OIG book focuses on home infusion for cost savings

HHBR Washington Correspondent

WASHINGTON – High on the list of items included in the Department of Health and Human Services (HHS; Washington) Office of Inspector General’s (OIG) Red Book, released last week, are cuts in Medicare reimbursement for enteral and parenteral nutrition. Red Book outlines a range of cost-saving recommendations that have not been fully implemented and often trigger legislative, regulatory, or administrative action.

According to the OIG, Medicare pays an average of 45% more than Medicaid agencies and 78% more than Medicare-risk HMOs for four parenteral nutrition codes. The OIG estimated savings of $65 million each year over the next five years if the Health Care Financing Administration (HCFA; Baltimore) develops "more cost-effective reimbursement" for parenteral nutrition solutions. The OIG proposed three alternative payment methods: 1) inherent reasonableness (IR); 2) acquisition cost; and 3) competitive bidding.

The OIG reported that HCFA has convened a workgroup to focus on ways to reduce costs for parenteral nutrition and noted that the Balanced Budget Act of 1997 (BBA) includes several provisions that would address its recommendations, including authorization for the agency to make IR adjustments up to 15% for all part B services other than physician services and authorization for up to five competitive bidding demonstrations.

Last year, enteral nutrition was targeted for a 15% reduction in reimbursement, but that cut is now on hold pending a General Accounting Office (Washington) examination of HCFA’s use of this authority requested by House Ways and Means Health Subcommittee Chairman Bill Thomas (R-CA).

The OIG also reported that while 80% of the beneficiaries met Medicare criteria for enteral nutrition therapy in 1995, vulnerabilities were identified with the use of special enteral formulas and the pump delivery method. The OIG estimated savings of $28 million over each of the next five years if the DMERCs target special formulas, pump equipment, and pump supply kits for focused medical reviews.

The OIG said HCFA agreed with this recommendation and noted that the BBA included several reforms related to reimbursement for beneficiaries in nursing homes, including a mandatory prospective payment system for Part A covered stays and consolidated billing for beneficiaries not in Part A covered stays.

The OIG also projected a $15 million savings each year over the next five years if HCFA reduces payment for patients receiving enteral nutrition at home using competitive acquisition strategies. "Payments for enteral nutrition therapy are excessive because reimbursement rates are high, and competitive acquisition strategies are not fully used," said the OIG. In its review of other payers of enteral nutrition, the OIG said it found payers who negotiated prices by taking advantage of discounts and other competitive acquisition strategies reimbursed from 17%-48% less than Medicare."

The OIG said HCFA concurs that Medicare is paying too much for enteral nutrients and supports the recommendation to reduce payments for enteral therapy administered at home under Part B. The OIG noted that the BBA included a provision to freeze Medicare payments for parenteral and enteral nutrition, equipment, and supplies for 1998 through 2002, and the DMERCs have proposed additional payment reductions through use of their inherent reasonableness authority.