Medicaid Bill Moves Forward, but Providers Must be Vigilant on State Issues

ATLANTA — By a vote of 61-39 today, the Senate decided to
pump $16 billion in match money into states’ Medicaid systems
— a move that could spell some relief for home medical
equipment providers.

HME companies throughout the country are battling what some have
called “draconian” cuts to Medicaid reimbursement as cash-strapped
states seek to stem the tide of red ink flowing from their
budgets.

The money going to the states could be substantial — $1
billion for Florida, $850 million for Pennsylvania, $185 million
for Wisconsin, for example.

Still, it’s not a done deal. The House and Senate must pass the
legislation in identical form before it can be sent to President
Obama for signature and enactment. House Speaker Nancy Pelosi,
D-Calif., said she will call representatives back from their August
recess next week to vote on aid to the states. (The Senate recess
starts Monday; Congress will not reconvene until after Labor
Day.)

If both chambers and the president approve the legislation, HME
providers might be able to breathe a bit easier, but that doesn’t
mean the threat of cuts disappears.

“With all the budget pressures with the federal government and
the state government, Medicaid is a prime area for cost-cutting,”
said Don Clayback, executive director of the National Coalition for
Assistive and Rehabilitative Technology, which has taken up the
cause of fighting Medicaid cuts to complex rehab. “Every state is
dealing with issues or will be faced with issues as we move through
the next 12 to 24 months.”

Florida Managed Care System

In Florida, providers are at risk of losing their Medicaid
patients as the state moves toward placing all Medicaid
beneficiaries — 2.7 million of them — into a
managed care system.

The proposal came up earlier this year in the state House and
was beat back. But the Florida Alliance of Home Care services
alerted its members this week that lawmakers in both of the state’s
legislative chambers are expected to introduce a bill in February
calling for the system.

“For the HME industry, managed care is a death knell,” said the
FAHCS alert. “Already, major insurers have consolidated their HME
networks to one or a few providers statewide, leaving many
hundreds of formerly participating small businesses out of luck,
leaving patients without small niche providers who give them the
specific product or service that assures them quality of life …
If all Medicaid patients are moved to managed care, the vast
majority of HME companies working with Medicaid patients will be
out of business.”

Selected Contracting in Ohio

The Ohio Association of Medical Equipment Services is working to
fend off “selected contracting,” the state’s version of competitive
bidding. OAMES sent a letter this week to state Medicaid officials
in response to their questions about the severe cuts resulting from
CMS’ rebid of Medicare competitive bidding. Two Ohio MSAs —
Cincinnati and Cleveland — are in Round 1 of the program.

“In 2007, they proposed selective contracting for DME supplies,”
said Kam Yuricich, executive director or OAMES, “so that’s been on
their radar.”

The association has so far been successful in repelling such a
system. Medicaid’s request for a response to the Medicare rates
“offered us an opportunity to be very detailed about the program,
using more of the facts [instead of] the misconceptions and the
false figures,” Yuricich said.

Yuricich and John Reed, an OAMES executive committee member from
PRO2 Respiratory Services in Cincinnati, drafted the response,
which stresses that the federal competitive bidding program “is bad
policy, based on false premises, [and is] built around flawed
economic theory that has been poorly implemented by CMS.”

OAMES is also working to engage advocacy groups in its fight
against any form of competitive bidding and is putting together a
consumer paper on the issue that details specifics about the
Medicare program.

“We’re writing a paper that gets to the heart: Even though this
is a Medicare initiative, this is a program that will totally gut
home services, regardless of payer,” Yuricich said. “The cascading
effect, that rippling effect, will be huge. We need to let [people]
know this tsunami of a program is coming down and it will be
fundamentally harmful to services as we know them. It has to be
stopped.”

Yuricich believes OAMES has so far been successful in deflecting
selective contracting because “we have a very strong working
relationship with Medicaid.”

Missouri ‘Win’ on Proposed Cuts

Such a relationship also paid off last week for Missouri HME
providers who saw a 3.5 percent Medicaid cut instead of a proposed
20 percent cut, said Rose Schafhauser, executive director of the
Midwest Association of Medical Equipment Services, whose Missouri
members meet with state program officials regularly.

“The cuts are horrible, but it was a pretty significant win to
even have the opportunity to sit down at the table and figure out
another alternative,” said Schafhauser. “We had every business line
represented at the table, so we were able to make sure every area
was covered.”

Missouri’s HME providers were facing a Medicaid cut proposed by
Gov. Jay Nixon that would pay them only 80 percent of Medicare
allowables. But the state’s Medicaid director asked Patrick Naeger,
chairperson of the Missouri Medicaid DME Subcommittee and a member
of MAMES, to come up with a plan that would sidestep the 20 percent
cut.

Naeger polled MAMES members on how best to save Missouri
Medicaid $4.5 million. With that input, Medicaid and the
subcommittee came up with a plan that changes reimbursement
policies for oxygen, hospital beds and some other items. While they
are tough changes, a 3.5 percent cut is easier to swallow than a 20
percent cut, Schafhauser said.

She believes the savings would never have been realized had
Missouri providers not had a relationship with the Medicaid
officials. That’s a notion that is spreading among the
association’s seven member states. 

“We’ve learned from one another,” Schafhauser said. “Nebraska
meets quarterly with their Medicaid, which wouldn’t give them the
time of day before. North Dakota meets quarterly with their
Medicaid. Iowa was successful in fending off competitive bidding
because they had cultivated a relationship.”

Such relationships work, agreed Clayback, who believes the
Missouri outcome is a prime example of what can happen when HME
providers connect with the people behind the policy-making.
Clayback worked with the state subcommittee to help get complex
rehab chairs and accessories exempted entirely from the cuts.

“By necessity, we as an industry need to improve how we work
with these [Medicaid] agencies,” Clayback said. “How do we monitor,
how do we ensure right relationships with the right people, how do
we change what is in the pipeline?” Those are some of the issues
that will be addressed at NCART’s National Medicaid Summit Oct. 6-7 in
Nashville.

The frequency of proposed Medicaid reductions is only going to
increase, Clayback said, so providers and state associations need
to remain vigilant and active. “You don’t want to be caught by
surprise on these issues,” he said.