Medicare Compliance & Reimbursement

DME suppliers battle looming pay cuts.

Two groups of stakeholders in the world of durable medical equipment (DME) are fighting separate battles over proposed Medicare cuts.

Power mobility device (PMD) suppliers--faced with Medicare payment rates that will drop as much as 43 percent Nov. 15--are turning to Congress in their efforts against the Centers for Medicare & Medicaid Services' (CMS) new fee schedule for PMDs.

Sens. Arlen Specter (R-PA) and Rick Santorum (R-PA) sent an Oct. 13 letter to Department of Health and Human Services (HHS) Secretary Michael Leavitt, expressing concerns about the impact the cuts could have on beneficiary access to PMDs, which include power wheelchairs and scooters.

"We urge you to postpone implementation of the fee schedule in order to provide adequate time for CMS to work with industry on an alternative payment methodology," the letter says.

In addition, South Dakota lawmakers joined in sending an Oct. 18 letter to Leavitt and Leslie Norwalk, acting CMS administrator, citing concerns about the paucity of PMD suppliers in rural areas.

Several suppliers, including Box Elder, SD-based WestMed Rehab, have said they will no longer provide power wheelchairs to most Medicare recipients after Nov. 15, when cuts in Medicare reimbursements go into effect.

On Oct. 24, Iowa medical equipment suppliers announced they had asked Charles Grassley (R-IA) to fight the PMD cuts.

The American Association for Homecare (AAHomecare) Rehab and Assistive Technology Council has asked CMS to withdraw the new fee schedules and postpone the Nov. 15 implementation date "so that CMS can work with stakeholders to arrive at payment amounts that are realistic and equitable."

OIG Oxygen Report Flawed, Industry Study Says

At the same time the battle rages over PMD cuts, oxygen suppliers armed with statistics are squaring off with CMS against proposed cuts in Medicare payment rates for oxygen equipment.

A new study commissioned by AAHomecare and conducted by Morrison Informatics analyzes a September 2006 report from the HHS Office of Inspector General (OIG). The report recommended reducing the oxygen capped rental payment period from 36 months to 13 months.

"The findings and recommendations in the OIG report are based on limited and inadequate data about the actual costs of providing home oxygen therapy to Medicare beneficiaries," notes AAHomecare in announcing the study.

The Morrison analysis noted these problems:

• The OIG report examined only selected costs associated with home oxygen therapy. The costs of oxygen equipment comprise only 28 percent of home oxygen providers' total costs.

• The OIG report did not study a statistically valid sample of beneficiaries.

• The OIG's savings estimate using a 13-month capped rental period isn't accurate, since it doesn't  reflect payments Medicare would have to make to reimburse for services currently covered in the monthly, bundled payment rate, and it includes savings that wouldn't be scored by the Congressional Budget Office and CMS Office of the Actuary as cost savings.

• The OIG's repeated use of 36 months of total reimbursement is inappropriate because this represents only 22 percent of all patients, not the average patient length of stay of 18 months.

• The OIG report didn't account for financial savings from the Medicare Modernization Act of 2003 or the Deficit Reduction Act of 2005.

To view the Morrison report, go to www.aahomecare.org.