Bush Medicare Plan May Aid HME Industry
It was easy to miss with the debate over war in Iraq and the space shuttle explosion dominating the headlines of major media outlets, but in late January, President Bush proposed a controversial change in how Medicare beneficiaries receive services. Under the President’s plan, beneficiaries could continue in the traditional fee-for-service program as it exists now, or they could choose from two government-subsidized private health insurance plans that include prescription drug coverage.
While it is still too early to predict the final outcome of this proposal, it may have some unintended good consequences for the HME industry as it seeks to fight competitive bidding, says Asela Cuervo, vice president and general counsel for the American Association for Homecare (AAHomecare).
First, because many legislators believe it is unfair to use the prescription drug benefit to pressure seniors into choosing private HMO-type plans, the proposal will be more controversial. This will increase the time it may take to pass and give the HME industry more time to make the case against competitive bidding, Cuervo says.
Second, it is inconsistent to save money in Medicare by pushing to privatize parts of it on the one hand, and to hire hundreds of additional Centers for Medicare & Medicaid Services (CMS) staffers to administer competitive bidding for HME on the other hand, Cuervo says. “If you want to turn [Medicare] over to the private sector, why do you build up the government bureaucracy in Medicare for competitive bidding?” she asks.
In addition, Cuervo believes it is a major victory for the industry that the proposal did not include competitive bidding and simply left that potentially controversial detail as something for Congress to work out. “As long as I have been working with this industry that has not happened,” she says. “It really speaks to the hard work everyone did last year to make known very clearly that this is a controversial proposal and it is problematic for beneficiaries and suppliers and it would not be what the Medicare program thinks it is.”
However, she cautions that this does not mean that the industry will not have a lot more hard work to do next year as many people in Congress who thought competitive bidding was a good idea still think it is—and she is not alone in that opinion.
Although competitive bidding is not the type of small detail the budget would mention, the issue will be raised again in Congress because there is a lot of pressure to offset increased spending in some parts of the Medicare program with spending cuts in other parts, says Cara Bachenheimer, a partner with the law firm Epstein, Becker & Green in Washington, DC, and a leading home care industry lobbyist. “Anyone who thinks otherwise is crazy,” she says.
The next step will be to see what Senate and House leaders do with the proposal. “It is really difficult to say at this point what the Bush budget will mean,” Bachenheimer says. “What will probably be more telling is the text that [House Ways and Means Committee] Chairman [Bill] Thomas [R-Calif] and [Senate Majority Leader Bill] Frist [R-Tenn] and the others on the Senate side put together and how that dovetails or doesn’t with what the administration has put forth.”
President Proposes $1.75 Billion Home Care Transition Program A 5-year program, proposed in February by President George W. Bush, would help Americans with disabilities move from nursing homes or other institutions to living in the community. Part of the fiscal year (FY) 2004 budget, the $1.75 billion program is included in the New Freedom Initiative, a nationwide plan to integrate people with disabilities more fully into society. Altogether, the New Freedom budget proposals will represent $2.1 billion in planned new spending over 5 years, with $417 million in new spending proposed for FY 2004. “We’ll continue to support President Bush’s New Freedom Initiative, which reduces barriers and promotes independence for people with disabilities,” US Department of Health and Human Services Secretary Tommy G. Thompson wrote in a February 4 statement. “Our investments will help people to transition from institutions to community care or home care, provide respite services for their family caregivers, and address the shortage of community direct care workers.” The proposal also seeks to establish presumptive eligibility for institutionally qualified individuals who are discharged from hospitals into the community for home- and community-based care services. In addition, the administration would explore access to and affordability of long-term care options. |
HHS Publishes HIPAA Final Security Rule
In February, the US Department of Health and Human Services (HHS) released the final security standards for protecting individually identifiable health information when it is maintained or transmitted electronically. Part of the administrative simplification provisions included in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and published in February in the Federal Register, the standards will be effective April 21. After that date, most covered entities will have 2 full years—until April 21, 2005—to comply with the standards. Under the security standards, covered entities must implement administrative, physical, and technical safeguards to protect electronic health information in their care.
