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HME SUPPLIERS' "CORE CHALLENGE" IS TO EDUCATE POLICY MAKERS ON COST

This article was originally published in The Gray Sheet

Executive Summary

HME SUPPLIERS' "CORE CHALLENGE" IS TO EDUCATE POLICY MAKERS ON COST savings that can be achieved through the use of home medical care services, the National Association of Medical Equipment Suppliers suggests in an informational brochure. Called "Health Care at Home: A Home Care Digest," the report states that "the core challenge to [home health agencies] and [home medical equipment] suppliers is to help policy makers understand that increases in the total reimbursement by government programs for HHA and HME services often represent a net savings when compared to costs for the same treatment services in an institution." The brochure cites several studies demonstrating cost savings through home care. For example, a 1991 study conducted by the insurance firm Aetna Life & Casualty found that "home care resulted in a savings of about $20,000 per patient per month for AIDS patients and around $40,000 per patient per month for infants with breathing problems," according to the brochure. A 1986 study of a Maryland state program cited by NAMES found that for children requiring respiratory support, "home care saved more than $15,000 each month per patient." Prepared as part of NAMES' ongoing "public education and awareness campaign," the brochure was developed to "help promote the key role that the HME services industry plays in our nation's health care system." The report was distributed the week of Dec. 21 to congressional health subcommittee members and staffers, the 110 new members of Congress and Clinton transition health policy adviser, Bruce Fried. NAMES asserts in the report that recent cuts in Medicare reimbursement for HME have been based on erroneous assumptions about HME supplier profits and the effects of HME fee schedules on Medicare costs. NAMES traces the "misconceptions" to General Accounting Office reports issued in November 1991 and July 1992. The first GAO report found that HME suppliers were making large profits from Medicare-reimbursed sales ("The Gray Sheet" Nov. 11, 1991, p. 33). The NAMES brochure notes that GAO's findings were critiqued by Dr. William Droms, CFA, of Georgetown University, who concluded that because of an insignificant sample size (six HME suppliers) and "faulty accounting methodology," the data in the GAO report was "of no value" ("The Gray Sheet" March 2, I&W-15). The association also takes issue with the second GAO report, which focused on the effects of fee schedules ("The Gray Sheet" July 13, p. 22). "The report appears to misrepresent the effects that the Omnibus Reconciliation Act of 1987 (OBRA 1987) had on HME costs and profitability," NAMES charges. GAO estimated that calendar year program costs under OBRA 1987 increased by about 17%. However, NAMES maintains that "the HME enactment of OBRA 1987 produced distinctly different results," adding that "trends within the HME services industry contradict GAO's claim that further reductions in Medicare reimbursement are justified." The "fact that the number of Medicare beneficiaries nationwide is increasing rapidly suggests that per capita costs for HME decreased under OBRA 1987," NAMES asserts. Reimbursement concerns are among several "key issues" facing providers and suppliers of home care services that are outlined in the brochure. Other central concerns include "stopping fraud and abuse" and "coordinating and supporting delivery of home care services." The report also incorporates data supporting the contention that there will be an increasing need for home health care services. Changing U.S. demographics such as an aging population and a higher survival rate for premature and low birth weight infants, NAMES says, will contribute to the growing need, as will technological advances that enable more home treatment services.
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