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

This final rule updates Medicare payments under the HH PPS for CY 2026. The net transfer impact related to the changes in payments under the HH PPS for CY 2026 is estimated to be -$220 million (-1.3 percent). The $220 million decrease in estimated payments for CY 2026 reflects the effects of the proposed CY 2026 home health payment update percentage of 2.4 percent ($405 million increase), an estimated -0.9 percent decrease that reflects the effects of the permanent adjustment ($150 million decrease), an estimated -2.7 percent decrease that reflects the effects of the temporary adjustment ($460 million decrease) and an estimated -0.1 percent decrease that reflects the updated FDL ($15 million decrease).

We use the latest data and analysis available. However, we do not adjust for future changes in such variables as number of visits or case-mix. This analysis incorporates the latest estimates of growth in service use and payments under the Medicare home health benefit, based primarily on Medicare claims data for periods that ended on or before December 31, 2024. We note that certain events may combine to limit the scope or accuracy of our impact analysis, because such an analysis is future-oriented and, thus, susceptible to errors resulting from other changes in the impact time period assessed. Some examples of such possible events are newly-legislated general Medicare program funding changes made by the Congress or changes specifically related to HHAs. In addition, changes to the Medicare program may continue to be made as a result of new statutory provisions. Although these changes may not be specific to the HH PPS, the nature of the Medicare program is such that overall changes may interact, and the complexity of the interaction of these changes could make it difficult to predict accurately the full scope of the impact upon HHAs.

Table 51 represents how HHA revenues are likely to be affected by the final policy changes for CY 2026. For this analysis, we used an analytic file with linked CY 2024 OASIS assessments and home health claims data for dates of service that ended on or before December 31, 2024. The first column of table 51 classifies HHAs according to several characteristics including provider type, geographic region, and urban and rural locations. The second column shows the number of facilities in the impact analysis. The third column shows the payment effects of the permanent adjustment on all payments. The aggregate impact of the permanent adjustment reflected in the third column does not equal the final -1.023 percent permanent adjustment because the adjustment only applies to the national, standardized 30-day period payments and does not impact payments for 30-day periods which are LUPAs. The fourth column shows the payment effects of the recalibration of the case-mix weights offset by the case-mix weight budget neutrality factor. The fifth column shows the payment effects of updating the CY 2026 wage index (that is, the FY 2026 hospital pre-floor, pre-reclassified wage index for hospital cost reporting periods beginning on or after October 1, 2021, and before October 1, 2022 (FY 2022 cost report data)) with a 5 percent cap on wage index decreases. The aggregate impact of the changes in the fifth column is zero percent, due to the wage index budget neutrality factor. The sixth column shows the payment effects of the final CY 2026 home health payment update percentage. The seventh column shows the payment effects of the final FDL. The eighth column shows the payment effects of the temporary adjustment on all payments. The aggregate impact of the temporary adjustment reflected in the eighth column does not equal the -3.0 percent temporary adjustment because the adjustment only applies to the national, standardized 30- day period payments and does not impact payments for 30-day periods which are LUPAs. The last column shows the combined effects of all the final provisions.

Overall, it is projected that aggregate payments in CY 2026 would decrease by 1.3 percent which reflects the -0.9 percent decrease from the permanent adjustment, the -2.7 percent decrease from the temporary adjustment, the -0.1 percent decrease from the updated FDL and the 2.4 percent home health payment update. As illustrated in table 51, the combined effects of all changes vary by specific types of providers and by location. We note that some individual HHAs within the same group may experience different impacts on payments than others due to the distributional impact of the CY 2026 wage index, the percentage of total HH PPS payments that were subject to the LUPA or paid as outlier payments, and the degree of Medicare utilization. BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C 2. Effects of the Changes for the HH QRP for CY 2027

Failure to submit HH QRP data required under section 1895(b)(3)(B)(v) of the Act with respect to a program year will result in the reduction of the annual home health market basket percentage increase otherwise applicable to an HHA for the corresponding calendar year by 2 percentage points. For the CY 2023 program year, 820 of the 11,549 active Medicare-certified HHAs, or approximately 7.1 percent, did not receive the full annual percentage increase because they did not meet assessment submission requirements. The 820 HHAs that did not satisfy the reporting requirements of the HH QRP for the CY 2023 program year represent $149 million in home health claims payment dollars after APU penalty during the reporting period out of a total $16.4 billion for all HHAs.

We proposed to remove four items as standardized patient assessment data elements beginning with the CY 2026 HH QRP. The four assessment items proposed for collection are (1) Living Situation, (2) Food Runs Out, (3) Food Doesn't Last, and (4) Utilities. We also proposed to remove the COVID-19 Vaccine: Percent of Patients Who Are Up to Date measure and the item related to the measure and corresponding data element. The net effect of these proposals is a decrease of four data elements at the start of care and resumption of care time points and a decrease in one data element at the transfer of care, death at home and discharge time points for a net decrease in burden.

Section VIII.B.1. of this final rule provides a detailed description of the net decrease in burdens associated with the proposed changes that are being finalized. We proposed that removal of data elements associated with the HH QRP would begin with assessments as of April 1, 2026. The cost impact of these proposed changes was estimated to be a net decrease of 17,810,282 in annualized cost to HHAs, discounted at 2 percent relative to year 2023, over a perpetual time horizon beginning in CY 2026. We described the estimated burden and cost reductions for these measures in section VIII. of this final rule. In summary, the implementation of provisions outlined in this final rule for the HH QRP is estimated to decrease the burden on HHAs by $1,496 per HHA annually, or $17,810,282 for all HHAs annually.

In section III.E. of this final rule, we proposed to amend the data non-compliance reconsideration request policy and process. For HHAs that seek to file an extension to file a request for reconsideration of a noncompliance determination, we estimated that this request will take HHAs approximately 15 minutes to complete. We believe that this data will be entered by the medical records specialists. However, HHAs determine the staffing resources necessary. For the purposes of calculating the costs we obtained median hourly wages from the U.S. Bureau of Labor Statistics' (BLS) May 2024 National Occupational Employment and Wage Estimates.\89\ To account for overhead and fringe benefits, we have doubled the hourly wage. These amounts are detailed in Table 52.

\89\ U.S. Bureau of Labor Statistics' (BLS) May 2024 National Occupational Employment and Wage Estimates. https://www.bls.gov/oes/current/oes_nat.htm. [GRAPHIC] [TIFF OMITTED] TR02DE25.089

We estimated that the collection of this request would result in an additional 15 minutes, or 0.25 hours, per request. Based on the number of reconsiderations requests we have received in the previous 3 years, we estimate an average of 85 requests per year, for an additional 21 hours per year (0.25 hours x 85 forms per year) for all HHAs. Given an estimated $48.32 hourly wage, we estimate an increase of $1015 (21 hours x $48.32) for all HHAs annually or $11.94 per HHA that request reconsiderations.

Section VIII. of this final rule provides a detailed description of the net decrease associated with the changes. For the COVID-19 items collected at transfer of care, death at home, and discharge, we estimated a decrease in clinician cost of $4,326,249 or $363 (- $4,326,249/11,904) for each of the 11,904 active HHAs. For the four SDOH data elements removed at start of care or resumption of care, we estimated a decrease in clinician cost of $13,484,033 or $1,132 (- $13,484,033/11,904) for each of the 11,904 active HHAs. For all provisions, we estimated a decrease in clinician costs of -$17,810,282 between 2027 and 2026 related to the implementation of the provisions outlined in this final rule across all HHAs or a $1,496 decrease (- $17,810,282/11,904). a. COVID-19 Data Element Burden

Comment: A majority of commenters supported the CMS recommendation to remove the COVID-19 Vaccine: Percent of Patients Who Are Up to Date measure from the HHQRP with most citing the collection burden associated with the measure. Many commenters highlighted the many other sources that can provide national COVID-19 vaccination rates.

