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By MATTHEW HAY
HHBR Washington Correspondent
WASHINGTON Congress has stepped in to further delay the reimbursement cuts for six items proposed by the durable medical equipment carriers (DMERC) under the Health Care Financing Administration’s (HCFA; Baltimore) expanded inherent reasonableness (IR) authority. Earlier this month, House Ways and Means Health Subcommittee Chairman Bill Thomas (R-CA) asked General Accounting Office (GAO; Washington) Director William Scanlon to examine whether HCFA has "overstepped its authority" in its use of the new IR authority granted to the agency as part of the Balanced Budget Act of 1997 (BBA).
HCFA was granted IR authority in the mid-1980s to increase or decrease reimbursement for individual items of durable medical equipment (DME) if the existing payments were found to be grossly deficient or excessive. The BBA expanded this authority and limited the requirement for notice and comment to instances where the adjustment exceeds 15%. Medicare Part B suppliers and home infusion providers have been arguing since early last year that HCFA grossly exceeded this authority when it proposed a 15% payment reduction for Category I enteral nutrition formulas and cuts of various magnitudes in several other items including blood glucose monitors, albuterol, lancets, and certain catheters.
In his request to GAO, Thomas specifically asked the GAO to analyze the role of the DMERCs in this process. "The BBA makes no mention of the secretary delegating authority to the DMERCs to implement IR authority," Thomas asserted. "I would ask that you examine the statute and the regulation and report back to me on the ability and legality of HCFA using DMERCs in this capacity." Thomas also asked the GAO to examine the impact these proposed cuts may have on Medicare services.
In addition, Thomas asked the GAO to weigh reports he has received from various heathcare trade groups that questioned HCFA’s sampling data, which they said were really just a survey of selected market prices. "Healthcare trade groups report to me that there were serious design flaws in the HCFA methodology, including flaws in the size and randomness of the surveys," said Thomas. There was also concern whether the surveys were focused on "the proper distribution channel for particular products," he added.
Thomas specifically pointed to the sampling methodology used for enteral nutrition formulas, which he said may have been based on the retail prices of enteral formulas that generally are not the formulas actually used in tube-feeding for Medicare beneficiaries.
Late last year, the National Alliance of Infusion Therapy (NAIT; Washington) and the National Home Infusion Association (NHIA; Alexandria, VA) challenged the proposed cut in enteral nutrition on precisely these grounds. The two groups, which together represent manufacturers, providers, and clinicians involved in the provision of infusion therapy drugs and services, charged that the DMERCs and HCFA had based the proposed price reduction perhaps exclusively on an analysis of retail price data.
The two groups contended that there are no retail price data available for the most commonly used Category I formulas and, as a result, a retail price survey would not reflect the market for those products. "Of the 78 formulas in Category I, less than 40% are sold at retail," they maintained. "Clearly, an analysis based on this limited retail price data cannot logically include all of the formulas in that category and, we would assert, neither should the conclusions of that analysis. The fact that so many enteral formulas in Category I do not have retail prices should demonstrate that the use of retail price data to develop a single payment rate for all these formulas is a flawed approach."
"Hopefully, GAO will consult with the industry to understand exactly what their concerns are," NAIT’s Alan Parver told HHBR last week. He added that his group and others are concerned not only about whether inherent reasonableness is a good idea, but about the way HCFA is implementing this authority. "This is an unprecedented expansive authority," said Parver. "For HCFA to take the position as it has that it does not have to meet standards of statistical validity, but can simply base payment adjustments on factors that make sense to them may be more than what Congress had in mind when it enacted that provision.
"The value of taking a snapshot of data to base payment adjustments, not because it is relevant or accurate, but because it is the easiest to obtain is also something that needs to be looked at," Parver added. "We are pleased that the Committee is taking that approach."
The GAO’s examination could easily take six months. It is likely the DMERCs, which delayed these cuts earlier this year, will not act until the study is completed.