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WASHINGTON WIRE

May 9, 2008
Issue 169

House Subcommittee Blasts Medicare Competitive Bidding Program: PPSV’s Peter Thomas Testifies

War Supplemental Could Include Medicaid and Medicare Provisions

CMS Issues Proposed Rule On Medicare Advantage, Part D Marketing

Top Story

House Subcommittee Blasts Medicare Competitive Bidding Program: PPSV's Peter Thomas Testifies

On Tuesday, the House Ways and Means Health Subcommittee held a hearing to examine Medicare's competitive bidding program for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS). PPSV Partner, Peter W. Thomas, testified at the hearing on behalf of the Consortium for Citizens with Disabilities (CCD) Health Task Force, opposing the competitive bidding program.

Included in the Medicare Modernization Act of 2003 (MMS), the Centers for Medicare and Medicaid Services (CMS) is in the process of phasing-in competitive bidding for DMEPOS. The first round is scheduled to begin on July 1, 2008 in 10 Metropolitan Statistical Area's (MSA). DME suppliers submitted bids and market share estimates for 10 targeted categories of DMEPOS and CMS offered contracts to the lowest bidders. On average, Medicare reimbursements will be cut by 26% for the targeted products. Those suppliers who did not receive bids will not be able to serve Medicare beneficiaries in the 10 areas. The second round of the program is schedule to be implemented next year in 70 MSAs across the country.

Chairman Pete Stark (D-CA) blasted CMS for poorly running the bidding process and unfairly preventing qualified suppliers from participating in the program. Other Members of the Committee, both Democrats and Republicans, agreed that the program was flawed. However, CMS Acting Administrator, Kerry Weems, staunchly defended competitive bidding as an important way to reduce costs to Medicare and the beneficiary.

At the hearing, Mr. Thomas stated that the program, as designed, threatens access, quality, and choice of provider for beneficiaries. Due to the dramatic reduction in reimbursement levels, suppliers will be forced to cut costs, and "cutting costs leads to decreased quality," stated Mr. Thomas.

In terms of access and choice of provider, Mr. Thomas expressed deep concern that many beneficiaries with disabilities and chronic conditions will wake up on July 1st to find they no longer have access to their long-term, trusted supplier and may be forced to "start over" with a new supplier who is unfamiliar with their medical background, does not carry their particular product brand, and is inconveniently located.

Mr. Thomas urged elimination of the competitive bidding program entirely, but if that were not possible, a delay in the second round if the roll-out goes forward in order to assess beneficiary problems from round one. He also urged that beneficiaries be allowed to "opt-out" of the program and supported a carve-out for complex, individualized devices such as power wheelchairs and seating systems.

Chairman Stark expressed interest in scraping the program entirely but told the witness from the American Association for Homecare, Thomas Ryan, that his industry would have to come up with $6 billion over five years to pay for the policy change. When pressed, the Mr. Ryan agreed that his members would oblige.

Health Care News

War Supplemental Could Include Medicaid and Medicare Provisions

Many Congressional Democrats are hoping to attach Medicare and Medicaid-related provisions to a war supplemental spending bill, expected to be considered by both chambers next week. The war spending bill, requested by President Bush, is likely to be one of the few pieces of legislation that will eventually be signed into law this year and, therefore, it has become an attractive vehicle for other legislative priorities.

The House spending bill contains moratoria on seven controversial Medicaid regulations which would delay their effective date until April, 2009. The House recently and overwhelmingly approved stand-alone legislation, HR 5613, to delay these Medicaid rules, but the bill has been stalled in the Senate due to Republican opposition. Implementation of the Medicaid regulations would restrict community-based rehabilitation services, targeted case management, graduate medical education (GME), provider taxes, and intergovernmental transfers (IGTs), among other cuts.

Meanwhile, the Senate is said to have included in its supplemental spending bill both the Medicaid regulations moratoria, as well as a provision restricting new physician-owned specialty hospitals from participating in Medicare. However, Senator Grassley (R-IA), Ranking Member of the Finance Committee, publicly expressed his opposition this week to including these provisions in an appropriations bill.

Citing jurisdictional concerns, Senator Grassley asked Appropriations Committee Chairman Robert Byrd (D-WV) and Ranking Member Thad Cochran (R-MS) to exclude the Medicaid and Medicare provisions from the supplemental. Grassley has been vocal in his opposition to delaying the Medicaid regulations but supports the ban on specialty hospitals, having lead an investigation on the issue when he was Chairman of the Finance Committee. Current Finance Chairman, Max Baucus (D-MT), is supportive of the moratoria on the Medicaid regulations and specialty hospitals' ban.

House Democratic leaders had planned to bring a war supplemental spending bill to the floor this week, but threats to vote against the measure from Republicans and fiscally conservative House "Blue Dog" Democrats ultimately forced them to pull the bill and reschedule floor debate until next week. The Senate Appropriations Committee is scheduled to mark-up its supplemental sending bill on May 15th.

The White House is threatening to veto any version of the legislation that goes beyond the President's spending request.

CMS Issues Proposed Rule On Medicare Advantage, Part D Marketing

On Thursday, the Centers for Medicare and Medicaid Services (CMS) issued a proposed regulation to limit marketing activities by insurance companies under Medicare managed care (Medicare Advantage) and the Part D prescription drug benefit.

Among other changes, CMS proposed that Medicare managed care plans reduce current sales incentives to pressure beneficiaries into enrolling in their plans. The rule would also prohibit "cold-calling" practices by health insurers and would restrict door-to-door solicitations under the Medicare Advantage and Part D benefits.

The Senate Finance Committee has been working on legislation to curb marketing abuses in the Medicare Advantage program and, while Chairman Baucus (D-MT) praised the CMS proposal, he stated his intent to pursue legislation on the issue as well.

The proposed rule will be in the May 16 Federal Register and can be found at http://www.cq.com/displayfile.do?docid=2719892&productId=5.

Upcoming Events

Hearings

Wednesday, May 14, 2008

Health and Safety Concerns over Plastic Additives in Consumer Products
Senate Commerce, Science and Transportation - Subcommittee on Consumer Affairs, Insurance, and Automotive Safety
10 a.m., 253 Russell

FDA Overhaul
House Energy and Commerce - Subcommittee on Health
10 a.m., 2123 Rayburn

Alzheimer's Disease
Senate Special Aging Committee
10:30 a.m., 106 Dirksen

Health Savings Accounts and Consumer Driven Health Care
House Ways and Means - Subcommittee on Health
10:30 a.m., 1100 Longworth

Children With Food Allergies
Senate Health, Education, Labor and Pensions - Subcommittee on Children and Families
2:30 p.m., 430 Dirksen

Thursday, May 15, 2008

Children's Health Coverage
House Energy and Commerce - Subcommittee on Health
10 a.m., 2322 Rayburn

For More Information

For further information on any topics discussed or publications listed, or to get copies of anything mentioned in this alert, please call 202.466.6550 and ask for the Legislative Practice Group.

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