Riding Out the Perfect Storm: Senate Bill ‘Very Scary’

WASHINGTON — This year alone, the HME sector has been hit
with a 36-month oxygen cap, a 9.5 percent DME cut and the reprise
of competitive bidding. And now, with the Senate’s health reform
bill (S.
3590) on the way to floor debate, there’s only one thing home
medical equipment providers can bank on: change.

On Saturday night, the Senate bill garnered the 60 votes
necessary to clear the way for debate after Thanksgiving. If
everything comes to pass as written in that piece of legislation
alone, it could spell monumental upheaval for the industry. (See
HME Still Under
Fire in Senate Health Bill, Nov. 20).

“We see the comingling of so many negative or detrimental
policies in the Senate bill that … when you put them all
together, the magnitude of the change and the constant change
within the HME sector makes it very hard for providers to adapt and
react,” said Walt Gorski, vice president of government relations
for the American Association for Homecare.

“What we have is the perfect storm,” he continued. “Provider
numbers are dropping and you have the price of the devices going up
and you have the reimbursement rates for the items and services
going down. Those factors cannot coexist well without, at the end,
harming the patient.”

Among other things, the Senate bill would speed up competitive
bidding, eliminate the first-month purchase option for power
wheelchairs and reduce annual CPI updates. But Cara Bachenheimer,
senior vice president of government relations for Elyria,
Ohio-based Invacare, said there are two other especially troubling
provisions in the bill.

“From our perspective, the most troubling provision is the
device manufacturer’s excise tax,” she said. “It’s a tax that
exceeds Invacare’s last reported year’s profits and [research and
development] investment.”

Under the proposal, manufacturers of medical devices with more
than $5 million in sales would have to pay an annual fee totaling
$2 billion beginning in 2010. That’s down from the initial proposal
of $4 billion, but it’s still an ominous amount — and the
timing is virtually immediate. Invacare Chairman and CEO Mal Mixon
has previously said the tax would “severely damage our ability to
bring new products to market.”

Bachenheimer said another worrisome provision would establish an
independent Medicare advisory commission that would have the power
to go directly to Congress with proposed changes to reduce the
program’s growth rate. If the changes go unchallenged, they would
automatically be implemented.

“That will give [the Department of Health and Human Services]
essentially unfettered authority to change pricing,” Bachenheimer
said. “There appears to be no due process or any other process or
protections to ensure rational decision-making by the IMAC —
and when was the last time a body like this had great expertise in
our area?”

Seth Johnson, vice president of government affairs for Exeter,
Pa.-based Pride Mobility Products, said he is also worried about
the IMAC.

“The biggest challenge to the industry … will be
appropriately educating [IMAC] board members on the DME industry,
its cost-effectiveness and the important role it plays within the
overall health care continuum,” he said.

He echoed Bachenheimer’s concerns about the medical device tax
and noted two other burdensome provisions: the Senate’s call to
eliminate the first-month purchase option for standard power
wheelchairs and a provision involving “productivity adjustments.”
Johnson said those adjustments would slice into providers’ pockets
even further because they would reduce annual CPI updates.

Then there’s the bill’s provision to accelerate competitive
bidding by increasing the number of MSAs in Round 2 to a total of
100 in the bid program. It would also require HHS to bid all areas
of the country or apply bid rates nationwide by 2016.

Bachenheimer said she does not hold out a lot of hope that the
myriad mandates will disappear in the final version of the bill.
“It will be very tough to get rid of any of these provisions,” she
said. “The cumulative impact of all these provisions is very scary,
particularly since they present a number of unknowns.”

Majority Leader Sen. Harry Reid, D-Nev., “is trying to get this
health bill through the Senate by Christmas, undoubtedly an
ambitious goal, but it could happen,” said Bachenheimer. “If so,
that leaves post-Christmas-January for conference to iron out the
major policy differences between the House-passed bill and whatever
the Senate passes.” (For Bachenheimer’s analysis of HME-related
provisions in the House bill, H.R. 3962, see Now on to the
Senate, Nov. 10.)

It’s important that industry stakeholders continue trying to get
the story out about HME to legislators, Bachenheimer added. “Our
industry needs to keep educating Congress on all these issues and
their impacts — that CMS needs to police the industry at the
gatekeeper time, that we are the solution to ballooning health care
costs,” she said.

Johnson agreed. “The industry efforts should be focused squarely
on communicating the impact the negative provisions in the Senate
health care reform legislation will have on their businesses and
the customers they serve,” he said. “These provisions are on the
table, and their fate will be determined during the debate on the
bill throughout December. Now is the time for the industry to reach
out to our senators and let them know how detrimental those
provisions would be if implemented.”

View the entire text (all 2,074 pages) of S. 3590, the

Patient Protection and Affordable Care Act.

For a rundown of the bill’s HME-related provisions from VGM
Group, see Long List
of Provisions Affecting HME, Nov. 23.