Advocacy for Homecare Providers and HME/DME …



South Carolina Medicaid DME Program Comments July 13, 2018INTRODUCTIONThe South Carolina Association of Medical Equipment Suppliers (SCMESA) is a proactive, state-wide association providing leadership, resources, and support to companies that provide medical equipment supplies and services to patients in their homes. Its mission is to facilitate business success, influence public policy, and improve patient care in the home.The American Association for Homecare (AAHomecare) is the national organization for durable medical equipment, infusion therapy, prosthetics, orthotics, and supplies (DMEPOS) suppliers, manufacturers, and other stakeholders in the homecare community. Its members are proud to be part of the continuum of care that assures Medicare and Medicaid beneficiaries receive cost effective, safe and reliable home care products and services. AAHomecare works with state associations such as SCMESA and providers to help influence good medical policy to ensure access to care for patients needing durable medical equipment and services. The SCMESA Board of Directors and membership and AAHomecare, and membership appreciate the opportunity to be part of the DME Payment System Meeting held on June 22, 2018 and to present comments to South Carolina Department of Health and Human Services (SCDHHS). Providers, manufacturers, associations, and other stakeholders signing this letter have reviewed the presentation provided and would like to offer the following comments in response to the proposal in an effort to ensure the goals of SCDHHS are met while ensuring Medicaid beneficiary access to medically necessary durable medical equipment and supplies. OVERVIEWAcross the country, health care plans are looking for innovative, cost-effective solutions to meet members’ needs. DMEPOS, which is referred to as DME or Home Medical Equipment (HME), enables millions of Americans with injuries, illnesses, and disabilities to safely maintain their independence at home for a fraction of the cost of institutional care. Numerous reports point to the cost effectiveness, patient preference, and better clinical outcomes for individuals who utilize HME and services in a homecare setting.As health care costs continue to rise, health plans are looking for ways to cut costs. It is critical for plans to leverage cost-effective solutions to meet beneficiary needs, to factor not just the front-end costs, but the impact on the overall outcomes of patients and the potential cost shifting that occurs with reimbursement reductions in the HME sector. Unfortunately, funding for HME has deteriorated by federal and state payors, threatening the viability of the HME Industry to continue meeting the needs of beneficiaries. Reimbursement continues to drop below the costs of providing HME, supplies, and services. A recent study by Dobson DaVanzo evaluated suppliers’ costs of providing HME to end users and found that the cost of goods sold only accounts for just over half of the total cost. As a service-intensive health care partner, suppliers also provide patient education, delivery and set-up, ongoing monitoring, service, and preventative maintenance, 24-hour on call services, and more. It is imperative that funding for HME reflect these costs so that the benefit can be stabilized and strengthened to preserve patient access. These services are essential for ensuring better patient outcomes in the least costly setting, patients’ homes. WHY SC MEDICAID SHOULD NOT ADOPT MEDICARE RATESOverview of Medicare Competitive Bidding Program Under the CBP, DME suppliers competed for a limited number of contracts to serve Medicare beneficiaries residing in these CBAs through a flawed auction program that awards contracts to those with the lowest bid amounts, resulting in a drastic reduction in competition for suppliers and opportunity to increase market share. 110 of the largest, most densely populated MSAs in the country currently participate as Competitively Bid Areas (CBAs) in the CBP for DMEPOS. These CBAs are home to 58% of all Medicare beneficiaries in the nation. In June of 2011, 244 economists, computer scientists, and engineers from top universities across the country, including four Nobel laureates, wrote the White House warning that continued implementation of the CBP would lead to market failure and thereby deny senior’s access to this critical healthcare benefit while increasing healthcare costs. (Reference: Cramton Hidden Costs)However, CMS continued onward with the program, and in 2016 applied pricing derived from highly populated CBAs to all area of the country without