HCFA vows to complete DME upgrade rule by early 2000

By MATTHEW HAY

HHBR Washington Correspondent

BALTIMORE – The Health Care Financing Adminis tration (HCFA; Baltimore) has pledged to issue a proposed rule on durable medical equipment (DME) upgrades by early next year. The regulation will permit Medicare beneficiaries to upgrade DME items that fall beyond the Health Care Financing Administration’s (HCFA; Baltimore) criteria for medical necessity, as long as the beneficiaries pay the difference in price. DME providers have been asking for this provision for a long time and say it would have a major impact.

The DME upgrade provision was included in the Balanced Budget Act of 1997 (BBA), but is among the dozens of provisions for which HCFA has yet to promulgate regulations. Secretary of Health and Human Services (Washington) Donna Shalala explained the delay in an Aug. 16 letter to Invacare (Elyria, OH) Chairman/CEO Mal Mixon by pointing to the "enormous volume" of changes required by the BBA. She wrote that the agency had to prioritize its implementation schedule "with an understandable emphasis on mandatory provisions."

Shalala also noted the agency’s concern that any upgrade rule includes a "means of protecting beneficiaries who may have a limited knowledge of medical equipment from suppliers who may misrepresent the need for upgraded items." HCFA Deputy Administrator Mike Hash also promised to consult beneficiary advocates about the rule when he notified Senate Minority Leader Tom Daschle (D-SD) on Aug. 12 that the agency is "actively working toward publishing a proposed rule early next year."

That triggered alarms among some suppliers who have watched HCFA resists this measure for years. "HCFA does not want to do this and never has," said one DME supplier. "That is why we had to go to Congress to force them to do it by putting it into law, and they have indicated they still don’t want to do it by dragging their feet for two years."

According to the supplier, HCFA is responding to the pressure from Congress to write a rule, but is expecting an overwhelmingly negative response from consumer advocate groups that will give them an excuse to further delay it. "I think it would be as good for beneficiaries as it would be for suppliers, but we may have a selling job to consumer advocate groups because they are suspicious of us," said the supplier. "If they understand it and it is done right, it would not expose beneficiaries to any greater risk of being defrauded than they are now and, in fact, would make it easier to take enforcement action."

A significant provision

Assuming that HCFA eventually publishes the upgrade provision, all sides agree it will have a major impact. "We think it is pretty significant for several reasons," said Invacare Director of Government Affairs Dave Williams, who is widely credited with prompting HCFA to commit to completing the rule by early next year. He said that as Medicare coverage guidelines become more and more limited and what Medicare pays for is increasingly constricted, beneficiaries will be seeking items that fall beyond the Medicare definition of medical necessity. "The big hold-back now is that they have to go wholly out of pocket and wait for Medicare to pay, versus just paying the difference," he says.

But according to Williams, the biggest impact of the upgrade provision – especially in the area of rehab technology – may be its relationship to the Workplace Incentives Act, which changed the definition of what Medicare has to cover. "Most people don’t understand it, but Medicare now has to rethink how it handles things because they are going to be required to provide equipment and services to people if it facilitates them entering employment," he explained. Williams said that removes the agency’s traditional fallback position, which views medically necessary only as items required to perform daily living activities within the four walls of the home.

For example, said Williams, a supplier might have a beneficiary with a significant disability that can not propel a manual chair and requires a power chair. "Right now, they are going to give them a very basic unit," he said. But if to go to work that individual needs a high-end unit with more range and seating system features that allow them to be in the chair for eight hours at a time, then HCFA will have to rethink that decision. "That suddenly now fits under the coverage guidelines with what Medicare is going to have to help pay for," Williams said.

In order to avoid Medicare being the full payer for those items, the program will instead pay for what is considered medically necessary, said Williams. "Medicare would pay for the medically necessary part, but the upgrade might be paid for by a vocational rehabilitation grant. The individual would then have the equipment they need to go to work, and we think that creates lots of openings."

Williams said the impact of the new provision will also be magnified by changing demographics. He said there are expanding numbers of people who are taking care of seniors in the home at risk of injury because they themselves are aging. "They are willing to upgrade right now," he said. "We see that on some product lines where people are willing to sign an unassigned claim to get a full electric bed so they don’t have to risk back injury.

"We think there are business opportunities here," Williams said. "More importantly, it gives people the opportunity to look at both what is available and what is medically necessary to make intelligent consumer choices."