Home Health & Hospice Week

Payment switch is 'a sledgehammer approach to killing a fly,' one expert says.

The controversial issue of payment for services versus products has raised its ugly head again in Medicare reimbursement, and suppliers and patients stand to suffer as a result.

The Centers for Medicare & Medicaid Services has proposed switching respiratory assist devices with bi-level capability and a backup rate from the frequent and substantial servicing payment category to the capped rental category.

The Medicare category switch for the devices - formerly known as NPPVs (noninvasive positive pressure ventilators) - could mean $30,000 less in reimbursement over five years for just a single RAD, CMS notes (see Eli's HCW, Vol. XII, No. 30, p. 235).

The problem is similar to the one surrounding Medicare reimbursement for drugs, notes Ron Richard, vice president of marketing for the Americas for San Diego, CA-based sleep disorder company ResMed. Durable medical equipment suppliers use the so-called extra margin included in payments for both RADs and drugs to pay for accompanying services, Richard notes.

"RADs look easy and relatively inexpensive, but they require constant review and adjustment" to ensure the patient is using them appropriately, says Patrick Dunne, consultant with Fullerton, CA-based Healthcare Productions Inc.

Capped rental items do include a modest service and maintenance fee after the 13- to 15-month rental period expires, "but that few bucks a month" won't cover the RT visits required to adjust and change settings on the RADs, Dunne protests. "It's a horrible mistake to go to capped rental," where the RAD is treated - and paid for - as "just another piece of equipment like a walker or a wheelchair" he argues.

"There are no clinical services associated with the DME benefit," agrees Jill Eicher, government relations director for the American Association for Respiratory Care. AARC is concerned that if Medicare reimbursement doesn't cover RT services for patients using RADs, "it could result in harm to the patient," Eicher says.

In fact, if Medicare refuses to provide enough reimbursement to cover RT services for RAD patients, "they are better off not covering the device at all," Dunne declares. Without the proper clinical visits accompanying RAD usage, the potential for harm to the patient is just too great, Dunne says.

 Payment System For High-Tech DME Flawed  

The Medicare reimbursement model for high-tech DME is "highly flawed, and has been for years," laments ResMed's Richard. DME payment rates are based on only equipment prices and upkeep, when many high-tech devices now require extensive clinical services accompanying them.

To make up for Medicare's lack of official recognition for the services needed for items such as ventilators and oxygen concentrators, CMS puts them in the FSS category, where they continue to receive payments as long as the patient uses the equipment, Dunne explains.

In fact, a 1993 law requires CMS to put certain ventilators in the FSS category "to avoid imminent danger to a beneficiary's health," CMS notes in its proposed rule on the devices. RADs should be part of that exception, Dunne argues.

CMS wants to keep payment for clinical services and equipment separate, explains Eicher. Officially adding payments for DME-related patient services "would mix up the Medicare payment structure," she says.

But adding payment for a service component is exactly what CMS must do if it refuses to keep RADs in the higher-paying FSS category, Dunne insists. CMS must overhaul its "archaic DME payment methodology," he says, especially as patients go home "quicker and sicker" from the hospital with more DME-related clinical needs.

CMS' fervor to move RADs into the capped rental category dates back to when Medicare first covered and paid for the devices. RAD expenditures shot up as respiratory DME companies latched onto the new devices in the face of falling oxygen payment rates.

But "new requirements put into place already have slowed the growth" of RAD sales, Richard protests. Thus, the $11.5 million savings the HHS Office of Inspector General has projected for the category switch is inflated.

Switching RADs' payment category "is a sledgehammer approach to killing a fly," Dunne agrees. New eligibility and documentation requirements have reined in RAD spending already, he maintains.

If CMS succeeds in pushing RADs into the lower-paying capped rental category, don't expect it to be the last reimbursement cut the devices see, Dunne predicts. The equipment will be vulnerable to further payment cuts, either through inherent reasonableness or other methods, once it is a regular capped rental item, he warns.