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This article was originally published in The Gray Sheet

Executive Summary

The fiscal year 1994 budget reconciliation package adopted by the Senate Finance Committee June 18 includes a proposal to base Medicare durable medical equipment payments on the median of local payment amounts. The provision "would change the basis of calculating the national payment ceilings and floors from the weighted [mean] average of local payment amounts to the median of local payment amounts," according to Finance Committee budget documents. The committee adopted the bill by a straight party line vote, with Democrats outnumbering Republicans 11 to 9. Adoption of the provision by the Finance Committee strengthens the likelihood that the proposal will be included in Congress' final fiscal 1994 budget legislation. Debate now moves to the full Senate, which is expected to pass the budget package in the next several weeks. The budget legislation passed by the House on May 27 was ambiguous regarding the DME fee schedule; the Energy and Commerce Committee portion of the bill included a proposal to move to a median-based DME fee schedule, while the Ways and Means Committee version did not ("The Gray Sheet" June 7, p. 9). Differences within the House bill and between the House and Senate bills will be resolved in House/Senate conference after the Senate passes a budget package. The Senate Finance Committee also proposed an additional $19 bil. in Medicare cuts above the $48.4 bil. sought by President Clinton and approved by the House. The proposed cuts include $1.7 bil. that will come from reduced payment updates for all Medicare Part B providers except physicians, clinical laboratories and parenteral and enteral nutrition providers. The proposal would freeze the update in 1994, and reduce it by 1% for 1995 through 1998, according to the budget documents. Clinical labs are excluded from the proposal because "they are already subject to a five-year freeze under the President's [budget] proposal." The House Ways and Means Committee proposal includes a two-year update freeze in provider payments; the Energy and Commerce proposal does not include an update freeze. Like the House budget package, the Finance Committee proposal would remove aspirators and nebulizers from the category of DME items requiring frequent and substantial servicing. If enacted, the Health Care Financing Administration would "remove all nebulizers and aspirators from the frequent servicing category along with the following items that are currently classified as ventilators: continuous airway pressure device (EO601), intermittent assist device with continuous airway pressure device (EO452) and therapeutic ventilator (EO453)," according to the budget documents. "While most of these items would be moved to the so-called rental cap category, a few inexpensive items would be moved to the inexpensive and other routinely purchased category," the committee says. "In either case, Medicare would stop making separate payment for accessories for those items (tubing, masks, filters, etc.)." The Finance Committee proposal also calls for a 30% reduction in payments for transcutaneous electrical nerve stimulation devices and would eliminate the payment update for parenteral and enteral nutrients, supplies and equipment in 1994. Both House Committee packages include the TENS payment reduction; the House Ways and Means proposal includes the one year freeze on parenteral and enteral updates.

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