When Congress returns next week, it will have a short period of time to accomplish anything before breaking for the final sprint ahead of the November elections. While passing legislation to fund the government will be a top priority, many health care providers are hoping the two chambers can restore devastating cuts to Medicare reimbursement rates that are impacting medical suppliers throughout the country.
At the heart of the problem is a competitive bidding process for critical home medical equipment and supplies initiated by Congress and the Centers for Medicare and Medicaid Services (CMS). The program was established to set rates using a bidding process for the largest and most densely populated Medicare service areas in the country.
In January, CMS used results from these bidding programs in metro areas to start cutting reimbursement rates in rural communities and, despite the concerns raised by many providers, followed that up in July with another round of cuts. In these two rounds of roughly equal reductions, the Medicare reimbursement rate has been cut by more than 50 percent for many items vs. the 2015 rates, and this has left many businesses struggling to provide care.
Tom Ryan, president and CEO of the American Association for Homecare, explained in an interview that the sudden and severe cuts are having a devastating impact on homecare providers. Ryan stated, “When you see a cut of that significance, it typically fades in over several years.”
“It’s very counterintuitive to me as a provider in the industry for over 30 years, with a business in New York and subsequently now the CEO of AAHomecare, that at a time when we’re looking to treat chronic diseases like COPD and try to care for patients in their homes that we continue to commoditize and just cut this benefit when we don’t want to see these patients readmitted,” said Ryan.
While both the House and Senate passed differing versions of legislation (H.R. 5210 and S. 2736) to roll back the second set of cuts and give policymakers time to assess the impacts of these steep reductions on patients in rural areas, no bill made it to the president’s desk before Congress recessed in July.
“This legislation represents an ongoing, bipartisan commitment to ensuring Medicare beneficiaries continue receiving critical care provided with durable medical equipment – particularly those Americans living in rural areas who would be disproportionately harmed by cuts in reimbursements,” said Rep. Tom Price, R-Ga., the sponsor of the House version of the bill and a former physician. “This delay should give policymakers additional time to come to a consensus on a more long-term solution. Every effort must be made to protect access to quality health care for seniors.”
The lack of Congressional action means providers across the country are taking drastic steps to adapt, doing everything from ending service and refusing new patients to, in the case of an Illinois business that once counted Abraham Lincoln as a customer, closing its doors.
Steve Gulick, the owner of a Danville, Illinois, medical supply company told his local paper that changes in Medicare prompted the decision to close his store after 170 years of operation.
“Medicare came in during January of this year and took the top ten items we deal with Medicare – hospital beds, wheelchairs, oxygen, C-Pap Units, walkers and some other ones – and cut the reimbursement by 24-percent. And then they sent out a newsletter in February and said ‘by the way, we’re going to cut reimbursement again in July by 24-percent.’ So 48-percent in the first six months of the year,” said Gulick. He told the paper: “We’re not big enough to survive that.”
Cape Medical Supply, Inc. in Sandwich, Massachusetts announced they will no longer accept new patients on Nantucket Island. The company is the only respiratory care provider for the island. Cape Medical Supply’s CEO wrote a blog post at the end of June explaining the discontinuation of service: “We were left with no choice after Medicare reduced reimbursement over 50% since December of 2015.”
The new rates have also triggered cuts for companies that serve TRICARE, which provides medical benefits to military personnel and their families. TRICARE uses the Medicare rates, and its contractors administering the program nationwide may take an additional discount on top of those.
The 50 percent-or-more cuts coming out of the bidding program are already painful enough for home medical equipment providers before taking an additional discount below the Medicare pricing. The industry says it has seen additional price reductions from 10 to 55 percent on top of the Medicare cuts depending on the region of where TRICARE claims are processed.
Because of these changes, “my company has stopped taking all TRICARE, and I know other companies in the Phoenix area are doing the same,” said Kirit Patel, owner of Progressive Home Medical in Chandler, Arizona. “Unfortunately, these new reductions are going to leave our veterans with reduced access to medical equipment they need.”
The same issue is being reported in other parts of the country where service to military families is suffering because of the Congressional inaction.
AAHomecare’s Ryan tells InsideSources the effects are reverberating across the industry. He believes Congress understands the problem, but with the constant gridlock and an election upcoming, he hopes to see action taken as quickly as possible. “The domino effect is happening. We’ve got a Congress that has a will to act, we just need to reconcile these bills and do it in a short period of time when they get back in September.”
