary. Thus, it is vital that patients are using equipment with the latest features and technology to ensure that the measuring and displaying of glucose levels is as accurate as possible, so that the best information is available for both patient activated and equipment activated changes in diet and insulin.

\79\ https://pubmed.ncbi.nlm.nih.gov/37306447/.

Both CGMs and insulin pumps require software updates to ensure they are functioning properly and are protected from hacking or cyberattacks. Klonoff (2019) has noted the need for diabetes devices to meet established, sound security baselines in design and throughout the product's lifecycle.\80\ Klonoff (2015) also notes that everything about the importance of robust cybersecurity that is true for medical devices in general is particularly true for diabetes devices. Thus, software updates are often necessary to ensure the cybersecurity of diabetes devices and prevent adverse events.\81\ The FDA, for instance, in 2019 warned patients and health care providers that certain insulin pumps were being recalled due to potential cybersecurity risks, and recommended that patients using these models switch their insulin pump to models better equipped to protect against these potential risks.\82\ The FDA noted that the cybersecurity vulnerabilities could allow a person to over deliver insulin to a patient, leading to low blood sugar (hypoglycemia), or to stop insulin delivery, leading to high blood sugar and diabetic ketoacidosis (a buildup of acids in the blood). For this recall, the manufacturer did not update the software, and instead opted to replace the device. However, Klonoff (2019) noted in response to this recall that insulin pump manufacturers should carefully review the cybersecurity of their products already on the market and provide software patches or updates when possible. Klonoff (2015) notes that patients with diabetes have a special need for impeccable data fidelity when they access their current glucose levels, glucose trend data, predictive data, insulin dosing records, hypoglycemia alerts, hyperglycemia alerts, blood pressure records, calorie information exercise records, and various reminders and timely notifications.

\80\ https://pmc.ncbi.nlm.nih.gov/articles/PMC6955451/.

\81\ https://pmc.ncbi.nlm.nih.gov/articles/PMC4667325/.

\82\ https://www.fda.gov/news-events/press-announcements/fda-warns-patients-and-health-care-providers-about-potential-cybersecurity-concerns-certain.

If beneficiaries are using rented CGM and/or insulin pump equipment, then the supplier of the rented equipment is responsible for making sure the equipment has the latest software updates and that the beneficiary is educated on how to use any updated software or features on the rented equipment. As the technology for these devices is rapidly changing and becoming more complex, beneficiaries may require more technical support from their supplier for any hardware or software issues. If either a CGM or insulin pump were to malfunction, for example provide inaccurate glucose measurements or insulin dosage, it would present an immediate health risk requiring urgent intervention. Suppliers of CGMs and insulin pumps must also adhere to frequent supply delivery schedules, as the supplies for these devices require frequent replacement so beneficiaries can maintain proper use of their equipment. Thus, we believe it is in the best interest of the beneficiary to classify CGMs and insulin pumps as items requiring frequent and substantial servicing.

We also believe that classifying CGMs and insulin pumps as items requiring frequent and substantial servicing, which would pay on a monthly rental basis in accordance with section 1834(a)(3) of the Act under the fee schedule payment rules and under the DMEPOS CBP in accordance with regulations at 42 CFR 414.408(h)(8) and (j)(2)(iii), would have the additional benefit of allowing greater access to the latest technology equipment. This would eliminate beneficiary-ownership of the CGMs or insulin pumps for new patients but allow flexibility to switch to newer technology equipment and supplies more often than once every 5 years. The beneficiary would no longer be locked into the same CGM device or insulin pump technology for 5 years. Moreover, this would prevent the concerning scenario where beneficiaries rely on CGM or insulin pump technology that has lost manufacturer support, resulting in reduced software updates, discontinued security patches, or obsolete components. Such outdated technology poses significant risks to patient safety, data security, and

therapeutic efficacy. By reclassifying these devices under the frequent and substantial servicing payment class, Medicare would ensure beneficiaries maintain access to current, fully supported technology that meets evolving safety and performance standards, which could ultimately reduce the potential for outdated device complications. The contract supplier of the rented equipment would be responsible for updating the software (including supporting the beneficiary with appropriately updating the software) and performing any other necessary maintenance and servicing of the equipment. The contract supplier would also be responsible for addressing recalls of the rented equipment and furnishing replacement equipment as necessary. As evidenced previously, the risk of recalls for this technology is real and serious if it were to occur. Under the DMEPOS CBP, the contract supplier would be required to furnish the CGM receiver or insulin pump ordered by the beneficiary's physician for use in treating diabetes, with the physician now being able to order changes in the equipment more frequently so that the beneficiary is able to take advantage of the latest equipment features and technology for managing diabetes. Over 98 percent of the cost of the CGM over 5 years is attributed to the frequent replacement of supplies and over 70 percent of the cost of the insulin pump over 5 years is attributed to the frequent replacement of supplies.

As discussed in section VII.F. of the preamble of this final rule, these items are currently delivered to beneficiaries from remote supplier locations that on average are hundreds of miles from the beneficiary's residence. In this section of the preamble of this final rule, we proposed to establish a nationwide or regional CBP(s) for items such as CGMs and insulin pumps that may be phased in under future competitions. We proposed to phase in payment on a monthly rental basis for CGMs and insulin pumps and all related supplies and accessories under the DMEPOS CBP. The monthly rental payments would continue as long as Medicare Part B coverage for the items continue. We proposed to amend 42 CFR 414.412(b) to establish bid limits for CGMs and insulin infusion pumps for the first time they are phased in as the lead item in a product category under a nationwide or regional CBA(s). For CGMs, we proposed that the bids submitted for rental of CGMs included as a lead item in a product category in a RID CBP for the first time cannot exceed the payment amount that would otherwise apply to the supplies for the CGM under subpart D of this part plus the average of the purchase fee schedule amounts that would otherwise apply to the CGM for the areas included in the RID CBP divided by 60 for the number of months over a 5-year period because the purchase fee schedule amount for the CGM receiver would cover use of the device for 5 years. Using 2025 fee schedule amounts to demonstrate how the bid limits would be calculated, for a nationwide CBP, the monthly fee schedule amount for the supplies for a non-adjunctive CGM (HCPCS level II code A4239) is $267.92. The average of the 2025 fee schedule amounts for the purchase of a new, non-adjunctive CGM (HCPCS level II code E2103) with a reasonable useful lifetime of 5 years is $286.03, which when divided by 60 generates a monthly payment of $4.77. The 2025 bid limit for the bundled nationwide monthly rental payment for non-adjunctive, class II CGMs would therefore be $272.69 ($267.92 + $4.77). Bidding entities competing to be a nationwide contract supplier for these items and other items in the same product category would need to submit bids that are lower than the bid limit ($272.69 in this example) to be considered. Not factoring in reduced pricing under the DMEPOS CBP, beneficiary coinsurance payments would be the same as they are now for the CGM receiver and monthly supplies, but the coinsurance payments for the CGM receiver would now be lower and spread out over 60 months rather than paid all at once in one lump sum.

