March 1994 HCFA proposes Medicare payment reductions for standard home blood glucose monitors, eventually reducing the price to $57 nationwide. This will prove to be the only time to date that IR reductions are implemented for HME.

August 1995 HCFA consults with the industry as a first step toward reduction of rates via IR. HCFA says the IR process justifies cuts from 7 to 43 percent. In a lengthy IR investigation, HCFA found that the Veterans Affairs Administration pays much less for oxygen equipment than does Medicare. HCFA, Congress and other government officials will repeatedly reference this study in discussions about oxygen cuts.

August 1997 The Balanced Budget Act of 1997 passes. It includes a provision that allows HCFA to use IR to increase or decrease payments by 15 percent for Part B services and equipment, except physician services. HCFA has the authority to reapply this increase, or decrease, every year. The action also clears the hurdles that HCFA currently has in place before it can implement IR: industry consultation, a comment period, impact studies and publishing intent in the Federal Register.

March 1998 The Durable Medical Equipment Carriers propose to reduce payment for gel pressure mattress pads via the expedited IR authority. The plan is later dropped because the DMERCs had overstepped their bounds by seeking reductions that were higher than the 15 percent mandated by Congress.

March 1999 Final IR notices are delayed pending the release of a General Accounting Office study, requested by Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Subcommittee on Health. Thomas questions HCFA's IR methodology and its legal right to delegate IR authority to the DMERCs.

Inherent Reasonableness Spring 1992 The Office of Inspector General sends a letter to Medicaid offices asking them to conduct demonstration projects on competitive bidding for wheelchairs, incontinence and oxygen. Proposals appear in several states.

October 1993 In his Health Security Act of 1993, President Clinton says that oxygen and oxygen equipment, enteral and parenteral nutrients, supplies and equipment-and other items that the Department of Health and Human Services Secretary deems appropriate and cost-effective-should be acquired through a competitive contract.

October 1994 As part of the Medicare Technical Amendments Bill, IR adjustment authority is expanded to all HME fee schedules. The Department of Health and Human Services must determine if payment amounts for decubitus care mattresses, TENS and "any other items considered appropriate by the Secretary" are inherently reasonable-and adjust the payments if not.

December 1995 HHS Secretary Donna Shalala asks HCFA to postpone regulatory efforts to reduce oxygen cuts. Meanwhile, HCFA hires a private company to conduct a study of 100 HME items, with industry officials speculating that the results might support IR cuts.

August 1997 The Balanced Budget Act of 1997 passes, requiring HCFA to conduct no more than five competitive bidding demonstration projects. At least one must include oxygen and oxygen equipment. HCFA must also report to Congress on the projects' impact on patient choice, access and quality.

September 1998 In their first application of the new IR authority, the DMERCs propose reductions between 3 percent and 32 percent for albuterol sulfate, glucose strips, lancets, Category I enteral products, catheters and eyeglass frames

August 1999 HCFA proposes cuts of 22 to 57 percent on folding walkers, wheeled walkers without seats, commode chairs with fixed arms, TENS units-2 lead, TENS unit-4 lead and vacuum erection systems. The reductions would be phased in over several years. This is the first national IR cut since the 7 percent blood glucose monitor cut went into effect in January 1995.

Competitive Bidding Spring 1994 The OIG announces it will launch several HME studies as part of its 1994-95 agenda. The impact of competitive bidding, including possible savings, will be studied.

Spring 1995 Citing the fact that competitive bidding is often used by the Veterans Affairs Administration, Senate and House budget committees recommend competitive bidding for HME. August 1995 Three competitive bidding demonstration projects are planned, two in Florida and one in an unnamed state. They are set to start in July 1996. HCFA is launching the projects at the urging of Congress, the OIG and the Justice Department. The projects never get off the ground.

August 1997 The Balanced Budget Act of 1997 passes. It includes two consolidated billing provisions-one for skilled nursing facilities and one for home health agencies. SNFs must receive payment for all Part B items provided to residents of the facility. The law also says that when someone is under the plan of care of an HHA, payment for HME shall be made to the agency. This provision appears to be tied to a new prospective payment system for HHAs, which has been delayed until April 1, 2000, because of Y2K system renovations.

November 1997 After months of investigation, industry officials discover that the OIG originated the consolidated billing proposal for HHAs. Several industry groups begin working together to determine how to interpret this provision, which could drastically alter relationships between HHAs and HME providers.

February 1998 In his annual legislative proposal, President Clinton again proposes "nationwide competitive pricing" to cut Medicare costs for medical equipment.

May 1998 HCFA announces that the first competitive bidding demonstration site will be in Polk County, Fla. The county has 92,000 Medicare beneficiaries, high expenditures per Medicare enrollee for equipment and supplies, and a large number of providers serving the area.

February 1999 The Florida Association of Medical Equipment Dealers sues HCFA, claiming it didn't follow guidelines for seeking industry input. A magistrate judge recommends a preliminary injunction, but a federal judge does not concur.

