WASHINGTON — This year alone, the HME sector has been hit with a 36-month oxygen cap, a 9.5 percent DME cut and the reprise of competitive bidding. And now, with the Senate's health reform bill (S. 3590) on the way to floor debate, there's only one thing home medical equipment providers can bank on: change.
On Saturday night, the Senate bill garnered the 60 votes necessary to clear the way for debate after Thanksgiving. If everything comes to pass as written in that piece of legislation alone, it could spell monumental upheaval for the industry. (See HME Still Under Fire in Senate Health Bill, Nov. 20).
"We see the comingling of so many negative or detrimental policies in the Senate bill that ... when you put them all together, the magnitude of the change and the constant change within the HME sector makes it very hard for providers to adapt and react," said Walt Gorski, vice president of government relations for the American Association for Homecare.
"What we have is the perfect storm," he continued. "Provider numbers are dropping and you have the price of the devices going up and you have the reimbursement rates for the items and services going down. Those factors cannot coexist well without, at the end, harming the patient."
Among other things, the Senate bill would speed up competitive bidding, eliminate the first-month purchase option for power wheelchairs and reduce annual CPI updates. But Cara Bachenheimer, senior vice president of government relations for Elyria, Ohio-based Invacare, said there are two other especially troubling provisions in the bill.
"From our perspective, the most troubling provision is the device manufacturer's excise tax," she said. "It's a tax that exceeds Invacare's last reported year's profits and [research and development] investment."
Under the proposal, manufacturers of medical devices with more than $5 million in sales would have to pay an annual fee totaling $2 billion beginning in 2010. That's down from the initial proposal of $4 billion, but it's still an ominous amount — and the timing is virtually immediate. Invacare Chairman and CEO Mal Mixon has previously said the tax would "severely damage our ability to bring new products to market."
Bachenheimer said another worrisome provision would establish an independent Medicare advisory commission that would have the power to go directly to Congress with proposed changes to reduce the program's growth rate. If the changes go unchallenged, they would automatically be implemented.
"That will give [the Department of Health and Human Services] essentially unfettered authority to change pricing," Bachenheimer said. "There appears to be no due process or any other process or protections to ensure rational decision-making by the IMAC — and when was the last time a body like this had great expertise in our area?"
Seth Johnson, vice president of government affairs for Exeter, Pa.-based Pride Mobility Products, said he is also worried about the IMAC.
"The biggest challenge to the industry … will be appropriately educating [IMAC] board members on the DME industry, its cost-effectiveness and the important role it plays within the overall health care continuum," he said.
He echoed Bachenheimer's concerns about the medical device tax and noted two other burdensome provisions: the Senate's call to eliminate the first-month purchase option for standard power wheelchairs and a provision involving "productivity adjustments." Johnson said those adjustments would slice into providers' pockets even further because they would reduce annual CPI updates.
Then there's the bill's provision to accelerate competitive bidding by increasing the number of MSAs in Round 2 to a total of 100 in the bid program. It would also require HHS to bid all areas of the country or apply bid rates nationwide by 2016.
Bachenheimer said she does not hold out a lot of hope that the myriad mandates will disappear in the final version of the bill. "It will be very tough to get rid of any of these provisions," she said. "The cumulative impact of all these provisions is very scary, particularly since they present a number of unknowns."
Majority Leader Sen. Harry Reid, D-Nev., "is trying to get this health bill through the Senate by Christmas, undoubtedly an ambitious goal, but it could happen," said Bachenheimer. "If so, that leaves post-Christmas-January for conference to iron out the major policy differences between the House-passed bill and whatever the Senate passes." (For Bachenheimer's analysis of HME-related provisions in the House bill, H.R. 3962, see Now on to the Senate, Nov. 10.)
It's important that industry stakeholders continue trying to get the story out about HME to legislators, Bachenheimer added. "Our industry needs to keep educating Congress on all these issues and their impacts — that CMS needs to police the industry at the gatekeeper time, that we are the solution to ballooning health care costs," she said.
Johnson agreed. "The industry efforts should be focused squarely on communicating the impact the negative provisions in the Senate health care reform legislation will have on their businesses and the customers they serve," he said. "These provisions are on the table, and their fate will be determined during the debate on the bill throughout December. Now is the time for the industry to reach out to our senators and let them know how detrimental those provisions would be if implemented."
View the entire text (all 2,074 pages) of S. 3590, the Patient Protection and Affordable Care Act.
For a rundown of the bill's HME-related provisions from VGM Group, see Long List of Provisions Affecting HME, Nov. 23.
