Medicare Reforms to Save $120 Billion, CMS Says

BALTIMORE — Medicare payment reforms, anti-fraud measures
and other initiatives such as competitive bidding for DME will
mean almost $120 billion in savings to the program over the next
five years, according to a new CMS report.

A list of major areas from which those savings will come shows
moving to payment systems that reward quality of care will save $55
billion, CMS said in the report. Further crackdowns on fraud and
abuse, such as enhanced screening for Medicare enrollment and
increased use of Recovery Audit Contractors (RACs), will save
another $1.8 billion.

Also on the agency’s list of savings: “Getting the best value
for Medicare beneficiaries and taxpayers for durable medical
equipment.” Medicare currently overpays for DME, and that
encourages fraud, according to the report. As a result of
competitive bidding, CMS said, Medicare will save $2.9 billion
through 2015, and $17 billion over 10 years. Beneficiaries will
save an additional $11 billion in out-of-pocket costs.

“Both the Government Accountability Office and the HHS Inspector
General have identified durable medical equipment as one benefit
for which Medicare pays significantly more than other payers; and
this overpayment makes the program more susceptible to fraud, abuse
and unnecessary utilization,” the report states.

But in a May 12 press release following the report, the
American Association for Homecare vehemently rejected those
“distorted assertions.”

Labeling the notion a “myth” that Medicare overpays for home
medical equipment, the reality is that “proponents of the bidding
system have used out-of-date reimbursement rates and false
comparisons of retail costs versus Medicare costs to argue their
case,” AAHomecare said.

“For many years, CMS has set reimbursement rates for home
medical equipment through a fee schedule. Over the past decade,
those reimbursement rates have dropped nearly 50 percent because of
cuts mandated by Congress or imposed by CMS.

“The costs of delivering, setting up, maintaining and servicing
medically required equipment in the home are obviously greater than
the cost of merely acquiring the equipment,” the association
continued. “But Medicare does not recognize the costs of these
services. So comparing the cost of the equipment to the larger cost
of furnishing the full array of required equipment, supplies and
services is false and misleading.”

Under competitive bidding, AAHomecare said, faulty bidding rules
encourage lowball bids that won’t allow for “a sustainable process
or a healthy pool of equipment suppliers.”

According to AAHomecare President and CEO Tyler Wilson, “There’s
a reason why more than two dozen patient advocacy groups, 167
economists and nearly 100 members of Congress oppose this
program: It undermines quality and increases costs. Because of this
bidding program, beneficiaries will spend more time in expensive
institutions, rather than in the far more cost-effective setting
— their own homes.”

Read the AAHomecare release in full.

Read the CMS report in full.