We all agree: Medicare cuts need slow phase-in, analysis

We all agree: Medicare cuts need slow phase-in, analysis
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A bipartisan group of lawmakers, patients and physicians is raising major concerns about recent reductions in Medicare payments, which will total $4.4 billion in cuts over a five-year period, for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). These cuts have been implemented without first understanding what impact they will have on Medicare patients’ access to the specific products their physicians have recommended for them. 

We share their concerns, and that is why the Advanced Medical Technology Association and the Council for Quality Respiratory Care are adding their voices to the chorus in support of bipartisan legislation that would temporarily delay the full phase-in of pricing policies for medical devices until we have enough evidence to understand the consequences.


Despite bipartisan, bicameral support for a bill to delay these Medicare cuts, Congress failed to enact the same legislation in both chambers before recessing for the summer. 

The broad DMEPOS category is made up of many different life-sustaining devices. Some of the most common are home-based respiratory therapies, which are used to treat conditions such as chronic obstructive pulmonary disease, or COPD, and obstructive sleep apnea. These home oxygen and sleep therapies allow patients to live independently, remain at home with their families and maintain a high quality of life.

For years, DMEPOS products were paid for under fee schedules set according to provisions in Medicare law. Today, however, 100 of the largest metropolitan statistical areas are participating in Medicare’s competitive bidding program for many DMEPOS products. Participating suppliers were awarded contracts based on their bids and their ability to serve Medicare beneficiaries in a competitive bidding area. Because these bidding areas are densely populated and home to about half of all Medicare beneficiaries in the country, many of the suppliers with winning bids have offset significant payment cuts for supplying DMEPOS with a larger volume and market share.

While we have had significant concerns with the Centers for Medicare and Medicaid Services’s (CMS) implementation of the competitive bidding program since its inception, we are especially troubled that the agency has moved forward with competitive bidding payment information based on bidding that did not take place in the very areas where it is being applied.

Competitive bidding has already resulted in major market disturbances. For home respiratory therapies, for instance, the process has generated sizable payment cuts ranging from 30 percent to 50 percent. To date, however, there has been little independent analysis of the competitive bidding program to evaluate whether the program has restricted the types of products available for patients or compromised physician decisions to prescribe specific products that are determined to be most appropriate for the patient’s medical and physical condition. A recent report from the Office of the Inspector General calls into question the validity of the current competitive bidding rates as well, noting that nearly 50 percent of the winning suppliers audited did not have the required state licenses to actually provide services. 

Absent comprehensive data, we just do not know if pricing changes have affected patient access. Beginning in January of this year, the agency implemented an aggressive timeline to phase in prices for DMEPOS established in competitively bid areas to those areas that have not been subject to competitive bidding. The final phase-in of competitively bid prices went into effect July 1.

There are a couple of important takeaways here. First, six months is not enough time to monitor disruption in Medicare beneficiaries’ access to medical equipment, especially given the significance of certain therapies and devices on a patient’s overall well-being. Second, we have little data regarding rural providers, who do not typically participate in the competitive bidding process. If a single provider in a traditionally underserved region shuts its doors or reduces services, access to some care could disappear entirely. This worst-case scenario is a real possibility because the CMS is using payment information based on bidding that did not take place in those areas and where costs of providing products to Medicare beneficiaries may be very different and unrepresentative of noncompetitively bid areas. 

Dramatically reduced reimbursement rates also stifle the ability of respiratory therapy providers and product manufacturers to innovate and develop new processes and products that would improve the patient experience and, ultimately, patient outcomes. By improving patient outcomes, DMEPOS providers and suppliers can contribute to Medicare’s overall goals of reducing readmissions, and therefore costs, by keeping patients healthy in the home.

Even though these experimental pricing policies are currently being implemented, lawmakers still have an opportunity to mitigate their impact on patients. We are calling on lawmakers in the House and Senate to come together when they reconvene in September and enact legislation to protect patients until all the facts are gathered.  This is the type of judicious policymaking older Americans deserve.

While a legislative solution has not been reached, we are confident that Reps. Tom Price (R-Ga.) and David Loebsack (D-Iowa) in the House and Sens. John ThuneJohn Randolph ThuneSenate Republicans raise concerns about TSA cyber directives for rail, aviation Democrats narrow scope of IRS proposal amid GOP attacks Senate GOP signals they'll help bail out Biden's Fed chair MORE (R-S.D.) and Heidi HeitkampMary (Heidi) Kathryn HeitkampWashington's oldest contact sport: Lobbyists scrum to dilute or kill Democrats' tax bill Progressives prepare to launch counterattack in tax fight Business groups aim to divide Democrats on .5T spending bill MORE (D-N.D.) in the Senate, along with their colleagues in Congress, can reach a consensus on this. Already, a delay of these cuts has strong bipartisan support.

This action is needed in order to preserve patient access to necessary medical equipment by delaying reimbursement cuts. By retroactively correcting cuts that took effect on July 1, and allowing an extended phase-in of the cuts instead, Congress will have more time to evaluate the effects of rate reductions on beneficiary access, while addressing the underlying issues with DMEPOS reimbursement in noncompetitively bid areas.

This legislation is an absolute win-win for patients and providers, allowing us to lean on evidence once again to trigger future healthcare innovation.

Whitaker is president and CEO of the Advanced Medical Technology Association, the leading national medical technology association. Starck is chairman of the Council for Quality Respiratory Care, a coalition of the nation’s seven leading home oxygen therapy provider and manufacturing companies.