Redefine industry in economic terms

Saturday, February 28, 2009

The new administration and Congress have begun 2009 by trying to stimulate the economy and by reauthorizing and significantly expanding the State Children’s Health Insurance Program (SCHIP) to the growing number of uninsured. The good news: There haven’t been additional DME reductions proposed to help pay for these initiatives. However, stakeholders anticipate that national competitive bidding and additional reductions to oxygen and power wheelchairs will be considered for potential inclusion in a comprehensive Medicare package that must pass by the end of 2009 for physicians to avoid a 20%-plus reduction in payments from occurring Jan. 1, 2010.

This raises the important question of how the industry can re-craft its message, in economic terms, to ensure it strongly resonates with the new administration and Congress as they discuss competitive bidding and a comprehensive Medicare bill.

When evaluating the focus and stated goals of the new administration, it’s imperative that we develop our message to strike an economic chord with policy-makers. Only then will it resonate and, ultimately, be supported by the administration and by Congress. Based on the significant payment decreases and increased regulatory mandates that have occurred over the past few years, the industry is in a good position to document the reductions and their impact.

Here are the areas that the industry should quantify to show the impact and significant changes that have already occurred:

4 Payment reductions - 9.5% cut for product categories included in Round 1 of competitive bidding (1/2009); power wheelchair payments reduced 27% on average (11/2006); 36-month oxygen cap; no update for inflation (for most DME).

4Operational cost increases - Insurance; maintenance and fuel for delivery vehicles; rent; wages for trained/certified staff, etc.

4Compliance cost increases - 25 supplier standards; billing and collection costs; mandatory accreditation; securing a surety bond for each location; and other mandated Medicare requirements.

Quantifying these reductions and increased regulatory mandates will show that the industry has given more than its share, even as a more cost effective alternative to other modalities of care. This should resonate with policy-makers looking for avenues to strengthen the economy and create or preserve jobs.

The overarching message that needs to be articulated to Congress and the new administration: The industry has already encountered significant payment reductions and unfunded government mandates in the form of increased regulatory requirements. We must also convey that many of these mandates and regulations were supported by the industry in order to strengthen anti-fraud measures. The bottom line remains that the industry cannot sustain more payment reductions or further unfunded mandates without eliminating jobs and reducing access to the most cost-effective treatments. The negative impact would be greatest in outlying areas where access for Medicare beneficiaries is jeopardized and, as revenues decline, the economic consequences would be counter to the stated goals of the new administration.

The industry’s position in support of eliminating competitive bidding provides a perfect opportunity to carry this message. Pre-competitive bidding data shows there were 9,198 unique suppliers across all bidding categories. When the winning bids were announced, that number decreased to 376 providers, a reduction of more than 95% of the suppliers of those items and services in the 10 bidding areas. Extrapolated out across the next 70 areas, or nationally, and we are talking about tens of thousands of companies out of business, hundreds of thousands of job losses, significantly limited access to medical equipment and, ultimately, higher costs to the Medicare program due to increased ER visits and inpatient treatments.

Throughout this year, there will be opportunities to highlight the cost effectiveness that our industry brings to the overall healthcare delivery model. However, in order to secure positive outcomes in the Medicare and competitive bidding debate, we must quantify how the industry has changed over the past few years and why Congress should truly consider home care a part of the overall healthcare solution. hme

Seth Johnson is the vice president, government affairs, for Pride Mobility Products in Exeter, Pa. He’s also vice-chairman of AAHomecare’s Rehab and Assistive Technology Council.