Insulin infusion pumps were included under the DMEPOS CBP in nine CBAs from 2014 through 2016 as part of the product category for external infusion pumps. The fee schedule amounts for insulin infusion pumps and related supplies and accessories are adjusted based on the prices established under this round of the DMEPOS CBP. In accordance with current regulations at 42 CFR 414.210(g)(3), the fee schedule amounts for nonrural areas within the contiguous United States are adjusted based on 110 percent of the unweighted average of the nine SPAs in effect in 2016, which are updated on an annual basis in accordance with inflation update factors specified under 42 CFR 414.210(g)(4). The current nonrural 2025 fee schedule amount for rental of an insulin infusion pump (HCPCS level II code E0784) is $543.08. The current nonrural 2025 fee schedule amount for the weekly supplies for an insulin infusion pump (HCPCS level II code A4224) is $25.19, and the current nonrural 2025 fee schedule amount for one sterile syringe type cartridge supply for an insulin infusion pump (HCPCS level II code A4225) is $3.38. By comparison, the 2025 adjusted fee schedule amounts for these items when furnished to beneficiaries in rural areas within the contiguous United States and areas outside the contiguous United States are much higher. The average of the 2025 fee schedule amounts for these areas is $565.51 for HCPCS level II code E0784, $28.50 for HCPCS level II code A4224, and $3.54 for HCPCS level II code A4225. The higher fee schedule amounts established for these areas in accordance with regulations at 42 CFR 414.210(g)(2)(ii) and (iii) account for higher costs of suppliers furnishing items in these areas. However, these items are being furnished mostly by mail to beneficiaries across the nation from remote supplier locations. The cost of shipping an item from a remote location to a beneficiary residing in a rural area is typically no higher than the cost of shipping an item from a remote location to a beneficiary residing in a nonrural area. Additional shipping and handling costs may be incurred in some cases for items that are shipped to an area outside the contiguous United States such as Alaska, Hawaii, or Puerto Rico, but there are very few beneficiaries living in these areas compared to areas within the contiguous United States.

For insulin pumps, we solicited comments on our proposal that the bids submitted for rental of insulin infusion pumps included as a lead item in a product category under the DMEPOS CBP for the first time cannot exceed the payment amount that would otherwise apply to the supplies and accessories for the equipment under subpart D of this part for nonrural areas for a one month period plus the total rental fee schedule amounts that would otherwise apply to rental of the insulin pump for 13 months of continuous use under subpart D of this part for nonrural areas divided by 60. The payment amount that would otherwise apply to the supplies and accessories for insulin pumps would be calculated using the nonrural weekly fee schedule amount for supplies paid using HCPCS level II code A4224 multiplied by four plus the nonrural fee schedule amount for nine sterile, syringe type cartridges paid using HCPCS level II code A4225. In 2024, Medicare paid for seven to nine units of A4225 per month on average for beneficiaries using insulin infusion pumps (HCPCS code E0784). We solicited comments on our proposal to use nine units for the one-month supply

calculation as this represents the upper range currently being paid for by Medicare on a monthly basis and therefore builds in sufficient payment to ensure this quantity of supplies can continue to be furnished. Using 2025 fee schedule amounts to demonstrate how the bid limits would be calculated, for a nationwide CBP, the weekly nonrural 2025 fee schedule amount for the supplies for an insulin infusion pump (HCPCS level II code A4224) is $25.19 and the monthly allowance is $100.76 ($25.19 multiplied by 4). The nonrural 2025 fee schedule amount for one sterile syringe type cartridge for an insulin infusion pump (HCPCS level II code A4225) is $3.38 and the monthly allowance is $30.42 ($3.38 multiplied by nine). The total nonrural 2025 rental payments for the insulin infusion pump over 13 months is $5,702.34 and the monthly allowance is $95.04 ($5,702.34 divided by 60 for the number of months over 5 years). The 2025 bid limit for the bundled nationwide monthly rental payment for insulin pumps would therefore be $226.22 ($100.76 + $30.42 + $95.04). Bidding entities competing to be a nationwide contract supplier for these items and other items in the same product category would need to submit bids that are lower than the bid limit ($226.22 in this example) to be considered. Not factoring in reduced pricing under the DMEPOS CBP, for beneficiaries that begin using insulin pumps once the new rules would take effect, coinsurance payments would be approximately the same as they are now for the insulin pumps and monthly supplies and accessories, but the coinsurance payments for the insulin pump would now be lower and spread out over 60 months rather than over 13 months. For beneficiaries who own their insulin infusion pump, coinsurance payments would remain approximately the same unless they elect to obtain a new insulin pump, which would result in new monthly coinsurance payments that include payment for the pump as well as the supplies and accessories for the pump. For beneficiaries who are in the middle of the 13-month capped rental period at the time the pumps are phased into the DMEPOS CBP and the new rules would take effect, their coinsurance payments would increase since they would transition to the new monthly payments with coinsurance payments which would not be reduced by the amounts attributed to the monthly rental payments already made under the capped rental rules. However, the payments made overall should be reduced under the DMEPOS CBP and therefore the net change in beneficiary coinsurance after factoring in the competitive bidding price reductions should be a reduction in cost sharing across the board.

We solicited comments on our proposal to make corresponding changes to the regulations for determining competitive bidding payment amounts for non-lead items at 42 CFR 414.416(b) to reflect how to use the bid amounts to calculate the monthly payments for the non-lead items. We solicited comments on our proposal that the SPAs for the rental of a non-lead item in a product category including CGMs and insulin infusion pumps would be established in a manner that is consistent with how SPAs are established currently for non-lead items in accordance with Sec. 414.416(b). Currently the SPA for a non-lead item is equal to the SPA for the lead item multiplied by the ratio of the 2015 fee schedule amount for the non-lead item for each area to the 2015 fee schedule amount for the lead item for the same area. Our methodology for calculating SPAs for non-lead items is based on the difference in the unadjusted fee schedule amounts for the lead item compared to the non- lead item. We use the 2015 fee schedule amounts for this purpose as this was the last year the DMEPOS fee schedule amounts were not adjusted based on pricing from the DMEPOS CBP. The fee schedule amounts for insulin pumps were adjusted using pricing from the DMEPOS CBP. Given the possibility that CGMs and insulin pumps would be included in the same product category (with CGMs being the lead item), we proposed to calculate what the unadjusted fee schedule amounts for CGMs would have been in 2015 so we can compare that to the unadjusted fee schedule amounts for insulin pumps from 2015 for the purpose of calculating the non-lead item SPAs for the insulin pumps. We solicited comments on our proposal that the 2015 fee schedule amounts for the monthly rental of a class II CGM would be calculated using the 2025 fee schedule amounts and removing the fee schedule update factors from 2016 through 2025 to convert the 2025 fee schedule amounts to 2015 fee schedule amounts. We also solicited comments on our proposal to then add the 2015 fee schedule amount for the monthly supplies for a class II CGM to the average of the 2015 fee schedule amounts for the purchase of a new class II CGM divided by 60 for the areas included in the CBA. The conversion of the fee schedule amounts to 2015 fee schedule amounts is necessary because the methodology under Sec. 414.416(b) uses the ratio of unadjusted fee schedule amounts from 2015 (the year before the DMEPOS CBP was implemented) between the non-lead item and the lead item multiplied by the SPA for the lead item to establish the SPA for the non-lead item and because Medicare did not start paying for class II CGMs until after 2015.

We solicited comments on our proposal that the 2015 fee schedule amounts for the monthly rental of an insulin infusion pump would be calculated using the average 2015 fee schedule amounts for the insulin infusion pump multiplied by 10.5 and divided by 60 for the nonrural areas included in the RID CBP, and then adding the average 2015 fee schedule amounts for the sterile syringe type cartridge for the insulin infusion pump multiplied by nine for the nonrural areas included in the RID CBP plus the average 2015 fee schedule amounts for the weekly insulin pump supplies multiplied by 4 for the nonrural areas included in the RID CBP. The average 2015 fee schedule amounts for the insulin infusion pump multiplied by 10.5 equals the total rental payments made over the 13-month capped rental period.

DME items that are class III devices under the Federal Food, Drug, and Cosmetic Act are excluded from the DMEPOS CBP by section 1847(a)(2)(A) of the Act. Federal Food, Drug, and Cosmetic Act classifies medical devices into three classes based on the level of control needed to ensure their safety and effectiveness. Class I devices are considered low risk and are subject to general controls. Class II devices are considered moderate risk and are subject to general controls and special, device-specific controls. Class III devices are considered high risk and are subject to general controls and premarket approval, the most stringent device marketing application required by the FDA. Class III CGMs are excluded from the DMEPOS CBP by section 1847(a)(2)(A) of the Act. In addition, there are some insulin infusion pumps that are approved by the FDA for use in conjunction with a class III CGM. In instances where an insulin infusion pump that has been approved by the FDA for use in conjunction with a class III CGM is being used in conjunction with a class III CGM, we believe the insulin pumps should be excluded from the DMEPOS CBP as well. We solicited comments on this proposal to exclude insulin pumps used in conjunction with a class III CGM from the DMEPOS CBP under these circumstances.

