Proposed Medicare cuts called ‘outrageous‘

Sunday, November 30, 2003

WASHINGTON - Legislators working on Medicare reform agreed last month 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 50 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 DME items and services. Tentatively, the list would include oxygen, wheelchairs, nebulizers, diabetic supplies and hospital beds/air mattresses, according to details circulated by AAHomecare Nov. 12.

Currently, Medicare reimbursement for nebulizers is 22.27% higher than FEHP. Medicare reimbursement for K0011 power wheelchairs is 3.28% higher, according to information provided by AAHomecare.

The industry does see a bright side in 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.”

Said AAHomecare President Kay Cox: “Four months ago, Thomas would have absolutely sealed the deal on competitive bidding. But with everyone’s enthusiasm with grassroots, we have been able to keep that at bay.”

Some within the industry are hopeful that competitive bidding can be kept at bay until 2006 when its principal champion, Rep. Bill Thomas, R.-Calif., will give up chairmanship of the House Ways and Means Committee.

Meanwhile, AAHomecare believes the current initiative has only 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.