Industry continues to battle Medicare reform

Sunday, November 30, 2003

December 1, 2003

WASHINGTON - It’ll be weeks before the dust settles and the full impact of Medicare reform legislation on HME providers can be assessed, but the early line is that there’s little if any silver lining.

That said, the industry hasn’t given up its efforts to mitigate the reform bill’s impact on providers. Even as President Bush prepares to sign the bill into law next week, AAHomecare is working with lawmakers to improve the bill’s language and lessen its negative impact on providers, said CEO Kay Cox.

There is also a chance that before the president signs the bill, Congress could tweak it - adding words here, removing them there - and improve the lot of HME providers, said John Gallagher, vice president of government relations for The VGM Group.

That would be a good thing because “I don’t think the industry has ever seen anything like this,” said healthcare attorney Tom Antone. “It imposes huge reimbursement reductions at the outset with the promise of more with competitive bidding.”

As written, the bill would:

- 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 the top five items and services. Tentatively, the list would include wheelchairs, nebulizers, diabetic supplies and hospital beds/air mattresses. Cuts could be as high as 22%.

The U.S. Senate passed Medicare reform legislation Nov. 25 by a vote of 54 in favor and 44 against. The House passed the bill 220 to 215 on Nov. 22.

At the moment, the bill’s most worrisome provision appears to be its reimbursement cut for respiratory medications. By one estimate, that cut could be as high as 80% when based on the ASP rather than the AWP. If that’s the case, providers say, look for most HMEs to exit that business line, creating a severe access problem for beneficiaries.

If all components of the bill go into effect as written, it bodes badly for HMEs and could drive inefficient operations out of business, say industry watchers.

“The bright spots are for those business that are positioned and have been positioning themselves to handle competitive bidding,” said a provider who asked that his name not be used. “If you haven’t done that, you are going to have to go out of business.”

Fortunately, the industry has a year before major cuts go into effect and several years before competitive bidding gets underway. Before that happens, the industry could convince lawmakers to amend the bill so that it’s less onerous to HMEs, Gallagher said.

“The fight continues,” he said.