ATLANTA — By a vote of 61-39 today, the Senate decided to pump $16 billion in match money into states' Medicaid systems — a move that could spell some relief for home medical equipment providers.
HME companies throughout the country are battling what some have called "draconian" cuts to Medicaid reimbursement as cash-strapped states seek to stem the tide of red ink flowing from their budgets.
The money going to the states could be substantial — $1 billion for Florida, $850 million for Pennsylvania, $185 million for Wisconsin, for example.
Still, it's not a done deal. The House and Senate must pass the legislation in identical form before it can be sent to President Obama for signature and enactment. House Speaker Nancy Pelosi, D-Calif., said she will call representatives back from their August recess next week to vote on aid to the states. (The Senate recess starts Monday; Congress will not reconvene until after Labor Day.)
If both chambers and the president approve the legislation, HME providers might be able to breathe a bit easier, but that doesn't mean the threat of cuts disappears.
"With all the budget pressures with the federal government and the state government, Medicaid is a prime area for cost-cutting," said Don Clayback, executive director of the National Coalition for Assistive and Rehabilitative Technology, which has taken up the cause of fighting Medicaid cuts to complex rehab. "Every state is dealing with issues or will be faced with issues as we move through the next 12 to 24 months."
Florida Managed Care System
In Florida, providers are at risk of losing their Medicaid patients as the state moves toward placing all Medicaid beneficiaries — 2.7 million of them — into a managed care system.
The proposal came up earlier this year in the state House and was beat back. But the Florida Alliance of Home Care services alerted its members this week that lawmakers in both of the state's legislative chambers are expected to introduce a bill in February calling for the system.
"For the HME industry, managed care is a death knell," said the FAHCS alert. "Already, major insurers have consolidated their HME networks to one or a few providers statewide, leaving many hundreds of formerly participating small businesses out of luck, leaving patients without small niche providers who give them the specific product or service that assures them quality of life ... If all Medicaid patients are moved to managed care, the vast majority of HME companies working with Medicaid patients will be out of business."
Selected Contracting in Ohio
The Ohio Association of Medical Equipment Services is working to fend off "selected contracting," the state's version of competitive bidding. OAMES sent a letter this week to state Medicaid officials in response to their questions about the severe cuts resulting from CMS' rebid of Medicare competitive bidding. Two Ohio MSAs — Cincinnati and Cleveland — are in Round 1 of the program.
"In 2007, they proposed selective contracting for DME supplies," said Kam Yuricich, executive director or OAMES, "so that's been on their radar."
The association has so far been successful in repelling such a system. Medicaid's request for a response to the Medicare rates "offered us an opportunity to be very detailed about the program, using more of the facts [instead of] the misconceptions and the false figures," Yuricich said.
Yuricich and John Reed, an OAMES executive committee member from PRO2 Respiratory Services in Cincinnati, drafted the response, which stresses that the federal competitive bidding program "is bad policy, based on false premises, [and is] built around flawed economic theory that has been poorly implemented by CMS."
OAMES is also working to engage advocacy groups in its fight against any form of competitive bidding and is putting together a consumer paper on the issue that details specifics about the Medicare program.
"We're writing a paper that gets to the heart: Even though this is a Medicare initiative, this is a program that will totally gut home services, regardless of payer," Yuricich said. "The cascading effect, that rippling effect, will be huge. We need to let [people] know this tsunami of a program is coming down and it will be fundamentally harmful to services as we know them. It has to be stopped."
Yuricich believes OAMES has so far been successful in deflecting selective contracting because "we have a very strong working relationship with Medicaid."
Missouri 'Win' on Proposed Cuts
Such a relationship also paid off last week for Missouri HME providers who saw a 3.5 percent Medicaid cut instead of a proposed 20 percent cut, said Rose Schafhauser, executive director of the Midwest Association of Medical Equipment Services, whose Missouri members meet with state program officials regularly.
"The cuts are horrible, but it was a pretty significant win to even have the opportunity to sit down at the table and figure out another alternative," said Schafhauser. "We had every business line represented at the table, so we were able to make sure every area was covered."
Missouri's HME providers were facing a Medicaid cut proposed by Gov. Jay Nixon that would pay them only 80 percent of Medicare allowables. But the state's Medicaid director asked Patrick Naeger, chairperson of the Missouri Medicaid DME Subcommittee and a member of MAMES, to come up with a plan that would sidestep the 20 percent cut.
Naeger polled MAMES members on how best to save Missouri Medicaid $4.5 million. With that input, Medicaid and the subcommittee came up with a plan that changes reimbursement policies for oxygen, hospital beds and some other items. While they are tough changes, a 3.5 percent cut is easier to swallow than a 20 percent cut, Schafhauser said.
She believes the savings would never have been realized had Missouri providers not had a relationship with the Medicaid officials. That's a notion that is spreading among the association's seven member states.
"We've learned from one another," Schafhauser said. "Nebraska meets quarterly with their Medicaid, which wouldn't give them the time of day before. North Dakota meets quarterly with their Medicaid. Iowa was successful in fending off competitive bidding because they had cultivated a relationship."
Such relationships work, agreed Clayback, who believes the Missouri outcome is a prime example of what can happen when HME providers connect with the people behind the policy-making. Clayback worked with the state subcommittee to help get complex rehab chairs and accessories exempted entirely from the cuts.
"By necessity, we as an industry need to improve how we work with these [Medicaid] agencies," Clayback said. "How do we monitor, how do we ensure right relationships with the right people, how do we change what is in the pipeline?" Those are some of the issues that will be addressed at NCART's National Medicaid Summit Oct. 6-7 in Nashville.
The frequency of proposed Medicaid reductions is only going to increase, Clayback said, so providers and state associations need to remain vigilant and active. "You don't want to be caught by surprise on these issues," he said.
