Economist on PMDs: 'It is hard to argue why these cuts would be good public policy'

Sunday, November 5, 2006

ALEXANDRIA, Va. - CMS's plan to slash reimbursement for power mobility devices by up to 41% on Nov. 15 could force 1,500 providers to close their doors, according to an AAHomecare-commissioned study.

Also in the study, which was released last week: Reduced reimbursement for PMDs could cost Medicare up to $5.9 billion over the next eight years due to increased hospital stays and increased physician and home healthcare services.

Economic consultant Clifford Fry and his team at RRC, a Bryan, Texas-based consulting firm, conducted the study for AAHomecare.

The study recommends that CMS rely on market forces--not price controls--for the provision of PMDs. "Price controls will impair the functioning of market forces and decrease access to power mobility," Fry states in the study.

Also in the study:

- CMS is imposing price controls below market price for PMDs.
- These price controls will result in "massive short-run shutdowns of supplier firms."
- Access to PMDs may decline from 30% to 50%.
- The new pricing will not cover the total cost of providing equipment and services. Until service is part of pricing, the agency should delay the reimbursement cut.

"The study raises legitimate questions about whether CMS had sufficiently examined the impact of their price cuts on access to power wheelchairs," Fry said. "It certainly seems that they have overlooked the impact of having 1,500 or more suppliers abruptly leave the market, and the long-term impact of paying more in healthcare costs for beneficiaries who don't have the power wheelchairs that they need.

"It is hard to argue why these cuts would be seen as good public policy," he continued.