exception for rural America, slashing Medicare reimbursement by over 50% on average. Bid areas like Atlanta and Miami set prices for rural and non-urban areas like Kings Tree, SC in spite of non-bid areas not having the opportunity to submit pricing to account for unique costs of accessing and caring for beneficiaries in these areas. Congress intervened out of concern in December of 2016 via the 21st Century CURES Act, statutorily providing a retroactive 6-month extension of a blended 50/50 rate of the 2015 fee schedule and 2016 new rate. However, on January 1, 2017, the full cut took effect once more. CMS acknowledged the crippling effect of expanding the CBP and issued a temporary relief for rural and non-contiguous areas through an Interim Final Rule (IFR) in May 2018, but this relief fell short of the needed relief for all non-bid areas. This IFR raised reimbursement for Rural America for dates of service June 1, 2018 to December 31, 2018. This HR 4229, the Protecting HOME Access Act, was introduced so that Congress could statutorily provide comprehensive relief to all non-bid areas from January 1, 2017 to December 31, 2018 in an effort to sustain the safety-net of suppliers while CMS was considering changes to the methodology for adjusting fee schedule amounts for items furnished on/after January 1, 2019 as mandated by the 21st Century CURES Act. On July 11, 2018 CMS published the annual End Stage Renal Disease proposed rule. This rule contains regulatory changes for the DMEPOS benefits. In this rule, CMS has proposed to extend reimbursement in the rural areas through December 31, 2020.Financial pressures from the Medicare Competitive Bidding Program for HME have already had a devastating impact on the number of South Carolina suppliers left to service those requiring HME; 31% of South Carolina DME locations have closed since 2013. The program’s flawed pricing methodology has proven unsustainable, with recent studies showing access issues and cost analysis showing losses for companies when providing products at Medicare pricing.The next round of Competitive Bidding was scheduled to take place on 1/1/2019. However, with publication of the ESRD rule, the next round of competitive bidding was delayed indefinitely. With this, delay, the flawed pricing established in previous competitive bidding rounds for the CB Areas and Non-Rural areas will remain in place. However, significant changes to the bidding program have been proposed which should eventually create a program that creates sustainable reimbursement. However, as discussed, that timeframe is unknown at this time. Impact of the 21st Century CURES on SCThe Omnibus bill of 2015 (P.L. 114-113) included a provision to limit the federal portion of funding for state Medicaid programs to the Medicare rates for DME) effective January 1, 2019. The 21st Century CURES Act (P.L. 114-255) accelerated the adoption of this policy by one year, going into effect January 1, 2018. This controversial provision will create hardships for the Medicaid programs trying to serve their Medicaid population who require vital HME to maintain their independence at home and an active lifestyle in the community. These rates will lead to additional closures and patient access issues, especially in underserved rural areas. States who adopt flawed Competitive Bid rates will put beneficiaries at risk and will be unable to provide DME at levels that assure efficiency, economy, and quality of care and that are sufficient to enlist enough providers so that care and services are available.The Medicaid Population is vastly different from the Medicare Population. Unlike the Medicare population which is made up of those 65 and older, SC Medicaid covers all age groups. Those disproportionately affected by the adoption of these rates will be pediatrics. The Pediatric population which primarily uses nebulizers to combat respiratory infections will surely see access issues under these rates. This will cause a significant cost shift towards Emergency Room visits and potential hospitalizations as pediatric beneficiaries will not have access to preventative equipment such as nebulizers. (reference: State Briefing on Medicare Rate Adoption February 2017) The 21st Century Cures Act does not require States to adopt Medicare Rates. This was clarified during the webinar hosted by CMS. In fact, the Social Security Act, § 1396a(a)(30)(A) contains a broad directive that a state Medicaid Program must “provide such methods and procedures relating to the… payment for… care and services available under the plan… as may be necessary… to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan.” States