What’s Out There that Threatens HME? A Lot

From: Home Care Magazine

ELYRIA, Ohio — If you’re looking for a bit of good news in the home medical equipment sector, here it is: Congress is finally interested in what is going on in this industry, particularly in competitive bidding.

“There is huge interest on the Hill,” said Cara Bachenheimer, senior vice president of government relations for Elyria, Ohio-based Invacare Corp. “That is encouraging. So we need to be doing more. Everybody needs to be doing more.”

In an interview Friday on key challenges confronting the industry, Bachenheimer emphasized that stakeholder involvement could perhaps prevent some negative legislative or regulatory action. At the least, it could lessen the pain for providers and beneficiaries.

Her message? Get out there and talk to your legislators and let them know what is really going on.

Here is Bachenheimer’s assessment of several current HME issues:

Competitive bidding

Despite its implementation, the industry is working to achieve a repeal of the competitive bidding program now underway in nine product categories in nine areas around the country.

“Is it realistic?” asked Bachenheimer. “I don’t know. A lot depends on events that have yet to unfurl. It’s early in the process. We don’t know exactly what the impacts [of Round 1] are, and we think that’s going to take a little longer.”

There are a number of questions swirling around a repeal, not the least of which is how to pay for it, she said. The Office of Management and Budget has assigned a $17 billion price tag to a repeal.

However, Bachenheimer said she was encouraged by a March 1 briefing for congressional staffers that drew a standing-room-only crowd. Put together by Reps. Glenn Thompson, R-Pa., and Jason Altmire, D-Pa., the event was largely for the benefit of new legislators who are totally unfamiliar with the issue, Bachenheimer said.

“The level of interest was great. They didn’t have room for a number of staffers that showed up,” she said. “It underscores that people are aware of this program, they are aware of the controversy and they want to understand more.”

The industry needs to capitalize on that thirst for knowledge. “You need to be educating members of Congress on what is going on,” Bachenheimer said. “If you aren’t in the program, you will be soon. It’s our job to paint the more accurate picture of what is really going on.”

Otherwise, she pointed out, legislators will only have the information funneled to them by the Centers for Medicare and Medicaid Services.

“CMS does a wonderful job on Capitol Hill,” Bachenheimer said wryly.

Would a bill for repeal have congressional support as it did last fall, when H.R. 3790 garnered 259 signatures?

“We clearly have more support in the House,” Bachenheimer said. “We still have folks in key positions in the Senate that we need to deal with.”

She said she appreciates the spotlight economists have focused on the project. Last fall, 167 internationally known economists sent a letter to Congress detailing the flaws inherent in the CMS project’s design. The economists called for an immediate halt to the program so it could be redesigned in line with accepted auction practices. The letter made its way to CMS, where it was basically dismissed.

But the economists have not backed down.

“You’d think CMS would be paying attention,” Bachenheimer said.

Last week, University of Maryland economist Peter Cramton, who spearheaded the letter, announced he would hold a mock HME auction April 1 to show CMS how its bidding design needs to be “fixed.”


Already beleaguered by reimbursement cuts and the 36-month oxygen rental cap, respiratory providers’ anxiety levels peaked recently when the General Accountability Office recommended further cuts to the benefit.

“There are a lot of deficiencies in the report,” Bachenheimer said. “It was a better report when it was a draft before CMS got its hands on it. They do recognize service components, they do sort of hint that services are not fully recognized when the payment was calculated. They basically said if you did it like the [Veterans Administration], you’d save X amount of dollars. But they fail to talk about how the VA is handled.”

The oxygen benefit under the VA is not bundled, as it is in HME, she pointed out. There are separate payments for services and delivery.

Stakeholders need to be up on the Hill telling that to legislators, Bachenheimer said. She noted that Republicans are putting together their own budget, and “the word is, there are going to be huge entitlement cuts. I think the best message for the industry is … to talk about how oxygen reimbursement is calculated.

“We need to be providing folks this information,” Bachenheimer continued. “They don’t have the time to do the research to figure out those kinds of details.”

She believes the Republican budget is two months or so in the offing, enough time to educate legislators about the discrepancies between how VA reimbursement is calculated and how the HME benefit is figured.

Medical device tax

Providers aren’t the only ones targeted in the HME arena. So are manufacturers. The Affordable Care Act calls for an annual tax on medical devices. Stakeholders had until last week to make preliminary comments to the Internal Revenue Service about the proposal. Invacare focused on why HME should be exempt, Bachenheimer said.

According to the company’s comments:

“Under the law, the Secretary of Treasury shall exempt from the definition of ‘taxable medical device’ ‘any other medical device determined by the Secretary to be of a type which is generally purchased by the general public at retail for individual use.’ Thus, in order to be exempt from the tax, the Secretary must determine that the device is generally purchased (a) by the general public; (b) at retail; and (c) for individual use. We believe that sales of home medical equipment should be exempt from the definition of ‘taxable medical device’ because of the exemption.”

“We think there is an extremely strong argument that the [products] in this industry meet the definition,” Bachenheimer said, adding that there are now multiple bills in the House and the Senate to repeal the proposed tax.

“There’s a lot of activity on all fronts. We don’t think Congress intended for our type of products to be included,” she said. The IRS is expected to issue a proposed rule on the issue sometime later this year.

Face-to face mandate

Although CMS has stalled its implementation of face-to-face evaluations for both home health and hospice benefits until the second quarter of this year, agency officials have said guidance for such a mandate for DME is forthcoming. (A provision in the health reform law requires beneficiaries to have an in-person visit in order for a physician to prescribe any items of DME.)

Still, the agency has been mum on when it will be made public or enforced.

“We really have nothing from CMS as to implementation plans,” Bachenheimer said, adding that the statute in the health care reform act does not specify an implementation date.

“Believe it or not,” she said, “folks at CMS are not too keen on this as a provision for DME.”

The reason? Medicare would incur more physician office visit charges for such things as canes.

Obama budget

In his 2012 budget proposal, President Obama is calling for all Medicare power wheelchairs to fall under prepayment review. As of last week, the budget was still in limbo.

“It is unclear if the Republicans will take any of the Obama budget or not,” Bachenheimer said. “I wish I had a better sense on this, but I just don’t know. Republicans changed the law so certain entitlements would be discretionary. The Republicans are out there with a six-foot hatchet, so it is kind of a scary proposition.”

‘High-risk’ providers

CMS has announced that beginning March 25, newly enrolling providers — including those providers opening new locations — would be considered “high risk” and subject to increased scrutiny before being awarded a Medicare number.

“I don’t disagree with the new providers because it is consistent with what we have been recommending all along,” Bachenheimer said, “but I am not sure it should apply to providers opening new locations.”

If established providers are in good standing, she said, “it doesn’t make any sense” to consider them high-risk providers.

That mandate, she said, is a consequence of the health reform law, which grants CMS new authorities.

“There are so many [situations] where CMS has the authority to address things unilaterally — and they will impact our industry. This is a good example,” Bachenheimer said.

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