AAHomecare tackles Medicare pricing methodology

Monday, February 28, 2005

ALEXANDRIA, Va. - AAHomecare has hired the research firm of Muse & Associates to conduct a study on the alternatives to gap-filling reimbursement, the controversial methodology Medicare uses to establish new allowables.

Providers and industry watchers have long complained that gap filling is inaccurate and often under prices products. Because Medicare has created 49 new power wheelchair codes that are scheduled to go into effect Jan. 1, 2006, gap filling is now a bigger concern than ever. Unless CMS adopts an alternative, they will use the current gap-filling methodology to determine a fee for these codes.

The AAHomecare study will be designed to provide several types of information. It will help provide CMS a basis for developing alternative price-setting methodology. The study will also help to establish a more formal process to ensure that the homecare community can share information with CMS about refinements to the new price-setting methodology, AAH stated in a release.

CMS uses gap filling to determine the median price of the products in a particular code. It then deflates that price back to what it was or may have been in 1986. From there, CMS uses a formula that considers annual CPI increases to determine the new price.

In determining a new reimbursement, gap filling doesn’t adjust for Medicare CPI freezes. Consequently, new allowables are often artificially deflated. Likewise, using gap filling to set allowables for products that didn’t exist in 1986 further depresses the fee schedule, providers say.