The next move

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Wednesday, December 31, 2003

Editor, HME News

The news is grim. Congress has legislated competitive bidding. And a CPI freeze for DME. And a transition from the average wholesale price (AWP) to the average sales price (ASP) for respiratory medications. And FEHP cuts. Ad infinitum, ad nauseum.

All of this comes on top of a power wheelchair scandal in Houston, front page derision of providers in mainstream newspapers all across America, a starring role for power wheelchairs in another NBC Nightly News ‘Fleecing of America’ installment. (Don’t forget the Jan. 26, 1998 ‘Fleecing’ report on suppliers in general.) And a new, stricter interpretation of medical coverage guidelines for K0011 power wheelchairs that could make it much more difficult to get qualified beneficiaries in chairs they need.

This was not the industry’s finest hour. Could it have played any differently? Well, that’s the question of the hour, isn’t it?

The HME industry has not faced such a radical reorientation of its business since implementation of the Six-Point Plan, which capped rental fees for DME, in 1987. The Balanced Budget Amendment of 1997 reduced oxygen reimbursement by 30% and ordered two competitive bidding demonstration projects that have come to fruition. But now Congress wants competitive bidding in the 10 largest metropolitan areas in 2007 and in 80 MSAs in 2009.

You don’t live in one of the 80 most populous regions? This won’t affect you? Try again. Congress has told CMS it can use its IR authority to set pricing with competitive bidding. You can run, but you won’t be able to hide from the pressure of competitive bidding.

The National Journal and one of the three network news broadcasts have declared the DME industry as the big loser in this fight. The pharmaceutical companies, the hospitals, the physicians, the HMOs - it looks as if everyone else turned out a winner.

It’s tempting to blame the industry’s single-minded strategy of defiance to competitive bidding for this devastation. But that would be a mistake. Here’s why. The industry has not yet been able to conjure a better world for itself. In theory, it would have been great to go to Congress with a vision and a plan for DME. Wouldn’t you rather be arguing for the adoption of a New Deal for DME than fighting off a legislative body’s plan for your industry? In theory, yes.

But what is the plan? Is unbundling of the fee schedule the way to go? Seems to make sense on the face of it. After all, the disconnect between the provider’s sense of the service he provides and the appreciation of that by legislators and regulators is profound. In this month’s HME NewsPoll, 43% of 97 respondents believe that unbundling ought to be part of a New Deal for DME.

Very quickly, however, you run into a problem. If CMS splits reimbursement several ways, what’s to keep a manufacturer from bidding on the equipment piece of the contract and farming out a service component to the provider, as is done at the VA?

Should the industry propose fee schedule changes to legislators as a way to mitigate their aggressive campaign for competitive bidding? About one out of every four NewsPoll respondents thinks so. The industry’s political leadership has proposed negotiated rulemaking, but lawmakers aren’t interested.

Fewer than one out of five respondents thinks the industry should just plow ahead with opposition to the proposed changes. That’s worked for the industry in the past. But the breadth of the Medicare Prescription Drug Act’s changes are so vast, that opposition alone will not do.

Where else could the industry propose that it go for the welfare of the Medicare beneficiary? To bundling home care? To some kind of capitation? It’d be a mistake to think the industry’s political leadership hasn’t been exploring alternatives.

“We’ve had constant discussions among the [AAHomecare] board and lobbyists about alternatives to what could be proposed, and we played through those strategies just like you would in a war room,” said AAHomecare Chairman Joel Mills.

AAHomecare launched a Future of Reimbursement committee to develop alternative strategies, but the group disbanded to mount a stiff campaign against the onerous provisions of the Drug Act.

Going forward, the industry will work together to fight the FEHP cuts and the ASP transition. But at the same time it will also have to work on the development of a new vision for itself and a New Deal for DME.

If we cannot ourselves achieve consensus on what we want the future to look like, how can we blame legislators for imposing their own vision on us?

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