Rule Relief

  • Medicare beneficiaries rely upon home respiratory therapies to treat Chronic Obstructive Pulmonary Disease (COPD) and Obstructive Sleep Apnea.
    • Home respiratory therapy is a critical set of services and equipment that allow more than one million Medicare beneficiaries to save the Medicare program money by reducing time spent in emergency rooms and nursing homes.

    • Home respiratory therapy suppliers also provide patient-centered services to reduce hospitalizations. Working with hospitals and commercial payors, CQRC companies have developed and implemented programs to help reduce hospitalization and Medicare program expenditures. Managed care programs and commercial payers recognize the important role home respiratory therapy suppliers play in reducing overall health care spending.
  • However, the decision to dramatically cut rates January 1 by applying competitive bid rates used in urban areas to areas the Congress expressly excluded from the competitive bidding program makes it less likely that Medicare beneficiaries will fully benefit from home respiratory therapy services.
    • Effective January 1, 2016, the average competitive bid rates in a region will become the new rates in non-competitive bid areas. These areas are mostly rural. While CMS does provide a 10 percent increase to these average competitive bid rates, that amount falls far short of the cost of providing services in these areas. CMS has also decided to provide only a 6-month phase-infor suppliers to attempt to adjust to the drastic cuts. This period is dramatically shorter than the 3-4 years others Medicare providers usually receive to absorb much smaller cuts.

    • For CQRC member companies, which are the larger national and regional home respiratory therapy suppliers, the cost of delivering services in non-CBAs is on average 13 percent higherthan their costs within CBAs. For these companies, the competitive bid reimbursement rates in CBAs are already an additional 5 percent below the cost to supply those services, on average.

    • To date, beneficiaries have not experienced changes in services primarily because member companies have managed to absorb these losses (a) to continue to participate in Medicare in CBAs in the hope that future rounds of bidding will recognize the true cost of providing services and (b) because traditional fee schedule rates in non-CBAs were sufficient to offset the losses.
  • Suppliers experience higher Medicare costs because of the broken audit process.
    • A significant reason that costs are higher in the Medicare program than for commercial payers and managed care plans is the out of control audit process. The current audit process results in the initial denial of more than two-thirds of all home respiratory therapy claims. It may take years for a supplier to be paid for a legitimate claim because the only objective part of the process is at the Administrative Law Judge level. The only change that will address the audit problem is to require a clear prior authorization process. Prior authorization would reduce costs for suppliers, as well as those of the Medicare contractors, by eliminating audit denials and further appeals.
  • The Congress should protect access to, and promote the value of, home respiratory therapy by supporting rule relief legislation.
    • While it may be appropriate to reduce the rates in non-CBAs, the new rates should cover the cost of providing care. Thus, the Congress should establish rates that align with the costs highlighted by the CQRC cost survey.

    • In addition, suppliers should have the same phase-in period (three to four years) to adjust to what will still be a cut that other Medicare providers receive.
      • Maps: Click to View
      • CQRC White Paper on Supplier Costs: Click to View
      • Current Legislation
        • S. 2312 DME Access and Stabilization Act of 2015
          • Summary: Among other things, S. 2312 would provide temporary relief to home respiratory therapy suppliers and other DMEPOS suppliers by setting Medicare payment rates in noncompetitive bidding areas at levels higher than the competitive bid rates.
          • Text: Click to View
          • Cosponsors: Click to View
          • CQRC Letter of Support: Click to View
        • H.R. 4185 the PACT Act of 2015
          • Summary: Among other things, S. 2312 would provide temporary relief to home respiratory therapy suppliers and other DMEPOS suppliers by setting Medicare payment rates in noncompetitive bidding areas at levels higher than the competitive bid rates and establish a DMEPOS market pricing program demonstration project, and for other purposes
          • Text: Click to View
          • Cosponsors: Click to View
          • CQRC Letter of Support: Click to View