HEADLINE NEWS
HME Industry Weighs-In on Medicare Spending Debate
WASHINGTON--A new report from the Health and Human Services Department's Office of Inspector General is fundamentally flawed, according to home medical equipment industry representatives.
Rekindling a debate that began nearly a decade ago, Sen. Tom Harkin, D-Iowa, who is chairman of the Senate's Subcommittee on Labor, HHS and Education, requested a report from the OIG comparing what Medicare pays for DMEPOS to what other government health care programs, such as the Veterans Administration and Medicaid, pay. Pointing to discrepancies of as much as 88 percent, the report concluded that "Medicare and its beneficiaries pay more than they should for certain medical equipment and supplies."
But the Alexandria, Va.-based American Association for Homecare said that comparing the VA to Medicare is like comparing apples to oranges.
By failing to account for structural differences between Medicare and other government health care programs, the OIG report missed the biggest pieces of the puzzle, AAHomecare said. Not only must DMEPOS suppliers pay administrative costs associated with Medicare's required documentation, but they also must provide services that Medicare does not reimburse directly.
"Transaction costs for servicing Medicare beneficiaries are higher than they are for VA patients because of the significant cost of complying with Medicare program rules," AAHomecare explained. Additionally, "Medicare suppliers must meet 21 supplier standards, which include maintaining a physical facility, delivering items to the beneficiary, providing education to the beneficiary and maintaining a complaint resolution procedure."
In short, "The report's conclusions are invalid," David Williams, director of government relations for Elyria, Ohio-based Invacare, told the subcommittee at a hearing on June 12. "It compares the Department of Veterans Administration, which provides only the equipment, with the combination of equipment and services that individual consumers receive from HME providers under Medicare."
Despite these arguments, Inspector General Janet Rehnquist defended the OIG's report and complimented Sen. Harkin on his efforts to curb Medicare's spending for DMEPOS. "We believe that fundamental reform is needed to ensure that Medicare and its beneficiaries pay a fair price," she told the subcommittee last week. "CMS needs to complete its inherent reasonableness regulation, and the [Bush] Administration and Congress need to work together to expand the competitive bidding provision beyond the demonstration phase."
"A competitive bidding program would force a limited number of suppliers to extend a limited level of service to beneficiaries, thus reducing the level of care provided without achieving any overall savings to the Medicare program because of the increased administrative cost, " said Dan Meuser, President Pride USA.
The call for competitive bidding has been a familiar one in Washington, during the months since President Bush issued his 2003 budget proposal.
"Certainly, the issue of competitive bidding is more serious now than it has ever been," said Cara Bachenheimer, a health law expert and an attorney with the Washington-based law firm Epstein, Becker & Green.
Because the national budget surplus has evaporated, lawmakers are looking for ways to cut costs, Bachenheimer explains. The fact that Congress is preparing to pass a massive prescription drug benefit only serves to increase the urgency of lawmakers' search for dollars. "While competitive bidding doesn't provide a huge amount of money," she adds, "it does provide a few pennies in the right direction," as certain legislators see it.
But Sen. Harkin's interest in competitive bidding is not new, Bachenheimer continues. "This is the exact same hearing he had several years ago. He has always been the most vocal proponent of competitive bidding, inherent reasonableness reductions and looking at what the VA pays without really caring to understand the 'apples to oranges' analysis."
This is not to say that providers have nothing to fear, Bachenheimer notes. "The one thing that everybody in the industry needs to do is visit their members of Congress, because these members don't understand the services we provide. If every member of Congress were contacted by two companies, believe it or not, it would make a difference."
Industry leaders are urging home medical equipment providers to contact their legislative representatives and voice their concerns about the detrimental effect that national competitive bidding could have on the home care industry. To follow is a list of Internet links and email addresses to various Congressional and legislative contacts.
U.S. Senate Web site: http://www.senate.gov
U.S. House of Representatives Web site: http://www.house.gov
Key Legislators:
Sen. Tom Harkin, D-Iowa, chairman of the Senate Appropriations Committee Subcommittee on Labor, Health and Human Services, Education and Related Agencies
E-mail: [email protected]
Web site: http://harkin.senate.gov
Subcommittee on Labor, Health and Human Services, Education and Related Agencies
Web site: http://appropriations.senate.gov
Members:
Arlen Specter, R-Pa., ranking member
E-mail: http://specter.senate.gov/webform.htm
Robert Byrd, D-W.Va.
E-mail: [email protected]
Thad Cochran, R-Miss.
E-mail: [email protected]
Larry Craig, R-Idaho
E-mail: http://www.senate.gov/~craig/webform.html
Mike DeWine, R-Ohio
E-mail: http://dewine.senate.gov
Judd Gregg, R-N.H.
E-mail: [email protected]
Ernest "Fritz" Hollings, D-S.C.