July 1999 HCFA notifies the losers and the 16 winners in the Polk County competitive bidding project. It also releases fee schedules representing reductions in five bidding categories of 13 to 31 percent from current rates: oxygen therapy, hospital beds, enteral nutritional therapy, urological supplies and surgical dressings.

October 1999 The Polk County competitive bidding project takes effect.

Consolidated Billing May 1991 HME fraud and abuse hits Congress' radar screen. Sen. Jim Sasser, D-Tenn., holds the first in a series of Senate Budget Committee hearings examining waste and abuse in the Medicare program by HME dealers. Also, Sen. William Cohen, R-Maine, looks into fraudulent telemarketing activities by dealers.

Spring 1993 More anti-fraud bills targeting the HME industry are introduced. HCFA and the OIG put out "Consumer Fraud Pamphlet: Medicare and Home Medical Equipment," describing how consumers can obtain HME, what is covered, how to recognize a good supplier and how to report fraud.

September 1994 HCFA halts release of new provider numbers for 30 days following the discovery that Medicare paid $6.7 million to 174 allegedly fraudulent providers. The FBI, OIG and Justice Department are on the case.

Spring 1995 House Budget Committee Chairman John Kasich, R-Ohio, asks that home health services be bundled with other post-acute services to save $19 billion over seven years. This would require HCFA to pay hospitals a lump sum that they would distribute to home health and other post-acute providers. The industry blasts the proposal for making hospitals one of Medicare's gatekeepers.

Spring 1996 Congress passes the Health Insurance Portability and Accountability Act, expanding enforcement powers of federal agencies and stiffening penalties. As a result, the FBI received $47 million in 1997-$9 million more than the previous year-for health care fraud enforcement.

April 1997 ORT exceeds HHS expectations. In its first year, it recovers $187.5 million-or $23 for every $1 spent. The program expands to Arizona, Colorado, Georgia, Louisiana, Massachusetts, Missouri, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia and Washington.

August 1997 The Balanced Budget Act of 1997 passes. It includes cost cutting and several anti-fraud and abuse initiatives, including a requirement that all Part B providers and HHAs post a surety bond of no less than $50,000. Also, providers can be excluded from Medicare if found guilty of a felony, and HCFA's ability to impose civil monetary penalties increases.

July 1999 The Home Care Coalition testifies at a congressional hearing, calling for a repeal of the home health consolidated billing initiative. Coalition members say the provision ignores the complexities of the distinct HHA and HME provider billing processes. Lobbying efforts intensify, with several legislators asking HHS secretary Donna Shalala to delay implementing consolidated billing. Despite this, HCFA publishes its final rule although it reiterates that Y2K issues will still delay implementation.

Fraud Watch January 1992 The number of bills that address fraud in the HME industry reaches an all-time high of eight. In general, the industry is supportive of the measures.

Summer 1993 NAMES revises its bylaws to allow its ethics committee to expel members for violations.

October 1994 The Medicare Technical Amendments bill passes, ending a four-year battle for federal HME standards. Suppliers must maintain certain ethical mores, and HHS must develop new Medicare standards. The amendments also include restrictions on telemarketing.

May 1995 President Clinton launches Operation Restore Trust, a special HHS initiative to reduce fraud and waste in three areas of high spending growth-home health agencies, HME and nursing homes. It is targeted at five states with more than a third of all Medicare beneficiaries: New York, Florida, Illinois, Texas and California.

September 1997 President Clinton places a six-month moratorium on new HHAs' joining Medicare. "We're going to keep scam and rip-off artists from getting into the Medicare system in the first place," he says.

March 1998 The OIG says about $12.6 billion of Medicare fee-for-service reimbursements were overpayments to health care providers in 1998, a 38 percent decrease from 1997. Medicare officials credit the government's campaign against fraud and waste.

July 1999 To step up its fraud detection and prevention efforts, HCFA hires 12 accounting and technology companies to conduct audits, medical reviews and other tasks. The Health Insurance Portability and Accountability Act gives HCFA the authority and the funds to pay for this initiative. HC

Summer 1993 The first Medicare trustees' report signaling a severe crisis in the primary Medicare trust fund is released. The trustees say Medicare's Hospital Insurance Trust Fund "is severely out of financial balance" and could be wiped out as early as 1998.

August 1993 A five-year, $496 billion budget passes. Medicare spending is to be reduced by $56 billion over five years, primarily in physician and hospital fees.

1994 A total of 31 million Americans-or 12 percent of the population-are 65 or older. More than 33 percent of health care expenditures are spent on this segment of the population.

1995 There are 37.7 million Medicare enrollees this year. The Congressional Budget Office says the nation will spend $176 billion this year on Medicare. Trustees say the trust fund will be exhausted by 2002.

August 1997 After years of political wrangling, Medicare reform is passed via the Balanced Budget Act of 1997. The bill cuts $115 billion from Medicare spending over five years and extends the life of the Medicare fund by 10 years.

March 1999 A bipartisan commission-created by BBA '97 to come up with a way to overhaul Medicare fails to agree on a recommendation and disbands.

June 1999 The solvency of Medicare has been extended until 2015, according to Medicare's trustees.