In a separate final regulation, the Federal Register also included HHS modifications to the transaction standards, which health plans, certain health care providers, and health care clearinghouses must use for electronic health care transactions. Covered entities must comply with these modified transaction standards by October 16.
To obtain the full text of both final rules, visit the CMS Web site at www.cms.hhs.gov/hipaa/hipaa2.
Court Dismisses Claims Against Apria, Again
In January, the US Court of Appeals for the Ninth Circuit dismissed a class action lawsuit against Apria Healthcare Group Inc, Lake Forest, Calif. Filed in August 2001, the complaint alleged that Apria made false and/or misleading statements in its public disclosures concerning a civil investigation of its Medicare billing documentation that has been pending since 1998. The District Court initially dismissed the suit in October 2002; in November, the plaintiff, J.E.B Capital Partners, LP, appealed that dismissal.
| Legislative/Regulatory News |
GAO Gives Competitive Bidding Mixed Reviews
Although the US General Accounting Office (GAO) report, released in January, applauded the two competitive bidding trials as demonstrating a feasible way for Medicare to reduce costs, it also noted that to implement the process nationwide would take new authority and “substantial administrative preparations.”In the competitive bidding demonstrations in Polk County, Florida, and San Antonio, Centers for Medicare & Medicaid Services (CMS) monitored the process since it was on a small scale, but “competing a larger number of products nationally would entail bidding in multiple markets and monitoring access and quality once prices had been set,” the report said. Titled Major Management Challenges and Program Risks: Department of Health and Human Services, the report also called the Medicare program “high-risk,” in part due to weaknesses in its CMS oversight and suggested financial and information management improvements. Medicare Adds Full-face CPAP Mask Coverage
For the first time, Medicare included a separate code for full-face continuous positive airway pressure (CPAP) masks on its 2003 fee schedule. Under A7030, Medicare now provides a ceiling reimbursement of $188.64 and a floor of $160.34. This addition will allow beneficiaries a more affordable way to obtain a full-face CPAP mask. AAHomecare Petitions CMS on ICD-9 Implementation
In a February letter, the American Association for Homecare (AAHomecare) detailed why the Centers for Medicare & Medicaid Services (CMS) should allow suppliers to use the old ICD-9 code on DME, prosthetics, orthotics, and supplies claims for patients who started service before the effective date of the new code set, April 1, 2003. Currently, CMS has no plan to grandfather in patients who started service before April 1, and without such a provision, providers could be forced to go back to their referral sources for new documentation for all their existing patients. This will delay claims billing and processing and place an unnecessary paperwork burden on suppliers, the association says. The letter, sent after a meeting with CMS in January on the same concern, explained how allowing suppliers to continue to use old ICD-9 codes for beneficiaries who started service before the effective date would not be inconsistent with HIPAA requirements. To obtain a list of the current ICD-9 update, see the CMS program memorandum AB-02-085 at www.cms.hhs.gov. CMS Addresses AWP Concerns
Quelling some fears about the government using average wholesale price (AWP) to reimburse health care practitioners and providers for only the costs of drugs, not the service of providing it, Centers for Medicare & Medicaid Services (CMS) Administrator Tom Scully told attendees of the National Health Policy Conference that if Congress does not act on the AWP issue by May, CMS will implement a “very aggressive” rule on the matter. At the conference, held in Washington, DC, in January, Scully said that he had heard “good argument” against using average wholesale price to determine government drug reimbursement, especially from oncologists. Yet, he also stated that there were instances where Medicare paid as much as 10 times what commercial payors were paying for drugs. To curb some of those costs, he said he would, if necessary, implement the inherent reasonableness rule, but hoped never to have to use it. “I think the fact that we could use it will make people behave more reasonably, and I think that’s a good thing,” Scully said. |
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