Two years after giving HCFA another weapon for fighting fraud and abuse, Congress has suspended the agency's ability to cut Medicare payments to durable medical equipment suppliers when HCFA deems their prices to be "grossly excessive."
That ability, called inherent reasonableness authority, was a gift of the Balanced Budget Act of 1997.
The recently signed fiscal 2000 budget law not only put that gift back on the shelf but also denies HCFA the use of the inherent reasonableness authority until the General Accounting Office completes a report on the matter.
After its authority was expanded in 1997, HCFA published two proposed DME payment reductions in the Federal Register. The first, an interim final rule published in January 1998, described the factors HCFA and its contractors would use to determine reasonable payments.
The medical device industry says the interim rule is too vague and allows HCFA to impose cuts of up to 60% on some items by making annual cuts of 15% during a period of several years. The 1997 law prohibits HCFA from cutting payments by more than 15% for any given year.
The second HCFA proposal, published in August 1999, recommends paying DME suppliers based on the prices they charge to the Department of Veterans Affairs.
The medical device industry, concerned about the two proposals, convinced Congress to tie HCFA's hands until the agency could better explain its reasoning.
"We worked really hard to get this addressed (in the law)," said Stephen Northrup, executive director of the Medical Device Manufacturers Association. "What was adopted was not everything we wanted, but it's a good start."
However, HCFA had already agreed not to implement its two proposed reimbursement reductions until the GAO report was completed.
"I will delay final action on the payment reductions until I have had the opportunity to review the GAO's report," HCFA Administrator Nancy-Ann Min DeParle wrote in a March 25 letter to Rep. William Thomas (R-Calif.), chairman of the House Ways and Means health subcommittee. Thomas requested the GAO report.
HCFA's proposed reductions would have affected the prices of walkers, blood glucose tests and other goods.