The 11th criterion

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Tuesday, December 31, 2002

The HME industry has known that, evenually, CMS was going to have the authority to start adjusting fee schedule prices at its (or its DMERC contractors’) discretion. Today, only Congress can make adjustments to the fee schedule. Starting Feb. 11, the DMERCs will have that right.

It’s been a long time coming. Congress first delegated the authority to HCFA (now CMS) more than 15 years ago, and subsequently refined that authority in BBA ‘97 and BBRA ‘99. The DMERCs have tried to implement some changes, but the hue and cry raised over their methodology in 1998 prompted Congress to put the sheath back on the axe.

CMS, at GAO’s prompting, has developed criteria for its new methodology, and so the sheath comes off the axe and the cutting is likely to commence.

The industry is rightly worried about the kind of cutting that may take place, and for several reasons. For starters, when the DMERCs do cut, it’s likely to cut in increments of 15% since that’s how CMS is interpreting the statute’s “grossly excessive” and “grossly deficient” language. CMS has also interpreted the statute in such a way that would allow the DMERCs to make cuts greater than 15% by simply implementing a number of cuts over successive years.

Theoretically, the same would hold true for increases, but I don’t know that many are putting much faith in anybody’s spending much time on grossly deficient fee schedule prices.

One place the DMERCs should spend time is on the eleventh criterion in the Dec. 13 Federal Register listing: “When using wholesale costs,” CMS writes, the DMERCs should “consider the cost of services necessary to furnish a product to beneficiaries.”

Conventional wisdom holds that HME service fees always get short shrift in the eyes of price-setters. The eleventh criterion should ensure that they do not. HME

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