do not have to do anything with their payment rates to be compliant with this legislation other than submit reconciliation data by 3/30/19. Due to the fact that SCDHHS did not complete a state plan amendment change by 3/31/18, the reconciliation process will be required by the 3/30/19 deadline. (Reference: Legal Opinion on Cures, Brown & Fortunato, P.C, SMDL, CMS Webinar)Critical Concerns with Adopting Faulty Medicare CBP RatesResponsible and sustainable reimbursement is essential for maintaining a healthy network of HME suppliers who enable children, adults, and seniors with disabilities, injuries, and illness to safely maintain their independence at home where it is more cost effective for the system, results in better patient outcomes, and is patient preferred. The CBP has been widely criticized for its shortcomings and detrimental impact on patient access due to insolvent reimbursement rates. Limiting SC Medicaid reimbursement to Medicare CBP rates have several major concerns, including:Patient Access is Jeopardized with Inadequate CBP Reimbursement. An independent, national study by Dobson & DaVanzo interviewed 428 patients and 538 case managers in 2017 and found that 52% of Medicare beneficiaries experienced access issues after implementation of CBP. Research also found that 89% of case managers reported an inability to obtain DME in a timely fashion creating delayed discharges from hospitals, admissions to skilled facilities in lieu of patients’ homes, or discharges without appropriate medical equipment leading to readmissions or hospital ER visits. A similar peer review study completed by the American Thoracic Society reported that 51% of respondents reported problems in accessing oxygen, DME, and services. Risk to SC Medicaid: These studies reveal severe access issues as result of the CBP rates in across the Medicare space; these are the same rates the Department is looking to implement for Medicaid beneficiaries in SC. (Reference: “HME Access Study Executive Summary, HME Access Study Highlights, and Independent Surveys Point to Consistent Patient Issues 12.17” and “Patient Perceptions of the Adequacy of Supplement al Oxygen Therapy”, published in the Annals of the American Thoracic Society.).Unsustainable Medicare Reimbursement Only Accounts for 88% of Costs. In 2016, Dobson & DaVanzo conducted a cost study to find the true costs of providing HME. The study found that only 88% of suppliers’ costs are covered by the Medicare CBP rates. Both small local and large national suppliers operated at a 12% overall when providing medical equipment, supplies, and related services to Medicare recipients. This loss cannot sustain as evidenced by the closure of 1 in 3 HME companies across the country since CB took effect. Risk to SC Medicaid: SC has already lost 31% of suppliers in the state due to the unsustainable reimbursement environment. Applying Medicare rates to the Medicaid program will only exacerbate the issue, making it challenging for Medicaid recipients to find resources to meet their medical needs in a homecare setting. (Reference: “Analysis of the Cost of Providing Durable Medical Equipment to the Medicare Population: Measuring the Impact of Competitive Bidding”, Dobson Davanzo)Numerous Legislative and Regulatory Changes to Medicare Rates Make Predicting Reconciliation Rates Difficult in the Near Term. The 21st Century Cures Act passed in December 2016 mandated a 6-month retroactive rate adjustment for non-bid areas from July 1, 2016 through December 31, 2016; it also mandated the DME MACs reprocess all claims at the higher fee schedule. CMS released an Interim Final Rule in May 2018, increasing the rates for “rural” and “non-contiguous” non-bid areas from June 1, 2018 through December 31, 2018. This was highly encouraged by Congress in the report language of the 2018 Omnibus legislation. Currently, Congress is considering HR 4229, the Protecting HOME Access Act of 2017, which would retroactively change the fee schedule from January 1, 2017 through December 31, 2018. Each of these impacts the fee schedule that will be used in the reconciliation process. Risk to SC Medicaid: The SC Medicaid Department does not have certainty on the rates that the reconciliation will be implemented against. At this point, it would be premature to adopt Medicare pricing while statutory and regulatory changes may still happen before the fee schedule that the Department will reconcile against is finalized. Exacerbated Patient Risk for SC Medicaid MCO Recipients Due to MCOs Discounting Off Medicaid. The state’s Medicaid fee schedule has a significant impact on the rates MCOs pay suppliers for serving the MCO patient population. 