Business Solutions

Legislative Outlook: Fingers Crossed!

Now that a ray of hope has shined on the industry's prospects on Capitol Hill, what will be HME's legislative agenda in the months to come?

• By David Kopf
• Mar 01, 2017

The HME industry is feeling something it hasn’t felt in some time: hope. With the arrival of a new Presidential administration and a new Congress, providers are crossing their fingers that they might finally have a real chance at reversing policies that have been hammering their businesses and patients for years.

The HME industry has faced a seemingly endless array of obstacles when trying to make its voice heard on Capitol Hill. Competitive bidding seemed to be a fact of life so deeply etched in stone that the Centers for Medicare and Medicaid Services carried itself as though it was completely opposed to working with the industry on any element of the policy. Add to that an avalanche of claims audits and other reimbursement cuts, and the industry’s prospects looked bleak indeed.

But given that most in the industry are enterprising, entrepreneurial individuals who are willing to go the extra mile, they still kept advancing the industry’s agenda. And that strategy paid off in recent years. While the goal might have been to repeal competitive bidding and replacement it with something better, such as the Market Pricing Program, the industry was still able to chip away at competitive bidding bit by bit.

A good example of how those efforts paid off were the binding bids legislation, which required bidders to obtain a “bidding bond” that functions like a surety bond. If a bidder declines the contract and its bid was at or below the bid price, then that bidder would forfeit its bond. This removed the extremely harmful problem of “suicide bidding” from the program, and vindicated literally years of hard-fought industry efforts on Capitol Hill to reform at least one piece of the faulty competitive bidding program.

But while the industry has been gaining victories, it is still stuck with a competitive bidding program that remains dysfunctional on a good day. A perfect example of that is the national expansion of competitive bidding, which has hurt rural patients and providers alike. While the CURES Act helped give providers a temporary reprieve, for example, there is still much work to be done to ensure rural patients will still have access to HME.

Which is why the resetting of the political and regulatory chessboard couldn’t come at a better time. Now that the scenario is offering HME providers some much-needed hope and optimism, what should be the industry’s legislative priorities?

A Public Policy Re-Think

Before we dive into specifics, it’s important that we take a moment to reassess the situation. Much of the industry’s recent woes have stemmed from competitive bidding. Bearing that in mind, one of the big factors to remember about competitive bidding is that in many respects, the entire program is a perpetual blank canvas. In fact, the program under which the industry has been working for the past several years is mainly the devising of CMS. While the Medicare Modernization Act, enacted way back in 2003, required a competitive bidding program for Medicare’s DMEPOS suppliers, it didn’t go too deep into the “how” of that program, and left the specifics largely up to CMS.

“CMS has huge amounts of discretion, and none of the details are in statute,” says Cara Bachenheimer, senior vice president of Government Relations for Invacare Corp. “In theory, the whole program could be rewritten under new administration.”

That’s an important consideration to keep in mind, because for the first time in a long time, the industry finally has something in CMS that it hasn’t had in a long time: friends. Well, to be more specific, it has an agency that will be willing to work with the industry now that it is under new management.

The new Secretary of Health and Human Services, longtime industry ally and up until recently Rep. Tom Price (R-Ga.). As a lawmaker, Price was the prime mover behind the legislative push to repeal competitive bidding and replace it with the industry’s alternative, the Market Pricing Program. In addition to the Price appointment, Pres.-elect Trump also named Seema Verma, founder and president of healthcare policy consulting firm SVC Inc. to serve as Administrator of the Centers for Medicare and Medicaid Services. Together, it is likely that Price and Verma will wield their considerable oversight to control how policies that impact the industry are organized and run. And they have broad discretion to start making common-sense fixes to the program.

It’s also important to remember that President Trump clearly ran on a platform of deregulation, so the Executive Office will be expecting its agency heads to carry out that mission.

“It is all about deregulation,” notes John Gallagher, vice president-government relations for the VGM Group Inc. “One of the first things he did — on the day he was sworn in — his first executive order was about delaying and stopping overregulation that impedes small business, and beneficiary access.