Response: We thank commenters for their support. We acknowledge commenters' difficulty with assessing patients' vaccination status in the HHA. We agree that the burden associated with this measure, including the resources spent by HH staff in trying to ascertain patients' vaccination status, outweighs the benefit of its continued use in the program, given the end of the PHE, the decrease in COVID cases, as well as the availability of treatments. After consideration of the public comments, we are finalizing our proposal to remove the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure from the

HH QRP beginning with the CY 2026 HH QRP. Beginning with patients discharged on or after April 1, 2026, HHAs would not be required to collect and submit the Patient/Resident COVID-19 Vaccine measure data to CMS. Until that time and with the posting of this final rule, HHAs may submit any valid response (0--No, 1--Yes or dash) on a Transfer, Death at home, or Discharge OASIS assessment, without any future quality measure implications. b. SDOH Data Elements Burden

Comment: A slight majority of commenters supported the proposal to remove the four standardized patient assessment data elements focused on collecting information related to SDOH. These commenters often acknowledged the importance of better understanding of SDOH in addressing healthcare challenges but noted that there may be less burdensome methods to obtaining the required SDOH data.

Response: We thank commenters for their support for our proposal to remove these four SDOH items from the standardized patient assessment data elements collected and submitted using the OASIS. We continue to monitor the HH QRP data collection requirements to look for ways to reduce administrative burden, where appropriate, while maintaining a high standard of quality care. We agree that removing these items at this time will alleviate some of the burden on HH providers associated with HH QRP data collection and submission requirements. We intend to align the HH QRP more closely with our overarching goal for improved health care delivery through health IT advances and low-burden interoperable electronic systems. As we stated in the CY 2026 HH PPS proposed rule (90 FR 2908), we plan to refocus efforts on how data elements can improve care coordination, efficiency, reduction in errors, and patient experience.

Final Decision: After consideration of the public comments, we are finalizing our proposal to remove four standardized patient assessment data elements (one item for Living Situation (R0310); two items for Food (R0320A and R0320B); and one item for Utilities (R0330)) collected under the SDOH category from the HH QRP beginning with the CY 2026 HH QRP without modification. 3. Effects of the Expanded HH VBP Model

In the CY 2022 HH PPS final rule (88 FR 77676), we estimated that the expanded HHVBP Model would generate a total projected 5-year gross FFS savings of $3,376,000,000. The changes to the applicable measure set proposed in this rule would not change those estimates because they do not change the number of HHAs in the Model or the payment methodology.

Based on policies discussed in this final rule, Tables 69 and 70 display the distribution of possible unweighted payment adjustments \90\ using CY 2023 as the performance year and CY 2022 as the baseline year for all 1-year measures. For 2-year measures (such as DTC and MSPB-PAC), payment adjustments were calculated using CYs 2022 and 2023 as the performance period and CYs 2021 and 2022 as the baseline period. Note that payment adjustments in the expanded Model are made in a budget-neutral manner.

\90\ Payment adjustments calculated for all HHAs with Medicare certification dates prior to January 1, 2021.

Tables 52 and 53 show the value-based incentive payment adjustments for the estimated 7,061 HHAs that would qualify to compete in the expanded Model based on CY 2023 performance data stratified by volume- based cohort, as defined in section III.F. of the CY 2022 HH PPS final rule (86 FR 62312). Using CY 2023 performance year data and the 5 percent payment adjustment, based on the 11 proposed quality measures, the 6,391 HHAs in the larger-volume cohort would have an average payment adjustment of positive 0.004 percent (+0.004 percent). Overall, smaller-volume HHAs would have an average payment adjustment of positive 0.006 percent (+0.006 percent). Eighteen states/territories do not have any HHAs in the smaller-volume cohort. The remaining states/ territories have HHAs in both volume-based cohorts. Florida, for example, has 556 HHAs in the larger-volume cohort with an average payment adjustment of positive 0.289 percent (+0.289 percent) and 50 HHAs in the smaller-volume cohort with an average payment adjustment of negative 0.003 percent (-0.003 percent).

The next columns provide the distribution of payment adjustment by percentile. For example, 10 percent of HHAs in the larger-volume cohort would receive downward payment adjustments of more than negative 2.252 percent (-2.252 percent). The median (50th percentile) payment adjustment for the larger-volume cohort is negative 0.086 percent (- 0.086 percent). Among smaller-volume HHAs, 10 percent of HHAs would receive downward payment adjustments of more than negative 2.513 percent (-2.513 percent). The median (50th percentile) payment adjustment for the smaller-volume cohort is negative 0.094 percent (- 0.094 percent). As an example of the range of payment adjustments in a given state, payment adjustments for larger-volume HHAs in Florida range from negative 2.284 percent (-2.284 percent) at the 10th percentile to positive 2.945 percent (+2.945 percent) at the 90th percentile, while the median (50th percentile) payment adjustment is positive 0.211 percent (+0.211 percent).

Table 54 provides the payment adjustment distribution based on the proportion of dual-eligible beneficiaries, average case mix using Hierarchical Condition Category (HCC) scores, proportion of beneficiaries that reside in rural areas, and HHA organizational status. To define cutoffs for the “percentage of dual eligible beneficiaries,” low through high percentage dual-eligible are based on the 20th, 40th, 60th, and 80th percentiles of percent dual eligible beneficiaries, respectively, across HHAs in CY 2021. To define case mix cutoffs, low, medium, or high acuity are based on less than the 25th percentile, between the 25th and 75th percentiles, and greater than the 75th percentile of average HCC scores, respectively, across HHAs in CY 2021. To define cutoffs for percentage of rural beneficiaries, all non- rural, up to 50 percent rural, and over 50 percent rural are based on the home health beneficiaries' core-based statistical area (CBSA) urban versus rural designation. Based on CY 2021 data, HHAs with the highest proportion of dual-eligible beneficiaries served have the highest average payment adjustment (+0.228 percent). In addition, a higher proportion of rural beneficiaries served is associated with better performance. Specifically, HHAs serving over 50 percent rural beneficiaries have an average payment adjustment of positive 0.167 percent (+0.167 percent), compared to a slightly negative average payment adjustment for HHAs serving only non-rural beneficiaries or HHAs serving up to 50 percent rural beneficiaries. Among organizational types, proprietary HHAs have a slightly negative average payment adjustment of 0.047 (-0.047 percent), whereas HHAs in other

organizational type categories have a positive average payment adjustment. BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C 4. Updates to the Home Health Agency Conditions of Participation (CoPs) To Align With the OASIS All-Payer Submission Requirements

As discussed in section V. of this final rule, we proposed technical revisions to the HHA CoPs to further clarify that the existing requirement for reporting OASIS information applies to all HHA patients receiving skilled services. This technical change sought to provide clarity by creating alignment between the terminology used in the CoPs and requirements for data collection and submission to OASIS for purposes of the HH QRP. CMS did not propose any revisions to the specific requirements for submitting data to OASIS or expand the data required to be collected that was finalized in the CY 2023 HH PPS final rule (87 FR 66862). For a review of the burden and operational costs associated with the transition to the OASIS all-payer submission requirements, we refer readers to the CY 2023 HH PPS final rule “Collection of Information” section (87 FR 66877 through 66879) and to the CY 2024 HH PPS final rule for the latest burden estimates (88 FR 77850 through 77855).

