Editor's Note

The Next Cut

What happens when the next reimbursement cut comes? And the next?

• By David Kopf
• Jun 01, 2017

I’ll admit it: when I first heard the news that the Senate gave the thumbs up to Rep. Tom Price’s (R-Ga.) appointment as Secretary of Health and Human Services, I did a little happy dance in front of my laptop. Moreover, Seema Verma’s appointment as Administrator of CMS further drove home the fact that the industry finally had some allies in the agencies responsible for overseeing a Medicare program that still represents a sizable share of many providers’ income.

I even went so far as to write a column to the effect that the pair would hopefully help usher in an era in which CMS realizes that HME providers can be a valued solution that helps cut program costs while improving outcomes.

Now I’m not so sure. My confidence in that notion is a little shaken. Why do I say that? Last month, per the CURES Act, CMS updated the blended, 50/50 reimbursement rates for July 1 to Dec. 31, 2016 claims in rural and non-bid areas — but CMS startlingly based its recalculation on the July 1, 2016 rates, rather than the Jan. 1, 2016 rates. (See “CMS Proceeds with Controversial Rural Rate Plan” to refresh your memory on that news.)

That decision was in direct contradiction to at least the intent the CURES Act, whose authors had planned for the recalculated reimbursement to be based on the Jan. 1, 2016 rates. The difference between the rates based on Jan. 1, 2016 and July 1, 2016 is significant and will quickly add up for providers, especially rural providers. If you’re in any doubt of how large the difference is, check out the chart from the American Association for Homecare on that article, as well as AAHomecare’s deeper, follow-up analysis of the rate plan, which is available in region-by-region Excel files.

It’s no wonder that AAHomecare President and CEO Tom Ryan called CMS’s decision what it really is: a “slap in the face” to the providers, advocacy groups and lawmakers that had worked to so hard to pass the CURES Act.

Once again, we see CMS clearly has made an end run around legislative language, in much the same way it did with complex rehab accessories. As you might recall, CMS included CRT accessories as part of its expansion of competitive bidding. However, when Congress passed the Medicare Improvements for Patients and Providers Act in 2008, one of the law’s provisions carved CRT out of the competitive bidding program. CMS’s excuse was that the law only specified the chairs, not their accessories — despite the fact that those “accessories” are therapeutically necessary parts of the chairs. Notice a pattern? CMS is like a loophole-seeking missile.

So where are Price and Verma in all this? It’s only fair to recognize the fact that CMS is inconceivably huge bureaucratic machine, and regulatory decisions don’t happen overnight. At the same time, President Obama signed the CURES Act into law in December; Price and Verma were tapped as nominees in late November; CMS began announcing details on its CURES Act implementation plan in January; and Price and Verma assumed their roles in March. It’s been a while since the pair assumed their respective roles. If CMS was able to remove all the Round 2019 information from its site just days after announcing its Round 2019 plan, wasn’t there sufficient time halt this rate plan and revise it so that it was based on the correct set of rates? I can’t say. I don’t work at CMS.

What I can conclude from all this is that Price and Verma are not fairy godmothers. While they might be in a position to the help the industry, whatever help they can offer won’t be all-encompassing, and it certainly won’t happen overnight. And in the case of CMS’s rural rate plan, we have no concrete assurance it will happen at all. Those rural providers might be stuck with that "slap in the face." I certainly hope not, but it's not outside the realm of possibilities.

This tells me that the industry must continue to act independently and push for legislative fixes for it problems, not just regulatory solutions. The more industry leaders and advocates—and providers—work in the House and Senate, the more it will secure industry friendly laws. It also tells me that providers must continue pushing toward revenue diversification, because Medicare is looking less and less like a solid foundation for a business. Providers must continue pursuing retail, private payer and facilities-based care so that they can establish the kinds of business strategies that will protect them from the next cut and the next.

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