Study Questions PMD Pricing: Cuts Will Trigger ‘Exodus’ of Providers and Cost Medicare Billions

ALEXANDRIA, Va.–The American Association for Homecare released
a study Wednesday that concludes CMS’ recent power mobility
reimbursement cuts will “trigger an exodus” of rehab providers and
will ultimately cost the agency billions.

According to the study, the cuts will cause at least 1,500
wheelchair suppliers to leave the industry, costing Medicare $2.7
to $5.9 billion over the next eight years to care for beneficiaries
who won’t be able to get the equipment they need.

Conducted by economist Clifford L. Fry, Ph.D., of Bryan,
Texas-based RRC, the study follows CMS’ release last month of the
new power mobility device fee schedule, which calls for cuts of
more than 40 percent for some equipment (see HomeCare Monday, Oct. 9). The new fees
are set to take effect Nov. 15.

The study found that there may be a 30 to 50 percent loss in PMD
availability as suppliers leave the marketplace, with beneficiaries
unable to provide mobility services for themselves.

While the study notes that Medicare’s direct expenditures for
power mobility will decline with the reimbursement cuts, it also
says the cuts–from 21 percent to 41 percent–amount to price
controls, with Medicare fees set below market prices for equipment
the necessary services that go with it. According to the study, the
cuts will ultimately increase Medicare expenditures for
hospitalization, physician services, and home care services for
beneficiaries who qualify for power wheelchairs but won’t acquire
them because the cuts will “impose massive short-run shutdowns of
supplier firms.”

The study recommends that CMS instead rely on market forces for
provision of products and services, since “price controls will
impair the functioning of market forces and decrease access to
power mobility.”

“The study raises legitimate questions about whether CMS had
sufficiently examined the impact of their price cuts on access to
power wheelchairs for the Medicare beneficiaries,” Dr. Fry said.
“It certainly seems that they have overlooked the impact of having
1,500 or more suppliers abruptly leave the market, and the
long-term impact of paying more in health care costs for
beneficiaries who don’t have the power wheelchairs that they need.
It is hard to argue why these cuts would be seen as good public
policy.”

The study is available on AAHomecare’s Web site at www.aahomecare.org.