After months of anticipation, Representatives Tom Price, M.D. (R-Ga.), and John Larsen (D-Conn.) introduced H.R. 1717, the Medicare DMEPOS Market Pricing Program (MPP) Act of 2013. This bipartisan legislation, introduced by two senior members of the House Ways and Means Committee, sends a powerful signal to both the Republican and Democrat leadership that the Medicare bidding program must be stopped prior to CMS’s scheduled July 1 implementation.
This is the industry’s alternative to fix the fundamental flaws with the structure of the Medicare bidding program. The most glaring issues that resonate best with legislators are the non-binding bids and Medicare’s use of the median to establish the single payment amounts rather than the clearing price. Those two shortcomings of Medicare’s bidding program are not only the most egregious, but they also make the system unlike any other bidding program in the world, let alone this country. The industry alternative would fix these flaws and replace them with a structure very similar to that used in other government and private sector bidding programs that are fully transparent.
The legislation is very similar to the MPP bill introduced last September, which garnered 94 co-sponsors in three short months prior to dying at the end of the last Congress. The primary change in the legislation this year has to do with the pay for in light of the Round Two single payment rates released in late January as reductions averaged 45 percent for DME and 72 percent for diabetic supplies. While the level of reductions are a result of the fundamentally flawed Medicare bidding program design, in order to replace it the industry must provide an alternative that is budget neutral. In H.R. 1717, this is referred to as the interim payment period, which is the period between when the current Medicare bidding program ends and the MPP alternative is implemented.
The MPP legislation would reduce the current Medicare fee schedule rates (not bid rates) for those DME items subject to Round Two bidding in the competitive bid areas by 5 percent on July 1, 2013 and then further reduce it by 10 percent on Jan. 1, 2014. An additional 10 percent reduction will occur on January 1, 2015 in order to provide a mechanism that better allows for a transition to MPP, rather than allowing the 45 percent average reduction under Medicare’s Round Two bidding program to go into effect on July 1 of this year. The interim payment provision for diabetic supplies would reduce those Medicare fee schedule amounts by 10 percent on July 1, 2013 and then further reduce the diabetic supply payments by 15 percent on Jan. 1, 2014. An additional 15 percent will be implemented on Jan. 1, 2015, which is much better than the alternative 72 percent cut going into effect on July 1 under Round Two Medicare bidding program. The bill requires that CMS implement the Market Pricing Program within 18 months of the bill becoming a law.
The good news is the industry has an alternative that would fix the underlying structural problems in a budget neutral manner, which is required by Congress. When bidding under the alternative MPP system does occur, it would be off of the higher Medicare fee schedule amount, and not those reduced rates established under the interim payment system. The bad news is we have a serious timing issue with the July 1 Medicare start date for the program. While CMS could still act to delay the start of the program, it appears the only way it will not be implemented on July 1 is if Congress takes action that directly requires CMS to change course.
Again, the good news is Medicare is not required to implement the program on July 1. At the time of this writing, Medicare’s web site still listed July 1 as a target date. Many members in Congress support delaying the start of the program, at least through the end of the year, in order to provide an opportunity to conduct the necessary oversight and review of both Round One and Round Two prior to a ten-fold expansion (nine areas to 91 more areas).
So, what is needed to advance the MPP alternative?
Currently, the MPP alternative has a significant number of co-sponsors. The goal is to get 218 by mid June, which is the number needed for a majority in the House. We are well on our way there, due largely to the significant concerns that Congress has with the structure of this program and the impact that will result if Round Two is allowed to go forward unchanged. While you have heard this many times before, if your Representative has not co-sponsored H.R. 1717 yet, contact his or her office to request he or she does so today. This is very important, even if you have done so a few times before. Legislators rarely sign on to a bill the first time they are asked.
When contacting your legislator’s office (Representative or Senator), let him or her know the following:
- The impact Round Two will have on your business (along with Round One if your company participated in that program), specifically changes made in preparation for the 45 percent average reduction (72 percent diabetic). This may include layoffs, service reductions, change in service area, discontinuation of certain products, salary/benefit reductions, etc.
- The negative outcomes from Round One — Reduced access to care, limited patient choice, lower quality of care for seniors and people with disabilities, delays in coordination of care needed for discharge resulting in more lengthy inpatient stays and higher costs to the Medicare program.
- Consumer support/impact — More than 30 consumer groups have written to Congress expressing significant concerns with the impact of the Medicare bidding program and the need to replace it with the Market Pricing Program (MPP) alternative.
- The industry has an alternative to fix the fundamental flaws in a manner that would allow an alternative bidding program to go forward in a manner that continues to provide significant savings to Medicare.
- Request he or she co-sponsor H.R. 1717, the Medicare DMEPOS Market Pricing Program Act of 2013.
There is growing confidence that if strengthened support for stopping Round Two of the bidding program continues, we will be successful. Please reach out to legislators who have yet to cosponsor H.R. 1717 this week. The facts speak for themselves on the issue. Now is the time for your legislators to act. Now is the time for you to act.