Medicare reform proposal whacks HME reimbursement

Sunday, November 16, 2003

November 17, 2003

WASHINGTON - Legislators working on Medicare reform agreed last week to a five-year CPI freeze for DME beginning in 2004 and to reimbursement cuts on five bread-and-butter products that could be as steep as 22% beginning in 2005.

Negotiators also agreed to conduct competitive bidding in 2007 in the 10 largest metropolitan statistical areas for six or fewer items. Two years later, the proposed legislation calls for competitive bidding in the 80 largest metropolitan areas.

The proposal staggered and riled HME leaders.

“For them to come and ask for reductions on top of the freeze, we think is ridiculous,” said AAHomecare Chairman Joel Mills. “We thought we already had a freeze for a period of five to seven years, and for them to come in and take more blood from us is just outrageous.”

In 2005, using median prices set by the Federal Employee Health Benefit Plan, Congress would begin cutting reimbursement for the top five items and services. Tentatively, the list would include oxygen, wheelchairs, nebulizers, diabetic supplies and hospital beds/air mattresses, according to AAHomecare.

Currently, Medicare reimbursement for nebulizers is 22.77% higher than FEHP. Medicare reimbursement for K0011 power wheelchairs is 3.28% higher.

There’s a chance that negotiators could approve a final Medicare reform bill by week’s end, said industry watchers. Once a bill is agreed upon, it would still have to pass in both houses of Congress before being sent to the president to be signed into law.

Said AAHomecare President Kay Cox: “We strongly oppose this agreement, and our grassroots work throughout this week will be increased. They came out with the freeze, and then they came out with reductions and now they want to go into competitive bidding. It’s a triple whammy. It will be devastating to the homecare industry.”

If there is a bright side, it’s the postponement of competitive bidding until 2007.

“It could have been worse,” said Cara Bachenheimer, Invacare’s vice president of government relations. “We could have had full competitive bidding starting in 2004.”

AAHomecare believes the current initiative has a 50-50 chance of reaching the President’s desk. In recent weeks, opposition to plans for more privatization in the Medicare program have threatened to doom the legislation.

"We cannot accept a proposal that is going to threaten the whole Medicare system," Sen. Edward. Kennedy, D-Mass., told the New York Times after the tentative deal was reached. Kennedy called the proposal for competition "an untried, untested, unworkable program."

Also in the proposed legislation, a rural carve-out would take effect in 2009, but rates determined by competitive bidding would phase in throughout the country.

The conferee’s agreement includes a provision that would require all HME suppliers to become accredited and mandates codification of all of the elements in CMS’s 10-point Wheeler Dealer plan.