Senate calls for accreditation/CPI freeze

Sunday, June 15, 2003

June 16, 2003

WASHINGTON - The Senate Finance Committee passed legislation Thursday that calls for durable medical equipment providers to become accredited by an independent accreditation organization. The legislation would also freeze CPI increases for DME and certain orthopedics for seven years.

While the industry has known for some time that the Senate Finance Committee, chaired by Charles Grassley (R-Iowa), was likely to propose a multi-year freeze on DME in its Medicare reform legislation, the call for new quality standards is a surprising twist.

In draft language obtained by HME News, the Senate bill proposes that the Secretary of Health and Human Services identify select accreditation organizations six months after the bill becomes law. HME providers would then have three years to achieve accreditation.

A new accreditation mandate for suppliers would have a tremendous impact on the industry. While the National Supplier Clearinghouse has issued roughly 108,000 HME supplier numbers, the number of accredited HME locations is far fewer. One source estimates that only 20% of all HME providers are accredited.

ACHC reports that it has accredited 150-200 HME supplier locations. CHAP has accredited about 850 locations, including all of Lincare’s 500 locations. JCAHO reports that it has accredited about 4,000 home care organizations, but those numbers include nursing agencies.

The House of Representatives is now introducing its Medicare reform legislation. Though it’s all but certain that competitive bidding will be part of the House package, sources also say the House, inspired by the Senate bill, may strengthen its own call for quality standards.

Although the president is eager to sign a prescription drug package, only optimists are saying a piece of legislation will be ready for his signature by July 4.

First, the House and Senate versions of Medicare reform will have to be reconciled in a conference committee and it’s still far from certain whether the respective bills are the marrying type.

Since the Senate has introduced its package first - a rarity on Capitol Hill - Washington insiders say the argument against competitive bidding has been strengthened. Sources say the quality standards issue was steered into the Senate Finance bill by Sen. Trent Lott (R-Miss.) as a hedge against fraud and abuse.

" If the Senate bill passes, the House bill has to be reactive," said David Williams, Invacare’s director of government relations. "If the Senate puts in a [CPI] freeze [for DME] and accreditation, then the House, in order to get competitive bidding in, has to create arguments of why it saves more money or will result in better quality patient care."

The HME industry is likely to support the Senate’s call for accreditation in theory but have reservations over how it is implemented.

" This is a major victory for our industry," said Calvin Cole, director of corporate development of the JCAHO-accredited supplier/manufacturer Hoveround. "It’s time that this industry steps up and police itself. Accreditation is a major step forward in policing itself."

While healthcare attorney Cara Bachenheimer also supports the concept of accreditation, she believes that HME providers will have trouble accepting both a CPI freeze for seven years, and the additional costs associated with accreditation.

For an HME supplier that generates about $1 million in revenue per year, both CHAP and ACHC state that the survey costs average out to about $1,500-$2,000 annually.

But the cost of getting ready for an accreditation, according to observers like Bachenheimer, are much more significant. If Congress insists on accreditation, she believes there should be some quid pro quo.

" Maybe give us some regulatory relief," she said, "whether it’s administrative-burden relief or paperwork relief or post-payment audits, but something. If you [the government] have some assurance of quality, you [an HME provider] should be given a break on some of the regulatory burdens that typically serve to penalize the compliant company."

Cole takes a harder line on the need for relief from issues like post-payment audits.

" Post-payment audits are expensive to those companies that don’t follow policies and procedures," said Cole. "It’s time that the industry subjects itself to outside independent audits and surveys."