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Ineffective Medicare Regulations for Home-Based Care

  • Published: 2011-01-22 : Author: American Association for Home-care
  • Synopsis: American Association for Home-care asked President Obama to review the onerous and outdated regulations that hamper job creation and threaten access to quality home medical equipment and services under the Medicare program.

Main Document

Home Medical Equipment Group Asks President Obama to Review 'Patchwork' of Ineffective Medicare Regulations for Home-Based Care.

This week, the American Association for Home-care asked President Obama to review the "onerous and outdated regulations that hamper job creation and threaten access to quality home medical equipment (HME) and services under the Medicare program." AAHomecare sent a letter to Obama in response to his January 18 executive order, "Improving Regulation and Regulatory Review," which solicits examples of burdensome regulations.

The Association asked specifically that the President examine "policies related to competitive bidding for durable medical equipment, respiratory therapy (including home oxygen and sleep devices), power mobility devices, diabetes testing equipment and supplies, Medicare audits and anti-fraud and abuse initiatives."

The letter states:

"The Association believes that there are a number of regulations that relate to the HME sector that need close scrutiny. These regulations, created over a 25-year period, have created a patchwork of rules that could be better designed to improve the quality of care furnished by HME providers with the goal of caring for individuals in their homes rather than in more costly institutional settings like nursing homes and hospitals.

"AAHomecare looks forward to working with you and your Administration to address ineffective and outdated rules and the hassle factor these regulations create on HME providers that inhibit job growth and quality of care. The Association will provide you with more detailed comments in the near future and I am available to meet with you or your staff to discuss these concerns further."

The Association will seek meetings with the appropriate White House, Office of Management and Budget, and Department of Health and Human Services officials to discuss their concerns further.

One of the most ineffective Medicare regulations for home-based care is the controversial Medicare "competitive" bidding program, which was implemented on January 1 of this year in nine large metropolitan regions: Charlotte, Cincinnati, Cleveland, Dallas-Fort Worth, Kansas City, Miami, Orlando, Pittsburgh, and Riverside, California. The program is scheduled to start up in another 91 regions later this year. The bidding program will affect millions of Medicare beneficiaries who require oxygen therapy, enteral nutrients (tube feeding), continuous positive air pressure (CPAP) and respiratory assistive devices, power wheelchairs, walkers, hospital beds and support surfaces, and mail-order diabetic supplies.

By design, this new Medicare program will severely restrict the number of companies that are allowed to provide the equipment and services subject to bidding. Since the bidding program began on January 1, patients, clinicians, and home-care providers have reported a variety of problems in finding an equipment provider and the right equipment and supplies.

In November, more than 160 leading economists and auction experts, including two Nobel laureates, warned Congress in several letters that Medicare's bidding design for medical equipment will fail. Those experts, who design market-based auction systems and do not oppose the concept of using a competitive bidding system to set Medicare prices, found that this particular bidding program designed by the agency that oversees Medicare, the Centers for Medicare and Medicaid Services, has fundamental flaws that will prevent it from achieving its objectives of low cost and high quality equipment and services.

Under the CMS-designed system, the bidding companies are not bound by their bids, which undermines the credibility of the process and encourages "low-ball" bids that create an unsustainable process. Ultimately, the experts told Congress, the bid design provides "strong incentives to distort bids away from [actual] costs," and lacks transparency that is "unacceptable in a government auction and is in sharp contrast to well-run government auctions." The experts' letters conclude, "This collection of problems suggests that the program over time may degenerate into a 'race to the bottom' in which suppliers become increasingly unreliable, product and service quality deteriorates, and supply shortages become common. Contract enforcement would become increasingly difficult and fraud and abuse would grow... Implementation of the current design will result in a failed government program."

More than a dozen national consumer and patient advocacy groups also oppose the controversial bidding program. Those groups include the ALS Association, American Association of People with Disabilities, Muscular Dystrophy Association, National Council on Independent Living, National Spinal Cord Injury Association, and United Spinal Association, among others.

The American Association for Home-care represents durable medical equipment providers, manufacturers, and other organizations in the home-care community. Members serve the medical needs of millions of Americans who require oxygen equipment and therapy, mobility assistive technologies, medical supplies, inhalation drug therapy, home infusion, and other medical equipment and services in their homes. The Association's members operate more than 3,000 home-care locations in all 50 states. Visit

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