CPI freeze torpedoed, but for how long?

Monday, May 26, 2003

May 27, 2003

WASHINGTON - Lawmakers scuttled plans last week to freeze for 10 years the consumer price index (CPI) for DME. The freeze was put forth as a way to help pay for a $25 billion reimbursement increase for rural healthcare providers.

The U.S. Senate had included the CPI freeze as part of its package of tax cuts, but drop it during negotiations with the House that produced a compromise $350 billion tax cut.

“The House and White House made it clear that they didn’t want to address anything in the tax bill but taxes,” said Dave Williams, Invacare’s director of government relations. “They want to save all Medicare issues for the Medicare reform package.”

If it had passed, the Senate tax plan would have: 1. Froze the CPI on DME, prosthetics and orthotics for 10 years; 2. Limited reimbursement for covered drugs to 85% of AWP; reimbursement is currently 95% of AWP; 3. Applied coinsurance and a deductible for clinical diagnostic lab tests.

Eight-six senators voted for the Senate plan, which did not include competitive bidding. It’s a reach, however, to say that 86 senators oppose competitive bidding and would not support it in the future as part of a Medicare reform package, Willams said.

“It is pretty clear that there will be a rural health initiative, and that other health interests are going to have to pay for it,” Williams said.

Exactly how it will be paid for remains to be seen. In the House, Rep. Bill Thomas (R-Calif.) is chairman of the powerful Ways and Means Committee and a big competitive bidding booster.

Charles Grassley (R–Iowa), chairman of the Senate Finance Committee, put forth the 10-year CPI freeze for DME as a way to help pay for a reimbursement increase for rural healthcare providers. Some interpret that as a sign he won’t accept a House proposal that includes competitive bidding.

Others aren’t so sure. Last year, Grassley and Max Baucus (D-Mont.) proposed a competitive bidding program for DME in metropolitan areas that contain 500,000 or more people (a plan that conveniently includes all or most of Iowa and Montana).

Grassley has said he’d welcome a plan other than competitive bidding - if it saves the necessary money to pay for an increased rural health benefit.

As far as a 10-year CPI freeze goes, that seems unlikely. The Congressional Budget Office put that number together quickly, without a lot of research, to make Grassley’s numbers work, say industry watchers.

“How could any industry withstand a 10-year freeze?” asked one industry watcher.

Given the uncertainty surrounding possible cuts to Medicare’s DMEPOS budget, it’s odd that providers aren’t making more noise on Capitol Hill, especially voicing opposition to competitive bidding, said John Gallagher, VGM’s vp of government affairs.

“There is going to be a (plan) coming out of the House and into the Senate in the next two or three weeks,” Gallagher said. “Now is the time to get vocal.”

With elected representatives home for Memorial Day week, it’s a great time to meet them at town meetings and voice opposition competitive bidding, Gallagher said.