The new Medicare law signed by President Bush on Dec. 8, 2003, includes a number of reforms that affect Medicare beneficiaries and the home care providers who serve them. The following highlights of portions of the law from the American Association for Homecare's Asela Cuervo, senior vice president, and Ann Howard, director of federal policy, will give you the basics, as will AAHomecare's accompanying summary of certain provisions. The summary chart is available in its entirety to association members at www.aahomecare.org. To view the entire law as it is written (678 pages), visit http//thomas.loc.gov.
The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) has two primary purposes: to provide prescription drug coverage for Medicare beneficiaries and to encourage as many beneficiaries as possible to consider an extended array of benefits offered through new private “Medicare Advantage” plans. Durable medical equipment companies need to position themselves to participate in these plans as the new Medicare era unfolds.
The MMA contains significant changes to Medicare reimbursement for home care companies that provide durable medical equipment prosthetics, orthotics and supplies (DMEPOS) items and services. A freeze in the Consumer Price Index update for these items is already in place, with reimbursement rates frozen at what they were on Dec. 31, 2003.
Likewise, there has been a reduction in the Average Wholesale Price for inhalation drugs. The MMA provides for a reduction in reimbursement for these drugs of as much as 15 percent from last year's reimbursement, or to 80 percent of AWP. Most drugs, however, will be reimbursed at 85 percent of AWP for 2004.
In 2005, reimbursement for inhalation drugs shifts to a new reimbursement model. The MMA calls for inhalation drugs to be reimbursed at 106 percent of the manufacturers' Average Sales Price, but a number of questions remain with respect to the way in which CMS will implement ASP. The statute describes ASP as an amount that is net of any discounts, rebates or other incentives. This suggests that Congress' intent was to approximate the average acquisition cost for these drugs. AAHomecare will be meeting with CMS to find out what their intent is for moving forward on implementing the regulation.
Yet another reimbursement provision that affects DME companies also becomes effective in 2005. The MMA provides for a reduction in reimbursement for certain items of DMEPOS based on data comparing Medicare reimbursement with reimbursement under the Federal Employees Health Benefits Program (FEHBP) collected and reported by the Office of Inspector General (OIG) for the Department of Health and Human Services. The size of the potential reduction for some items, such as oxygen, is still uncertain, but data published by the OIG in 2002 suggest that the reductions could be in the range of 3 percent to 22 percent.
Finally, the MMA calls for accreditation for suppliers who bill the Medicare program, and national competitive bidding beginning in 2007. There are many issues that remain open as to how these two provisions will be implemented. For example, the accreditation provision requires the Secretary of Health and Human Services to develop standards that will be administered by accrediting bodies.
The Secretary also may exercise discretion in several areas of competitive bidding, such as exempting certain products or geographic areas from competitive bidding. Moreover, the competitive bidding provisions will have far-reaching implications on reimbursement even for areas not subject to competitive bidding, because the bid prices can be applied nationally to adjust existing fee schedules.
Our plate is full this year at AAHomecare. We will take every opportunity to ensure access to quality services and products for our nation's disabled and elderly.
| DME REIMBURSEMENT PROVISIONS | ||
|---|---|---|
| REIMBURSEMENT FOR INFUSION DRUGS Section 303 |
Infusion drug payments are frozen at the AWP in effect on October 1, 2003. These drugs will be subject to Competitive Bidding in 2007. | IMPACT: Payment levels will remain frozen at 2003 rates. Competitive bidding may result in further lowering of prices for these drugs. |
| REIMBURSEMENT FOR INHALATION DRUGS Section 303 |
Reimbursement for inhalation drugs will be 85% of AWP in 2004. The Secretary has the authority to reduce this amount further but not lower than 80% of AWP. In 2005, payment will be based on ASP plus 6%. | IMPACT: Beginning in 2005, payment for respiratory medications will be significantly reduced. It's possible that implementation issues could result in a modest delay in the use of ASP. |
| PAYMENT FOR DME AND OFF-THE-SHELF ORTHOTICS Section 302 |
Five-year freeze in the CPI update on items not subject to competitive bidding in 2007. In 2005, certain items will be subject to payment reductions based on payments for the items under the FEHBP program. | IMPACT: Although there will be no increase for DME and off-the shelf orthotics for an extended period, competitive bidding for most items will be delayed. The impact of the FEHBP reductions remains unclear, but estimates suggest that the reductions could be between 3% and 22%. |
| COMPETITIVE BIDDING Section 302 |
Requires competitive bidding in the 10 largest MSAs beginning in 2007, followed by the next 80 largest in 2009. Competitive bidding prices could be applied nationally beginning in 2009. | IMPACT: Competitive bidding will reduce the number of suppliers servicing Medicare beneficiaries in an MSA. If the bid items are the “bread and butter” items like oxygen and hospital beds, losing bidders will lose a significant piece of their Medicare revenue, depending on their payer mix. Because CMS can apply competitive bidding prices nationally, there is the possibility of seeing further reductions in the fee schedule payments commencing in 2009 in areas not subject to competitive bidding. |
| MANDATORY ACCREDITATION AND CLINICAL CONDITIONS OF COVERAGE Section 302 |
The Secretary must establish and implement quality standards and accreditation. Suppliers must meet the accreditation and quality standards to receive Medicare supplier numbers. Requires face-to-face examination of beneficiary by physician or specified clinician and written prescription as a condition of payment for power wheelchairs and other selected items. Effective upon enactment. |
IMPACT: These requirements improve the professionalism of home care companies, which is positive. However, they impose new regulatory requirements at a time when reimbursement will decline significantly. |
| HOME HEALTH PROVISIONS | ||
| HOMEBOUND Section 702 |
Demonstration to clarify definition of homebound — two year, three state demo, up to 15,000 participants who have permanent severe conditions, need help with three ADLs, require skilled nursing permanently. | IMPACT: Could lead to opening up eligibility requirements for benefit. |
| INCREASE FOR HOME HEALTH SERVICES FURNISHED IN RURAL AREAS Section 421 |
5% add-on for one year, for episodes or visits ending on or after April 1, 2004, and before April 1, 2005. | IMPACT: Restores funding for one year at half the add-on that expired April 1, 2003. Leaves the battle to be fought again in 2004. |
| HOME HEALTH MARKET UPDATE -.8% Section 701 |
Reduction in market basket update of -.8% for last 3 quarters of CY 2004, and all of CY 2005-2006. Changes market basket updates from fiscal years to calendar years. | IMPACT: Reduces 3.3% update of October 1, 2003, in an era of escalating costs, competition for nurses. |
| PROCESS CHANGES | ||
| IMPROVEMENTS IN NATIONAL AND LOCAL COVERAGE DETERMINATION PROCESS TO RESPOND TO CHANGES IN TECHNOLOGY Section 731 |
Requires the Secretary to make available to the public factors considered in making national coverage determinations regarding when an item or service is reasonable and necessary. Requires the Secretary to develop a plan to evaluate new local coverage determinations to decide which local decisions should be adopted nationally. Also requires the Secretary to implement revised procedures for issuing temporary national HCPCS codes under Medicare Part B no later than July 1, 2004. | |
