May 18, 2016

CQRC Cautions More Time and Data Are Needed to Assess Full Patient Access Impact of Medicare Cuts to DMEPOS

Home respiratory therapy leaders question usefulness of limited data released by CMS and continue to support legislative reforms to extend phase-in of cuts to ensure delivery of quality care

WASHINGTON – The Council for Quality Respiratory Care (CQRC) today cautioned that data released from the Centers for Medicare & Medicaid Services (CMS) do not fully reflect the true impact of Medicare cuts recently imposed on Durable Medical Equipment, Prosthetics, Orthotics & Supplies (DMEPOS), including home-based respiratory therapies. CQRC is a coalition of the nation’s leading home respiratory therapy providers and manufacturing companies that together provides in-home patient services and respiratory equipment to the majority of Medicare’s one million beneficiaries who rely upon home respiratory therapy.

On January 1, CMS began applying the competitive bid rates used in urban areas to rural and other non-competitive bid areas, which resulted in a 30-50 percent cut to home respiratory therapy. In establishing these cuts, CMS did not take into account the cost of the equipment, supplies, or services provided. CMS also applied competitive bid rates in the very areas that the Congress indicated should not be subjected to competitive bidding. Further, CMS provided an accelerated six-month phase-in for the cuts, which will take full effect on July 1. The CQRC has warned CMS and lawmakers in Congress that these cuts put access to high-quality and innovative home respiratory therapy for America’s seniors at risk and could result in higher overall Medicare spending.

In the release of the data on assignment rates on May 17, CMS suggests that the adjusted fee schedule rates for DMEPOS continue to adequately cover the cost of providing services, including home respiratory therapy. The CQRC, however, cautions that the data do not reflect the cuts’ full impact on beneficiary access and outcomes or overall Medicare spending.

The CMS release is based on a limited four months of data (January – April 2016) and looks only at the practice of assignment (whether a Medicare provider is willing to accept Medicare rates as payment in full for the services provided). Four months is not sufficient time to assess the impact of such a substantial cut, let alone enough time to fully evaluate whether the full cuts – which could be 50 percent or more over last year’s rates – should be implemented July 1. The CQRC warns that at least 15 months of data is necessary to assess the true impact of the cut.

In addition, the data released do not provide information about the impact of the cuts on patient outcomes or utilization of more expensive health care services. The CQRC also stresses that home respiratory therapy is essential to keeping patients out of more expensive settings including hospitals, emergency rooms (ERs), and skilled nursing facilities. CMS provides no data about the impact of the cuts on the utilization of these services by Medicare patients who require home respiratory therapy. Even if these issues were addressed, four months of data do not offer adequate information to evaluate whether the cuts affect hospitalizations, ER visits, or admissions to other institutional settings because patients are unable to access home-based respiratory therapy or have experienced a reduction in services.

“Home respiratory care is essential to lowering overall Medicare spending, however these cuts limit our ability to offer the quality services our patients need to remain in the home,” said Dan Starck, CQRC Chairman. “As of July 1, we face the second half of the cuts to home respiratory care, resulting from the end of the phase-in period, and a new set of cuts of 18 percent or more due to another round of competitive bidding. Home respiratory therapy providers have warned that if implemented on July 1, these cuts will result in an unavoidable reduction in services. It is important that policymakers fully understand the impact of these cuts on the patient community, including the shift of our patients to more expensive settings.”

The rate cuts threaten access to care and services in those areas of the country that are most at-risk in terms of access – rural America. Lawmakers have repeatedly recognized that patients living in rural areas have limited healthcare options. Many patients with COPD and other chronic respiratory diseases rely upon home respiratory therapy to remain at home with their families and friends. Yet, CMS has applied competitive bidding rates established in urban areas to these very distinct rural areas without examining the cost of providing services in these outlying areas. The data released today provide no information about the actual cost of the services provided, whether providers have reduced services to patients, or whether patients are experiencing other access-related issues that affect their health outcomes.

“It is not surprising that based on only four months of data, CMS found no difference in the assignment rate,” said Starck. “Given the current blended rate, providers have not asked patients to bear the brunt of the cuts by trying to recoup the full cost of providing services. Instead, we have tried to work with lawmakers to extend the phase-in, stabilize the competitive bidding program, and find ways to reduce the cost of providing services to Medicare beneficiaries. Put simply, we have tried to protect the beneficiaries as much as possible, but if the full cuts take effect July 1, the vast majority of providers will no longer be able to do so.”

To mitigate the impact of the cuts and maintain transparency throughout the payment adjustment process, CQRC supports the Patient Access to Durable Medical Equipment Act (PADME), legislation to provide relief to home respiratory therapy providers in non-competitively bid areas by allowing additional time for the implementation of the rate cuts.

Specifically, the bill would:

  • Extend the current phase-in of the blended rate (50 percent of the previous fee schedule rate and 50 percent of the new competitively bid-based rate) until October 1, 2017, which delays additional cuts in rural areas by 15 months.

  • Adjust the bid ceiling on competitive bidding by setting ceiling at the FY2015 fee schedule rate and adjust for inflation to create a measure of stability in the competitive bidding program.

  • Require publication of a monthly report by CMS to monitor the impact of the cuts on Medicare beneficiary access.

  • Require CMS to take into account specific factors when adjusting the noncompetitive bid rates to ensure that the rates take into account unique aspects of providing services in rural and other non-urban areas.

“We applaud CMS for their ongoing commitment to monitoring the impact of payment rate adjustments on beneficiary access, however we ask that they allow more time and examine the full range of data necessary to fully study the impact of cuts on both cost and patient outcomes before further cuts are implemented,” Starck added.

More than one million Medicare beneficiaries rely upon home respiratory therapies to treat Chronic Obstructive Pulmonary Disease (COPD) and Obstructive Sleep Apnea (OSA). Home oxygen and sleep therapies allow patients to live independently, remain at home with their families and maintain quality of life.

To learn more, visit and follow CQRC on Twitter at @TheCQRC.

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.

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