The number of legislative and regulatory issues the HME services industry confronted last year led to more and more people and companies becoming involved in advocating for home health care. To get a better idea of what this year may bring in the legislative and regulatory arena, we tapped some of the major players in last year’s lobbying battles to get their thoughts.

Cara C. Bachenheimer, JD, is vice president of government relations for the home health care product manufacturer Invacare Corp, Elyria, Ohio.	Kay Cox is president and CEO of the American Association for Homecare, Alexandria, Va.	John Gallagher is vice president of government relations for the member services organization The VGM Group, Waterloo, Iowa.	Darren Jernigan is director of government affairs for the mobility product manufacturer Permobil Inc, Lebanon, Tenn.
David Miller is CEO of the home health care group purchasing organization The MED Group, Lubbock, Tex.	Kevin Quaglia is director of industry affairs for the mobility product manufacturer Pride Mobility Corp, Exeter, Pa.	Robert Rudowski is director of business development for the home health care group purchasing organization Northwood Inc, Center Line, Mich.	David T. Williams is a consultant for political and legislative strategy based in Cleveland, Ohio.

Two reports on competitive bidding are expected out in 2004, one from the General Accounting Office (GAO) and one from CMS. What may these reports do to the industry’s efforts to delay or remove competitive bidding from last year’s Medicare law, and what are the HME industry’s chances of getting either a delay or a removal of competitive bidding?

Bachenheimer: It will be a sunny day in hell before we see a government report on competitive bidding that is helpful to the industry. We can and should fully expect that these reports, if indeed they are issued this year, will bolster the government’s case that competitive bidding is a good thing. Our longer-term chances of staving off or eliminating competitive bidding will occur once some critical congressional committee changes occur. The upside of this story is that we have several years to lay the groundwork to eliminate competitive bidding. The industry needs to be smart and strategic, by pursuing two parallel tracks. First, work to delay and eliminate competitive bidding; second, prepare businesses in the event that it does come to pass. We must lay the groundwork now for both strategies.

Cox: Those reports are very important, but we also need to continue to extensively educate federal lawmakers about the inherent dangers to consumers posed by this form of so-called competitive bidding. It is important to remember that an outright repeal will take more than a few favorable reports, it will take a broad coalition of consumer groups and like-minded health care partners working along multiple tracks to repeal this provision. AAHomecare and our members are committed to this effort, and are working toward this end.

Gallagher: One of our concerns is the entire discussion still is not “apples to apples.” In the demonstration projects, if you did not win a bid, you were still able to maintain your existing Medicare patient population. CMS likes to talk about the fact that no providers went out of business in the demonstration projects, but with competitive bidding under the current Medicare Act it is unclear if providers who lose their bids will be able to keep their current patients. It will be very difficult for most to adjust to the drastic revenue change of losing their current patients. Even if they were to keep their current patients, as attrition occurs the providers will need to find revenue from the increasingly competitive private sector. Employees will lose their jobs and some businesses will fail. As an industry we need to fund independent studies that will repudiate once and for all these government reports that continue to purport apples to oranges comparisons.

Jernigan: The reports will definitely provide more facts for either side to exploit. I believe that it will help the cause against competitive bidding, and remember, these are numbers that can be taken to the new HHS Secretary. Proof is in the pudding so to speak. Competitive bidding, I think, will split as each industry group will seek to have its product or segment of the industry exempt. Everyone will flood the HHS Secretary for a “carve out.” However, if we can convince the administration with the new numbers that competitive bidding is not working, the chance for the removal of competitive bidding through Congress will be greater.

Miller: Until we see the reports and conclusions, it is hard to predict their impact. I expect the industry will have to expand on certain factors such as the lack of choice, level of service, impact on community providers, and the real administrative issues and costs. If the reports are favorable to the government’s position, obviously they will damage our efforts. If, on the other hand, they do not prove up to the savings estimates of the GAO or CMS, then they may be helpful to us. However, it will literally take an act of Congress to remove this portion of the new Medicare law and that will require much more on industry’s part than just these reports. The industry will need to digest these new reports and use the information to develop an expanded and comprehensive anti-competitive bidding strategy. We must create reliable data that is statistically and strategically valid and that will help the government save money through an alternative to competitive bidding.

Quaglia: The GAO and CMS reports on competitive bidding will add uncertainty to the competitive bidding process. First, although an overall savings to the Medicare program may be reported, the true costs to the program may not be taken into consideration. Our hope is that each report looks at the entire process, including administrative costs, consumer feedback, etc, in order to come to its conclusions. If CMS looks solely at the bottom line figure, it may seem that the passing of competitive bidding was a success. However, if all factors are considered, we feel competitive bidding will not produce the desired results. If we continue our unified efforts to delay/ remove the provision, competitive bidding is not a certainty.

Rudowski: Both reports have been leaked to some degree and don’t readily offer an “out” for national competitive bidding or inherent reasonableness reimbursement reductions. Essentially, CMS is dealing with two core issues. First, the population receiving benefits is growing “exponentially,” and second, the population paying for the benefits is dwindling. These socio-economic forces make both legislators and CMS look closely at any means to control expenditures. Neither report will bring to light any earth-shattering “we can’t do this” news. We expect these to be real challenges for the industry in the coming years.

