MMA Provisions Begin

Top Five DME Categories Set for Cuts in 2005

    The Medicare Modernization Act (MMA) included provisions for a cut in reimbursement for power and standard wheelchairs, nebulizers, beds, air mattresses, and diabetic supplies to take effect in 2005.

Calculations for these cuts were to be based on pricing included in a 2002 report from the Health and Human Services' Office of Inspector General (OIG) which, in turn, was based on findings from 30 of 200 federal employee health benefit plans (FEHBP). The use of FEHBP data prompted controversy from the outset, with opponents protesting that no clinical or cost comparison exists between relatively young, healthy FEHBP enrollees and elderly, sick Medicare beneficiaries. The argument is that these fundamental differences could affect DME prices.

    Even though the MMA does not require Centers for Medicare and Medicaid Services (CMS) to look for other data than that in the FEHBP data, Rep. David Hobson (R-Ohio) and Rep. Harold Ford Jr., (D-TN) have introduced a bill (H.R. 4491) that would rescind the scheduled DME reimbursement cuts scheduled for January 2005. AAHomecare has taken a proactive role in promoting passage of this bill by requesting congressional members to cosponsor the legislation and to enact it before the end of 2004.

Disappointing Enrollment in Medicare Prescription Drug Discount Card

    Medicare's first step toward a prescription drug benefit came up short, as fewer than 1 million Medicare beneficiaries signed up for the prescription drug discount card first offered on June 2. Beneficiaries must pay a $30 annual premium and choose from among 70+ cards, each with different types of benefits and discounts, ranging between 11% and 18% for brand names of 209 drug classes. Larger savings are available on mail order drugs. The yearly premium is waived for beneficiaries with annual incomes below $12,372 (individuals) and $16,608 (couples). Both low-income categories are eligible for a $600 subsidy embedded in their card.

    Sign-up options were available via telephone or online, but because many seniors do not have Internet access, they were unable to compare the card benefits and select a card that best met their needs. Other beneficiaries said the entire process was confusing or that they were getting better discounts for their prescription drugs online, in Canada, or through other programs.
News sources have reported that insurance companies (who sponsor the cards) and drug companies are benefiting more from the cards than the Medicare beneficiaries.

    CMS issued a press release¹ on June 8, stating that Medicare beneficiaries could save between 46% and 92% on "many commonly used prescription brand drugs" by purchasing generic drugs using their Medicare Drug Discount card.

CMS Seeks Nominations for Competitive Bidding Oversight Committee

    In accordance with provisions in MMA, CMS posted a notification in the June 2, 2004 Federal Register,² soliciting nominations for individuals to serve on a Program Advisory Oversight Committee (PAOC) for the competitive bidding program slated to begin in 2007. Nominations were accepted until July 2, 2004. This 12- to 15-member committee will remain in existence until December 31, 2009, by which time competitive bidding will have been fully implemented. The goals of the committee are multifaceted: 1) to establish financial standards for providers; 2) to establish requirements for data collection to efficiently manage the program; 3) to develop proposals for interaction among all stakeholders (manufacturers, providers, suppliers, and the like); and 4) to establish quality standards.

    Candidates for the PAOC include Medicare beneficiaries, physicians and other practitioners, manufacturers, suppliers, individuals from professional standards organizations, financial standards specialists, data management specialists, association representatives, and experts in shipping medical materials.

CMS Proposes 2005 Home Health Prospective Payment Rates

    The proposed calculations for the national 60-day episodic payment rate for Medicare home health (HH) agencies were published in the Federal Register³ on June 2, 2004. This is the first update based on a calendar year (CY) rather than a fiscal year (FY), a change resulting from provisions in MMA. CMS has "rebased" and revised the home health market basket it uses in calculating HH payment rates to more accurately reflect price changes of efficiently providing home health care. CMS defines "rebased" as changing the base year for the structure of costs. Previously, the base year was 1993; it is now 2000. Revising means changing the data sources, cost strategies, and pricing CMS uses in its calculations. The 2005 proposed HH prospective payment for a 60-day episode of care increased 3.3%, from $2,213.37 (2004) to $2,268.70. 

1. Centers for Medicare and Medicaid Services. Big Savings Available on Generic Drugs through Medicare-Approved Drug Discount Cards. Available at: www.cms.hhs.gov/media/press/release. Accessed June 19, 2004.

2. Medicare Program: Request for Nominations for the Program Advisory Oversight Committee for Competitive Acquisition of Durable Medical Equipment and Other Items. Federal Register. 69(106). June 2, 2004:31125. CMS-1279-N.

3. Medicare Program: Home Health Prospective Payment System Rate Update for Calendar Year 2005: Proposed Rule. Federal Register. 69(106):31248-31275.