Because class III CGMs are excluded from the DMEPOS CBP by statute and we proposed that insulin infusion pumps used in conjunction with class III CGMs would also be excluded from the DMEPOS CBP, we believe it is necessary to use the authority at section 1842(b)(8) of the Act to limit the payment amounts for class III CGMs and insulin infusion pumps used in conjunction with class III CGMs to the level established for class II CGMs and insulin infusion pumps that are used alone or in conjunction with a class II CGM under the CBP.

As discussed previously, class III CGMs are statutorily excluded from the DMEPOS CBP and are less accurate than class II CGMs. We believe that lowering the Medicare payment amounts for class II CGMs and class II insulin infusion pumps under the DMEPOS CBP and maintaining higher payments for class III CGMs and insulin infusion pumps used in conjunction with class III CGMs under the Medicare fee schedule for DME would encourage a shift from more accurate class II CGMs and insulin pumps to less accurate class III CGMs and insulin pumps. To prevent this from happening, we therefore proposed to adjust the fee schedule amounts for class III CGMs and insulin pumps used in conjunction with class III CGM to equal the payment amounts established for class II CGMs and insulin pumps under the DMEPOS CBP.

In order to make proposals to use the authority at section 1842(b)(8) of the Act to adjust the fee schedule payment amounts for class III CGMs and insulin infusion pumps used in conjunction with class III CGMs, the process mandated by section 1842(b)(9) of the Act and its implementing regulations at 42 CFR 405.502(g) and (h) apply. We expect that reductions in the payment amounts for class II CGMs and insulin pumps under the DMEPOS CBP would result in payment amounts for these items that are more than 15 percent below the fee schedule amounts for class III CGMs and insulin pumps used in conjunction with class III CGMs. We proposed that in situations where the Medicare bundled monthly rental payment amounts for class II CGMs and/or insulin pumps under the DMEPOS CBP are more than 15 percent lower than the Medicare bundled monthly rental fee schedule amounts for class III CGMs and insulin pumps used in conjunction with class III CGMs, that the Medicare bundled monthly rental fee schedule amounts for class III CGMs and insulin infusion pumps used in conjunction with class III CGMs would be adjusted so that they are equal to the bundled monthly rental payment amounts established under the DMEPOS CBP for the class II CGMs and insulin pumps. b. Medicare Part B Fee Schedule Payments for Class II CGMs and Insulin Pumps

We did not propose to utilize the inherent reasonableness authority at 42 CFR 405.502(g) and (h) to adjust the prices of class II CGMs or insulin infusion pumps paid under Medicare Part B. In accordance with section 1834(a)(1)(F)(i) of the Act, the payment basis for class II CGMs and insulin infusion pumps furnished in a CBA is the payment basis determined under the CBP. In accordance with section 1834(a)(1)(F)(ii) and (iii) of the Act, we solicited comments on our proposal that the fee schedule amounts for class II CGMs or insulin infusion pumps would be adjusted based on information on the payment determined under the CBP for the rental of the equipment using the methodology established in regulations at 42 CFR 414.210(g). For the same reasons discussed previously for class III CGMs and insulin infusion pumps used in conjunction with class III CGMs, in any situation where payment for class II CGMs or insulin infusion pumps not used in conjunction with class III CGMs are paid for in accordance with the fee schedule payment basis at section 1834(a)(1)(B) of the Act in an areas that is not a CBA following the phase in of these items under the DMEPOS CBP, these items would be classified as items requiring frequent and substantial servicing under section 1834(a)(3) of the Act. 3. Provisions of the Regulation a. Payment for CGMs and Insulin Pumps Furnished by Contract Suppliers Under the DMEPOS CBP and by Grandfathered Suppliers

We solicited comments on our proposal to make payment on a monthly rental basis for CGMs and insulin pumps furnished by contract suppliers under the DMEPOS CBP and by non-contract, grandfathered suppliers in accordance with section 1847(a)(4) of the Act, which allows rental agreements for covered CGMs and insulin pumps entered into before the application of the DMEPOS CBP to be continued once the items are phased in under the program, on a bundled monthly rental basis in accordance with regulations at 42 CFR 414.408(h)(8) and (J)(2)(iii), respectively. Payment would be based on SPAs for the bundled, monthly rental of the items for both the contract suppliers and non-contract grandfathered suppliers. Separate payment for supplies and accessories for the equipment would no longer be made and contract suppliers would retain ownership of the rental equipment. b. Bids Submitted for Class II CGMs or Insulin Pumps Included as a Lead Item in a Product Category for the First Time

We solicited comments on our proposal to amend the regulations at 42 CFR 414.412 to specify that the bids submitted for rental of CGMs included as a lead item in a product category under the DMEPOS CBP for the first time cannot exceed the payment amount that would otherwise apply to the supplies for the equipment under subpart D plus the average of the purchase fee schedule amounts that would otherwise apply to the CGM (HCPCS level II code E2103) for the areas included in the CBA divided by 60.

We also solicited comments on our proposal to amend the regulations at 42 CFR 414.412 to specify that the bids submitted for rental of insulin infusion pumps included as a lead item in a product category under the DMEPOS CBP for the first time cannot exceed the payment amount that would otherwise apply to the supplies and accessories for the equipment under subpart D of this part for nonrural areas for a one month period plus the total rental fee schedule amounts that would otherwise apply to rental of the insulin pump for 13 months of continuous use under subpart D of this part for nonrural areas divided by 60. The payment amount that would otherwise apply to the supplies and accessories for insulin pumps would be calculated using the nonrural weekly fee schedule amount for supplies paid using HCPCS level II code A4224 multiplied by 4 plus the nonrural fee schedule amount for nine sterile, syringe type cartridges paid using HCPCS level II code A4225. c. Separate Payment for Replacement of Supplies and Accessories for Class II CGMs and Insulin Pumps Owned by the Beneficiary at the Time These Items Are Phased in Under the DMEPOS CBP for the First Time in a CBA

We solicited comments on our proposal that separate payment can continue to be made under the DMEPOS CBP for replacement of supplies and accessories necessary for the effective use of a CGM or insulin pump owned by the beneficiary at the time these items are phased in under the DMEPOS CBP for the first time in a CBA. The

beneficiary would continue to own the CGM or insulin pump and would receive replacement supplies and accessories for the CGM or insulin pump from a contract supplier for the CBA where they reside. This is a temporary transition rule that would phase out once all beneficiary- owned CGMs or insulin pumps are replaced by rented equipment after they are lost, stolen, irreparably damaged, have been in use for the equipment's 5-year reasonable useful lifetime. During this transition period, SPAs for the monthly supplies and accessories for a beneficiary-owned CGM or insulin pump would be established in accordance with the payment rules for non-lead items under proposed regulations at 42 CFR 414.416(b)(4) summarized in section VII.G. As noted previously, we proposed that the beneficiary would have the option to transition from the use of the equipment they own to use of a rented CGM and/or insulin pump from a contract supplier at any time. d. Calculating SPAs for Class II CGMs, Insulin Pumps, and Supplies and Accessories for Beneficiary-Owned Class II CGMs and Insulin Pumps Furnished as Non-Lead Items in a Remote Item Delivery CBP

We solicited comments on our proposal to amend existing regulations at 42 CFR 414.416(b) by adding paragraph (3) to establish the methodologies for calculating the SPAs for items furnished as non-lead items under product categories in a RID CBP for the monthly rental of class II CGMs, the monthly rental of insulin infusion pumps, the monthly supplies for a beneficiary-owned class II CGM, and the monthly supplies and accessories for a beneficiary-owned insulin infusion pump in a manner consistent with existing regulations at 42 CFR 414.416 which bases the SPAs for the lead item in a product category and CBA on the bids submitted and the SPAs for each non-lead item in the same product category and CBA based on the 2015 fee schedule amount for the non-lead item divided by the 2015 fee schedule amount for the lead item multiplied by the SPA for the lead item.

