Bush signs Medicare legislation

Sunday, December 7, 2003

December 8, 2003

WASHINGTON - President Bush signed legislation today that creates a Medicare prescription drug benefit but that also hits the HME industry with a host of reimbursement cuts, including competitive bidding.

The bill, which the government estimates will cost $400 billion over 10 years, would remake Medicare in part by offering drug benefits to 40 million elderly and disabled people while giving insurance companies and private health plans a huge new role in Medicare.

As written, the bill requires the following HME reimbursement cuts:

- Freeze the CPI fee schedule for five years;

- Make accreditation mandatory.

- Implement competitive bidding in 2007 in the 10 largest metropolitan statistical areas for six or fewer items; two years later competitive bidding would be expanded to the 80 largest metropolitan areas. CMS could expand competitive bidding prices for an item nationally.

- Reduce reimbursement for respiratory drugs from 95% of AWP to 85% in 2004. In 2005, reimbursement would be based on the average sales price plus 6%.

- Use the median prices set by the Federal Employee Health Benefit Plan to cut reimbursement for eight items and services. Tentatively, the list would include oxygen, wheelchairs, nebulizers, diabetic supplies and hospital beds/air mattresses. Cuts could be as high as 22%.

Fortunately for the HME industry, there is time to lobby lawmakers to lessen or do away with the cuts before they are scheduled to take effect. If implemented as written, the sheer size of the cuts would drive many providers out of business and create access problems for beneficiaries, say industry watchers.

AAHomecare is still formulating its strategy for the coming year, but in Washington, money talks. To be more of a player, the industry must raise more money, said Chairman Joel Mills.

“ Without a doubt, this proved to us that we need to be a bigger player on Capital Hill,” Mills said. “We have upgraded our image and upgraded our noise level and grassroots participation. Now we need to develop some champions on Capitol Hill, and one way to do that is to improve our political action committee funds so we can have a little bit more of war chest.”