“And [Trump] talked about providers being overregulated,” Gallagher continues, adding that Trump also signed an executive order removing regulations when new regulations are passed. “I can give you about 20 of those that would be great for the DME industry,” he jokes.

And it’s important to note that there is not just a leadership change. Price will be bringing staff with him that share is same desire to deregulate and create a healthcare landscape that reflects that perspective. There will be a welcome cultural shift in the agency, Gallagher believes.

“The people he’s bringing over to HHS and CMS are great staffers that really understand what DME providers have been going through,” he explains. “And that will be to our advantage, as well.”

And in instances, we have already seen CMS enjoy moments of clarity where it has been willing to change program flaws administratively. The agency reset the bid ceiling to avoid a perpetual downward spiral of bid amounts until the program became unsustainable — something the industry had been asking for.

Then we saw it again when CMS announced plans in its Round 2019 announcement (see News, Trends & Analysis, page 8 to learn more) to incorporate a “lead item” bidding methodology into the program for certain items. Under this approach, suppliers will bid for a lead item within a grouping of similar equipment that takes into account the costs of furnishing all of the equipment in the grouping. The single payment amount for the other items within the grouping will be based on their relative differences in fees when compared to the lead item. This again, was something the industry had been asking for as part of the Market Pricing Program.

So now we have the one Congressional champion who repeatedly launched legislation to replace competitive bidding with the Market Pricing Program heading up HHS. This could be a golden opportunity to see implementation of the various components of the MPP that haven’t been secured, such as basing bid prices on clearing prices, rather than the median prices of winners.

“That’s another administrative fix that we’ll be pushing for,” Bachenheimer says. “There’s a whole series of them.”

An agency that will work with the industry — it almost seems like a novel concept after the past 10 years or so. Add to that a legislature that is most likely going to be acting far more in concert with that agency, and the industry should be taking a whole new perspective on how it addresses its more pressing problems.
Which brings us to our two most pressing problems that will dominate the industry’s legislative and regulatory agenda in coming months.

“We really have two top priorities,” says Seth Johnson, vice president of government relations for Pride Mobility Products Corp. “Talking with The American Association for Homecare and working very closely with the executive committee of National Coalition for Assistive & Rehab Technology, the first two priorities are to extend the industry relief that was provided in the CURES bill … and to secure permanent relief of the competitive rehab accessories.”

CURES Act & Rural Relief

There is no more pressing problem than helping the providers and patients that have been cast adrift by national bidding expansion. Last year the industry was unable to turn back the bid expansion. The Patient Protection/Affordable Care Act, required that competitive bidding prices be used to determine reimbursement for bidding items in all non-bid areas starting on Jan. 1, 2016. The process was to be phased in with partial rate cuts occurring at the start of that year, and the full rate cuts were to be implemented on July 1, 2016.

No matter what the industry tried leading up to that point, it was unable to stop the bid expansion. Last-minute legislative pushes saw the House and Senate pass delays to the bid cuts on two occasions, but completely unforeseen circumstances such as a Congressional sit-in over gun control scuttled attempts to forestall the rural bidding cuts.

The full cuts went into implementation and rural providers were hit hard. Now providers serving patients in remote areas were forced to shutter businesses, or at least refuse to take on additional Medicare patients. Also, a ripple effect started to be felt across programs such as TRICARE, which bases its DME reimbursement on Medicare rates. Things looked grim for those providers and their patients.

But suddenly the industry was given a lifeline. In December, the industry was able to achieve some relief for rural providers and patients. Congress
Fingers Crossed!passed the CURES Act, which President Obama then signed into law, which retroactively sets the implementation date for the full bid expansion cuts to Jan. 1, 2017. Providers will be reimbursement for the additional amount taken from DMEPOS claims made after July 1, 2016 and before the start of this year.

This was helpful, but the full rates were back into effect on Jan. 1, which left rural providers and patients right back at square one. Fortunately, the industry is now in a position to work with CMS on some immediate fixes, while new rules come into play. In statute, CURES requires that there be a reissuing of the rules specific to rural providers. Those rules would not come into effect until the next round of competitive bidding a year and a half from now, and in the meantime CMS can alter how it handles the bid expansion pricing. An easy fix is to go back to the transitional rates that CMS applied during the first six months of the expansion.