We received no comments on the regulatory impact analysis for this proposal and believe there is no additional burden. 5. Provider Enrollment

As previously noted, we proposed several provider enrollment provisions to strengthen and clarify certain aspects of the provider enrollment process. This RIA addresses provisions that: (1) we believe would have a financial impact; and (2) would not, in our view, have such an impact but which require explanation. a. Retroactive Revocations

Section 424.535(g)(1) states that except as described in Sec. 424.535(g)(2) and (3), a revocation becomes effective 30 days after CMS or its contractor mails notice of its determination to the provider. Under existing Sec. 424.535(g)(2)(i) through (viii), there are grounds for which CMS can revoke a provider's enrollment retroactively to the date the provider's non-compliance commenced. Retroactive revocation allows CMS to collect monies that have been paid to the provider since the beginning of its non-compliance. We explained in section VI.A. of this final rule that we proposed to increase significantly the number of grounds for a retroactive revocation in new Sec. 424.535(a)(8)(iii) and (g)(2)(viii) through (xiv). These nine situations and our proposed revocation effective dates (listed in parentheses) are as follows:

An independent diagnostic testing facility's (IDTF's) liability insurance lapsed (date the insurance lapsed).

The provider submitted false or misleading information on its enrollment application (date the provider signed the application's certification statement).

The provider failed to timely report a change of ownership, an adverse legal action, or addition, deletion, or change of a practice location (day after the date by which the provider was required to report the change, addition, or deletion).

The provider's Drug Enforcement Administration (DEA) certificate of registration was surrendered in response to a show cause order (date the certificate was surrendered).

The individual's ability to prescribe one or more drugs has been suspended or revoked by any state in which the physician or non-physician practitioner practices (date of the state's suspension or revocation).

Under Sec. 424.535(i), if we revoke a provider's enrollment, we can revoke all of the provider's other enrollments. The effective dates of these other revocations would be the effective date of the triggering revocation.

A DMEPOS supplier was revoked for non-compliance with a condition or standard in Sec. 424.57(b) or (c), such as the requirement to meet the DMEPOS quality standards (date on which the non-compliance began).

Under Sec. 424.535(a)(8)(i), the provider or supplier submits a claim or claims for services that could not have been furnished to a specific individual on the date of service (the earliest date of service on the claim or claims that is or are triggering the revocation).

Under Sec. 424.535(a)(8)(ii), CMS determines that the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements (the last date of service on the claims in question).

Table 72 contains several data categories. One is the average annual number of revocations that occur in each of the previous scenarios. Another is the average length of time between when the non- compliance begins in these situations and 30 days after the revocation letter is sent to the provider in question. For instance, suppose a provider undergoes a change of ownership effective May 1 but fails to report it to CMS. The revocation letter is mailed to the provider on June 1, meaning the effective date is July 1. The period between the date of non-compliance and the effective date under paragraph (g)(1) is thus 60 days. However, under our proposal the provider would be ineligible for payments for services furnished during this 60-day period because its revocation would now be retroactive.

An additional category addresses the amount of savings that would accrue to the Medicare program from our proposal. Based on internal CMS data, we calculated in the fourth column in Table 72 the average amount of actual payments made to each of the providers in each of the table's nine revocation reasons in Table 72 during the estimated time period in the table's third column. We then multiplied this figure by the numbers in the second column (average annual number of revocations). The fifth and final column outlines the total annual savings that would result. To illustrate--

There are 11 revocations per year for lapses in IDTF liability insurance.

As shown in the fourth column of the table, each of these 11 IDTFs received an average of $19,423 during the 3-month period identified in the third column of the chart.

Multiplying 11 by $19,423 results in $213,653 in total, combined annual savings for that category of revoked providers.

We recognized that in certain prior provider enrollment regulations, we have used a standard $50,000 average annual payment amount when calculating savings figures. However, the totals in the third column of the table reflect the actual amounts the revoked providers were paid. They are accordingly much more accurate than a base $50,000 figure.

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We accordingly project annual savings of $2,197,402,183 stemming from our retroactive revocation proposals. b. Expanded and Clarified Revocation Reasons

In accordance with existing Sec. 424.535(a)(14), CMS can revoke a physician's or practitioner's enrollment if the individual has a pattern or practice of prescribing Part B or D drugs that is abusive, threatens the health and safety or Medicare beneficiaries, or fails to meet Medicare requirements. We proposed to expand this authority to include drugs associated with services covered under Part A. We are unable to establish a savings estimate for this revision, for we cannot predict the number of instances in which we would utilize Sec. 424.535(a)(14) for Part A prescribing patterns or practices.

We also proposed in new Sec. 424.535(a)(8)(i)(D) to clarify that our revocation authority under paragraph (a)(8)(i) includes situations where beneficiary attestations state that the service(s) or item(s) the provider claims were furnished to the beneficiary were, in fact, not. As this is merely an elucidation of our existing authority to revoke in such situations, we do not anticipate additional savings therefrom. c. Additional Deactivation Reason

We proposed under new Sec. 424.547 that CMS may deactivate a physician's or non-physician's practitioner's ability to order, certify, or refer the Medicare services and items identified in Sec. 424.507(a) and (b) if the individual--

Is enrolled in Medicare solely to order, certify, or refers beneficiaries for Medicare Part A or B services or items; and

The individual has not been listed as the ordering, certifying, or referring individual on a Medicare Part A or B claim received in the previous 12 consecutive calendar months.

As with our proposed expansion of Sec. 424.535(a)(14), we are unable to establish a savings or burden estimate for new Sec. 424.547 because we cannot predict the number of instances in which we would apply this authority. d. Comments Received and Conclusion

We received no comments on our regulatory impact estimates for the provider enrollment proposals addressed in this section IX.C.45. Accordingly, we are finalizing these projections as proposed. 6. DMEPOS Supplier Accreditation Organizations

Section VI.B. of this final rule outlines our revisions to Sec. Sec. 424.57 and 424.58 and the reasons for them. Most of our changes would involve: (1) additional requirements an organization must meet to become and remain a CMS-approved DMEPOS AO; and (2) additional surveys that must be performed. The ICR component of these requirements was addressed in section VII. of this final rule. This RIA discusses the principal non-ICR costs and potential savings associated with our provisions. Our proposed estimates are below followed by the comments we received and our responses thereto. a. Costs

For purposes of our cost calculations, we would use the following median wage categories and hourly rates from the BLS May 2024 National Occupational Employment and Wage Estimates for all salary estimates. We believe these occupational classifications, some of which were used in the February 15, 2024, proposed rule referenced in section VI.B. of the subject rule, would be most applicable to our cost impact analysis:

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There are generally two types of surveys that will form the bases of our calculations: (1) initial and reaccreditation surveys (which include the survey and the accreditation); and (2) “off-cycle” surveys, or ad-hoc surveys performed outside of the initial and reaccreditation process to reconfirm compliance with the quality standards. Ad-hoc surveys--which, except perhaps in cases where the supplier is adding a new product, typically does not involve the accreditation process itself but only the survey--can occur in response to, for instance, a complaint or a CMS request that a survey be performed. The hour burdens and fees associated with (1) and (2) vary widely among AOs. However, based on our information, we estimated the following, emphasizing that: (1) the hour burdens could involve multiple individuals (for example, a 6-hour burden could have two individuals contributing 3 hours each); (2) the survey costs to the AO include travel and other expenses; and (3) both the hour and cost burdens could include incidental tasks (for example, the AO contacts the supplier for additional data regarding its reaccreditation application):

Initial and Reaccreditation Processes and Surveys

++ Burden to Supplier for Initial Accreditation and Survey--24 hours and $5,000 fee the supplier pays to the AO.

++ Burden to Supplier for Reaccreditation and Survey--14 hours and $3,000 fee.

(Note that the two preceding burdens include the supplier's preparation and submission to the AO of its accreditation or reaccreditation materials.)

++ Burden to AO for Survey, Review/Decision, and Accreditation (Initials and Reaccreditation)--20 hours.

Off-Cycle Surveys

++ Burden to Supplier for Survey--6 hours and $2,000 cost of the survey.

++ Burden to AO for Survey and Review/Decision--14 hours (cost addressed below).

These figures will be used as inputs for the succeeding estimates.

