GAO Reviews Medicare's Approach to Covering Medical Equipment, Including Insulin Pumps

The report foresees the rules for durable medical equipment becoming increasingly inadequate to keep pace with technology advances, and wants a review of policies.
Published Online: July 18, 2017
Mary Caffrey
A report from the Government Accountability Office (GAO) calls for a review of Medicare’s policies for covering durable medical equipment (DME), and asks CMS to weigh changes that would extend coverage to novel devices and encourage innovation.

Historically, Medicare will not pay for devices that don’t meet the DME test: the device must serve a medical purpose, can withstand repeated use, and have an expected life of 3 years. As technology advances, however, the lines are blurring between durable and disposable technology, and some devices that combine both—with potential to help patients achieve better glycemic control or greatly improved sleep—will fall outside current definitions. GAO predicts missed opportunities to keep patients healthy, and thus wants to review DME payment policies.

Allowing payment for disposable medical equipment—or asking Congress to create a new benefit category—might prevent head-scratchers like a call the report cites: Earlier this year, CMS made a breakthrough policy change when it ruled that certain seniors with diabetes could have a Dexcom G5 continuous glucose monitor. But then a Medicare Administrative Contractor said seniors could only be reimbursed if they didn’t use the Dexcom with their smartphone.

That ruling, reported by The American Journal of Managed Care®, was specifically cited by GAO as an example of how “CMS has already faced issues accommodating new technology.”

The report found that CMS’ challenges with technology will only increase as devices like new versions of the artificial pancreas get closer to completion. Increasingly, traditional medical device companies are working with technology giants like Google and Apple to create products that require minimal interaction from patients with diabetes and chronic disease.

Their goal: if medical devices have the usability of a smartphone, patients will stick with them and stay healthy, while feeding data to their doctors and health systems. Thus, devices will easily track progress at both the individual and population health level. Already, device and technology companies are forming partnerships with these goals in mind. Devices will soon become smaller and cheaper, which should also appeal to Medicare.

GAO’s report examined several types of devices: durable and disposable insulin pumps, infusion pumps, and blood glucose monitors. Insulin pumps that have both durable and disposable components present the current challenge, because Medicare has refused to pay for at least one popular pump (which appears to be Insulet's Omnipod based on the description in the report) after ruling its insulin delivery mechanism is disposable even though the bulk of the device lasts more than 3 years. This is the type of hair-splitting where GAO sees future problems. Six of 21 stakeholders interviewed for the report said medical device technology is advancing, and 5 “specifically cited CMS’ definition of DME as a disincentive to technological innovation, such as the development of disposable substitutes.”

“As advancing technology results in changes to the functionality of devices, including the development of disposable substitutes, CMS will likely have to consider how its benefit coverage policies will apply to them,” the report stated.

Disposable substitutes for DME can have certain advantages: some disposable models are lighter and quieter; with certain patients, disposable products can promote adherence if it's not necessary to clean and transport supplies, as it is for durable products. In some care settings, disposal products reduce nurses’ workloads and prevent infection. On the downside, DME varieties are preferred when dosing needs to be highly specific.

The GAO report goes into detail on several potential DME substitutes, with their potential benefits and limitations; it outlines the current incentives and disincentives for developing disposable DME substitutes. Lack of Medicare reimbursement for disposable equipment topped the list of barriers.

What can be done? The GAO recommended the following:
  • CMS should evaluate the possibility of paying for disposable devices, including the potential for overall cost savings.
  • If necessary, CMS should ask Congress to authorize a new benefit category if the current options would be inadequate to pay for disposable equipment.

GAO reports that HHS, which includes CMS, believes this type of evaluation is premature. But GAO says it “continues to believe an evaluation is needed to help HHS anticipate and plan for significant changes using a forward-looking process.”


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