Reconciliation bill does little to improve on HME provisions

Thursday, March 18, 2010

WASHINGTON - A $940 billion healthcare reform bill released by the House of Representatives Thursday contained a revised proposal to tax medical device manufacturers, but little else of note for the HME industry, stakeholders said.

The Health Care and Education Affordability Reconciliation Act of 2010, which would amend the Senate health care reform bill passed in December, would increase the tax from 2.5% to 2.9% on Class II and III medical devices but would exempt Class I medical devices, which includes DME such as canes, crutches and walkers. It would also exempt items typically purchased by the public at retail for individual use. The tax would start Jan. 1, 2013, a year earlier than previously proposed.

"The retail provision is not 100% crystal clear, but that could be good for us," said Cara Bachenheimer, vice president of government relations for Invacare. "The Class I exemption is obviously good for us."

Still, others say any tax on medical device manufacturers could have a negative trickle down to HME providers.

"We continue to tell lawmakers that the majority of HME patients are Medicare/Medicaid and there is no way to pass on that cost to the patients," said Jay Witter, senior director of government affairs for AAHomecare. "The HME sector will have to eat the cost."

The bill also contained a couple of provisions that would boost efforts to address fraud and abuse, including a $250 million increase in funding over the next decade; and "enhanced oversight" for new HME providers, requiring payments to be withheld for 90 days if the Department of Health and Human Services determines that there is a significant risk of fraud.

"That could make it difficult for (providers) who are just starting out to actually maintain their businesses," said Stacey Harms, manager of government affairs for AAHomecare, which has promoted its 13-point action plan since 2008. "There should be additional steps to go through in the beginning, but I don't know if withholding all payments for 90 days is a step in the right direction."

Other HME-related provisions, including an expansion of Round 2 of national competitive bidding and the elimination of the first month purchase option for standard power wheelchairs, remain unchanged.

While the House was expected to vote on the Senate bill over the weekend, final health care reform could drag on for weeks, said stakeholders.