Senate tax plan would freeze Medicare CPI for DME

Sunday, May 18, 2003

May 19, 2003

WASHINGTON - The Senate passed tax legislation last week that would freeze the DME consumer price index (CPI) for 10 years to help pay for a $25 billion boost in reimbursement to rural home health providers, including home health agencies.

The New York Times reported misleadingly last week that the Senate plan would reduce reimbursement for wheelchairs to help pay for increased Medicare payments to other providers

In reality, the Senate plan would reign in reimbursement on all DME, not just wheelchairs. As proposed, the Senate tax plan would: 1. Freeze the CPI on DME, prosthetics and orthotics for 10 years; 2. Limit reimbursement for covered drugs to 85% of AWP; reimbursement is currently 95% of AWP; 3. Apply coinsurance and a deductible for clinical diagnostic lab tests.

The good news is that the Senate plan does not mention competitive bidding for DME. There is still a chance, however, that the House could propose a competitive bidding plan.

AAHomecare called the proposed CPI freeze unacceptable and urged members to communicate that message to their elected representatives.

While the proposal to reduce reimbursement for HME is part of the Senate tax package, it’s far from a done deal. Senate and House leaders must still hammer out a final tax bill when they meet in conference to reconcile their two tax packages next week.

“We are so far away from a final decision on what will happen with DME that it’s not worth worrying about,” said one industry watcher.