We also solicited comments on our proposed methodologies for calculating the 2015 fee schedule amounts for the monthly rental of class II CGMs, the monthly rental of insulin infusion pumps, the monthly supplies for a beneficiary-owned class II CGM, and the monthly supplies and accessories for a beneficiary-owned insulin infusion pump under paragraphs (i) through (iv) of Sec. 414.416(b)(3) as follows:

The 2015 fee schedule amounts for the monthly bundle that includes a CGM and supplies are calculated using the 2025 fee schedule amounts and removing the fee schedule update factors from 2016 through 2025, and then adding the 2015 fee schedule amount for the supplies to the average of the 2015 fee schedule amounts for the purchase of a new CGM divided by 60 for the areas included in the RID CBP.

The 2015 fee schedule amount for the monthly supplies for a CGM owned by a beneficiary is calculated using the 2025 fee schedule amount and removing the fee schedule update factors from 2016 through 2025.

The 2015 fee schedule amounts for the monthly bundle that includes an insulin infusion pump and supplies and accessories are calculated using the average 2015 nonrural fee schedule amounts for the insulin infusion pump multiplied by 10.5 and divided by 60 for the areas included in the RID CBP, and then adding the average 2015 nonrural fee schedule amounts for the sterile syringe type cartridge for the insulin infusion pump multiplied by nine for the areas included in the RID CBP plus the average 2015 nonrural fee schedule amounts for the weekly insulin pump supplies multiplied by 4 for the areas included in the RID CBP.

The 2015 fee schedule amounts for the monthly bundle that includes the supplies and accessories for an insulin infusion pump owned by a beneficiary is calculated using the average 2015 nonrural fee schedule amounts for the sterile syringe type cartridge for the insulin infusion pump multiplied by nine for the areas included in the RID CBP plus the average 2015 nonrural fee schedule amounts for the weekly insulin pump supplies multiplied by 4 for the areas included in the RID CBP. e. Insulin Infusion Pumps Used in Conjunction With Class III CGM

We solicited comments on our proposal that in instances where an insulin infusion pump that has been approved by the FDA for use in conjunction with a class III CGM is being used in conjunction with a class III CGM, both the insulin pump and the class III CGM would be excluded from the DMEPOS CBP. f. Payment Reclassification of CGMs and Insulin Infusion Pumps

We solicited comments on our proposal to reclassify all CGMs and insulin infusion pumps paid for in accordance with the rules at section 1834(a) of the Act as items requiring frequent and substantial servicing under section 1834(a)(3) of the Act and regulations at 42 CFR 414.222 for the reasons highlighted in section VII.A. g. Special Payment Limits for Class III CGMs and Insulin Infusion Pumps Used in Conjunction With Class III CGMs

With regard to class III CGMs excluded from the DMEPOS CBP by section 1847(a)(2)(A) of the Act and insulin infusion pumps used in conjunction with class III CGMs, we solicited comments on our proposal to use the authority at section 1842(b)(8) of the Act to establish special payment limits for these items if the bundled monthly rental amounts for class II CGMs and/or insulin infusion pumps established under the DMEPOS CBP are at least 15 percent below the bundled monthly rental fee schedule amounts for the class III CGMs and related supplies and insulin infusion pumps and related supplies established in accordance with section 1834(a)(3) of the Act. In accordance with Sec. 405.502(g)(1)(ii), a payment amount can be considered grossly excessive and can be adjusted using the authority under section 1842(b)(8) of the Act and process outlined in section 1842(b)(9) of the Act and regulations at Sec. 405.502(g) if it is determined that an overall payment adjustment of 15 percent or more is necessary to produce a realistic and equitable payment amount. We believe it is realistic to conclude that suppliers of class III CGMs and insulin pumps used in conjunction with class III CGMs would be able to furnish class III CGMs and insulin pumps at the payment amounts established for class II CGMs and insulin pumps under the DMEPOS CBP. We believe the bids obtained for class II CGMs and insulin pumps under the DMEPOS CBP that are determined to be bona fide is valid and reliable data for use in establishing realistic payment amounts for class III CGMs and insulin pumps used in conjunction with class III CGMs. We believe it would not be equitable to pay more for a class III CGM and/or insulin pump than a class II CGM and/or insulin pump because class III CGMs are less accurate than class II CGMs. We believe that a reduction in payment for class II CGMs and/or insulin pumps under the DMEPOS CBP of greater than 15 percent indicates that the fee schedule amounts for these items were grossly excessive. We believe that if the fee schedule amounts for class III CGMs and/or insulin pumps used in conjunction with class III CGMs are more than 15 percent higher than the payment amounts established for class II CGMs and/or insulin pumps under the DMEPOS CBP, that the fee schedule amounts for class III CGMs and/or insulin pumps used in conjunction with

class III CGMs are grossly excessive. We believe that similar conclusions can be made regarding supplies and accessories used in conjunction with class III CGMs and insulin pumps used in conjunction with class III CGMs owned by the beneficiary at the time class II CGMs and insulin pumps are phased in under the DMEPOS CBP. We believe it is realistic and equitable to establish the payment amounts for these supplies and accessories based on the payment amounts established under the DMEPOS CBP for supplies and accessories used in conjunction with beneficiary-owned class II CGMs and insulin pumps. Separate payment for supplies and accessories for beneficiary-owned class III CGMs and insulin pumps used in conjunction with class III CGMs would no longer be made once the 5-year reasonable useful lifetime for the beneficiary- owned equipment has expired. Medicare payment for class II CGMs and insulin pumps would be established under the DMEPOS CBP and therefore the fee schedule amounts for these items would not be adjusted using the authority under section 1842(b)(8) of the Act. We also solicited comments on our proposal that the monthly rental fee schedule payment amounts for class III CGMs would be limited to the monthly rental SPAs established for class II CGMs under the DMEPOS CBP. We proposed that the monthly rental fee schedule payment amounts for insulin pumps used in conjunction with class III CGMs would be limited to the monthly rental SPAs established for insulin pumps under the DMEPOS CBP. We solicited comments on our proposal that the monthly fee schedule payment amounts for supplies used in conjunction with beneficiary-owned class III CGMs would be limited to the monthly SPAs established for supplies used in conjunction with beneficiary-owned class II CGMs under the DMEPOS CBP. We also solicited comments on our proposal that the monthly fee schedule payment amounts for supplies and accessories used in conjunction with beneficiary-owned insulin pumps that are used in conjunction with class III CGMs would be limited to the monthly SPAs established for supplies and accessories used in conjunction with beneficiary-owned insulin pumps under the DMEPOS CBP.

In accordance with section 1842(b)(8)(C)(ii) of the Act, we believe that the payment amounts for class III CGMs, insulin pumps used in conjunction with class III CGMs, and supplies and accessories used in conjunction with beneficiary-owned class III CGMs and insulin pumps used in conjunction with class III CGMs do not reflect changing technology, increased facility with that technology, or reductions in acquisition or production costs. If the fee schedule payment amounts for class II CGMs and insulin pumps are reduced by more than 15 percent under the DMEPOS CBP, then this is an indication that the cost of furnishing these items is significantly lower than the fee schedule amounts for these items. We believe the same would also be true for class III CGMs and insulin pumps used in conjunction with class III CGMs as we believe the acquisition and production costs of class III CGMs and insulin pumps used in conjunction with class III CGMs are similar to the acquisition and production costs of class II CGMs and insulin pumps that are not used in conjunction with class III CGMs. The equipment is used for the same purpose and includes the same covered features of continuous glucose monitoring and pumping of insulin. In the case of CGMs, manufacturers of class II CGMs have invested in making the equipment more accurate and therefore the acquisition and production costs of class II CGMs may be higher than the acquisition and production costs of class III CGMs. Insulin pumps used in conjunction with class III CGMs perform the same covered function as insulin pumps that are not used in conjunction with class III CGMs. We believe it is therefore realistic and equitable to pay no more for a class III CGM or insulin pump used in conjunction with a class III CGM than the payment amount established under the DMEPOS CBP for a class II CGM or insulin pump.

