The name of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 has been shortened to the Medicare Modernization Act or MMA. The shorter name has done nothing to mitigate the negative impact on HME providers. Competitive bidding is still scheduled to start in 2006. Fee schedule adjustments, based on the average paid by participating health insurance companies that insure government workers and their families under the Federal Employees Health Benefits Program (FEHBP), are scheduled to go into effect January 1, 2005.

CMS is notorious for missing deadlines. However, Congress and the White House are putting enormous pressure on the agency. Implementation of nationwide competitive bidding is a year off and thus not receiving quite as much attention at this time. But there is every indication that CMS staff are working feverishly on the FEHBP-based pricing initiative.

It is hardly a “silver lining,” but the industry did receive some good news recently in the form of a letter from House Ways & Means Committee Chairman Bill Thomas (R-Calif) to industry advocate Representative David Hobson (R-Ohio).

Thomas rarely puts anything in writing that could delay or undermine the implementation of one of his “cost-saving” initiatives. However, in his letter to Hobson, Thomas acknowledges the inadequacy of cost data gathered by the Office of Inspector General (OIG) and cites the authority, in fact the obligation, given to the Secretary of the Department of Health and Human Services in the MMA to gather sufficient data to ensure the accuracy of any numbers used to set Medicare fees through either the FEHBP-based pricing initiative or inherent reasonableness program.

Despite rumors to the contrary and promises made in the heat of battle, there will be no MMA Corrections Bill this year. Neither the President nor the Republican majority in Congress has any desire to open this legislation up for more discussion (and criticism by Democrats) during an election year. Anyone who says otherwise is just plumb wrong. No time or resources should be wasted trying to change the legislation this year.

The letter from Thomas to Hobson provides a clear strategic direction that the HME industry should follow as it prepares for implementation of both the FEHBP-pricing and competitive bidding initiatives.

The industry must commission a comprehensive effort to establish a valid and complete database on what is paid for the goods and services provided to Medicare beneficiaries and federal employees. The industry cannot afford to wait and see what government agencies such as the General Accounting Office or the OIG come up with. This is not the kind of project that can be effectively done by association staff. It will cost a lot of money to hire actuaries and experts in the field of health care economics to complete a statistically valid and defensible study. If the industry tries to do this on the cheap, it will lose in the long run.

The database is important because it will serve as the linchpin for litigation that will be necessary to challenge the estimates CMS will undoubtedly attempt to use in implementing these egregious provisions of the MMA—and for reducing fees under its inherent reasonableness authority. Once again, the industry cannot afford to attempt to block CMS using lobbyists who happen to be lawyers. The industry must be prepared to hire attorneys who are specialists in litigating cases against the government. Threatening letters from association staff will not do.

It would be folly to assume that the 109th Congress will be willing, much less able, to reverse the provisions of the MMA even though the industry must make every effort to try to get them to do so. A parallel legislative and legal approach is necessary. This will not be cheap, but the lives of many small businesses depend on the adequacy of the industry’s effort.

If the industry gathers enough valid data and successfully challenges the FEHBP-based pricing initiative in the courts, it will also undermine the basic principles upon which nationwide competitive bidding is based. Times are tough. For many companies, profits are down or nonexistent. Rather than excuses, these are the very reasons needed to justify investing in this crucial effort to challenge policies contained in the MMA.

Cara C. Bachenheimer, JD, is vice president of government relations for Invacare Corp, Elyria, Ohio. David T. Williams is a consultant for political and legislative strategy.