There is also variance among the DMEPOS AOs regarding the staff that performs the surveys and accreditation reviews. We recognized that many DMEPOS AOs hire contractors to conduct surveys and that non- medical personnel at the AO might make final accreditation decisions. Yet we also wish to remain as consistent as possible with wage categories in other CMS accreditation rulemaking efforts. For purposes of this RIA and our burden calculations only, therefore, we assumed that: (1) contractor personnel (under the OHPTO wage category) would perform the surveys; and (2) nurses and MHSMs would perform initial reviews and make final determinations regarding the supplier's accreditation. As for the suppliers themselves, we believe that administrative personnel would work with the AO in the survey and be involved in the accreditation process (for example, preparing the application, as they do with Form CMS-855 enrollment applications).

There are five categories of surveys, reviews, and accreditations that form the bases of our accreditation cost estimates: (1) complaint investigations and surveys; (2) additional initial surveys; (3) annual reaccreditations and surveys; (4) CMS-directed ad-hoc surveys; and (5) change of ownership surveys. These are addressed in the succeeding subsections. (1) Complaint Investigations and Surveys

Proposed new Sec. 424.58(e)(3)(i)(B) and (C), state, respectively, that after receiving a complaint, an AO must--

Perform an initial review of the complaint to determine whether, based on the complaint and any other information, the supplier may be non-compliant with one or more DMEPOS quality standards; and

Conduct a survey of the accredited facility if the AO's initial review concludes that such non-compliance may exist and a survey is deemed necessary.

In assessing potential ICR costs to the AO, we estimated that each year an AO would report 50 complaints to us. With 8 AOs, this would result in 400 complaints annually. We further assumed the following:

It would take an average of 4 hours for an AO to perform its initial review of potential non-compliance. The hourly rate of this task would be split between nurses and MHSMs, resulting in a wage of $101.71 ($90.00 + $113.42)/2).

Roughly 20 percent of initial reviews would result in an off-cycle survey, which would take the OHPTO 8 hours to perform; this would also result in 80 complaint surveys being performed each year (400 x 0.2).

It would take the AO 6 hours to render a decision on the survey and whether the supplier should remain accredited (as well as to notify the supplier of the decision). We will apply the aforementioned combined $101.71 hourly rate for this task.

The supplier would incur a burden of 6 hours during the survey. The hourly rate would be $44.28.

The cost of the complaint survey would be $2,000, which the supplier would pay to the AO.

Given these assumptions, we project the following annual figures for complaint surveys:

Initial Review Burden to AOs--1,600 hours and $162,736 (400 complaints x 4 hours x $101.71).

Survey Cost Burden to AOs--640 hours and $38,656 (80 surveys x 8 hours x $60.40).

Post-Survey Decision Burden to AOs--480 hours and $48,821 (80 x 6 hours x $94.59).

Burden to Suppliers During Survey--480 hours and $21,254 (80 x 6 x $44.28).

Supplier Survey Fees Paid to AO--$160,000 (80 x $2,000).

Table 57 outlines the annual burden impact of Sec. 424.57(e)(3)(i)(B) and (C). [GRAPHIC] [TIFF OMITTED] TR02DE25.095

(2) Additional Surveys and Reaccreditations

Several other provisions would increase the frequency of surveys to be performed and/or reaccreditations to be undertaken:

Proposed Sec. 424.58(e)(8)(i)(A) states that except as otherwise directed or permitted by CMS, the AO must perform a survey of all suppliers and their locations seeking initial accreditation or reaccreditation with the AO.

Proposed Sec. 424.57(c)(24) states that supplier locations must be resurveyed and reaccredited at least once every 12 months (rather than the current 3-year period).

Proposed Sec. 424.58(e)(8)(ii) states that CMS may, at any time, direct the AO to perform a survey of an accredited supplier or group thereof.

Proposed Sec. 424.551 states that a DMEPOS supplier must enroll as a new supplier, receive a survey, and be reaccredited if it undergoes a non-exempted change in majority ownership.

There presently are approximately 46,500 accredited and enrolled DMEPOS suppliers, and about 1,780 accredited DMEPOS suppliers enroll in Medicare each year.

We currently permit a limited amount of sampling, which allows a DMEPOS AO to forgo performing a survey for certain supplier types, such as large chain suppliers in areas without high rates of fraud, waste, and abuse. While we do not have exact figures regarding the number of supplier locations that are not surveyed due to sampling, we estimate-- solely for purposes of this RIA--the amount to be roughly 50 percent of all chain suppliers. (a) Initial Accreditation

The only additional initial accreditation burden associated with Sec. Sec. 424.58(e)(8)(i)(A) would involve surveys of 50 percent of 1,780 of the aforementioned DMEPOS suppliers (or 890) at a cost to each supplier of $2,000 per survey. Using our previous calculations, Table 58 outlines the annual hour and cost burdens. [GRAPHIC] [TIFF OMITTED] TR02DE25.096

(b) Reaccreditation

The additional burden associated with reaccreditation would involve 46,500 suppliers being surveyed and reaccredited twice more than they currently are within a 3-year period. This means that approximately 93,000 new re-surveys and reaccreditations would occur within the first 3 years of this rule, or 46,500 per year. Added to this will be the 3,560 new suppliers that would become initially accredited and enrolled during this period (1,780 x 2 years), thus totaling an annual average of 48,280 (46,500 + 1,780) suppliers over this period. We will use the following baselines for our estimates:

As previously noted, we project the time burden for a survey and reaccreditation to be 14 hours for the supplier and 20 hours for the AO.

The fee will be $3,000.

The survey hour and wage estimates will remain the same (for example, 8 hours per survey for the AO).

The following wage rates will be used:

++ Suppliers--$44.28 (administrative personnel).

++ AO application review--$101.71 (same as the AO post-survey wage).

++ AO surveyors--$60.40.

The supplier accreditation application process will take 8 hours (14 hours--6 hours for the survey), and the AO application review process will take 6 hours (20 hours--8 hours for the survey--6 hours for the final review/decision).

Table 59 accordingly outlines the burden associated with our annual resurvey and reaccreditation proposals: [GRAPHIC] [TIFF OMITTED] TR02DE25.097

(c) CMS-Directed Off-Cycle/Ad-Hoc Surveys

We projected that CMS each year would direct the performance of 100 surveys outside of the proposed annual reaccreditation surveys and the complaint surveys. We noted that per proposed Sec. 424.58(c)(1)(xxiii)(L), the AO must have a binding written agreement with its DMEPOS suppliers regarding whether the AO, the supplier in question, or both will assume the costs of a CMS-directed survey. Solely for purposes of this impact analysis, we projected that the supplier would pay the survey cost. Table 59 outlines our estimated net costs of ad-hoc/CMS-directed surveys: [GRAPHIC] [TIFF OMITTED] TR02DE25.098

(d) Change in Majority Ownership

Our data indicates that, on average, approximately 3,768 DMEPOS suppliers each year undergo an ownership change involving a new owner of 50.0 percent or more of the supplier. These surveys would be conducted outside the reaccreditation, complaint, and CMS-directed survey processes. Table 61 outlines the following annual non-ICR burden estimates. [GRAPHIC] [TIFF OMITTED] TR02DE25.099

(3) Additional Costs (a) Conflicts of Interest

We proposed new Sec. 424.58(n) several prohibitions against AO conflicts of interest. For instance, proposed paragraph (n)(1) would state that if a DMEPOS AO's owner, surveyor, or employee has or had an interest in or relationship with a DMEPOS supplier the AO has accredited, the AO owner, surveyor, or other employee cannot participate in the survey of that supplier. We estimated in section VII. of this final rule the AO's ICR burden of explaining in its initial and reapproval applications its policies/procedures for avoiding conflicts of interest. Beyond this, though, we are unable to establish a burden estimate for this provision. The reason is that-- aside from the recent criminal case cited in section VI.B. of this final rule--we do not know the extent to which conflicts of interest exist among our 8 DMEPOS AOs. We requested feedback from stakeholders that could help us prepare such a projection. (b) Consulting