In accordance with section 1842(b)(9)(A) of the Act, the Secretary shall 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 to reduce payment for the item or service by more than 15 percent for a year. The corresponding regulations at 42 CFR 405.502(g)(3) require CMS to publish in the Federal Register proposed and final notices announcing a special payment limit before it adopts the limit. Regarding special payment limit adjustments greater than 15 percent of the payment amount, 42 CFR 405.502(h)(3) requires that before making a determination that a payment amount for a category of items or services is not inherently reasonable by reason of its grossly excessive or deficient amount, CMS consult with representatives of the supplier industry likely to be affected by the change in the payment amount. CMS must publish in the Federal Register the proposed and final notices of a special payment limit before it adopts the limit. Therefore, as part of this final rule, we solicited comments from representatives of suppliers or other individuals who furnish class III CGMs, insulin pumps used in conjunction with class III CGMs, and supplies and accessories used in conjunction with beneficiary-owned class III CGMs or beneficiary-owned insulin pumps used in conjunction with class III CGMs on the proposed payment reductions for these items and services.

In accordance with section 1842(b)(9)(B)(iii) of the Act and the corresponding regulations at 42 CFR 405.502(h), when the proposed special payment limit adjustments are greater than 15 percent of the payment amount within a year, CMS must consider in a proposed and final notice the potential impacts of the proposed payment reductions on quality, access, and beneficiary liability, including the likely effects on assignment rates and participation rates. We proposed that the payment amounts for class III CGM suppliers and manufacturers would be reduced, but at the same rate as class II CGM suppliers and manufacturers, avoiding the potential impact of providing a financial incentive to increase access to less accurate class III CGMs and decrease access to more accurate class II CGMs. We solicited comments on the proposed reductions in payment and believe they would level the playing field and avoid providing class III CGM suppliers and manufacturers with an unfair advantage. The quality of CGMs in general would not be impacted and if anything would be preserved since contract suppliers would not have a financial incentive to furnish class III CGMs in place of class II CGMs. Class III CGMs currently make up about 25 percent of total allowed charges for CGMs under Medicare and so any impact resulting from the proposed reductions in payment for class III CGMs would be significantly less than any impact resulting from payment reductions for class II CGMs under the DMEPOS CBP. We therefore believe the proposed payment special payment limits and special payment method for class III CGMs and insulin pumps would have a minimal impact on the CGM and insulin pump industry in general. The impact on access to CGMs in general as a result of the special payment limit and method of payment would also therefore be minimal. Beneficiary cost-sharing for class III CGMs, insulin pumps used in

conjunction with class III CGMs, and supplies and accessories used with beneficiary-owned class III CGMs and insulin pumps would be reduced as a result of the special payment limit and method. Program savings would also be achieved for these items. Assignment rates and participation rates would likely not be affected as a result of the proposed special payment limits and payment method as payment for the cost of furnishing class III CGMs and insulin pumps on assignment-related basis would be based on the payment established under the DMEPOS CBP based on bids submitted by bidding entities for furnishing class II CGMs and insulin pumps on an assignment-related basis for all beneficiaries under the DMEPOS CBP. Under the DMEPOS CBP, contract suppliers of class II CGMs and insulin pumps are required to accept assignment of all claims for furnishing these items by section 1847(b)(5)(C) of the Act. Suppliers of class III CGMs know that if they do not accept assignment of the claims for the class III CGMs or insulin pumps used in conjunction with class III CGMs, their customers could switch to a class II CGM supplier or supplier of an insulin pump that is not used in conjunction with a class III CGM to avoid the financial liability associated with unassigned claims. h. Advance Billing for Three Months of Rental

Payment for supplies and accessories used with a beneficiary-owned class II or class III CGM or a beneficiary-owned insulin infusion pump is currently made for these items in quantities necessary for a 90-day period. We solicited comments on a proposal to allow contract suppliers to bill for up to 3 months of rental for CGMs and insulin infusion pumps in advance to be consistent with this policy. i. Summary of Provisions

The following is a summary list of the provisions under this section for which we solicited comments: Payment Rules for Class II CGMs and Insulin Infusion Pumps That Are Not Used in Conjunction With Class III CGMs and Are Furnished Under the DMEPOS CBP

Payment would be on a continuous rental basis with payment for use of the equipment and all necessary supplies and accessories included in monthly rental payments made for up to 3 months in advance. Contract suppliers retain ownership of the rented equipment.

Payment for replacement of supplies and accessories only for beneficiary-owned equipment at the start of the program in a CBA would continue to be made as separate items under the product category until the beneficiary-owned equipment is replaced because it is lost, stolen, irreparably damaged, has exceeded the reasonable useful lifetime (as defined at 42 CFR 414.210(f)(1)), or in cases where the beneficiary elects to obtain newer equipment. Beneficiaries who own their equipment and want to replace the equipment with new equipment would have the option to obtain new rented equipment from a contract supplier at any time.

Rental agreements for equipment in place at the time the new rules are phased in under a CBA may be continued under the existing grandfathering rules for items requiring frequent and substantial servicing. Payment to grandfathered suppliers would be based on the monthly rental payment amounts established under the DMEPOS CBP.

If the class II CGM is the lead item in the product category the first time the new payment rules are implemented in a CBA, the bid limit would be established based on the monthly fee schedule amount for the replacement supplies plus the average purchase new fee schedule amount for the CGM for the areas included in the CBA divided by 60.

If the insulin pump is the lead item in the product category the first time the new payment rules are implemented in a CBA, the bid limit would be established based on the average weekly fee schedule amount for the replacement supplies and accessories for the areas included in the CBA multiplied by 4, plus the average fee schedule amount for the syringe type cartridge for the areas included in the CBA multiplied by nine, plus the average of the total rental fee schedule amounts over 13 months for the insulin pump for the areas included in the CBA divided by 60. Payment Rules for Class III CGMs and Insulin Infusion Pumps Used in Conjunction With Class III CGMs (To Be Effective on the Date the New Rules for Class II CGMs and Insulin Pumps Are Implemented)

All CGM and insulin pump equipment would be classified as items requiring frequent and substantial servicing for the purposes of implementing the payment rules under section 1834(a) of the Act. Payment would be on a continuous rental basis with payment for use of the equipment and all necessary supplies and accessories included in monthly rental payments made for up to 3 months in advance. Contract suppliers retain ownership of the rented equipment.

Special payment limits would be established in accordance with regulations at 42 CFR 405.502(g) and sections 1842(b)(8) and (9) of the Act to limit payment for class III CGMs and insulin infusion pumps used in conjunction with class III CGMs as well as supplies and accessories for beneficiary owned class III CGMs and insulin infusion pumps used in conjunction with class III CGMs to the payment amounts established for class II CGMs and insulin infusion pumps as well as supplies and accessories for beneficiary owned class II CGMs and insulin infusion pumps under the DMEPOS CBP.

Payment for replacement of supplies and accessories only for beneficiary-owned equipment would continue to be made as separate items after the implementation date of the CBP until the beneficiary- owned equipment is replaced because it is lost, stolen, irreparably damaged, is more than 5 years old, or in cases where the beneficiary elects to obtain newer equipment.

We solicited comments on these provisions as well as on the proposed provisions for determining SPAs for non-lead items under a product category including class II CGMs and/or insulin infusion pumps.

