Big-Ticket Budget May Not Be So Rosy for HME

WASHINGTON — President Barack Obama’s
proposed 2010 budget might be lacking in details, but there was
enough in the $3.6 trillion document to make industry stakeholders
wary of what it might mean for the home medical equipment sector of
health care.

Unveiled Wednesday, the budget calls for, among other things,
$316 billion in Medicare/Medicaid cuts over the next 10 years to
help finance a $634 billion reserve fund for health reform. More
than half of that savings — $176.6 billion — would come
through implementation of a competitive bidding program for
Medicare Advantage plans.

“It does have some very serious potential repercussions for us,”
acknowledged Don Clayback, vice president of government relations
for The MED
Group, Lubbock, Texas. “I think there’s no doubt, given the
financial pressures, that they are going to be looking for a great
deal of savings from various sectors.

“We are going to be on the chopping block just like everyone
else,” he said. “I think the pressures have ramped up and we now
will be, in essence, battling against other segments of the health
care market, because there’s no doubt the president and Congress
are going to need to come up with these savings.”

John Gallagher, vice president of government relations for
Waterloo, Iowa-based VGM Group, agreed the budget is “not good
at first blush.” He pointed specifically to a proposed $37 billion
cut to home health over a 10-year period and to the Medicare
Advantage competitive bidding proposal.

“Those are the very folks keeping mom at home,” he said,
referring to the home health proposal. “If they don’t see any need
for home health, what does that mean for HME?”

As to the Medicare Advantage bidding plan, he said, “The Obama
administration is becoming attracted to competitive bidding as a
means to find savings. And that’s not good for us as we try to
eliminate competitive bidding on the DME side.”

While she is not sure how the Medicare Advantage proposal will
play on Capitol Hill, Cara Bachenheimer, senior vice president of
government relations for Elyria, Ohio-based Invacare Corp., pointed out
there is a significant difference in how the payments for such a
program would be determined. “The little detail that was released
said that payments would be set on the average of bids submitted,
which is very different from how they were set under the HME
competitive bidding program last year,” she said.

Whether that will have any effect on HME competitive bidding
remains to be seen. “You can read stuff into it, but you have to
stop yourself before you go too far,” Bachenheimer said about the
proposed budget. “It’s in flux. A lot is to be determined.”

The proposed budget’s biggest threat to HME “is language
strengthening the Medicare program by reducing excessive Medicare
payments,” said Seth Johnson, vice president of government
relations for Pride Mobility Products,
Exeter, Pa. “It is unclear if it is still believed that DME costs
are excessive.”

If that turns out to be the case, aggressive reimbursement cuts
could be the result.

However, Gallagher cautioned, “people shouldn’t get het up over
this because there is no meat yet … They floated a trial
balloon and a lot of changes are expected.”

Details aren’t likely to come before the end of March, he and
others said.

Even as industry thought-leaders considered the grimmer aspects
of the proposed budget, they also spotted some possible
opportunities for the HME sector.

A plan that would pay hospitals less if patients are readmitted
within a 30-day period could be a boost for HME, suggested
Bachenheimer. “That’s a great argument for home care,” she said,
explaining that if patients are prescribed appropriate HME,
readmissions could be lessened greatly, a boon for hospitals.

Johnson pointed out that Obama has pledged to protect American
jobs and small businesses. “This is what his [agenda] is all
about,” he said. “Those are clearly words we need to be using on
the Hill and in our discussions with the administration, because
nearly 90 percent of the industry is comprised of small
businesses.”

It is important for the industry to point out to legislators, he
said, the effect certain actions would have on HME. For example,
the major threat hovering over the industry now — competitive
bidding — “will most likely result in great consolidation in
the industry,” Johnson said. “That consolidation would result in
the loss of tens of thousands of jobs. That is counter to what the
new administration has outlined as its agenda.”

All of the HME advocates agreed that now is the time for the
industry to come to a consensus on its message to legislators.

“We have to come to a consensus on what we are willing to give
up, if anything, and what must we focus on to get immediately,”
said Gallagher, noting that getting the 36-month oxygen rental cap
rescinded would be high on the list. “We have to get energized
now,” he added. “We can’t wait for the long-term debate.”

Added Bachenheimer, “We’ve got to be at the forefront and ready.
We’ve got a good story to tell.”

Part of that story is that HME is a solution to paring costs,
said Clayback. “I think we need to continue to push with members of
Congress and members of key committees like the Senate Finance
Committee and the House Ways and Means Committee so that they
recognize even more dramatically than they do now that HME is part
of the solution for savings; it’s not another source to gain
additional savings from.”

Clayback said in an environment that could well see HME
competing with hospitals and physicians — two formidably
powerful sectors — for dollars, “I don’t think we can
sugarcoat what [condition] we are in, because people need to
realize that things are going to be tougher than they ever have
been, so our message needs to be stronger and even louder.

“Our message,” he continued, “needs to be packaged in terms of,
‘We are part of the solution, we provide benefit in the home, we’re
more economical, we’ve taken significant cuts, we’ve paid our dues
— give us stability.’”

View a PDF of the full budget (142 pages). A section on the
Department of Health and Human Services begins on page 67.

For a HomeCare report on the president’s message to the
nation Feb. 24, see Obama: ‘Health
Care Reform Will Not Wait Another Year’, Feb. 25.