We proposed in new Sec. 424.58(m) to prohibit consulting services--as that term will be defined in that paragraph (m)--by an AO and its associated consulting divisions or companies to any DMEPOS supplier to which the AO provides accreditation services: (1) prior to an initial accreditation survey; or (2) within 6 months of the next scheduled re-accreditation survey. We do not know the degree to which such services--which, for purposes of our proposal, focus mostly on simulated surveys--are furnished by DMEPOS AOs to DMEPOS suppliers; nor do we have data regarding potential DMEPOS AO lost revenue (if any) resulting from new Sec. 424.58(m). Therefore, we solicited comments from AOs and suppliers for the purpose of establishing an estimate regarding the financial impact of this proposal. (c) Additional Staff

We recognized that our proposal for annual DMEPOS supplier surveys and reaccreditations would require DMEPOS AOs to hire additional personnel. Regarding surveys, we mentioned earlier that AOs often have contracted staff perform them. Although we estimated the hour and cost burden associated with the additional surveys--using a $60.40 wage and an 8-hour burden for each contracted surveyor--we have no means of calculating any precise increase in the AO's contract costs (such as additional payments to the contractor, costs of contract revisions, or securing a new contractor); this is because we are not privy to the terms of each AO's individual contract. Accordingly, we solicited comments from stakeholders regarding potential costs beyond those relating to the surveyor hour burden. As for AO personnel who review accreditation applications, make final decisions thereon, and perform other related tasks, we would project that the eight AOs combined would hire 12 nurses and 12 MHSMs to handle this additional work. In calculating the burden, we will utilize our previously noted $90.00 and $113.42 wages (for nurses and MHSMs, respectively), which results in a $101.71 average wage. We will also assume a 2,080-hour work year. This results in an hour burden of 49,920 ((12 + 12) x 2,080) and a cost of $5,077,363, which would include training costs. We welcomed comments on this projection, particularly regarding the number of individuals AOs may have to hire. (d) AO Ownership Changes

We proposed in new Sec. 424.58(o) to mirror the policies and procedures in 42 CFR 488.5(f) for situations where an AO undergoes a change of ownership. We are not including a burden estimate for this proposal because we do not anticipate a DMEPOS AO undergoing an ownership change in the coming years. (e) Rebates

We proposed in new Sec. 424.58(h) and (i) that if CMS terminates or suspends a DMEPOS AO's approved status, the AO must refund to a DMEPOS supplier all payments the supplier made to the organization:

As part of the DMEPOS supplier's request for accreditation or reaccreditation; and

Prior to the organization's notification to the DMEPOS supplier of its final decision regarding the supplier's request.

We estimated in the ICR section of this final rule that one AO will be terminated over the next 3 years and one AO suspended over this same period. We cannot project how many suppliers' applications (and surveys) would be in process at the time of termination or suspension. However, if we assumed that 46,500 suppliers will

be annually reaccredited and there are eight AOs, each AO on average will have 5,813 reaccreditations each year (46,500/8), or 484 (5,813/ 12) per month. If we further assume that an accreditation takes 4 months to complete, approximately 1,936 accreditations (484 x 4 months) could be in process with the AO at any given time. With a $3,000 reaccreditation fee that will be refunded and 0.66 AOs being terminated or suspended each year ((one termination + one suspension)/3 years), this results in an annual total refund amount of $3,833,280 ($3,000 x 1,936 x 0.66). (f) Form CMS-855S Initial Application--Required Fee

DMEPOS suppliers that are initially enrolling in Medicare due to a change in majority ownership under proposed Sec. 424.551 would have to pay an application fee in accordance with Sec. 424.514. The application fees for each of the past 3 calendar years were or are $730 (CY 2025), $709 (CY 2024), and $688 (CY 2023). Consistent with Sec. 424.514, the differing provider application fee amounts were predicated on changes/increases in the CPI for all urban consumers (all items; United States city average, CPI-U) for the 12-month period ending on June 30 of the previous year. While we cannot predict future changes to the CPI, the application fee amounts between 2023 and 2025 increased by an average of $14 per year. We believe this is a reasonable barometer with which to establish estimates (strictly for purposes of this proposed rule) of the provider enrollment application fee amounts in the first 3 calendar years of the final provision (that is, 2026, 2027, and 2028). Thus, we project a fee amount of $744 in 2026, $758 for 2027, and $772 for 2028.

Applying these prospective fee amounts to the annual number of projected DMEPOS suppliers impacted by our change in majority ownership proposal--specifically, 3,300 suppliers--this results in a figure of $2,455,200 (or 3,300 x $744) in the first year, $2,501,400 in the second year, and $2,547,600 in the third year. Averaged over this 3- year period, the amount would be $2,501,400, though there is ambiguity about whether this effect would be classified as a transfer rather than a cost. (4) Total Costs

Table 62 outlines the proposed total annual net costs of our changes to Sec. Sec. 424.57 and 424.58. Two things must be mentioned regarding these figures. First, and as already noted, some costs could not be calculated due to a lack of available data. Second, accreditation fees and refunds are not included in the following table because they are considered transfers rather than costs. This is reflected in the accounting statement. [GRAPHIC] [TIFF OMITTED] TR02DE25.100

(5) Comments Received and Responses

We solicited comments on the following specific matters concerning our DMEPOS accreditation cost projections:

Whether there are any other costs that we should consider in our analysis and, if so, what those costs are. This could include costs to parties other than DMEPOS suppliers and DMEPOS AOs.

Whether our hour estimates for each noted task (for example, initial AO review of a reaccreditation application) are reasonable and, if not, what the revised estimate(s) should be.

We received the following comments on our proposed estimates:

Comment: Several commenters believed that our proposed burden estimates were too low, including the projection regarding the number of employees the AOs may have to hire.

Response: While we appreciate these comments, we believe our projections are reasonable and are therefore finalizing them.

Comment: Multiple commenters stated that our DMEPOS accreditation proposals conflict with Executive Orders 14192 and 14267, which direct agencies to reduce burdens and expand--not restrict--competition.

Response: We appreciate these comments. Regarding Executive Order 14192, we refer stakeholders to section IX.J. of this final rule for a discussion of the rule's interaction with this order. As for Executive Order 14267, we do not believe our DMEPOS proposals restrict competition; they merely aim to help us exercise greater oversight of the DMEPOS accreditation process to ensure that DMEPOS payments are only made to compliant DMEPOS suppliers.

Comment: Several commenters requested detailed financial analyses of the impact of our DMEPOS accreditation proposals on: (1) hospice- based suppliers; and (2) small and medium suppliers, especially those in Puerto Rico.

Response: While we thank the commenters for their requests, we believe establishing general estimates applicable to all DMEPOS supplier types and geographical regions is the most appropriate means of helping

stakeholders understand the burden associated with our DMEPOS accreditation proposals. (b) Savings

We stated in the proposed rule that we anticipate considerable savings to the Trust Funds and the taxpayers resulting from our DMEPOS AO provisions. This will stem from what we believe will be dramatic reductions in inappropriate payments to DMEPOS suppliers due to non- compliance with the DMEPOS quality standards. More frequent surveys and reaccreditations will allow us to closely monitor suppliers for non- compliance. Indeed, we noted our concern that DMEPOS suppliers fall out of compliance with the quality standards between their initial accreditation and their reaccreditation 3 years later.

Per our internal data, we project that an average of 339 DMEPOS suppliers are revoked each year based on a termination of their accreditation under Sec. 424.57(c)(24). We noted in Table 72 that the average supplier of the 790 that were revoked for violation of a condition or standard in Sec. 424.57(b) or (c) received $488,328 over a 3-month period. Although we are unable to ascertain the number of these 790 suppliers that were revoked for violating Sec. 424.57(c)(24), we believe it is appropriate to apply the $488,328 figure to those revoked for a loss of accreditation.

