Bill Supports Industry Nonambulatory Standard
On September 15, the Senate Appropriations Committee approved a bill that includes affirmation of HME industry-supported language for the definition of nonambulatory. According to Seth Johnson, director of government affairs for Pride Mobility Products Corp, Exeter, Pa, the bill includes language that Senator Arlen Specter (R-Pa) previously had included in a Labor, Health and Human Services, Education, and Related Agencies Bill. “The committee strongly believes that there needs to be a coverage policy firmly based on a functional standard of nonambulatory, which is exactly what the industry has been saying,” says Johnson.

Arlen Specter

The full House of Representatives on September 9 passed its own 2005 Labor, Health and Human Services, Education, and Related Agencies Appropriations Bill that included similar language on the nonambulatory definition.

“Now we also have Congress—both House and Senate—saying the same thing,” Johnson says. “Now CMS should develop coverage criteria that are based on this definition of nonambulatory.”

The actual Senate bill language reads: “The Committee is aware of changes being developed by CMS to alter the Medicare coverage policy for power mobility devices including power wheelchairs. The Committee strongly encourages CMS to use its resources toward development of a coverage policy firmly based on a functional standard of nonambulatory. The Committee believes beneficiaries who cannot perform their basic acts of daily living, toileting, food preparation and emergency egress, are nonambulatory—and must have access to this mobility benefit to function independently.

“The Committee supports controlling fraud and abuse through requirements that ensure proper substantiation of medical need for this equipment but does not support narrowing the definition of nonambulatory to exclude the elderly and disabled dependent on these devices to function in the home. The Committee believes that the medically necessary application of this mobility benefit can save Medicare money through cost-avoidance associated with expensive institutional care or hospitalization resulting from falls by the growing elderly population.”

AAHomecare Questions Suggested O2 Cuts
CMS should reduce oxygen reimbursement in 2005 by 10% to 20%, recommends the Department of Health and Human Services Office of Inspector General (OIG) in a report released in September; the American Association for Homecare (AAHomecare) questions the validity of the office’s report.

Per a provision in the MMA, CMS must lower the reimbursement rates for oxygen, as well as a number of other HME items, to the median Federal Employees Health Benefits Program (FEHBP) prices, starting in 2005. Using data from 164 FEHBP and Medicare+Choice (now Medicare Advantage) managed care plans, the OIG report determined the percentage difference between the 2002 Medicare fee schedule and the median prices paid by FEHBP. “Based on a claim-by-claim analysis, FEHBP and Medicare+Choice plans’ actual payment rates are approximately 10% to 23% lower than actual Medicare fee schedule allowances for home oxygen equipment,” the report says.

CMS agreed with the OIG’s cuts recommendation as well as the inspector general’s suggestion to consider alternative payment methods, such as competitive bidding, contracts with local or national providers, and capped rental arrangements.

AAHomecare President and CEO Kay Cox says the OIG report provides an “apples to oranges comparison...[that] blends the data from all types of plans together.”

“The most appropriate comparison between Medicare and any other managed care entity is the fee-for-service plan model,” Cox says. “Unlike health maintenance organizations, preferred provider organizations, or other hybrid managed care models involved in the FEHBP and Medicare+Choice plans, the traditional Medicare program does not contract directly with home oxygen providers and does not guarantee enrollee volume in exchange for pricing concessions, especially across multiple product lines.”

AAHomecare commissioned a study on the subject that found a difference of less than 1% between median monthly FEHBP fee-for-service payments and Medicare payments for stationary oxygen and portable systems.

In addition, the OIG studied and asked for data on only four HCPCS codes and made no reference to the inclusion in its data and calculations of FEHBP plan payments for oxygen contents, says AAHomecare. The AAHomecare-commissioned study, conducted by Morrison Inform-atics Inc, separated FEHBP plan payments for oxygen contents included with stationary and portable oxygen units, tracking HCPCS codes that were commonly in use in 2002 and are in place among managed care payors today. AAHomecare says the inclusion of these oxygen content payments is critical to the accuracy of any survey of median FEHBP prices. The Morrison study, which used data about 107 FEHBP plans, found virtually no difference between pricing for FEHBP fee-for-service plans and Medicare rates for home oxygen.

The OIG study also did not address the significant pricing, contracting, patient service, and administrative differences between the Medicare program as compared to FEHBP or Medicare+Choice plans, AAHomecare says. “AAHomecare will be working closely with OIG and CMS to ensure that they have all the appropriate data for pricing of home oxygen, to benefit our home oxygen patient,” Cox says.

Kay Cox GAO Recommends Competitive Bidding Implementation Strategies As CMS prepares to launch a nationwide competitive bidding program for certain DME, prosthetics, orthotics, and supplies (DMEPOS), the experience it gained during the competitive bidding demonstration can provide insights on four key issues, according to a Government Accountability Office (GAO) report issued in September to Congress. The report recommends that the agency consider the following in its 2007 implementation: Selecting items that account for high overall Medicare spending since doing so during the competitive bidding demonstration in Polk County, Florida, and San Antonio, Tex, allowed Medicare to achieve savings of $8.5 million. Streamlining implementation with methods such as developing a standardized competitive bidding approach for multiple locations and using mail-order delivery for selected items. Collecting better information on specific items provided to beneficiaries to help ensure appropriate payments. Routinely monitoring the program to ensure beneficiary access to quality items and services is not compromised. Senator Chuck Grassley (R-Iowa), who co-requested the GAO report, says he hopes Medicare officials will study these new recommendations as he is concerned about competitive bidding’s potential impact on small businesses and possible hindering of beneficiaries’ access to quality suppliers in rural states like Iowa. “Careful monitoring of the new competitive bidding program will be necessary to ensure that Medicare is paying appropriately for DME and to protect beneficiary access to quality items,” says Grassley, who was a key architect of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, in which the competitive bidding provision was included. “Inflated payments have resulted in billions of taxpayer dollars being squandered for overpriced medical equipment. This only serves to undermine taxpayer confidence in the Medicare program and to further jeopardize the program’s future ability to pay for the needs of a growing Medicare population. It’s important to strike the right balance between reining in excessive payments and making sure beneficiaries get what they need.” The American Association for Homecare (AAHomecare) applauds Grassley’s concern. “We salute Senator Grassley for his continuing efforts to promote accountability without losing sight of the importance of patient care and access,” says AAHomecare President and CEO Kay Cox.

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