Williams: The GAO’s track record on competitive bidding reports is not good. They still owe Congress a report on the first demonstration in Polk County, Florida! Given that Congress has set implementation of competitive bidding to start in 2007, GAO staffers are unlikely to rank these two reports very high on their 2004 work plan. Further, even if all three reports unanimously concluded that competitive bidding was a bad idea, further studies would be ordered the minute they were handed to House Ways and Means Committee Chairman Bill Thomas (R-Calif). Proponents of competitive bidding won this year, but the war is not over. Repealing the provisions in this year’s Medicare bill will be an uphill battle but it is a battle that must be fought. At the same time, the industry must begin to think about competitive bidding in terms of when, not if, it happens. This means running a parallel strategy where one effort is under way to repeal competitive bidding while another is undertaken to work with CMS staff to make competitive bidding work for Medicare, beneficiaries, and providers. Either way, the industry has 3 years to get its act together.

In 2005 CMS will begin to lower Medicare reimbursements for some products based on the Federal Employees Health Benefits Program (FEHBP) median payments for the same products. Most industry advocates say comparing FEHBP with Medicare is like comparing apples and oranges. What are the industry’s chances of getting lawmakers to listen to this argument and remove this provision from the new Medicare law?

Bachenheimer: Eliminating FEHBP pricing reductions is Invacare’s top legislative priority for 2004. We have some excellent arguments to accomplish this objective. First, FEHBP populations differ significantly from the Medicare population, resulting in significant differential costs of doing business. Second, the OIG report data was scanty and even insufficient for an inherent reasonableness reduction. (The OIG stated this in publicly released correspondence.) Third, this proposal was pulled out of thin air at the eleventh hour, without any opportunity for consideration or debate by members of Congress. Finally, we believe the budget estimates are relatively minor for this provision, despite the large negative impact on the industry. We are working diligently to garner support for this issue from a broad spectrum of legislators to maximize our chances of getting this provision repealed this year.

Cox: We have an excellent case on the FEHBP policy, and some very committed advocates in Congress on our side. The bottom line is that this policy was shortsighted and based on incomplete information, even according to the federal government. While this will take a great deal of effort this coming year, the policy and precedent are too important for us not to be fully committed. AAHomecare has already met with several of our Congressional leaders, and a multi-prong strategy is now being executed. So, while it will be a tough fight, we are already engaged and playing to win.

Gallagher: I think we will have an easier fight against FEHBP cuts than we do with competitive bidding. This is mainly because of where the idea for the FEHBP cuts is coming from. If the current administration were truly shooting for privatization of Medicare, it would be an FEHBP model that they will want to use. A modified FEHBP model that includes true regulatory relief and apples to apples product requirements may be better for the industry than the politically charged ad-hoc system we have been living with. But we need to go public with the fact that currently it is not a fair comparison, and we need to show Congress (at the grassroots level) what a provider actually goes through to process a patient on Medicare as opposed to a patient in a FEHBP.

Jernigan: It is very difficult to remove language from law when the impact has yet to be assessed. Lawmakers want “more time,” or “to give it a chance,” or if it doesn’t work, we can set up a “committee” to look it over, but this is only after the provision has had time. I do not think it will be difficult to show the apples and oranges comparison coupled with an explanation that when the provision shows bad results that this is why. But I honestly think we will have to live with it for a little while before we can move forward.

Miller: Until the HME industry has better status with the lawmakers through accreditation and valid data combined with the support of consumers and health care professionals, our chances are not good. While this is an uphill battle, we must continue to fight. The last-minute addition of this provision along with the price freeze and competitive bidding is unreasonable. While the industry is willing to share in the cost-cutting efforts, our local providers who are servicing patients in their homes should not be the victims of larger, better financed organizations. The comparability issue is worth pursuing, as long as the level of service and billing requirements are considered when comparing rates for two or more payors.

Quaglia: Unfortunately, by lowering reimbursement to FEHBP rates for some products, CMS has perhaps concluded that certain components of our industry (service, evaluation, etc) are not relevant. This example is the epitome of the need for strengthening our relationship with CMS, as well as educating lawmakers on what constitutes proper medical care. Unfortunately, time is of the essence on this matter and education/ relationship building alone may not succeed. Therefore, we need to act now to develop methods for and provide testimonials of true cost comparisons (not only monetary costs, but consumer/ intangible costs as well) between Medicare and the FEHBP. If we can undeniably demonstrate the need to re-examine this provision by outlining the burdens on both providers and consumers alike, we have a chance to influence lawmakers.

Rudowski: Because legislators and CMS believe that our industry provides a commodity not a service, we are the only ones seeing the “apples to oranges” comparison. The only way to effectively fight for our goals is to educate and inform the legislators and CMS that we bring a valuable service that actually saves the agency real dollars by lowering the costs of care. If we fail to do that, then, for all intensive purposes, we sell the exact same “widget” as FEHBP gets, only for more money.

Williams: The FEHBP reduction will happen and happen quickly because it is an easy mathematical computation based on readily obtainable information. Barring a miracle, this will be implemented as part of the 2005 fee schedule adjustments. The good news is that there are some strong policy arguments to be used against this provision if, and that’s a big if, there is a vehicle to do so next year. The Republican leadership promised Representative Dave Hobson (R-Ohio) that there would be an opportunity to fully debate this issue—which was added under the literal cover of darkness—in 2004. The bad news is that there is no upside for either the leadership or the White House to reopen the Medicare Drug Bill during an election year. Why? Because the Democrats would use every hearing to point out the inadequacy of the prescription drug benefit and every other flaw in the legislation. There is a real political risk that reopening discussion on any aspect of Medicare could force the President and the Republican Congress to put distance between them and what they now see as the capstone of the 108th Congress and the first term of the Bush presidency.