Each supplier would be reaccredited three times more frequently than it presently is. Therefore, we will use a figure of 339 revocations occurring 2 years sooner than they otherwise would have and 339 occurring 1 year sooner than they otherwise would have. This results in a 3-year total of $497 million (= (2 x 339 x $488,328) + (339 x $488,328)), or a yearly average estimate of $166 million (= $497 million / 3). As this is only a 3-month total, we must multiply it by 4 to achieve an annual savings (3 months x 4 = 12 months), which we projected to be $664 million. (It should be noted that there will be double-counting if the estimate resulting from this calculation were added to the $386 million estimate in Table 72--because for the overlap that exists between the estimated 790 and 1,017 suppliers, either the retroactive collection brings in reimbursements equal to three months' worth of improper payments, leaving only 9 months' worth to be affected by the reaccreditation, or reaccreditation brings in 12 months' worth, leaving none to be affected by retroactive collection.)

We received no comments on our DMEPOS accreditation savings estimates and are therefore finalizing them as proposed. 7. DMEPOS Prior Authorization

We proposed adding technical language to Sec. 414.234(c)(1) that provides for the exemption process in Sec. 414.234(c)(1)(ii). We also proposed to exempt a supplier from the mandatory prior authorization process (OMB Control No. 0938-1293) in Sec. 414.234(c)(1)(ii)(A) upon demonstration of compliance with Medicare coverage, coding, and payment rules and that this exemption will remain in effect until CMS withdraws the exemption. In proposed Sec. 414.234(c)(1)(ii)(B), we proposed to provide 60-day notice of an exemption from mandatory prior authorization requirements. Similarly, we proposed to provide 60-day notice if an exemption is withdrawn. We will exempt suppliers that achieved a prior authorization provisional affirmation threshold of at least 90 percent during a periodic assessment. If the rate of prior authorizations with non-affirmations submitted becomes higher than 10 percent during a periodic assessment, we would withdraw the exemption for the specific noncompliant supplier, until the following periodic assessment. a. MAC Workload Reduction

Based upon our internal data for CY 2024, looking across the 4 Durable Medical Equipment Medicare Administrative Contractor (DME MAC) jurisdictions, we assessed the number of suppliers that would have met the 90 percent threshold needed to qualify for an exemption from mandatory prior authorization each year. Based upon contractual costs to complete mandatory prior authorization, the total cost for all 4 DME MACs' workload was $13,194,555. We assessed the reduction in workload, accounting for compliant suppliers that met the 90 percent threshold, to be an average of 17 percent reduction, or $2,243,074 in savings in 1 year had this process been in place for CY 2024. We note that the number of compliant suppliers (for example: 6 percent in 2024) does not directly reflect the number of PARs submitted or the workload required by the MACs. In our assessment, we found that suppliers submit PARs for multiple items and multiple beneficiaries, and the most compliant suppliers submit more PARs than the noncompliant suppliers. b. Supplier Burden Reduction

A detailed analysis of the supplier burden reduction is found in the ICR section of this rule; however, an overview of the totals is found herein. [GRAPHIC] [TIFF OMITTED] TR02DE25.101

We were unable to determine the number of compliant suppliers in future years. However, if we average the data from previous years, the average percentage of compliant suppliers or PTANs is 4 percent.

[GRAPHIC] [TIFF OMITTED] TR02DE25.102

The total burden is assessed in Table 80. By reducing the total average annual burden ($6,357,938) by the average number of suppliers (represented by PTANs) not submitting prior authorization requests by 4 percent, we have an average savings of $254,318 per year. c. Total Burden Reduction

We estimated the reduction of burden for suppliers to be $254,318 per year. We estimated the reduction in workload for the MACS to be $2,243,074 per year. Combined, we estimated these savings to equal a total sum of $2,497,392 per year.

We received no comments on this section of the proposal and therefore are finalizing this provision without modification. 8. DMEPOS Competitive Bidding Program

We believe that the provisions of this regulation related to the DMEPOS CBP and payment for CGMs have no net impact. The DMEPOS CBP is required to be implemented by the Act and impacts associated with its implementation have already been accounted for. a. Changes to the Calculation of SPAs and Number of Contracts To Be Awarded

From 2011 to 2018, the competitive bidding program calculated SPAs based on the median (50th percentile) of winning bids but targeted a large number of contracts to award. Current regulations set the SPA as the maximum (100th percentile) of the winning bids, but did not generate the savings required to award contracts under the Act. We expect that the combination of setting the SPA as the 75th percentile and reducing the number of contracts to be awarded will result in SPAs broadly similar to those seen in previous, successful rounds of competitive bidding, and therefore result in zero net expenditure. b. Application of Annual Inflation Update Factors to SPA

In previous rounds of competitive bidding, bidders were expected to account for expected inflation over the contract period when making their bids and thus bid higher to account for these costs. With this change, we expect that bidders will bid lower prices, based on current year costs, with the understanding that these will be escalated by inflation in future years. Over the course of the contract, there should be no net impact from this change. c. Revision of Payment for CGMs

The change in payment category for CGMs will have no net impact because the Medicare payment amount calculated as the bundled rental payment under the classification as items that require frequent and substantial servicing will equal the expected payments that Medicare would have made under the current payment category. d. Other Provisions

The other provisions of this rule are purely an administrative effort with no impact on Medicare coverage or expenditure, and, for this reason, have no cost or transfers associated with them.

If regulations impose administrative costs on private entities, such as the time needed to read and interpret this final rule, we should estimate the cost associated with the regulatory review. Due to the uncertainty involved with accurately quantifying the number of entities that will review the rule, we assume that the total number of unique commenters on this year's proposed rule will be the number of reviewers of this final rule. We acknowledge that this assumption may understate or overstate the costs of reviewing this rule. It is possible that not all commenters reviewed this year's proposed rule in detail, and it is also possible that some reviewers chose not to comment on the proposed rule. For these reasons we thought that the number of commenters would be a fair estimate of the number of reviewers of this rule. We also recognize that different types of entities are in many cases affected by mutually exclusive sections of this rule, and therefore for the purposes of our estimate we assume that each reviewer reads approximately 50 percent of the rule.

Using the wage information from the BLS for medical and health service managers (Code 11-9111), we estimate that the cost of reviewing this rule is $113.42 per hour, including overhead and fringe benefits https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average reading speed, we estimate that it would take approximately 8.05 hours for the staff to review half of this final rule. For each entity that reviews the rule, the estimated cost is $913.03 (8.05 hours x $113.42). Therefore, we estimate that the total cost of reviewing this regulation is $14,379,309 ($913.03 x 15,749) [15,749 is the number of estimated reviewers, which is based on the total number of unique commenters from this year's proposed rule].

We described in section II.C.1.e. of this final rule, to achieve budget neutrality as required by law, we calculated a permanent adjustment by determining what the 30-day base payment amount should have been in CYs 2020, 2021, 2022, 2023, and 2024 in order to achieve the same estimated aggregate expenditures as obtained from the simulated 60-day episodes. One alternative to the finalized -1.023 percent permanent adjustment included finalizing the calculated permanent adjustment of -4.162 percent. Another alternative would be to calculate and only finalize the remaining permanent adjustment needed to account for behavior change attributable to the implementation of the PDGM for CYs 2020 through 2021 claims, rather than through 2022 claims. Another alternative would be to not finalize an adjustment and delay the permanent adjustment to a future year. However, we believe it is most appropriate to finalize only applying the remaining adjustment to CYs 2020 through 2022 claims, as there are several factors that make it difficult to separate the effects

of PDGM and non-PDGM-related behaviors on estimated aggregate expenditures, such as changes to the OASIS assessment which started in CY 2023. Moreover, the utilization trends provide evidence that most of the effects related to the implementation of PDGM occurred by the end of CY 2022.