“We’re hoping that a lot of the fixes to the program are going to be developed in a regulatory payment environment,” says Tom Ryan, president and CEO of the American Association for Homecare. “That’s the whole idea of trying to work with the agency now that we have Price’s leadership on-board.

“Obviously, number one is to go back to that blended rate in effect,” he continues. “Let’s go back to rate that was Jan. 1 that was still a hit for the industry, but it was livable, and then let’s have new rulemaking come into play some of the things that were specified in CURES, such as travel, number of providers in the area, and so forth.”

But the industry isn’t taking any chances. While it readies itself to work with the new HHS and CMS leadership, it is also working on a legislative approach to protect rural providers.

“Oh we have to have our champions in line,” Ryan says. “And absolutely there is a feeling among our champions that the six months that have come and gone were not enough, more needs to be done, and they’re poised to help us.

“The key is will there be a piece of moving legislation that can get this accomplished,” he continues. “If you have to go legislative, more often than not, you have to be concerned with what the pay-for will be.”

Protecting CRT Accessories

Another “here and now” issue particularly for mobility providers in nonbid areas, and specifically those offering complex rehab technology, is the use of competitive bidding rates to adjust the reimbursement for CRT accessories.

Somehow, in a move that left many in the industry with their jaws on the floor, CMS started applying bid rates to those accessories when it planned and implemented the national expansion of competitive bidding. The industry fought the move, but CMS went ahead and did it anyway, which felt to many like the agency was making an end run around existing Federal law.

“Our argument, that many people on the Hill have agreed with, is that CMS’s policy is not consistent with the Medicare Improvements for Patients and Providers Act of 2008,” Bachenheimer says. “The intent of Congress was to exclude those items completely.”

That law, which was mainly a delay of the first implementation of Round One bidding, also permanently exempted Group 3 complex rehab wheelchairs and accessories from the bidding program. However, when CMS implemented the national expansion of competitive bidding, it suddenly started.

For now, the CURES Act extended the exemption from bid pricing of CRT accessories that were originally passed through Patient Access and Medicare Protection Act through June of this year, but a more permanent fix needs to happen. The hope is that Congress won’t have to be involved.

“There’s a very strong argument that this can be undone administratively — just like it was ‘done up’ administratively,” Bachenheimer notes, explaining that the existing statute — the Patient Protection/Affordable Care Act — that required national expansion, also gave CMS a good deal of latitude in terms of how it implements that expansion.

“Congress told CMS to use information from the bid areas to adjust prices in non-bid areas. It doesn’t say, ‘use the bid prices in non-bid areas,’ she explains. “So, CMS has the authority to adjust that underlying regulation, which defines the payment amounts and the timing, the phase-in and that sort of thing. So that could be completely changed at the administrative or regulatory level without a legislative fix.”

“So we’ll be pursuing that with the new administration,” Bachenheimer continues. “But we will also — and this is probably less immediate — will be pursuing something [legislative] with folks on the Hill,” she adds.

A legislative fix is more of a long-term strategy meant to solidify the exemption in order to protect the benefit throughout future administrations and Congresses, Bachenheimer adds.

“We’re expecting legislation to be reintroduced by the champions that largely carried the water on PAMPA last year: Sens. Casey and Portman, and Rep. Zeldin who is close to securing Democrat co-lead to join him in that effort in the House,” Pride’s Johnson adds. “So we’ll have that legislation to provide permanent protection for complex rehab accessories.”

As we can see, with the parallel efforts to advance legislative fixes to the two hear and now problems of rural relief and protecting CRT accessories, the industry isn’t taking any chance. But there has been an undeniable shift in Washington, and it might take some time to survey the changes. Like people walking out into the sunlight after years of living in darkness, it will take a while for the industry to get a lay of the land.

For many providers, this legislative and regulatory re-set might feel like completely new territory. It’s been a long time since the industry has had a CMS that’s been willing to work with it, or a Congress or Executive that have been willing to work in concert with that agency. But that is the new lay of the land, and it offers that rare commodity that’s been in such short supply for the HME industry: hope.

This article originally appeared in the March 2017 issue of HME Business.