WASHINGTON--Last Monday, President Bush released a $3.1 trillion budget plan for fiscal 2009 that, if approved, would cut Medicare and Medicaid spending by $200 billion--with some of those cuts coming from HME.
The blueprint--President Bush's last and most expensive to date--would slash Medicare by $182.7 billion over the next five years and cut Medicaid by $17.4 billion. As in last year's proposal, the budget would specifically reduce the home oxygen rental cap from its current 36 months to 13 to save an estimated $3 billion over the five-year period. It would also eliminate the first-month purchase option for power wheelchairs to save $720 million in that time frame.
Not surprisingly, industry reaction to the news was not positive.
A response from the American Association for Home Care blasted the plan, which it said would "weaken the nation's home care infrastructure."
"Home care delivers value for every health care dollar, and it is clinically effective and preferred by patients and families," said Tyler J. Wilson, AAHomecare president. "These proposed cuts show a complete disregard for the nation's home care safety net. Some of the reimbursement mechanisms in Medicare should be improved so they align better with beneficiaries' needs. However, these proposed cuts do not improve Medicare and would be bad for patients and providers alike."
AAHomecare said elimination of beneficiaries' option to purchase a power wheelchair in the first month "would reduce beneficiary access and increase costs to Medicare, requiring durable medical equipment companies to provide financing for a patient's wheelchair."
In essence, that would render providers as "lending institutions for the federal government," the association said. "If the first-month purchase option is eliminated, access to wheelchairs will decrease since providers will not be able to secure the financing to cover the costs of the power wheelchair over a 13-month period."
In addition to shortening the oxygen rental period, AAHomecare pointed out the phrase "and revise the monthly payment amount" was added in the budget text, "which suggests the administration proposes an oxygen rate cut in addition to the shorter rental period."
The Council for Quality Respiratory Care, a coalition of 11 home oxygen providers and manufacturers, echoed concerns regarding the budget's oxygen provision. CQRC contends that between competitive bidding and policy changes scheduled for Jan. 1, 2009--when the first beneficiaries will assume ownership of their equipment under the Deficit Reduction Act--oxygen therapy can't afford any additional hits.
"It is difficult to imagine how we would accommodate patient needs with these newly proposed cuts, especially as we struggle to wholly grasp the depth of the unprecedented funding cuts already before us," said Peter Kelly, CQRC chairman. "Balancing the federal budget at the expense of vulnerable patients is just bad policy."
A statement from Invacare noted new oxygen technology such as home transfilling equipment and portable concentrators would likely be exempt from the budget proposal. But the Elyria, Ohio-based manufacturer also acknowledged the potential longevity of the provisions targeting HME. According to Invacare, providers can expect those cuts to stay on the table, especially with the approaching deadline for the Medicare "doc fix."
"With regards to Medicare, Congress will pick up its Medicare proposals where it left off in December 2007, when it could gain the votes to pass only a bare bones Medicare package whose primary purpose was to stave off a Medicare payment cut for physicians until June 30, 2008. In the next few months, Congress will continue its consideration of a Medicare package, which is likely to include oxygen and power wheelchair cuts, though not the same as those proposed by the administration," Invacare said.
In explaining the budget, HHS Secretary Mike Leavitt pointed out reductions must be made or Medicare will be bankrupt in 11 years. "American sensitivity to entitlement warnings has become numbed by a repeated cycle of alarms and inaction. Dire warnings have become a seasonal occurrence, like the cherry blossoms blooming in April, part of life's natural rhythm. This must change. There are those who will be unhappy with this budget, but given the Medicare system we have, putting off solving the problem is no longer an acceptable," Leavitt said in a Monday afternoon press conference.
CMS data shows that, in the past 25 years, Medicare spending has grown from $52.6 billion in 1983 to an estimated $396.3 billion in 2008, a 7.5-fold increase. Currently, the program consumes 16 cents of every federal dollar spent and is third only to Social Security and defense spending. In 2009, funding for total Medicare spending, which will cover 45.5 million Americans, is expected to be nearly $425.5 billion.
While the HME sector represents only about 1.7 percent of Medicare's total spending and is the slowest-growing sector in the program, Leavitt said net savings from the entire budget proposal would slow the program's annual growth rate from 7.2 percent to 5 percent.
Despite possible repercussions of the Bush budget, Washington insiders said the Democratic Congress is not likely to support the plan. Already, House Speaker Nancy Pelosi, D-Calif., has said the proposal is in stark contrast to the budget Congress will offer in the coming weeks.
In fact, according to Seth Johnson, some congressional aides were even calling the president's budget DBA, or "dead before arrival," as details leaked out before its presentation last week. However, he warned, the threats to oxygen and PWCs aren't going away. "We're certainly in for another battle this year" as Congress fashions a Medicare package and must address the physician payment issue before June 30, he said.
"Once again that's the driver here," continued Johnson, vice president of government affairs for Pride Mobility Products, Exeter, Pa. "We built a strong grassroots advocacy effort that helped the outcome in [avoiding these cuts] last year. I'm confident we can do the same thing this year as long as we take advantage of the groundwork we laid, but we really only have the spring and into the early part of the summer to do it."