Finally, we proposed to implement a temporary adjustment to begin reconciling retrospective overpayments from CYs 2020, 2021, 2022, 2023, and 2024, as discussed in section II.C.1.f. of this final rule. Section 1895(b)(3)(D)(iii) of the Act gives CMS the authority to make a temporary adjustment in a time and manner deemed appropriate though notice and comment rulemaking.

We considered not finalizing a temporary adjustment, as in prior rules. Another alternative would be to either finalize the -5.0 temporary adjustment as proposed or finalize a different percentage to begin to recoup the calculated temporary adjustment dollar amount. However, due to the growing temporary adjustment amount calculated from CYs 2020 through 2024, to delay the implementation of a temporary adjustment would lead to many more years of reductions to the payment rate to reach budget neutrality. We did, however, consider commenters' concerns about the magnitude of a -5.0 percent temporary adjustment in tandem with any finalized permanent adjustment. As such, we believe it is most appropriate to finalize implementing a 3.0 percent reduction in CY 2026, that is equivalent to a 0.9700 temporary adjustment factor, to the CY 2026 national, 30-day payment rate. By implementing a -3.0 percent temporary adjustment, we can begin recoupment of retrospective overpayments. Postponing the collection of this large dollar amount would lead to an extended duration of temporary adjustments or larger reductions to the payment rates in future years to reach budget neutrality sooner.

Therefore, we believe it was best to finalize the implementation of the permanent adjustment of -1.023 percent and a temporary adjustment of -3.0 percent to the CY 2026 base payment rate. 2. HH QRP

Regarding our proposal to remove the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure, we considered keeping the measure, but determined the cost and burden associated with maintaining these measures outweigh the benefit of their continued collection and are proposing to remove them.

Regarding our proposal to remove four standardized patient assessment data elements we are removing these in an effort to reduce burden. We considered keeping these but believe that removing will help reduce burden.

Finally, regarding proposals to amend the reconsideration request policy and process, we considered the alternative of leaving the policy language unchanged. However, we have noted some areas in our policy where HHAs may benefit from clearly demarcated deadlines regarding requests for reconsideration. 3. Provider Enrollment

There were two principal alternatives we considered. First, we contemplated proposing more than the nine retroactive revocation grounds addressed in Sec. 424.535(a)(8) and (g)(2)(viii) through (xiv). However, we decided to only include these nine and to address potential other grounds via future rulemaking. Second, we considered a 6-month period (instead our proposed 12-month timeframe) for our proposal in new Sec. 424.547 regarding ordering, certifying, and referring physicians and non-physician practitioners. Given that this would be a new provision and that a 12-month timeframe would be consistent with that which had applied to non-billing providers and suppliers for many years, we decided that a 12-month period would be most appropriate.

We received no comments on the provider enrollment alternatives section of this RIA and are therefore finalizing this section without modification. 4. DMEPOS Supplier Accreditation Organizations

There are several alternatives we contemplated in preparing our proposed revisions to Sec. Sec. 424.57 and 424.58.

First, we considered retaining the current 3-year cycle for resurveys and reaccreditations. However, as explained in section VI. of this final rule, we are concerned that unqualified suppliers are becoming accredited and that existing accredited suppliers are falling out of compliance with the quality standards between their 3-year reaccreditation periods. This has potentially resulted in many millions of dollars being inappropriately paid to non-adherent suppliers. Only through closer vetting of suppliers via more frequent surveys can we be better assured that Medicare is only paying legitimate suppliers.

Second, existing Sec. 424.58(b)(1) lists detailed information that DMEPOS AOs must submit with their initial approval and reapproval applications. We considered retaining this list as is and even eliminating several items therefrom so as to ease the application burden on AOs. However, as we noted in section VI.B. of this final rule, we have not re-approved any existing AOs since 2006. Considering this long passage of time, we believe it is critical to have as much data as possible about our AOs. Therefore, we proposed to increase the scope of information that AOs must submit with their applications. This will help ensure that: (i) we have all the data needed to make informed application decisions; and (ii) only qualified organizations perform DMEPOS accreditation activities.

Third, we contemplated duplicating the requirements that initial AO application submissions, initial AO application decisions, and AO terminations be published in the Federal Register. We ultimately declined this approach and instead proposed to make these pronouncements--including those for suspensions--on our CMS website. We believe this will facilitate faster communication with interested stakeholders.

Fourth, and in a broader context, we considered the extent to which our proposed provisions should parallel those in part 488. We contemplated having practically all of provisions be distinct from part 488, meaning there would be little duplication. This was primarily because of the excessive program integrity risk that DMEPOS suppliers have traditionally posed to Medicare and the consequent need to tailor our provisions to effectively address it. While we indeed proposed a significant number of provisions that are either modifications of those in part 488 or are not included in part 488 at all, we decided to mirror certain provisions in part 488. As explained in section VI.B. of this final rule, we believe this will create precedent for some of our provisions and take advantage of existing, well-established procedures regarding certified provider and supplier accreditation.

We received no comments on the DMEPOS accreditation alternatives section of this RIA and are therefore finalizing this section without modification. 5. Prior Authorization of Certain DMEPOS Items

Regarding our proposal to clarify circumstances under which CMS would exempt a supplier from the prior authorization process in proposed Sec. 414.234(c)(1)(ii)(A) upon demonstration of compliance with Medicare coverage, coding, and payment rules, we did not consider the

alternative of not providing prior authorization exemptions to certain suppliers, as we believe the benefits of the exemption program provides savings to both the Trust Funds, as well as eligible suppliers.

We did not consider alternatives to the 90 percent provisional affirmation threshold. We believe that by achieving this percentage, the supplier would be demonstrating an understanding of the requirements for submitting accurate claims. We do not believe it is necessary for a supplier to achieve 100 percent compliance to qualify for an exemption because unintentional and sporadic errors could occur that are not deliberate or systemic attempts to submit claims that are not payable. We use a 90 percent threshold for exempting hospital OPD providers from the prior authorization process upon a provider's demonstration of compliance with Medicare coverage, coding, and payment rules. Additionally, we use a 90 percent affirmation rate threshold in our Review Choice Demonstration for Home Health Services for home health agencies demonstrating compliance with Medicare requirements. In that program, home health agencies select from different initial review choices, such as pre-claim review (which is similar to prior authorization) and postpayment review of all home health billing periods. After a 6-month review period, agencies are evaluated to determine their review approval rate. If the agency meets the 90 percent threshold, they have additional review options open to them, including relief from most reviews. This threshold represents the best balance between the need to review PARs, while reducing burden on suppliers and effectively utilizing contractor resources, creating savings to the Trust Funds.

We received no comments on this section of the proposal and therefore are finalizing this provision without modification. 6. DMEPOS Competitive Bidding Program

Alternative possibilities for setting the SPA were considered. However, the current method of using the maximum bid did not result in savings while the previous method of using the median, definitionally, forced half the suppliers to accept a SPA below their bid. We believe the 75th percentile represented the best balance of the need to reduce the impact of outlier bids while paying most suppliers at or above their bid amount.

Similarly, while we considered other methods to determine the number of contracts to offer in each CBA, we concluded that the chosen methodology results in the best method of balancing the need to ensure a sufficient number of bidders to meet the anticipated needs of beneficiaries, while ensuring an adequate level of business for winning bidders.

We did not consider alternatives to the other proposed changes as we believe these specific changes were needed to ensure the efficient operation of the CBP.

The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. In addition, HHAs are small entities, as that is the term used in the RFA. Individuals and States are not included in the definition of a small entity.

