Health Reform ‘Framework’ Hits HME; AAHomecare Vows to Fight

ARLINGTON, Va. — The American Association for Homecare
said yesterday it intends to fight the HME cuts proposed by the
Senate Finance Committee, which is currently debating a “framework”
document for health care reform issued by Chairman Max Baucus,
D-Mont., Sept. 6.

According to AAHomecare, that framework includes a number of
proposals that would erode Medicare reimbursements for the home
medical equipment sector. There is also a provision calling for an
excise tax on medical device manufacturers.

“The American Association for Homecare is disappointed that the
Senate Finance Committee ‘framework’ circulated earlier this week
by Chairman Baucus would target the durable medical equipment
sector for further cuts under Medicare,” said association President
and CEO Tyler J. Wilson.

“Reductions in Medicare reimbursement, curbs on inflation
‘updates’ and excise taxes are bad medicine for a sector that is
already struggling due to past actions by Congress,” Wilson
said.

The reductions and new fees proposed by the Finance Committee
bill are aimed at oxygen, power wheelchairs and the broader HME
sector generally, AAHomecare said.

“Congress should note that this sector has endured numerous cuts
in recent years, notably with the Medicare Modernization Act of
2003, the Deficit Reduction Act of 2005 and the Medicare
Improvements for Patients and Providers Act of 2008,” Wilson
said.

“As a result of these reductions, power wheelchair
reimbursements have declined more than 35 percent in the past five
years and oxygen reimbursement has declined by nearly 50 percent
over the past decade. A further result is that spending growth in
this sector is less than 1 percent per year according to the most
recent National Health Expenditures data.

“The problems facing the health care system in this country will
not be helped by heaping on additional cuts to home medical
equipment and services,” Wilson continued. “The exact opposite is
true. Senate Finance is proposing cuts to the most cost-effective
sector in Medicare.”

AAHomecare’s analysis of the bill follows:

Oxygen Payment Reforms: This provision would
repeal the 36-month rental cap, reduce the current rental amount
paid through the fee schedule for stationary equipment and contents
and increase the rental amount paid through the fee schedule for
portable oxygen contents.

Though not contained in the framework released by Baucus,
AAHomecare believes that the Finance Committee is looking to modify
monthly payment rates as follows: concentrator-only rate, $80;
traditional combined portable rate, $185 ($80 concentrator + $105
portable add-on); oxygen generating portable equipment rate,
$227.

In addition, AAHomecare believes the oxygen proposal under
consideration by the Senate Finance Committee would save
approximately $1 billion over 10 years, define services and patient
protections along the lines of what is being discussed in the House
oxygen reform proposal, keep inflation updates intact in future
years and maintain oxygen as a competitively bid category.

Power Wheelchair Payment Improvement: This
provision would eliminate the option for a wheelchair supplier to
purchase a power-driven wheelchair with a lump-sum payment (except
for complex, rehabilitative power wheelchairs). Though not
contained in the framework document, AAHomecare believes the
Finance Committee is looking to front-load monthly rental payments
in the first few months of rental under the 13-month rental
period.

Medical Device Manufacturers Fee: Under this
proposal, an annual fee raising $4 billion would be imposed on the
medical devices manufacturing sector beginning in 2010. The fee
would be allocated by market share in the United States.

Durable Medical Equipment Outlier Payment Rule:
This provision would reduce payments in non-competitive-bidding
metropolitan statistical areas (MSAs) with spending levels that
exceed a benchmark of 110 percent of the national average. MSAs
above the benchmark would have payment rates reduced by an amount
equal to 75 percent of the difference between its spending and the
benchmark. This appears to allow CMS to apply competitive bidding rates in
non-bid areas. [AAHomecare is seeking additional information to
confirm this analysis.]

Accreditation Exemption: Small pharmacies would
be exempt from the Oct. 1, 2009, DME accreditation requirement in
Medicare.

Part B Productivity Adjustments: This provision
would reduce payment updates for Part B providers by an estimate of
increased productivity. We believe the effect of this proposal
would be to reduce the CPI update for DME by about 1 percent each
year. [AAHomecare is seeking additional information to confirm this
analysis.]

Fraud, Waste, and Abuse: Fraud, waste, and
abuse in Medicare and Medicaid would be reduced by a series of
provisions to prevent and deter wasteful or fraudulent activity as
well as assist in the identification and prosecution of such
activity once it has occurred. These policies include: a new
enrollment process for providers and suppliers, including an
application fee; data matching and data sharing across federal
health care programs; increased civil monetary penalties; increased
authority to suspend payment during creditable investigations of
fraud; and new procedures to disclose and repay overpayments.

Medicare Commission: This provision would
establish an independent Medicare Commission (MC) that would submit
proposals to Congress to extend Medicare solvency and improve
quality in the Medicare program. Congress would have an opportunity
to amend the proposal or pass an alternative proposal with an
equivalent amount of budgetary savings. Should Congress not pass an
alternative measure, the HHS Secretary would be required to
implement the provisions included in the original MC proposal.

Minimum Benefits under Insurance Market
Reforms: Provisions establishing the required benefits in
the public insurance options DO NOT specify DME as one of the
required benefits under insurance plans.

Baucus’ complete framework document can be found in the “What’s
New” section of AAHomecare’s Web site at www.aahomecare.org.