■ January 7, 2015

CQRC Raises Concerns about Medicare Payment Cut

CMS implementation of substantial cut to the Medicare fee schedule for home respiratory therapy services sets rates below the cost of providing services

January 7, 2015, Washington, DC – The Council for Quality Respiratory Care (CQRC) expressed concern today as the Centers for Medicare and Medicaid Services (CMS) implements a dramatic rate cut for home respiratory therapy items and services. On January 1, CMS began a six-­‐month phase-­‐in of new Medicare rates that amount to a 30-­‐50 percent cut, depending upon the item being provided.

More than 1 million Medicare beneficiaries rely upon home respiratory therapies to treat Chronic Obstructive Pulmonary Disease (COPD) and Obstructive Sleep Apnea. Home oxygen and sleep therapies allow patients to remain at home with their families. Home respiratory therapy suppliers provide patient-­‐centered services to reduce hospitalizations. Working with hospitals and commercial payors, CQRC companies have developed and implemented programs to help reduce hospitalization and Medicare program expenditures. Managed care programs and commercial payers recognize the important role home respiratory therapy plays in reducing overall health care spending.

However, the decision to dramatically cut rates this January 1 by applying competitive bid rates used in urban areas to rural areas that the Congress expressly excluded from the competitive bidding program makes it less likely that Medicare beneficiaries will fully benefit from home respiratory therapy services in the future.

“CQRC remains concerned that the significant rate reduction could impact access to care because the size of the cut will result in suppliers having to find ways to substantially reduce the cost of providing services or stop providing services to beneficiaries altogether,” said Dan Starck, CQRC Chairman and CEO of Apria Healthcare. “Most companies have not fully adjusted their operations to account for the massive price reductions associated with the competitive bidding rates. CMS has not provided a sufficient phase-­‐in to assess the impact of the change.”

While CMS does provide a 10 percent increase to these average competitive bid rates, that amount falls far short of the cost of providing services in these areas. For CQRC member companies, which are the larger national and regional home respiratory therapy suppliers, the cost of delivering services is far in excess of the modest 10 percent price increase.

“To date, beneficiaries have not experienced changes in services primarily because member companies have managed to absorb these losses to continue to participate in Medicare in Competitive Bid Areas (CBAs) in the hope that future rounds of bidding will recognize the true cost of providing services and because traditional fee schedule rates in non-­‐CBAs were sufficient to offset the losses,” said Starck. “The changes in the fee schedule rates make it difficult to see how the system remains viable.”

“We understand that the overall cost of care needs to come down, yet a big part of the solution is homecare. Continuing to reduce homecare reimbursement rates at the cost of reducing providers only makes it more difficult to move Medicare beneficiaries to the lowest cost care setting, the home.” added Starck, “Also, the Congress required that new rates should take into account the cost of providing services in the non-­‐CBAs. The new rates for the rural areas fall significant short of covering the costs, even for the larger and more efficient companies.”

Who We Are

The CQRC is a coalition of the nation’s eight leading home respiratory therapy providers and equipment manufactures. CQRC members currently provide home respiratory therapy to more than 600,000 program beneficiaries who rely on treatment at home to maintain their independence and enhance their quality of life. Together they employ more than 35,000 people across the United States.

Learn More About Home Respiratory Therapies:

Millions of Americans are living with COPD and Obstructive Sleep Apnea, experiencing acute respiratory failure, or living with neuromuscular diseases. These individuals rely upon home respiratory therapies to remain at home. Learn more about home respiratory therapies and how they can help.

Stay in Touch:

Subscribe to our newsletter