Inherent reasonableness on the horizon

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Wednesday, July 31, 2002

WASHINGTON - As if competitive bidding wasn't enough to worry about, CMS is on the verge of releasing what may be a final rule on the exercise of its inherent reasonableness authority (IR).

IR would allow CMS and the DMERCs to cut reimbursement of durable medical equipment items by a maximum of 15% per year, but federal payers have been restrained from using this authority until CMS issues its final rule.

That rule has been finalized inside CMS, according to Asela Cuervo, AAHomecare's senior v.p. of government relations and general counsel, and is being cleared by the Office of Management and Budget for release soon. Cuervo is arguing that the rule should come out in proposed, not final, form.

"This stuff is stale. It was 1998 when this came out. We're going on five years now," she said.

When CMS released its IR rule in 1998, it emerged as an interim final rule. As soon as the comment period ended, CMS moved ahead and began using its authority. But CMS quickly came under fire as critics took issue with the center's data collection methodology.

When Congress passed the Balanced Budget Refinement Act, IR was put on hold pending further studies by various agencies, including the GAO. Those studies have generally supported the exercise of IR by CMS. The industry still does not.

IR "puts a great deal of discretion in the hands of CMS," said Cuervo. "They have not hesitated to delegate that discretion to the DMERCs. And from what we've seen with the way that discretion has been used, it's certainly a concern." HME

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