Reform Bill Could Change the Face of HME

WASHINGTON — Following the Senate’s dramatic Christmas Eve
passage of its health care reform bill (see Health Reform Passes
Senate; HME Looks at Sweeping Changes, Dec. 24), lawmakers in
the House and the Senate must now reconcile their bills to produce
compromise legislation that will be sent to President Obama.
According to press reports, they’re expected to do that by the time
he delivers his State of the Union address.

Political observers say melding the bills will be difficult,
however, since they contain crucial differences: a public health
insurance option in the House bill that is not in the Senate
measure, the design of health insurance exchanges and the structure
of employer mandates to provide coverage.

In the meantime, HME stakeholders have plenty to worry about in
both bills. For a summary of measures in the House bill that would
affect the industry, see Now on to the
Senate, Nov. 10.

If you missed the provisions in the fast-moving Senate bill that
would affect HME, for starters, it would speed up and expand the
competitive bidding
program, impose a tax on medical device makers, eliminate the
first-month purchase option for standard power wheelchairs, adjust
CPI updates and exempt some pharmacies from accreditation.

Here’s a summary of some of the bill’s provisions courtesy Cara
Bachenheimer, senior vice president of government affairs for
Elyria, Ohio-based Invacare:

Annual Fee on Manufacturers and Importers of Medical Devices
(Section 9009)

This provision would impose an annual fee on the medical device
manufacturing sector beginning in 2011, based on 2010 sales. The
tax would raise $2 billion starting in 2011, and $3 billion
starting in 2017. This non-deductible fee would be allocated across
the industry according to market share.

The fee would not apply to any sale of a Class I product or any
sale of a Class II product that is primarily sold to consumers at
retail for not more than $100 per unit (under the FDA product
classification system). Small manufacturers, defined as those
companies with sales of medical devices in the U.S. of $5 million
or less, would be exempt, and firms with U.S. sales between $5
million and $25 million would pay the tax on 50 percent on the
sales.

The Secretary of the Treasury would require manufacturers to
file an annual report of its covered domestic sales for the prior
calendar year. The Secretary would establish individual assessments
by determining the relative market share for each covered entity. A
covered entity’s relative market share would be the entity’s
covered domestic sales as a percentage of the total reported
covered domestic sales for all covered entities.

Expansion of Round 2 and Beyond of Competitive Bid Program
(Section 6410)

This provision would expand Round 2 of the competitive bid
program by 21 additional metropolitan areas. It would also require
the Secretary to bid all areas of the country or apply bid rates
nationwide by 2016.

Elimination of First-Month Purchase Option for Standard Power
Wheelchairs (Section 3136)

Effective for services beginning Jan. 1, 2011, beneficiaries
would no longer have the option to have Medicare purchase a
standard power wheelchair in the first month of medical need.
Instead, the Medicare program would pay on a rental basis for 13
months, and ownership would transfer at that time. DME suppliers
would be paid 15 percent of the purchase price in months one
through three, and 6 percent of the purchase price in months four
through 13. Complex rehab power wheelchairs would retain the
first-month purchase option. This provision would not apply to any
contracts entered into prior to Jan. 1, 2011 under the competitive
bid program.

Elimination of CPI Increases; Imposition of Annual Productivity
Adjustment (Section 3401)

The provision would eliminate the 2014 two percent add-on
payment (above CPI) for DME that Congress provided for in last
year’s Medicare Improvements for Patients and Providers Act.
Instead, DME fee schedule updates would be reduced each year by a
“productivity adjustment” estimated to result in a minus one
percent applied to the annual update factor for DME items.

Accreditation Exemption for Certain Pharmacies (Section
3109)

This provision would exempt from the accreditation requirement
pharmacies with less than 5 percent of revenues from Medicare
DMEPOS billings until the Secretary of HHS develops
pharmacy-specific standards.