Tuesday, November 30, 2004

WASHINGTON - As far as one well-placed CMS official is concerned, industry concerns and complaints about Medicare’s reliance on old data to establish allowables for new technology is another reason to embrace competitive bidding for DME.

“Competitive bidding makes a lot of sense because you are going to let the current market determine the current price,” said the CMS official, who asked to remain unnamed. “

Don’t expect the industry to embrace that perspective on competitive bidding, which is scheduled to begin in 2007. It does point out, however, that CMS and industry leaders/providers share a dislike of establishing new allowables by using “gap filling.”

When it comes to changing that methodology, “we’re thinking about it and talking about it, but no one has decided anything yet,” said the CMS official.

With gap filliing, CMS determines the median price of the products in a particular code. It then deflates that price back to what it was or may have been in 1986. From there, CMS uses a formula that considers annual CPI increases to determine the new price.

In determining a new reimbursement, gap filling doesn’t consider Medicare CPI freezes. Consequently, new allowables are often artificially deflated. Likewise, using gap filling to set allowables for products that didn’t exist in 1986 further depresses the fee schedule, providers say.

Gap filling created a ruckus recently when CMS used it to set new allowables for seat and back cushions. Those allowables turned out to be so low that industry groups convinced CMS to reprice the allowables (See story page 18).

Now, as CMS moves to establish new codes and allowables for power wheelchairs, industry watchers believe gap filling could create a woefully inadequate fee schedule.

“If they are 25% off the mark for the allowable for a power wheelchair, they will put people out of business,” said Seth Johnson, Pride Mobility’s director of government affairs. “Gap filling is fundamentally flawed and needs to be revised.”

Cara Bachenheimer, Invacare’s vice president of government relations, said that CMS officials, while they may wish to scrap or change gap filling to make it more accurate, “just don’t know what to do.”

“That’s why I think it is incumbent upon the industry to develop a formula or methodology that makes sense,” she said.

Plans to do that are being discussed by various industry groups, but the chance of CMS using a methodology other than gap filling to establish allowables for the new power chair codes are slim. Long standing Medicare procedures - gap filling has been in place since he late 1980s - aren’t changed over night, said the CMS source.

“All I can say officially is that we have concerns about it,” the source said. “We are considering options. I wouldn’t rule out the possibility of some kind of reform in the future. I just don’t know how far in the future.”