Escalating Medicare Billing for Ventilators Raises Concerns

WHY WE DID THIS STUDY

CMS has expressed concerns about the recent substantial increase in Medicare billing for noninvasive pressure support ventilators. Ventilator technology has evolved so that it is possible for a single device to treat numerous conditions by operating in several different modes-i.e., basic continuous positive airway pressure (CPAP) mode, respiratory assist device (RAD) mode, and traditional ventilator mode. Medicare covers ventilators and RADs for similar respiratory diagnoses, but the selection of the appropriate device is based on the severity of the beneficiary's condition. RADs are covered for beneficiaries with less severe conditions, whereas ventilators are covered for more severe conditions. CPAP devices are covered for the treatment of obstructive sleep apnea. The emergence of this multimodal device, when combined with Medicare coverage and payment policies that favor reimbursement for ventilators, may create incentives for suppliers to provide and bill for a ventilator when the device is actually being used as a RAD or CPAP device.

HOW WE DID THIS STUDY

We analyzed Medicare claims data on noninvasive multimodal ventilators (coded as E0464), CPAP devices, RADs, and related supplies from 2009 through 2015.

WHAT WE FOUND

In 2015, Medicare paid 85 times more claims for E0464 ventilators than it did in 2009, leading to rapidly escalating expenditures for this device. We examined factors that might-but ultimately do not-explain this increase. The reduced prices for CPAP devices and RADs in Competitive Bidding Areas does not appear to be driving increased billing for E0464 ventilators. Additionally, it did not appear that a large proportion of the beneficiaries with E0464 ventilators had recently switched to these devices from using a CPAP device or RAD.

Instead, the E0464 ventilator billing trend is being driven primarily by 3 national suppliers that have rapidly expanded their market share and that accounted for 54 percent of the nationwide growth in beneficiaries with E0464 ventilator claims from 2012 to 2015. Additionally, there was a dramatic shift in the use of ventilators to treat respiratory conditions rather than neuromuscular conditions. Medicare also paid $25 million for E0464 ventilator claims with indicators of inappropriate billing (e.g., billing for multiple devices or billing to treat obstructive sleep apnea). These claims will be referred to CMS for further review.

WHAT WE CONCLUDE

The information presented in this data brief provides useful contextual information for CMS as it develops further policy and refines its program integrity efforts in this area. For example, CMS could consider monitoring the providers with the largest market shares of ventilator beneficiaries or exploring the causes and implications of the shift in diagnoses on ventilator claims. This data brief also reinforces the importance of CMS's and its contractors' reviews (both prepayment and postpayment) of ventilator claims; these reviews have found high rates of improper payments.