WASHINGTON, D.C. (June 9, 2016)—The Council for Quality Respiratory Care (CQRC)—a coalition of the nation’s leading home oxygen therapy provider and manufacturing companies—commended lawmakers in the House Ways & Means Health Subcommittee for reviewing legislation to sustain and improve the Medicare program, including the Patient Access to Durable Medical Equipment Act (PADME). The PADME Act—bipartisan legislation widely supported by the respiratory care community—will extend the implementation of severe Medicare cuts to durable medical equipment (DME).

The PADME Act delays cuts to home oxygen supplies and services that began on January 1, and are scheduled for full implementation on July 1. The cuts are the result of the Centers for Medicare & Medicaid Services (CMS) applying competitive bid rates used in urban areas to rural and other non-competitive bid areas that Congress specifically excluded from the DME competitive program. The CQRC warns that more time is needed to observe and analyze the impact of the cuts on beneficiary access before additional cuts take effect. While home oxygen leaders caution cuts could put access to high quality and innovative home respiratory therapy at risk, they also warn cuts could result in higher overall Medicare spending due to increased hospital admissions.

“In many parts of the country, the amount paid for these services doesn’t cover the cost so it could decrease availability,” said Congressman Tom Price, MD at today’s hearing when addressing the PADME Act, referencing a 20 percent decrease in the number of DME providers in his home state of Georgia.

Dr. Price added, “Patients’ lives are literally at risk. The National Minority Quality Forum has data that demonstrates it is driving up costs by avoidable hospital bills and increasing out of pocket payments by patients. It has led to increased mortality and hospitalizations and higher costs for Medicare beneficiaries.”

Home oxygen leaders stress the importance of consistent and uninterrupted access to home respiratory care, particularly for patients managing Chronic Obstructive Pulmonary Disease (COPD) who are vulnerable to hospitalizations and readmissions and reside heavily in rural areas. The CQRC and other leaders across the DME provider and supplier communities have warned, “Six months is not enough time to monitor disruption in Medicare beneficiaries’ access to the DME items they need, and to evaluate what impact major reductions in payment have on their access to life-sustaining equipment and services.”

“We applaud Congressman Price and his bipartisan colleagues in the Ways & Means Health Subcommittee for considering this legislation and recognizing the value home oxygen services add to improving patient health and reducing Medicare costs,” said Dan Starck, Chairman of CQRC. “We strongly urge them to act to ensure this bill is passed before the July 1 deadline.”

Further underscoring the need to slow down these cuts through the PADME Act is a new report from the Office of the Inspector General, which raises serious concerns about the appropriateness of the current competitive bidding rates because unqualified suppliers’ bids were included to set the rate. The OIG found that 43 percent of the awarded contracts were given to suppliers that had not met State licensure requirements. If non-licensed providers had been excluded from the program when the rates were set, the competitive bidding rates would be higher than those that CMS is trying to apply on July 1.

“The OIG findings are further evidence that CMS should slow down the application of likely incorrect competitive bidding rates in noncompetitive areas. We urge lawmakers to review the OIG’s conclusions, which we think clearly demonstrate a need for promptly advancing the PADME legislation,” added Starck. Specifically, the bill would:

  • Extend the current phase-in of the blended rate (50 percent of the previous fee schedule rate and 50 percent of the new competitively bid-based rate) until October 1, 2017, which delays additional cuts in rural areas by 15 months.
  • Adjust the bid ceiling on competitive bidding by setting the ceiling at the FY2015 fee schedule rate and adjust for inflation to create a measure of stability in the competitive bidding program.
  • Require publication of a monthly report by CMS to monitor the impact of the cuts on Medicare beneficiary access.
  • Require CMS to take into account specific factors when adjusting the noncompetitive bid rates to ensure that the rates take into account unique aspects of providing services in rural and other nonurban areas.

In addition to supplying equipment, oxygen and supplies, home respiratory therapy providers provide patient-centered services to reduce hospitalizations. Working with hospitals and commercial payers, CQRC companies have developed and implemented programs to help reduce hospitalizations and Medicare program expenditures. Managed care programs and commercial payers already recognize the important role home respiratory therapy plays in reducing overall health care spending.

Visit cqrc.org for more information.