Comment: A number of commenters expressed concern over the implications of the proposals on patient access to care and associated outcomes, emphasizing the complications and side effects that occur due to unmanaged diabetes, such as diabetic ketoacidosis, kidney failure, heart disease, neuropathy, amputation, and vision loss. Many commenters referred back to the recommendations established by the American Diabetes Association's 2025 Standards of Care in Diabetes emphasizing the need for access to appropriate technology and medication, including the consistent use of CGMs for people with diabetes who use any form or frequency of insulin, as well as those who do not use insulin but use at least one non-insulin, glucose-lowering medication. Many commenters also stated that there is a documented decrease in health expenditures and hospitalizations after the integration of CGMs and pumps for insulin therapy. Positive health outcomes are associated with the use of these devices, including lower A1c (HbA1c) levels, increased glycemic control, and reduced time managing the disease.

Response: We agree with the comments and believe beneficiaries should be able to use the latest CGM and/or insulin pump technologies. We proposed to change the current rules to prevent beneficiaries from being locked into a device for five years. As discussed in the proposed rule, the technology for CGMs and insulin infusion pumps is rapidly evolving to be more accurate and to work in tandem, with combination CGM/insulin pump systems that regulate the administration of insulin based on patient need and even in anticipation of a patient's need. It is vital that patients are using equipment with the latest features and technology to ensure that the measuring and displaying of glucose levels is as accurate as possible, so that the best information is available for both patient activated and equipment activated changes in diet and insulin.

Comment: A commenter stated that suppliers are not obligated to carry or provide all brands of CGMs and insulin pumps at this time, and creating the bundled category of CGMs and insulin pumps has the potential to eliminate suppliers who have a strong history of supplying specific types of diabetes technologies. The commenter stated that suppliers would need to revise their approach (for example, acquiring and providing certain diabetes technologies that they have never offered previously and may be unfamiliar with) or limit beneficiary access to a few, specific diabetes technologies such as one type of CGM and/or one type of insulin pump. If CGMs and insulin pumps are bundled, this will present even greater challenges for beneficiary access to their preferred technologies as there will be no obligation or clear mechanism for suppliers to stock and offer the multiple combinations of CGMs and insulin pumps that beneficiaries currently use and to which they have access today.

Response: Under the physician authorization process at 42 CFR 414.420, a contract supplier must furnish the specific brand of CGM and/or insulin pump prescribed by the physician or treating practitioner if the physician or treating practitioner believes the specific brand is needed to avoid adverse health outcomes. Once folded into the DMEPOS CBP, contract suppliers are required to furnish any brand of class II CGM or insulin pump included under the product category if the beneficiary requests the item from the contract supplier and the physician authorizes use of a specific brand CGM or insulin pump as part of their order. We are confident that manufacturers of CGMs and insulin pumps will work closely with the contract suppliers to make the products available and educate and train contract suppliers to make them familiar with the brands of class II CGMs or insulin pumps they have not carried in the past. This is not unlike any situation today where a supplier starts furnishing a new brand of CGM or insulin pump that has just been introduced onto the market and needs to become familiar with the new product.

Comment: Many commenters do not believe CGMs and insulin pumps can be furnished on a rental basis, stating that suppliers lack the expertise to furnish CGMs and insulin pumps on a rental basis, including repairing and servicing equipment, managing returns and replacements of equipment, including recalls, refurbishing equipment for reuse, and providing technical support, software updates, and device training that manufacturers are currently providing for this equipment. Commenters stated that certain CGMs and insulin pumps are single patient use devices and cannot be reused. Many commenters do not believe suppliers can absorb the upfront costs of purchasing equipment that may quickly be replaced and will not be able to recoup their investments in the equipment from payments over 5 years.

Response: We note that all DME items are required to be able to withstand repeated use in accordance with regulations at 42 CFR 414.202, including CGMs, and can be rented to another patient once one patient is finished renting the item. The DMEPOS supplier standards at 42 CFR 424.57(c) require suppliers to answer questions and respond to complaints a beneficiary has about any DMEPOS item that is sold or rented. The supplier may not pass this responsibility off to the manufacturer of the equipment. Suppliers may subcontract with manufacturers to perform repairs or maintenance and servicing of rented CGMs and insulin pumps. Insulin infusion pumps are currently paid for on a rental basis for a period of continuous use of 13 months, during which time suppliers must maintain and repair the equipment as needed and provide all services necessary for the equipment to function properly. While we acknowledge not all suppliers have experiencing repairing and servicing equipment, managing returns and replacements of equipment, including recalls, refurbishing equipment for reuse, and providing technical support, software updates, and device training that manufacturers are currently providing for this equipment, we believe current evidence demonstrates the need for suppliers to provide frequent and substantial servicing in order to reduce complications with the use of such technology. We believe that the assistance and services currently provided by manufacturers to owners of CGMs who are Medicare beneficiaries can be redirected to the suppliers or owners of the rented CGMs. Regarding the ability of suppliers to absorb the upfront cost of rented CGM receivers, we believe this is an expense that can easily be borne by suppliers that would also be receiving payment for the supplies for these items. In 2024, Medicare allowed charges for CGMs receivers and supplies totaled $1,989 million, or almost $2 billion, and 96 percent of these payments ($1,905 million) were for the supplies for the CGM. We believe suppliers will be able to absorb the upfront cost of purchasing CGMs they rent from the money they receive for the supplies for the rented CGMs. Suppliers will consider all of their costs, including the upfront cost of purchasing and servicing CGMs they will rent, into the bid amounts they submit for these items under the DMEPOS CBP. Based on our experience with blood glucose monitors and the widespread rebates offered by manufacturers, which often brought the cost of the glucose monitor down to $0, we are confident that manufacturers will help suppliers bear the cost of the upfront purchase of stand-alone CGMs that suppliers will now be furnishing on a rental basis to beneficiaries under Medicare Part B. CGMs are similar to blood glucose monitors in that most of the money made is for the ongoing replacement of the supplies for the monitor. Manufacturers of blood glucose monitors were very willing to significantly reduce the cost of purchasing blood glucose monitors to reap profits from the ongoing supplies for their brand of blood glucose monitors. We believe manufacturers of CGMs, some of which are also manufacturers of blood glucose monitors, will have a similar incentive to reduce the cost of their brand of CGM receiver, thereby reducing the cost for the supplier.

Comment: Some commenters stated that CMS does not have the authority to change the payment methodology for CGMs and insulin pumps because CMS does not have the authority to classify the items as items requiring frequent and substantial servicing.

Response: We do not agree. Section 1834 of the Act directs CMS to make payment determinations for DME items and services, which includes a determination regarding which of the paragraphs (2) through (7) of subsection (a) of section 1834 of the Act the items

and services are classified under, as well as how the fee schedule amounts for the items and services are established, so that they are in compliance with the exclusive payment rules under sections 1834(a) and 1847(a) and (b) of the Act.

Comment: A commenter agreed with the change in payment methodology for class II CGMs, but believed that the change in payment methodology should be implemented before the items are phased in under the DMEPOS CBP.

Response: We do not agree. We continue to believe that payment on a continuous monthly rental basis for these items should be phased in at the same time that class II CGMs and insulin pumps are phased in under the DMEPOS CBP to give suppliers time to prepare for the transition to the new monthly rental business model. Given the fact that class II CGMs and insulin pumps are currently the highest volume category of items and services subject to the mandate for competitive bidding under section 1847(a) of the Act, and given the emphasis under section 1847(a)(1)(B)(ii) of the Act to prioritize the highest volume items and service first under the DMEPOS CBP, we believe class II CGMs and insulin pumps are the highest priority category of items and services for phase in next under the DMEPOS CBP. As such, both suppliers and manufacturers should begin preparing for the phase in of class II CGMs and insulin pumps under the DMEPOS CBP and the concurrent classification of CGMs and insulin pumps paid for on a fee schedule basis as items requiring frequent and substantial servicing. We will announce the effective date of this payment classification through program instructions in accordance with regulations at 42 CFR 414.210(b)(2).

