Business Unusual

While the Administration’s proposed FY 2009 budget package on Medicare and oxygen payment were appropriately dismissed on Capitol Hill, that is not an indication that Congress will leave the home oxygen benefit alone this year, or next.

2008 is the second year of a two-year session of Congress. Last year’s House Medicare bill was passed in August as part of the Children’s Health and Medicare Protection Act, or CHAMP, bill. So the ball is now in the Senate’s court to put together its Medicare package. Again, the desire to stave off a physician payment cut, now scheduled to take effect July 1, 2008, is the key driver behind Congress’ desire to pass some kind of Medicare package this year.

Later this spring, the Senate Finance Committee will likely go through the normal process of “marking up” a Medicare bill at the committee level. This is when committee Chairman Max Baucus will publicly announce the Medicare package he wishes to move through the Senate.

The committee mark-up provides both Democratic and Republican committee members a chance to modify that package and report it out of committee before consideration on the full Senate floor later.

The situation this year presents a series of entirely new dynamics. First, we have a good understanding of the details of the oxygen provision that the Senate Finance Committee will likely include in its package, or “chairman’s mark.” Second, and most important, we have CMS’ implementation of the competitive bidding program.

The Senate Finance Committee spent considerable time in the fall developing a package internally to address its issues with the current payment system for home oxygen therapy. The issues are the same as those highlighted in the HHS Office of Inspector General’s September 2006 report, which examined the acquisition cost of home oxygen concentrators.

The sound bite that has resonated on Capitol Hill — and that continues today — is that the Medicare program pays $200 for 36 months and how that total amount compares to the simple acquisition cost of a concentrator.

We are intimately familiar with the fundamental flaw of relying only on concentrator acquisition cost as a way to measure the appropriateness of the current level of Medicare payment. At the same time, some on Capitol Hill have begun to understand how payment for stationary equipment subsidizes the costs of providing ambulatory equipment and services.

Last year’s non-public Senate proposal for Medicare oxygen payment changes took an entirely different approach from those in the House. As you will remember, the House bill would reduce the rental cap from 36 to 18 months, with an exception for new technology.

Instead, the Senate draft package would reduce the payment rate for stationary equipment and increase the portable rate, with the increase dependent upon the technology provided. New home oxygen technology such as portable oxygen concentrators and transfilling systems would overall not receive any payment reduction under this proposal.

Importantly, the Senate draft package would repeal the equipment ownership transfer mandate. Finally, these payment cuts would not apply to contract suppliers in the initial 10 competitive bidding MSAs.

Further complicating the oxygen discussion on Capitol Hill is CMS’ implementation of competitive bidding. Think of the resulting complexities given the following facts: Round one of competitive bidding in the first 10 metropolitan areas begins July 1 this year. Round two is scheduled to begin July 1, 2009. Last year’s House Medicare oxygen provision specifically exempted the initial 10 bid areas. In early January, CMS announced the next 70 bid areas with a tentative implementation of mid-2009.

Any legislation passed this year would likely be effective Jan. 1, 2009. Any oxygen payment cut legislated this year would have to exempt not just the initial 10 areas but also the next 70. Once you exempt these 80 large metropolitan areas, you lose about half the savings. Therefore, to the extent the Congress’ goal is to save money, i.e., pay for the “doc fix,” the oxygen payment provision becomes far less attractive.

From a policy perspective, if you implement the oxygen cuts in all the areas not affected by the bidding program in 2008 and 2009, you set up two wholly different payment systems — and payment levels.

Senate Finance Committee Chairman Baucus’ Montana beneficiary constituents would be subject to a congressionally mandated payment level, while House Ways and Means Committee Chairman Charlie Rangel’s New York constituents would be subject to the bidding program. It’s difficult to imagine that Congress would allow two such disparate systems to co-exist.

So what does all this mean for 2008? It’s not business as usual in D.C.

While Congress is scrutinizing how Medicare pays for home oxygen, CMS is implementing the bidding program, facts are emerging about the bid rates, providers in the next 70 areas will be submitting bids this summer and, later this year, beneficiaries will be informed whether their current provider will continue to serve them after the 36-month cap kicks in beginning Jan. 1, 2009.

This provides a complicated backdrop, and hopefully a very loud noise level, that Congress will have no choice but to listen to and act on appropriately.

A specialist in health care legislation, regulations and government relations, Cara C. Bachenheimer is vice president, government relations, for Invacare Corp., Elyria, Ohio. Bachenheimer previously worked at the law firm of Epstein, Becker & Green in Washington, D.C., and at the American Association for Homecare and the Health Industry Distributors Association. You can reach her by phone at 440/329-6226 or by e-mail at [email protected].