Health and Disability

The Medicare Payment Advisory Commission (MedPAC) may take another look at Medicare reimbursements for durable medical equipment (DME). Its consideration follows lawmakers' decision to temporarily delay implementation of the competitive bidding program.

The Medicare Improvements for Patients and Providers Act (MIPPA) halted the controversial bidding process, which began on July 1 in 10 metropolitan statistical areas. In exchange for the delay, reimbursements for items and services that were selected for the bidding program were cut by nearly 10%, and contracts that had been awarded to 325 suppliers through the bidding program were terminated.

Norman DeLisle, MDRC
"With Liberty and Access for All!"
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Sens. Debbie Stabenow (D-Mich.) and George Voinovich (R-Ohio) on Friday circulated a letter in the Senate seeking support for legislation that would delay a competitive bidding program in Medicare for durable medical equipment, CongressDaily reports. The program is scheduled to begin on July 1 (Edney, CongressDaily, 6/9). CMS will select DME suppliers to participate in Medicare based on bids they submit. The 2003 Medicare law mandated the program as part of a larger effort to implement competitive bidding.

In 2008, the program will operate in 10 of the largest Metropolitan Statistical Areas and will apply to 10 of the top durable medical equipment, prosthetics, orthotics and supplies product categories. In 2009, the program will expand to an additional 70 MSAs and will continue to expand in future years. The program also will apply to additional product categories in future years. The program likely will result in an average 26% decrease in the prices of medical equipment in the 10 MSAs, according to CMS (Kaiser Daily Health Policy Report, 5/7).

Norman DeLisle, MDRC
"With Liberty and Access for All!"
GrandCentral: 517-589-4081
MDRC Website: http://www.copower.org/
LTC Blog: http://ltcreform.blogspot.com/
Recovery: http://therecoveringlife.blogspot.com/
Change: http://prosynergypsc.blogspot.com/

A new economic study finds that the competitive bidding program for durable medical equipment (DME) being rolled out by the Centers for Medicare and Medicaid Services (CMS) would lead to reduced competition, lower quality of care, and higher costs.

Two Robert Morris University professors, Brian O'Roark, PhD and Stephen Foreman, PhD, conducted the study, which was released this week by the Pennsylvania Association of Medical Suppliers (PAMS).

"The limits on competition that CMS is proposing to implement will have great potential to produce higher prices and lower service quality," Foreman stated. "The franchise bidding process that CMS is implementing is at odds with everything that we know about markets, efficiency and incentives. We should be encouraging added competition in the market, not limiting it. Limits on competition like those proposed by CMS rarely, if ever, make consumers better off."

A Senate bill introduced last week would impose a $500,000 surety bond requirement on providers of durable medical equipment (DME) under Medicare and would put thousands of small homecare companies out of business, says the American Association for Homecare.

A law passed in 1997 requires a $50,000 surety bond for DME providers as a deterrent to fraud and abuse. However, the federal government has never actually implemented the surety bond requirement for the DME sector. The Centers for Medicare and Medicaid Services has proposed that the amount increase to $65,000.

The bill introduced last week, S. 2603, called the "Medicare Fraud Prevention Act of 2008," would increase the $50,000 surety bond requirement by a factor of ten. The bill would also increase civil and criminal fines for Medicare fraud and abuse. The bill is sponsored by Senators Mel Martinez (R-Fla.), John Cornyn (R-Texas), Norm Coleman (R-Minn.), Lamar Alexander (R-Tenn.), David Vitter (R-La.) and Jim DeMint (R-S.C.).

"The impact of a half-million dollar surety bond requirement would be devastating on law-abiding small providers,"

The Centers for Medicare & Medicaid Services (CMS) on January 25 issued a proposed rule to enhance the enrollment standards for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers. The proposed rule is intended to increase protections for Medicare and its beneficiaries from potentially dishonest or low quality suppliers.

By creating five new standards and strengthening seven of the 21 existing standards that suppliers must meet, the proposed rule would provide Medicare beneficiaries with additional assurance that they are being served by suppliers who meet the highest standards of quality.

"The proposals represent the next step in Medicare's ongoing efforts to ensure its beneficiaries continue to have access to high quality products and services at appropriate prices, while protecting them and the program from unscrupulous suppliers," said CMS Acting Administrator Kerry Weems. "In addition to meeting the enrollment standards, all DMEPOS suppliers are required to obtain accreditation from one of ten accrediting organizations announced in November 2006."

The American Association for Homecare vigorously disputed the validity of using Internet prices for power wheelchairs as a basis for setting reimbursement rates for power wheelchairs provided to seniors and disabled beneficiaries in Medicare.

The Association outlined its concerns in letters sent to Daniel Levinson, Inspector General for the U.S. Department of Health and Human Services Office of Inspector General (OIG), and to Congressman Pete Stark (D-Calif.), who chairs the House Ways and Means Subcommittee on Health.

On October 30, the OIG issued a report titled, "A Comparison of Medicare Program and Consumer Internet Prices for Power Wheelchairs," which concluded that, "Medicare and its beneficiaries could have achieved savings during the first quarter of 2007 had Medicare reimbursements more closely resembled prices available to consumers over the Internet." AAHomecare strongly questions the appropriateness of the OIG comparison and its policy implications for Medicare reimbursement rates.

Tyler J. Wilson, president of the American Association for Homecare, commented, "This study and the inappropriate comparison of Medicare and Internet pricing will be used by some members of Congress to justify further cuts to power wheelchair Medicare reimbursement rates and defend the new competitive bidding program. We urge Congress to evaluate Medicare reimbursement for power wheelchairs in the correct context."

In today's letters to both Inspector General Levinson and Congressman Stark, the Association made several points:....