Comment: A commenter requested that the monthly payment for the equipment be based on a 3-year lifetime rather than a 5-year lifetime to account for the cost of replacing equipment more often when beneficiaries elect to upgrade their rented equipment. Another commenter stated that CMS did not provide a rationale for why the equipment costs should be amortized over 5 years when calculating the monthly equipment rental payment and that the payment for the equipment acquisition costs should not be spread over 5 years so that the supplier can be fully paid for the equipment if a beneficiary decides to upgrade to newer technology equipment before the 5 year period is over. Some commenters suggested as an alternative to the proposed rule that CMS lower the reasonable useful lifetime for CGMs and insulin pumps from 5 years to 3 years so that beneficiaries could obtain new technology items every 3 years instead of every 5 years.

Response: We do not agree with these comments. The Medicare payment for DME is based on payment for new items expected to last for 5 years. Pursuant to 42 CFR 414.210(f), the reasonable useful lifetime of DME or prosthetic and orthotic devices is determined through program instructions. In the absence of program instructions, carriers may determine the reasonable useful lifetime of equipment but in no case can it be less than 5 years. A reasonable useful lifetime of 3 years has not been established for any DME item. The equipment lifetime is 5 years and so the equipment acquisition costs can be recouped over 5 years by renting the equipment to multiple patients. If the reasonable useful lifetime of the equipment was changed from 5 years to 3 years, a corresponding reduction in the fee schedule amounts for the equipment of 40 percent would be necessary to make the change budget neutral and would defeat the purpose of the commenters' suggestion. In addition, manufacturers often provide trade-in promotions to reduce the cost of upgrading equipment to newer products. CMS may determine the reasonable useful lifetime of DME or prosthetic or orthotic devices through program instructions. In the absence of program instructions, the reasonable useful lifetime must not be less than 5 years. If interested parties believe a reasonable, useful lifetime of 5 years is not appropriate for CGMs and/or insulin pumps, we welcome additional information supporting consideration of an alternative to the 5-year useful lifetime for such equipment. Adjusting the reasonable useful lifetime of an item solely to facilitate beneficiary access to newer technology is inconsistent with the reasonable useful lifetime requirement for capped rental DME established under section 1834(a)(7)(C)(iii) of the Act, which provides that the Secretary may establish an alternative reasonable useful lifetime for an item if, based on prior payment experience for such item, the Secretary determines that a five-year reasonable useful lifetime is not appropriate for that particular item.

As discussed in the proposed rule, technology for CGMs and insulin pump equipment is rapidly evolving and becoming increasingly complex (90 FR 29263). These devices often require regular software updates to ensure proper functionality and protection against hacking or other cybersecurity threats. In addition, beneficiaries may require more extensive technical support from their suppliers to address hardware and software issues. Taken together, these characteristics indicate that such devices are items requiring frequent and substantial servicing and, therefore, should be paid in accordance with 42 CFR 414.222.

Comment: Some commenters did not agree that the monthly cost of insulin pump supplies should be calculated by multiplying the currently weekly (7-day) allowance for the supplies (HCPCS level II code A4224) by 4 since there are often more than 28 days in a month.

Response: We do not agree. Although the current allowance for code A4224 is for a one-week supply and there are often more than 28 days in a month, not all beneficiaries will use the supplies for a full 4 weeks or a full 30, 31, or even 28 days. The monthly payment should cover the average cost of the supplies and not the maximum cost (the cost in a scenario that does not exist where all beneficiaries use the supplies for the full month each month). Based on Medicare claims data for 2024, the average number of paid units per month per beneficiary for HCPCS level II code A4224 was 3.49 (the average usage is three and a half weeks or approximately 24 days). Multiplying the fee schedule amount for HCPCS level II code A4224 by 4 for payment for supplies for 28 days more than covers the average monthly Medicare payment for these supplies as currently billed.

Comment: Some commenters did not agree that the monthly cost of insulin pump syringes (HCPCS level II code A4225) should be calculated by multiplying the fee schedule amount for level II code A4225 by nine and believe the monthly usage is 10 or more.

Response: We do not agree. Based on Medicare claims data for 2024, the average number of paid units per month per beneficiary for HCPCS level II code A4225 was 8.63. Multiplying the fee schedule amount for HCPCS level II code A4225 by nine more than covers the average monthly Medicare payment for these supplies as currently billed.

Comment: Many commenters did not agree that the inherent reasonableness authority and process for adjusting grossly excessive fee schedule amounts under section 1842(b)(8) and (9) of the Act and regulations at 42 CFR 405.502(g) and (h) should be used to limit the monthly rental fee schedule amounts for class III CGMs and insulin pumps used in conjunction with class III CGMs to the monthly rental payment amounts established for class II CGMs and insulin pumps not used in conjunction with class III CGMs under the DMEPOS CBP. Some commenters

pointed out that class III CGMs pose a higher risk to patients than class II CGMs.

Response: We do not agree with commenters that the inherent reasonableness authority should not be used to keep payments for class III CGMs and insulin pumps used in conjunction with class III CGMs in line with payments for class II CGMs and other insulin pumps. We believe that the equipment is very comparable and that the cost of the class III CGMs and insulin pumps used in conjunction with class III CGMs are no higher than or less than the cost of comparable class II CGMs and insulin pumps. We agree that certain class III CGMs cannot be used to make diabetes treatment decisions without verification by blood glucose monitors and therefore pose a higher risk to patients than other CGMs because they are less accurate. As a result, we do not believe it would be inherently reasonable for Medicare payment amounts for less accurate and less expensive CGMs to be higher than the Medicare payment amounts for other CGMs that are more accurate. We are therefore finalizing the proposed special payment limits for class III CGMs and insulin pumps used in conjunction with class III CGMs.

Regulations at 42 CFR 405.502(h)(3)(ii) require that the final notice of a special payment limit must include an explanation of the factors and data considered in establishing the special payment limit and include the economic justification for any uniform fee or payment limit established. As explained in the paragraph previously, class III CGMs and insulin pumps used in conjunction with class III CGMs are very comparable to class II CGMs and other insulin pumps, and in some cases, class III CGMs, unlike class II CGMs, cannot be used to make diabetes treatment decisions without verification of the results by a blood glucose monitor. Based on these factors, we conclude that it would not be inherently reasonable to pay more for a class III CGM or insulin pump used in conjunction with a class III CGM than a class II CGM or insulin pump that is not used in conjunction with a class III CGM. In cases where the fee schedule amounts for class III CGMs and insulin pumps used in conjunction with class III CGMs are at least 15 percent higher than the Medicare payment amounts established for class II CGMs and insulin pumps under the DMEPOS CBP in the same area(s), the fee schedule amounts for class III CGMs and insulin pumps used in conjunction with class III CGMs are considered grossly excessive and are adjusted so as not to exceed the payment amounts established for class II CGMs and insulin pumps under the DMEPOS CBP for the same area(s). CGMs and insulin pumps are mainly furnished on a mail order basis from remote supplier locations. If one uniform, national payment amount is established for class II CGMs and insulin pumps under the DMEPOS CBP, the economic justification for establishing a uniform special payment limit for class III CGMs and insulin pumps used in conjunction with class III CGMs equal to the uniform, national payment amount established for class II CGMs and insulin pumps under the DMEPOS CBP is that the cost of furnishing the items does not vary based on where the item is shipped and it is therefore reasonable to have one national uniform rate for the items.

Comment: Some commenters believe that since class III DME items are excluded from the DMEPOS CBP that pricing from the DMEPOS CBP cannot be used to establish the payment amounts for items excluded from the DMEPOS CBP.

