Medicare payments jump a whopping 20% for DME

Wednesday, April 30, 2003

WASHINGTON — Medicare spending for durable medical equipment surged by 20% last year to $6.5 billion, according to data gathered by CMS’s Office of Actuary. In March, the Medicare Board of Trustees submitted its annual financial report to Congress.

The 20% growth clip ranks DME as the second fastest growing sector of the Medicare program — after hospice, which grew by 24% — and more than doubled CMS expectations in last year’s report. In 2002, Medicare’s actuaries had projected that DME expenditures would rise by only 9%.

The four fastest growing product categories last year were:

Power wheelchairs: 54%

DME drugs: 25%

Blood Glucose testing: 18%

Home oxygen: 13%

One of the Medicare officials who is preparing the report said the removal of those four items would have caused a 9% increase in spending for DME. “So they have a significant bias in terms of the rates of increase,” the official said.

For 2002, preliminary findings at the Office of Actuary have broken out DME expenditures this way:

Home oxygen: $1.8 billion

DME drugs: $0.8 billion

Power wheelchairs: $0.6 billion

Blood Glucose testing: $0.6 billion

In other words, the four largest DME product categories have garnered a $3.8 billion or a 58% share of total Medicare expenditures for DME.

The Office of the Actuary defined DME drugs as “mainly albuterol and ipratropium bromid.” The 25% growth rate in this product category was in line with growth rates in other drug categories covered by Medicare.

While HME providers have long advocated that the home medical equipment market should increase, given that patients are leaving the hospital sicker and quicker, the 20% surge in DME spending took many by surprise.

“We certainly haven’t seen that kind of increase,” said Steve Knoll, president of Knoll Patient Supply in Topeka, Kan. And chairman of AAHomecare. “No one else that I have talked to since has any indication in their business that that kind of growth has occurred.”

But at first blush, Knoll isn’t daunted by the revelation that the DME slice of the Medicare pie is growing twice as fast as in-patient hospital care.

“If those diabetic products and respiratory products are keeping people out of emergency room, we are doing the right thing” he said.

Nor does growth in those product categories surprise Asela Cuervo, senior vice president of government relations at AAHomecare.

“If you look at the disease groups that fall into these categories, they’re in the news everyday,” said Cuervo. “You hear about the epidemic in diabetes constantly now. A big study last year found that COPD was the fourth leading cause of death, and the only cause of death that’s growing. These Medicare beneficiaries are the population that needs to be targeted most heavily because they have the complications.”

Still, no matter how passionately the industry argues for a greater role in the healthcare continuum of care, they also know that dramatic growth raises red flags at CMS, especially as consumer- driven television commercials target Medicare beneficiaries with advertisements for power wheelchairs and diabetes products.

“The top three growth items are everything you see pumped out on TV,” said Bill Bayer, president of Medical Express in Bristol, Pa. HME