What’s Out There that Threatens HME? A Lot

ELYRIA, Ohio — If you’re looking for a bit of good news in
the home medical equipment sector, here it is: Congress is finally
interested in what is going on in this industry, particularly in
competitive bidding.

“There is huge interest on the Hill,” said Cara Bachenheimer,
senior vice president of government relations for Elyria,
Ohio-based Invacare Corp. “That is encouraging. So we need to be
doing more. Everybody needs to be doing more.”

In an interview Friday on key challenges confronting the
industry, Bachenheimer emphasized that stakeholder involvement
could perhaps prevent some negative legislative or regulatory
action. At the least, it could lessen the pain for providers and
beneficiaries.

Her message? Get out there and talk to your legislators and let
them know what is really going on.

Here is Bachenheimer’s assessment of several current HME
issues:

Competitive bidding

Despite its implementation, the industry is working to achieve a
repeal of the competitive
bidding program now underway in nine product categories in nine
areas around the country.

“Is it realistic?” asked Bachenheimer. “I don’t know. A lot
depends on events that have yet to unfurl. It’s early in the
process. We don’t know exactly what the impacts [of Round 1] are,
and we think that’s going to take a little longer.”

There are a number of questions swirling around a repeal, not
the least of which is how to pay for it, she said. The Office of
Management and Budget has assigned a $17 billion price tag to a
repeal.

However, Bachenheimer said she was encouraged by a
March 1 briefing for congressional staffers that drew a
standing-room-only crowd. Put together by Reps. Glenn Thompson,
R-Pa., and Jason Altmire, D-Pa., the event was largely for the
benefit of new legislators who are totally unfamiliar with the
issue, Bachenheimer said.

“The level of interest was great. They didn’t have room for a
number of staffers that showed up,” she said. “It underscores that
people are aware of this program, they are aware of the controversy
and they want to understand more.”

The industry needs to capitalize on that thirst for knowledge.
“You need to be educating members of Congress on what is going on,”
Bachenheimer said. “If you aren’t in the program, you will be soon.
It’s our job to paint the more accurate picture of what is really
going on.”

Otherwise, she pointed out, legislators will only have the
information funneled to them by the Centers for Medicare and
Medicaid Services.

“CMS does a wonderful job on Capitol Hill,” Bachenheimer said
wryly.

Would a bill for repeal have congressional support as it did
last fall, when H.R. 3790 garnered 259 signatures?

“We clearly have more support in the House,” Bachenheimer said.
“We still have folks in key positions in the Senate that we need to
deal with.”

She said she appreciates the spotlight economists have focused
on the project. Last fall, 167 internationally known economists
sent a letter to Congress detailing the flaws inherent in the CMS
project’s design. The economists called for an immediate halt to
the program so it could be redesigned in line with accepted auction
practices. The letter made its way to CMS, where it was basically
dismissed.

But the economists have not backed down.

“You’d think CMS would be paying attention,” Bachenheimer
said.

Last week, University of Maryland economist Peter Cramton, who
spearheaded the letter, announced he would hold a mock
HME auction April 1 to show CMS how its bidding design needs to
be “fixed.”

Oxygen

Already beleaguered by reimbursement cuts and the 36-month
oxygen rental cap, respiratory providers’ anxiety levels peaked
recently when the General Accountability
Office recommended further cuts to the benefit.

“There are a lot of deficiencies in the report,” Bachenheimer
said. “It was a better report when it was a draft before CMS got
its hands on it. They do recognize service components, they do sort
of hint that services are not fully recognized when the payment was
calculated. They basically said if you did it like the [Veterans
Administration], you’d save X amount of dollars. But they fail to
talk about how the VA is handled.”

The oxygen benefit under the VA is not bundled, as it is in HME,
she pointed out. There are separate payments for services and
delivery.

Stakeholders need to be up on the Hill telling that to
legislators, Bachenheimer said. She noted that Republicans are
putting together their own budget, and “the word is, there are
going to be huge entitlement cuts. I think the best message for the
industry is … to talk about how oxygen reimbursement is
calculated.

“We need to be providing folks this information,” Bachenheimer
continued. “They don’t have the time to do the research to figure
out those kinds of details.”

She believes the Republican budget is two months or so in the
offing, enough time to educate legislators about the discrepancies
between how VA reimbursement is calculated and how the HME benefit
is figured.

Medical device tax

Providers aren’t the only ones targeted in the HME arena. So are
manufacturers. The Affordable Care Act calls for an annual tax on
medical devices. Stakeholders had until last week to make
preliminary comments to the Internal Revenue Service about the
proposal. Invacare focused on why HME should be exempt,
Bachenheimer said.

According to the company’s comments:

“Under the law, the Secretary of Treasury shall exempt from
the definition of ‘taxable medical device’ ‘any other
medical device determined by the Secretary to be of a type which is
generally purchased by the general public at retail for individual
use.’ Thus, in order to be exempt from the tax, the Secretary must
determine that the device is generally purchased (a) by the general
public; (b) at retail; and (c) for individual use. We believe that
sales of home medical equipment should be exempt from the
definition of ‘taxable medical device’ because of the
exemption.”

“We think there is an extremely strong argument that the
[products] in this industry meet the definition,” Bachenheimer
said, adding that there are now multiple bills in the House and the
Senate to repeal the proposed tax.

“There’s a lot of activity on all fronts. We don’t think
Congress intended for our type of products to be included,” she
said. The IRS is expected to issue a proposed rule on the issue
sometime later this year.

Face-to face mandate

Although CMS has stalled its implementation of face-to-face
evaluations for both home health and hospice benefits until the
second quarter of this year, agency officials have said guidance
for such a mandate for DME is forthcoming. (A provision
in the health reform law requires beneficiaries to have an
in-person visit in order for a physician to prescribe any items
of DME.)

Still, the agency has been mum on when it will be made public or
enforced.

“We really have nothing from CMS as to implementation plans,”
Bachenheimer said, adding that the statute in the health care
reform act does not specify an implementation date.

“Believe it or not,” she said, “folks at CMS are not too keen on
this as a provision for DME.”

The reason? Medicare would incur more physician office visit
charges for such things as canes.

Obama budget

In his 2012 budget proposal, President Obama is calling for all
Medicare power wheelchairs to fall under prepayment review. As of
last week, the budget was still in limbo.

“It is unclear if the Republicans will take any of the Obama
budget or not,” Bachenheimer said. “I wish I had a better sense on
this, but I just don’t know. Republicans changed the law so certain
entitlements would be discretionary. The Republicans are out there
with a six-foot hatchet, so it is kind of a scary proposition.”

‘High-risk’ providers

CMS has announced that beginning March 25, newly enrolling
providers — including those providers opening new locations
— would be considered “high risk” and subject to increased
scrutiny before being awarded a Medicare number.

“I don’t disagree with the new providers because it is
consistent with what we have been recommending all along,”
Bachenheimer said, “but I am not sure it should apply to providers
opening new locations.”

If established providers are in good standing, she said, “it
doesn’t make any sense” to consider them high-risk providers.

That mandate, she said, is a consequence of the health reform
law, which grants CMS new authorities.

“There are so many [situations] where CMS has the authority to
address things unilaterally — and they will impact our
industry. This is a good example,” Bachenheimer said.