The North American Industry Classification System (NAICS) was adopted in 1997 and is the current standard used by the Federal statistical agencies related to the U.S. business economy. We utilized the NAICS U.S. industry title “Home Health Care Services” and corresponding NAICS code 621610 in determining impacts for small entities. The NAICS code 621610 has a size standard of 19 million \91\ and approximately 96 percent of HHAs are considered small entities. Table 66 shows the number of firms, revenue, and average revenue per firm for the home health care services category (NAICS 621610).

\91\ https://www.sba.gov/sites/sbagov/files/2023-03/Table%20of%20Size%20Standards_Effective%20March%2017%2C%202023.xlsx.

[GRAPHIC] [TIFF OMITTED] TR02DE25.104

The economic impact assessment is based on estimated Medicare payments (revenues) and HHS's practice in interpreting the RFA is to consider effects economically “significant” only if greater than 5 percent of providers reach a threshold of 3 to 5 percent or more of total revenue or total costs. The majority of HHAs' visits are Medicare paid visits and therefore the majority of HHAs' revenue consists of Medicare payments. Based on our analysis, we conclude that the policies finalized in this rule would result in an estimated total impact of 3 to 5 percent or more on Medicare revenue for greater than 5 percent of HHAs. Therefore, the Secretary has determined that the HH PPS final rule would have a significant economic impact on a substantial number of small entities.

Specifically, we estimate that the net impact of the payment policies in this final rule would be a -1.3 percent impact in the aggregate for CY 2026 or approximately -$220 million. Table 66 details the total percentage payment reduction by number of 30-day periods. We estimate that smaller HHAs (those with less than 100 periods of care and thereby lower overall revenues) would receive a -2.0 percent payment impact in CY 2026. Also, we estimate that larger HHAs (those with more than 1,000 periods of care and thereby higher overall revenues) would receive a -1.1 percent payment impact in CY 2026. Furthermore, table 51 details the total percentage payment impact by facility location. We estimate that HHAs located in the Pacific region would receive the largest impact reflecting a -2.4 percent payment impact. As discussed in the preamble, the net decrease in CY 2026 is mostly driven by the impact of the permanent and temporary adjustments which are reflected in the third and eighth columns of table 51. We solicited comments on this RFA analysis on small entities and did not receive any comments.

Regarding options for regulatory relief, we note that section 1895(b)(3)(D)(i) of the Act requires CMS to annually determine the impact of differences between the assumed behavior changes, which were finalized in the CY 2019 HH PPS final rule with comment period (83 FR 56461), and actual behavior changes on estimated aggregate expenditures under the HH PPS with respect to years beginning with 2020 and ending with 2026. Additionally, section 1895(b)(3)(D)(ii) and (iii) of the Act requires us to make permanent and temporary adjustments to the payment rate to offset for such increases or decreases in estimated aggregate expenditures through notice and comment rulemaking. While we find that the -1.023 percent permanent adjustment, described in section II.C.1.g. of this final rule, is necessary to offset the increase in estimated aggregate expenditures for CYs 2020 through 2022 based on the impact of the differences between assumed behavior changes and actual behavior changes, we would also continue to reprice claims, per the finalized methodology, and make any additional adjustments to account for behavior change related to the implementation of the PDGM and the change to a 30-day unit of payment at a time and manner deemed appropriate in future rulemaking.

As discussed previously in the Alternatives Considered section of this final rule, we explored alternatives to the finalized -1.023 percent permanent adjustment including finalizing the remaining permanent adjustment needed to account for behavior change attributable to the implementation of the PDGM for CYs 2020-2021, rather than through 2022 claims. However, we believe that our data supports finalizing the remaining permanent adjustment to account for behavior changes only for claims in CYs 2020 through 2022. Another alternative would be to delay the permanent adjustment to a future year. We do not believe delaying the permanent adjustment is an appropriate alternative as it would continue to defer application of a permanent adjustment to prevent future overpayments and would allow for continued accrual of the temporary adjustment. Furthermore, we agree with commenters who highlighted multiple other factors which

likely have contributed to behavior change that is outside of the statutory scope to make permanent and temporary adjustments related to the effects of actual behavior change resulting from the implementation of the PDGM and the change to a 30-day unit of payment. We agree that these factors make it difficult to separate the effects of PDGM and non-PDGM-related behaviors on estimated aggregate expenditures. As such, we believe the finalized policies offer the most regulatory relief to HHAs.

In addition, we explored alternatives to the finalized -3.0 percent temporary adjustment to reconcile retrospective overpayments in CYs 2020 through 2024. However, as stated previously in this final rule, we believe that delaying the implementation of a temporary adjustment would lead to many more years of reductions to the payment rate to reach budget neutrality. We also recognized commenters' concerns about the magnitude of finalizing the proposed -5.0 percent temporary adjustment in tandem with any finalized permanent adjustment. Postponing the collection of this large dollar amount would lead to an extended duration of temporary adjustments or larger reductions to the payment rates in future years to reach budget neutrality sooner. We solicited comments on the overall HH PPS RFA analysis and did not receive any comments.

Among the over 7,000 HHAs that are estimated to qualify to compete in the expanded HHVBP Model, we estimate that the percent payment adjustment resulting from this final rule would be larger than 3 percent, in magnitude, for about 660 competing HHAs (9 percent) (estimated by applying the 5 percent maximum payment adjustment under the expanded Model to CY 2023 data). As a result, more than the RFA threshold of 5 percent of HHAs nationally would be significantly impacted.

In addition, section 1102(b) of the Act requires us to prepare an RIA if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the RFA provisions at 5 U.S.C. 604. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. This final rule is not applicable to hospitals. Therefore, the Secretary has certified that this final rule will not have a significant economic impact on the operations of small rural hospitals.

The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than $8.0 million to $41.5 million in any 1 year. Individuals and states are not included in the definition of a small entity. This final rule primarily affects pharmacies and drug stores and home health equipment rental suppliers. [GRAPHIC] [TIFF OMITTED] TR02DE25.105

Since we are uncertain of the DMEPOS suppliers' composition, we asked the public for aid in understanding the various industries that supply DMEPOS products. So far, we have identified only the two industries in table 68.

[GRAPHIC] [TIFF OMITTED] TR02DE25.106

As can be seen in table 68, almost all DMEPOS suppliers are small entities as that term is used in the RFA.\92\ Additionally, table 68 shows the disproportionate impacts among firms, and between small and large firms. In table 68, both industries, Pharmacies and Drug Stores and Home Health Equipment Rental firm size (by receipts), firm count, percentage of small firms, and total average revenue were aggregated to determine the DMEPOS concentration ratios.

\92\ Note, the entire population of DMEPOS suppliers is not known at this time. However, based on our experience, the majority of DMEPOS suppliers are covered in the two industries identified.

For purposes of the RFA, approximately 98.4 percent of pharmacies and drugs stores and home health equipment rental industries are considered small businesses according to the SBA's size standards with total revenues of $49.9 million or less in any 1 year. Individuals and states are not included in the definition of a small entity.

This rule does not affect health care enterprises operated by small government entities such as counties or towns with populations 50,000 or less. HHS generally uses a revenue impact of 3 to 5 percent as a significance threshold under the RFA. The RFA threshold analysis, therefore, indicates that there is not a significant economic impact on a substantial number of small entities. Furthermore, the regulation review costs mentioned previously, is de minimis and would not impose any additional burden on these small businesses. Therefore, the Secretary certifies that this final rule would not have a significant economic impact on a substantial number of small government entities.

In addition, section 1102(b) of the Act requires us to prepare an RIA if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area for Medicare payment regulations and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined, and the Secretary certifies, that this final rule will not have a significant impact on the operations of a substantial number of small rural hospitals.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on state and local governments, preempts state law, or otherwise has Federalism implications. Since this regulation does not impose any costs on state or local governments, the requirements of Executive Order 13132 are not applicable.