Respiratory providers continue to face challenges with Congressional budget reconciliation proposals, competitive bidding uncertainty, quality standards, and dispensing fee reductions.

Marcia Nusgart, RPh

Both Congress and CMS are plotting to dramatically impact respiratory providers and manufacturers. Congress may do it in the form of proposed provisions in the current budget reconciliation, while CMS will address it in the form of coverage, coding, payment initiatives, and competitive bidding.

At press time, the Senate version of the budget reconciliation package includes a proposal to cut $910 million from Medicare DME spending over 5 years. One section of the proposal is to discontinue the capped rental option for HME, eliminating the Medicare beneficiary’s choice of continuing to rent medical equipment in the capped rental category. If this occurs, the costs and responsibilities for maintaining medical equipment will be shifted to Medicare beneficiaries and will negatively impact respiratory providers and manufacturers financially.

As I write this article, both providers and manufacturers are sending letters to the House Ways and Means Committee, House Energy and Commerce Committee, and Senate Finance Committee asking them to maintain the Medicare beneficiaries’ option to continue renting capped rental medical equipment.

CMS continues to impact the respiratory community through various coverage, coding, and reimbursement initiatives. While at times it seems that CMS has devoted the majority of its resources to the implementation of Medicare Part D and issues related to the health concerns caused by Hurricanes Katrina and Rita, there is still staff dedicated to continuing to work on respiratory issues.

One overarching initiative is the implementation of competitive bidding. The DME industry is awaiting the release of the proposed rule, which should give details on criteria for site selection, item selection, bid evaluation, and structure for implementation. CMS projected that the proposed rule would be released in the early fall, but it is difficult to say when it will actually be released.

In the meantime, the September 26-27 Program Advisory and Oversight Committee (PAOC) addressed two issues: the durable medical equipment prosthetic and orthotic supplies (DMEPOS) quality standards and six panel presentations from stakeholders (physicians, clinicians, providers, patients, and manufacturers) on the impact of competitive bidding on specific product sectors such as respiratory equipment.

Respiratory panel members stressed that:

• clinically complex respiratory equipment is not appropriate for competitive bidding;
• respiratory standards are critical to ensure consistent access to technology, care, and service;
• appropriate payment is necessary to support the high levels of service for home respiratory care;
• technology has evolved since the earlier competitive bidding demonstration projects and new technology is essential to meet the clinical needs of all beneficiaries;
• competitive bidding will impact patient access to clinically appropriate products/services and negatively impact outcomes; and
• product descriptions and coding must be expanded to better represent the diversity, quality, and cost of substantially equivalent technologies.

The respiratory panel stressed the following recommendations to PAOC members and CMS staff:

• Develop a system to appropriately stratify, define, and differentiate DME (including respiratory).
• Expand the number of HCPCS codes to ensure that the full range of respiratory devices are available to meet the specific clinical needs of all beneficiaries.
• Develop and establish product standards to ensure consistency and availability of products necessary to meet the specific clinical needs of all beneficiaries.
• Develop and establish clinical standards to ensure availability of qualified and credentialed personnel for all beneficiaries 24 hours a day, 365 days a year, including emergency and after hours services.

In addition to the panelists’ presentations, there was discussion of the newly released draft quality standards for suppliers. Eventually, all DMEPOS suppliers who want to participate in Medicare will have to meet the quality standards—including business and product specific requirements—which will be applied by CMS-approved accrediting bodies as mandated under the Medicare Modernization Act. The 60-day comment period ended on November 28, 2005.

Both the business and product specific quality standards are seen as troubling by many providers and manufacturers since the product-specific ones seem very “prescriptive” and reflect items that should be included in a “policy and procedures” manual. There are respiratory standards for oxygen, home invasive mechanical ventilation, continuous positive airway pressure (CPAP), bilevel positive airway pressure, and intermittent positive pressure breathing. A second round of draft quality standards, which will include nebulizers, will be released for comment. More information about the meeting, the presentations, and the quality standards can be found at: http://www.cms.hhs.gov/suppliers/dmepos/compbid/paoc.asp.

Respiratory HCPCS Coding Issues
Over the years, the Coalition of Respiratory Care Manufacturers has met with senior CMS staff to implement an HCPCS coding process that is open, understandable, and transparent. In October 2004, CMS responded by implementing some of the Coalition’s recommendations such as: expanding the public meetings to include all DMEPOS, not just DME, and implementing an appeals process in 2007. The Coalition met with senior CMS staff in February 2005 stating that further refinements needed to be made such as:

• clarifying the HCPCS coding criteria and harmonizing them with the HCPCS coding decision letters; and
• recognizing that the CMS HCPCS coding decisions have been using expanded criteria that reflect national coverage decision criteria (function, peer-reviewed evidence, clinical outcomes). The Coalition pointed out that using these criteria blurs the distinction between coverage and coding, and creates a new and high standard for new codes.

Because the process still needs improvements, the new respiratory HCPCS codes for 2006 do not include many products for which HCPCS code applications were submitted. An example is the auto-CPAP.

However, some respiratory product categories did get new HCPCS codes. These include:

• E1392—portable oxygen concentrator rental;
• A4604—tubing with integrated heating for use with positive airway pressure devices; and
• K0730—for controlled dose inhalation drug delivery system.

CMS internally generated a national coverage determination reconsideration when there was sufficient evidence to change the current policy for beneficiaries having arterial oxygen partial pressure measurements in the range of 56 to 65 mm Hg. The current oxygen policy allows for coverage of home oxygen for patients with oxygen partial pressure measurements at or below 55 mm Hg or oxygen saturation at or below 88%. If certain other diseases or conditions are present, an oxygen partial pressure of 56-60 mm Hg or an oxygen saturation of 89% are permitted.

The review was initiated on August 16, 2005, with a February 2006 decision date. Many organizations such as the Coalition of Respiratory Care Manufacturers and the American Association for Homecare submitted comments.

Dispensing Fee Woes
Two issues will deeply affect respiratory providers and manufacturers: a decrease in the inhalation therapy dispensing fee in 2006 and the requirement that respiratory-assist devices with bilevel capability and a back-up rate must be classified as capped rental DME.

In the 2006 physician fee schedule, CMS stated that the monthly dispensing fee for inhalation drug therapy would drop from $57 per monthly supply to $33. In the first month, the fee would be $57, and then drop to $33 in succeeding months. The 90-day supply would be reduced from the current $80 to $66 in 2006.

The industry has stated over the past year that even at $57 per month, the dispensing fee does not cover the many services associated with providing home inhalation drug therapy to Medicare patients, and there is no data that justifies such a reduction in the fee.

Over the years, the respiratory industry has advocated to CMS that respiratory-assist devices should stay in the frequent and substantial servicing category. However, due to the impact of an earlier Office of Inspector General study, CMS has sent to the Office of Management and Budget a final rule on payment reclassification of these devices to capped rental. The respiratory industry, including patient groups, have sent letters to CMS and members of Congress asking that the devices stay in the frequent and substantial servicing category.

While both Congress and CMS are hitting the DME industry hard on coverage, coding, and payment issues, it is essential that providers and manufacturers answer back by joining professional organizations such as the Coalition of Respiratory Care Manufacturers and the American Association for Homecare. It is only through your efforts that change will come. DP

Marcia Nusgart, RPh, is executive director of the Coalitions of Respiratory Care, Wheelchair Seating, Enteral Nutrition, and Wound Care Manufacturers, Bethesda, Md. She can be reached via e-mail: marcia@nusgartconsulting.com.