Response: We do not agree. The Medicare payment rules for CGMs and insulin pumps are located at section 1834(a) of the Act, which is the exclusive provision for payment for these DME items under Part B and under Part A to a home health agency. Section 1834(a)(10)(B) of the Act authorizes use of the inherent reasonableness authority to make adjustments in the payment for DME items under section 1834(a) of the Act if the payment amount is determined to be grossly excessive or deficient and is therefore, not inherently reasonable. Regulations implementing this provision at 42 CFR 405.502(g) and (h) specify factors that result in grossly deficient or excessive payment amounts that include, but are not limited to, whether the payment amounts for a category of items or services are grossly higher or lower than the payments made for the same category of items or services by other purchasers in the same locality. As explained previously, we believe that class III CGMs and insulin pumps used in conjunction with class III CGMs are comparable to class II CGMs and insulin pumps used in conjunction with class II CGMS. As explained previously, we believe that class III CGMs and insulin pumps used in conjunction with class III CGMs are comparable to class II CGMs and insulin pumps used in conjunction with class II CGMs. The cost of the class III CGMs and insulin pumps used in conjunction with class III CGMs are no higher than or less than the cost of comparable class II CGMs and insulin pumps. In some cases, class III CGMs, unlike class II CGMs, cannot be used to make diabetes treatment decisions without verification of the results by a blood glucose monitor. It would not be inherently reasonable to pay more for a class III CGM or insulin pump used in conjunction with a class III CGM than a class II CGM or insulin pump that is not used in conjunction with a class III CGM.

Comment: Some commenters believe the process outlined in the statute and regulations for establishing special payment amounts using the inherent reasonableness authority has not been followed and others believe the requirements for use of valid and reliable data in determining an appropriate payment amount for class III CGMs and insulin pumps used in conjunction with class III CGMs have not been met.

Response: We do not agree with the comments. We are following the process outlined in the statute and regulations for establishing special payment amounts using the inherent reasonableness process. We are consulting with representatives of suppliers or other individuals who furnish class III CGMs and insulin pumps used in conjunction with class III CGMs via the proposed rule and the comments that we received on the proposed rule from representatives of suppliers or other individuals who furnish class III CGMs and insulin pumps used in conjunction with class III CGMs. We published notice of the proposed determination in the Federal Register on July 2, 2025 (90 FR 29266), specifying the proposed special method to be used in determining the payment amount for class III CGMs and insulin pumps used in conjunction with class III CGMs in accordance with regulations at 42 CFR 405.502(g)(1)(v), explaining the factors and data we took into account in determining the payment amount, and explaining the potential impacts of the determination on quality, access, and beneficiary liability, including the likely effects on assignment rates and participation rates. We clarified that in accordance with regulations at 42 CFR 405.502(g)(1)(ii) the fee schedule amounts for class III

CGMs and insulin infusion pumps would not be considered grossly excessive and would not be adjusted if it is determined that an overall payment adjustment of less than 15 percent is necessary to produce a realistic and equitable payment amount. This was all discussed in the July 2, 2025, edition of the Federal Register (90 FR 29267), which went on display on June 30, 2025. We allowed 60 days for public comment on the proposed determination. The factors and data we took into consideration in making the final determination are explained in the response to public comments (and also summarized later in the section), which also explains why we believe the factors and data considered are valid and reliable. Regarding the specific requirements for use of valid and reliable data at Sec. 405.502(g)(4), the criteria listed under (i) through (xi) are applicable when conducting a pricing survey, which was not done in this case. As explained in response to comments received on the proposed special payment limits noted previously, our determination is based on other factors other than prices obtained from a pricing survey; therefore, the criteria listed under Sec. 405.502(g)(4) are not applicable. We are now publishing this document in the Federal Register with notice of the final determination.

The following is an explanation of the factors and data we considered in making the inherent reasonableness determinations, including the economic justification for a uniform fee/payment limit:

As explained in the response to comments noted previously, class III CGMs and insulin pumps used in conjunction with class III CGMs are very comparable to class II CGMs and other insulin pumps, and in some cases, class III CGMs, unlike class II CGMs, cannot be used to make diabetes treatment decisions without verification of the results by a blood glucose monitor. Based on these factors, we conclude that it would not be inherently reasonable to pay more for a class III CGM or insulin pump used in conjunction with a class III CGM than a class II CGM or insulin pump that is not used in conjunction with a class III CGM. In cases where the fee schedule amounts for class III CGMs and insulin pumps used in conjunction with class III CGMs are at least 15 percent higher than the Medicare payment amounts established for class II CGMs and insulin pumps under the DMEPOS CBP in the same area(s), the fee schedule amounts for class III CGMs and insulin pumps used in conjunction with class III CGMs are considered grossly excessive and are adjusted so as not to exceed the payment amounts established for class II CGMs and insulin pumps under the DMEPOS CBP for the same area(s). CGMs and insulin pumps are mainly furnished on a mail order basis from remote supplier locations. If one uniform, national payment amount is established for class II CGMs and insulin pumps under the DMEPOS CBP, the economic justification for establishing a uniform special payment limit for class III CGMs and insulin pumps used in conjunction with class III CGMs equal to the uniform, national payment amount established for class II CGMs and insulin pumps under the DMEPOS CBP is that the cost of furnishing the items does not vary based on where the item is shipped and it is therefore reasonable to have one national uniform rate for the item We also note that the OIG recently issued a report titled “Medicare Payments for Continuous Glucose Monitors and Supplies Exceeded Supplier Costs and Retail Market Prices, Indicating Medicare Can Save At Least Tens of Millions of Dollars in One Year” (OEI-04-23-00430) showing that the average supplier acquisition cost for supplies for a class III CGM are lower than the average supplier acquisition cost for supplies for a class II CGM, further supporting the need to ensure that Medicare payment amounts for class III CGMs and CGM supplies do not exceed the amounts paid for class II CGMs and CGM supplies.

After consideration of the public comments received, we are finalizing the proposal with one technical change in the regulation text. In the proposed rule, the proposed regulation text under 42 CFR 414.416(b)(3)(iv) incorrectly used the acronym “CBR” for competitive bidding program instead of “CBP”. We are finalizing that portion of the regulation text to instead say “CBP” under 42 CFR 414.416(b)(3)(iii). We are finalizing the rest of the proposal without changes including the following:

Class II CGMs and insulin pumps phased in under the DMEPOS CBP will be paid for on a monthly rental basis in accordance with Sec. 414.408(h)(8) as DME items requiring frequent and substantial servicing. Noncontract suppliers with grandfathered rental agreements in place at the time the new rules are phased in under a CBA may be continued under the existing grandfathering rules for items requiring frequent and substantial servicing, and will be paid based on the monthly rental amounts established under the DMEPOS CBP. Suppliers may bill for up to three months of rental in advance.

Payment for replacement supplies and accessories for beneficiary-owned class II CGMs and insulin infusion pumps will be paid for under the DMEPOS CBP in accordance with the special temporary transition rules at Sec. 414.408(m) until the beneficiary-owned equipment is replaced.

All CGMs and insulin pumps paid for in accordance with section 1834(a) of the Act will be classified as items requiring frequent and substantial servicing under section 1834(a)(3) of the Act beginning on the date class II CGMs and insulin pumps are first phased in under the DMEPOS CBP, which we expect will occur in the near future.

Payment for class III CGMs and insulin pumps used in conjunction with class III CGMs will be limited to the amounts established for class II CGMs and insulin pumps under the DMEPOS CBP if these amounts are at least 15 percent lower than the fee schedule amounts for class III CGMs and insulin pumps used in conjunction with class III CGMs.

Suppliers may bill for up to three months of rental in advance for all CGMs and insulin pumps regardless of whether payment is made under a DMEPOS CBP or under the fee schedule.

Payment for replacement supplies and accessories for beneficiary-owned class III CGMs and insulin pumps used in conjunction with class III CGMs will be paid for under the fee schedule in the same amounts established for these items under the DMEPOS CBP until the equipment is replaced or the beneficiary elects to obtain new equipment from a contract supplier under the DMEPOS CBP.