E-mail: http://www.senate.gov/~hollings/webform.html
Kay Bailey Hutchison, R-Texas
E-mail: http://hutchison.senate.gov/e-mail.htm
Daniel Inouye, D-Hawaii
E-mail: http://www.senate.gov/~inouye/webform.html
Herb Kohl, D-Wis.
E-mail: [email protected]
Mary Landrieu, D-La.
E-mail: http://landrieu.senate.gov/webform.html
Patty Murray, D-Wash.
E-mail: [email protected]
Harry Reid, D-Nev.
E-mail: http://www.senate.gov/~reid/email_form.cfm?lowsrc=1
Ted Stevens, R-Alaska
E-mail: http://stevens.senate.gov/webform.htm
A full list of U.S. Senators and their contact information is available at http://www.senate.gov/contacting.index.cfm.
To contact your U.S. Representative by mail or e-mail, go to http://www.house.gov, click on "Write Your Representative," and follow the prompts. The House of Representatives Web site also has official mailing labels of member addresses available for downloading.
Other resources:
Capitol Connection, a partnership between The MED Group and the American Association for Homecare, where you can search for elected officials or search for issues and legislation that affect the home care industry. Form letters are available for e-mailing or mailing to the elected officials of your choice.
Web site: http://capwiz.com/medgroup.com
Report Rekindles Medicare DME Spending Debate
WASHINGTON--Last week brought national attention to a debate that has been simmering just below the surface of Congressional notice for nearly a decade.
Based on a June 11 report from the U.S. Department of Health and Human Services' Office of Inspector General, major news organizations such as USA Today and NBC Nightly News have suggested that Medicare pays too much for durable medical equipment, prosthetics, orthotics and supplies.
The report, which the OIG prepared at the request of Sen. Tom Harkin, D-Iowa, and chairman of the Senate's Subcommittee on Labor, HHS and Education, compares what Medicare pays for DMEPOS to what other government health care programs, such as the Veterans Administration and Medicaid, pay for the same equipment. Pointing to discrepancies of as much as 88 percent between what Medicare pays and what the VA pays, the report concludes that "Medicare and its beneficiaries pay more than they should for certain medical equipment and supplies."
But home care industry representatives say the report is fundamentally flawed. "Comparing the VA to Medicare is like comparing apples to oranges," the Alexandria, Va.-based American Association for Homecare wrote in testimony it submitted to the subcommittee.
Similar to the OIG's previous studies on the subject, this report "fails to account for the structural differences in the programs and the additional administrative costs of providing DMEPOS to Medicare beneficiaries," AAHomecare said. Not only must DMEPOS suppliers document the medical necessity of each claim, but they also must obtain a prescription from physicians, document proof of delivery, incur the expense of billing Medicare co-pays and deductibles, and bear the risk of bad debt, the association explained.
Additionally, DMEPOS suppliers provide services that Medicare does not reimburse directly. "Transaction costs for servicing Medicare beneficiaries are higher than they are for VA patients because of the significant cost of complying with Medicare program rules," AAHomecare insisted. "Medicare suppliers must meet 21 supplier standards, which include maintaining a physical facility, delivering items to the beneficiary, providing education to the beneficiary and maintaining a complaint resolution procedure."
To learn more about this debate--and to read lobbying advice from industry experts--watch for a HomeCare Monday SPECIAL REPORT scheduled to arrive in your email later today.
Medicare Pays Too Much to Maintain Capped Rental Items, OIG Says
WASHINGTON--For the second time this month, the U.S. Department of Health and Human Services' Office of Inspector General has released a report that says Medicare pays too much for durable medical equipment. This time, the OIG focused on what Medicare pays to maintain capped rental items.
After tracking for five years maintenance and repair payments for 3,553 pieces of equipment, the OIG determined that "Medicare paid substantially more for maintenance than repairs," and that "only 9 percent of capped rental equipment actually received any maintenance and servicing from June to December 2000."
Based on these findings, the OIG recommended that the Baltimore-based Centers for Medicare and Medicaid Services eliminate the semi-annual maintenance payment the agency currently allows for capped rental items. CMS should pay for repairs only "when needed," the report concluded.
But Michael DeCarlo, a health law expert with the Washington-based law firm Dickstein Shapiro Morin and Oshinsky, said that the current maintenance fees for capped rental items already are too low.
"The OIG has always said that Medicare pays too much," he explained. "But the current prices do not even reflect inflation."
Instead of increasing capped rental payments each year to keep up with inflation, as the current methodology requires, "Medicare [almost every year since 1987] has either reduced or cancelled the annual inflation update," DeCarlo said. For DME providers who must incur overhead and maintenance costs during the first 15 months of rental, the current system is harsh.
"Now the OIG is saying you get nothing for keeping [the equipment] in working order," DeCarlo continues. "When medical necessity ends, you get the equipment back, but all rental equipment goes through very tough wear and tear--and depreciation. Quite frankly, the OIG report suffers from the fact that no one in the OIG has ever run a business. If they had to open a storefront and rent wheelbarrows, they would see the problems that occur with rentals."