64% of South Carolina’s Medicaid beneficiaries are serviced by MCO plans, and the state is responsible for ensuring access to these services for Medicaid beneficiaries serviced by the Medicaid MCO plans, Currently, all Medicaid MCO plans in South Carolina pay suppliers a discounted rate off of the Medicaid fee schedules—many of which are significant discounts.Risk to SC Medicaid: Medicare patient access issues are already widely acknowledged across the country due to the unsustainable CB pricing. Should SC adopt Medicare rates, its MCO patient populations are at an even greater risk of not having timely access to medically necessary HME, supplies, and services.ADDITIONAL SC MEDICAID IMPROVEMENT RECOMMENDATIONSChallenges with Beneficiary Cost Sharing Co-Pay Requirements Medicaid beneficiaries are financially burdened by the co-pay that they are responsible for to be to able to receive medically-necessary HME, supplies, and services under the South Carolina Medicaid program. Unlike other health care providers, HME suppliers are at greater risk of not being able to collect co-payments from beneficiaries for items provided. Home delivery and shipping of HME items recur monthly, as customers rarely come to the HME location to get their products. Suppliers face an undue responsibility for attempting to collect co-payments for monthly rentals or supplies from members and have little recourse but to make efforts to remove the medical equipment from their homes and discontinue service if the co-pays cannot be collected. In contrast, providers like physician offices and pharmacies are able to obtain the co-pay up front before services are rendered, thus mitigating risk of non-payment and avoiding costly and time-consuming efforts in collecting monies due. It is recommended that the copay for the DMEPOS benefit be eliminated.Medicare Crossover ClaimsCurrently, SC Medicaid does not process claims automatically that are crossed over by Medicare. This is an inefficient process that creates an additional cost to providers to manually submit claims for payment. Instead, SCDHHS should implement payment of crossover claims to be processed automatically without additional steps for the supplier. Also, Qualified Medicare Beneficiaries (QMB) should have the cost share of services paid by SC Medicaid per Medicare regulation. Currently, SC Medicaid is denying many of these secondary claims for QMB beneficiaries incorrectly. These claims should be paid up to the least costly allowable. CONCLUSIONThe undersigned organizations respectfully recommend that SCDHHS complete the following actions in order to meet the stated SCDHHS goals established in the DME Payment System meeting:Delay decision for rate changes until midyear 2019 to allow time for Medicare payment system to be defined.Continue to work with SCMESA, AAHomecare, and other stakeholders to establish a fee schedule that will ensure access to DMEPOS services.Implement language with MCO plans to not allow discounts below the Medicaid fee schedule for DMEPOS.Implement language with MCO plans to establish consistent medical policy and authorization guidelines when servicing beneficiaries. Remove copay requirement for the DMEPOS benefit.Implement automatic processing of Medicare crossover claims.Implement correct processing of secondary cost share claims for QMB beneficiaries. Thank you again for allowing these groups the opportunity to submit comments and proposals for SCDHHS’ consideration. We will be available to discuss any and all aspects of this proposal. Sincerely, SCMESA Board of DirectorsAmerican Association for HomecareBobby HortonLaura WilliardVGM and AssociatesNumotion Craig DouglasAlexis WardA-1 MedicalABC Medical, LLCRuss WarnerJamie SmithAcuity Billing & ConsultingAdvanced Home CareTamra MaxfieldJim HoganAftercare EssentialsAll Medical, Inc.Kay ReidBill HaysBencor MedicalBryant Pharmacy & SupplyJohn HussGail SmithCarolina HomecareCommunity Life-Link, LLCJackie BoltBernard GeraldDaniel’s Pharmacy of BarnwellDrucker MedicalKyle McHughConnie GibbonsEquipped for LifeFamily Pharmacy ServicesTrent GambleCurtis RankinsHawthorne Medical EquipmentHome Medical, Inc.Kim CannanTerry PintoHome Medical Supplies & EquipmentLow Country Home OxygenLisa YoungGlenn SchraderMoon’s Home MedicalPAL MEDDaniel KeatonDan GoochPetsch Respiratory ServicesQuality Home MedicalDavid PetschChip FullerReliable Medical of SC, LLCTri—State MedicalJeff ReedRoy PatelTucker-Wells Medical EquipmentPoinsett MedicalKen WellsBlaine Smith ................
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