Home medical equipment representatives and HCFA officials are fighting over the validity of a government study used by HCFA and congressional Republicans to justify a payment cut for home oxygen services of as much as 40%.
The current fight actually began several years ago when Sen. Tom Harkin (D-Iowa) called for a decrease in Medicare reimbursements for home medical equipment. According to Harkin, Medicare was being overcharged for such equipment compared with what other federal programs were paying.
A study by the Department of Veterans Affairs found that Medicare was being charged as much as 40% more than the VA for similar services.
That spurred HCFA to begin its own study (Nov. 27, p. 4) and to propose reducing Medicare reimbursements by 40%, which, according to the Congressional Budget Office, would save nearly $4 billion over seven years.
Not to be beaten to any potential savings, congressional Republicans included a provision in recent budget legislation that would reduce Medicare payments for home oxygen by 20% in 1996, growing to a 30% cut by 2002. The GOP proposal would save nearly $3 billion over the same period.
But representatives of home medical equipment groups say the VA study is flawed. According to a study commissioned by the groups and prepared by former HCFA Chief Actuary Roland King, the VA unbundled its costs for home oxygen equipment, billing separately for things such as service and oxygen tanks, while Medicare bundled the costs. The groups say that because Medicare bundled the costs, they appear significantly higher than the VA costs.
According to King's report, "the VA monthly payment for home oxygen is essentially the same as the monthly payment by Medicare."
But HCFA disputes that claim and said in a letter to a medical equipment lobbying group that officials intend to go ahead with their plans to issue a regulation reducing home oxygen payments, possibly before year-end.
"Based on our analysis, we do not believe there is a currently a basis for revising our plans," HCFA Administrator Bruce Vladeck said.