To read the report, go to http://www.oig.hhs.gov, and click on the "reports" heading. Then, download the report, entitled "Medicare Maintenance Payments for Capped Rental Equipment."
FDA Considers Medical Devices Fee
WASHINGTON--To speed its device-approval process, the U.S. Food and Drug Administration is considering charging medical device makers a fee to review new products, an FDA spokeswoman told HomeCare.
"In recent weeks, the FDA has been talking to different parts of the medical devices industry about the possibility of developing a user-fee program," she said. While there may be some exceptions, the fee generally would apply to every medical device that the FDA reviews under pre-market approval applications, or 510(k) notices�including home medical devices, she explained.
The idea is not new. More than a decade ago, Congress approved the Prescription Drug User Fee Act, which authorized the FDA to collect fees from pharmaceutical companies in exchange for reviewing new drugs. The agency used the resulting revenue to hire more reviewers, in an effort to speed the drug-approval process.
But a similar user-fee proposal for medical devices died in the planning stages, because certain medical-device industry representatives opposed the fees, the FDA spokeswoman continued.
Now the agency has resurrected the proposal, in the form of the Medical Device User Fee Act, or MEDUSA, which some in the medical-device industry already have endorsed. In fact, the Washington-based Advanced Medical Technology Association lobbied unsuccessfully to attach the proposal to recent bioterrorism legislation.
Still, "lawmakers on both sides of the aisle clearly understand the need to increase FDA resources and strengthen review tools to prepare [the agency] for rapid advances in medical technology," AdvaMed President Pamela Bailey said. "Congress should act promptly to pass these measures to ensure the FDA can keep up with the increasingly rapid pace of medical innovation and give patients access to the latest advances in technology."
The proposal currently on the table, which AdvaMed's Board approved unanimously on May 20, would provide the FDA with "an additional $40 million for device review activities in the first year--$25 million from user fees and $15 million from an increase in appropriations, pending congressional approval, with a five-year aggregate at approximately $225 million," the association explained. "It also would establish firm performance goals for review decisions and review cycles."
Despite recent setbacks, "the goal is to try to do something during this session of Congress--by September," the FDA spokeswoman said.
For more about what AdvaMed has to say about medical device user fees, go to http://www.advamed.org/publicdocs/userfeestoc.html.
FDA to Monitor High-Risk Devices
WASHINGTON--The U.S. Food and Drug Administration soon will have the authority to monitor certain high-risk medical devices even after granting approval for the devices, according to a June 6 rule in the Federal Register.
The "post-market surveillance" rule, which takes effect July 8, targets devices that sustain life, such as artificial heart valves, and attempts to identify dangerous side effects that are too rare to evaluate fully in pre-market studies.
But instead of collecting data on all risky devices, the FDA now will have the authority to choose which devices to track, based on the agency's discretion and specific public health concerns, says Laura Alonge, a biologist with the FDA's Issues Management staff.
"It would not include oxygen tanks, but conceivably it could include oxygen concentrators and even wound dressings--if we identify a problem," she says. "That's the important thing to understand. We would use the rule [to collect data] if we identified a problem and thought that this data would give us information we needed to address that issue."
To read the post-market surveillance rule, go to http://www.access.gpo.gov/su_docs/fedreg/a020606c.html, and scroll down to the heading entitled Food and Drug Administration.
Two Agencies Testify on Medicaid Fraud
WASHINGTON--Last week, two U.S. government agencies concluded that fraud and abuse probably are rampant in the current Medicaid system.
In testimony before the House subcommittee on government efficiency, financial management and intergovernmental relations, Deputy Inspector General Michael Mangano from the Health and Human Services Department's Office of Inspector General said, "We believe that, in terms of federal tax dollars, accounting loopholes and failure to set reasonable reimbursement levels are resulting in great losses. There also is, without a doubt, fraud in Medicaid."
Reaching a similar conclusion, the General Accounting Office outlined for the subcommittee a series of internal oversight problems that have cost the Centers for Medicare and Medicaid Services millions of dollars in overpayments.
Using the Comproller General's Standards for Internal Control in the Federal Government to evaluate the Medicaid program, the GAO concluded that CMS did not perform proper risk assessments--nor did the agency mitigate identified risks, adequately monitor the effectiveness of its actions or ensure that Medicaid's organizational structure clearly defined each entity's responsibilities.
"In closing," said Linda Calbom, the GAO's director of financial management and assurance, "I want to emphasize that while CMS is acting to improve its financial oversight of the Medicaid program, the increasing size and complexity of the program, coupled with diminishing oversight resources, requires a new approach to address these challenges."
To read the OIG's testimony, go to http://www.oig.hhs.gov/testimony.html, and to read the GAO's testimony, go to http://www.gao.gov.
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