Washington Pushing to resolve Medicare-reform legislation before the July 4 recess, both houses of Congress were poised to vote, at press time, on prescription
by Brook Raflo


Pushing to resolve Medicare-reform legislation before the July 4
recess, both houses of Congress were poised to vote, at press time,
on prescription drug bills that included dramatic provisions for
the home care industry. In the House, the Rules Committee was
working to combine two versions of a prescription drug package that
included HME competitive bidding, before sending a reconciled bill
to the floor for a vote. In the Senate, lawmakers were debating the
final 11 proposed amendments to a prescription drug package that
included a seven-year consumer-price-index freeze for durable
medical equipment.

Final votes on these reform packages were slated to take place
as early as June 26 in both the House and Senate. Neither the House
nor the Senate version was likely to change significantly before
these votes occured, and initial passage of both bills was all but
assured, according to David Williams, director of government
relations for Elyria, Ohio-based Invacare.

Consequently, the fate of home-care reform lies in the
conference that soon will take place between representatives from
the House and Senate, as the two sides try to agree on a final bill
to send to the President.

“The Conference Committee could come up with a package in
early- to mid-July,” Williams explained. “This whole
thing is going to be done by August.”

Night and Day

When it comes to home-care reform, the House and Senate bills
are as different as night and day. While both bills require the
home care industry to endure cuts to help pay for a prescription
drug benefit, the House version asks the industry to bear a
disproportionate share of the cost burden, according to the
Alexandria, Va.-based American Association for Homecare. Not only
would the House version implement competitive bidding nationwide
during a three-year phase-in period, but it also would reduce the
home health market basket for three consecutive years and possibly
add a home health copayment.

“It's worse than [the competitive bidding provision the
House passed] last year, Williams said. “It allows
competitive bidding to be the foundation for ‘inherent
reasonableness.’ The secretary [of the Health and Human
Services Department] could do competitive bidding in Dade County,
Fla., and use that pricing information to [support] an IR change
across the country. It's an ugly bill.”

The Senate version, on the other hand, would achieve
approximately $7.7 billion in home-care savings during the next
decade by freezing the CPI update for seven years. It also would
reduce the Part B drug reimbursement from 95 percent to 85 percent
of the “average wholesale price.” Unlike its sibling
legislation in the House, however, the Senate version does not
include a home health copayment or a market basket reduction for
home health.

Initially, AAHomecare informed Congress that the industry was
willing to accept a five-year CPI freeze, as an alternative to
competitive bidding, but the association recently expanded that
agreement to include a seven-year freeze. By avoiding competitive
bidding, “the freeze would protect patient choice and access
to quality DME and services — and help preserve thousands of
small businesses and employee jobs,” the association wrote in
‘talking points’ posted on its Web site. Additionally,
the savings that would result from the freeze would be
“roughly the same amount as the proposed ‘competitive
bidding’ program.”

On the issue of raising standards for DME providers, the two
bills agree. The Senate version, however, goes further toward
spelling out the details of these standards, requiring all Medicare
DME suppliers to become accredited within three years of the bill's

Which Version Will Prevail?

For many reasons, the Senate version of the prescription drug
package seems likely to prevail over its House counterpart during
conference, experts say.

First, the Bush Administration June 19 sent a letter of support
to the authors of the Senate's bill, Sens. Bill Frist, R-Tenn.;
Chuck Grassley, R-Iowa; and Max Baucus, D-Mont. “This bill is
an important first step toward implementing many of the President's
principles for strengthening and improving Medicare,” the
letter said. “The bill would provide beneficiaries with more
options and better benefits, including long-overdue prescription
drug coverage in Medicare.”

Second, the Medicare Payment Advisory Commission recently
recommended that Congress continue the competitive bidding
demonstration projects, to study the program further.

Finally, the seven-year freeze “gives immediate money to
the Medicare program, whereas competitive bidding doesn't realize
savings until 2005,” Williams explained. “I'd say the
odds are 60 [percent] to 40 [percent] in favor of the freeze over
competitive bidding.”

61% of respondents to HomeCare's June Web Poll named the
respiratory market as the HME industry's most dominant. Seventeen
percent named the mobility market, 16 percent named supplies, and 6
percent named beds and support surfaces.

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service of the home medical equipment industry.