CPI zigs and zags: up, down and up

Monday, December 31, 2001

WASHINGTON - The frosting that CMS spread over last summer's CPI increase has lost a little of its sweetness, but providers are still better off than they were in 2000.

The math here is not calculus, but it's a little convoluted. Last July, CMS gave providers a 3.7% CPI increase, and another 3.2% on top of that for the previous six months. Between July and December, then, the DME fee schedule jumped 6.9%. CMS also boosted reimbursement for respiratory therapy by .3%.

Starting this month, CMS will increase reimbursement for respiratory therapy another .3% or 69 cents a month per oxygen patient. On the DME side, providers will lose the additional 3.2% CMS gave them last July, but gain .6%. The DME fee schedule will pay providers 4.3% more in 2002 than in 2000.

Overall, good news. But such zigzagging reimbursement, even if ultimately it zags up, brings its own challenges.

For one, after six months of the inflated CPI "you get used to it," sort of like a pay raise that's given and then taken away, said Steve Carmichael, president and CEO of Pulmocare Medical Supply in Champaign, Ill.

"It's not a huge number, but because of this unnatural six-month puff in (DME) reimbursement, providers will see a little more red if they've been in the red and a little less black if they've been in the black," Carmichael said.

Additionally, when Congress implements this kind of up-and-down reimbursement change, even with good intentions, it can make the industry's revenue growth look unpredictable to lenders if they don't know what's going on, said Asela Cuervo, AAhomecare's v.p. of government relations.

"It looks like you had this huge spike and then you are falling back down," she said. "It doesn't look like a stable industry." HME