Medicare: Boon for Suppliers; Waste for Taxpayers
From Charles Duhigg in the New York Times (hat tip: C-J), not a big surprise, but it's still good to see the details of this sort of thing...
Millions of people with respiratory diseases have relied on oxygen equipment, delivered to their homes, to help them breathe. A basic setup, including three years of deliveries of small oxygen tanks, can be bought from pharmacies and other retailers for as little as $3,500, or about $100 a month.
Unless, that is, the buyer is Medicare, the government health care program for older Americans.
Despite enormous buying power, Medicare pays far more. Rather than buy oxygen equipment outright, Medicare rents it for 36 months before patients take ownership, and pays for a variety of services that critics say are often unnecessary.
The total cost to taxpayers and patients is as much as $8,280, or more than double what somebody might spend at a drugstore.
The high expense of oxygen equipment — which cost Medicare over $1.8 billion last year — is hardly an anomaly.
Medicare spends billions of dollars each year on products and services that are available at far lower prices from retail pharmacies and online stores, according to an analysis of federal data by The New York Times. The government agency has paid above-market costs for dozens of items, a comparison of Medicare figures with retail catalogs finds.
For example, last year Medicare spent more than $21 million on pumps to help older and disabled men attain erections, paying about $450 for the same device that is available online for as little as $108. Even for a simple walking cane, which can be purchased online for about $11, the government pays $20, according to government data.
These widespread price discrepancies, including those for oxygen services, have been noted in dozens of regulatory reports.
But when officials and politicians have tried to cut these costs, they have often encountered a powerful foe: the companies that sell these devices, who ask their elderly customers to serve, in effect, as unpaid lobbyists, calling and writing to their representatives in Congress, protesting at rallies, and even participating in political attacks against individual lawmakers who take on the issue....
“These industries rely on a basic threat: If you mess with us, we can turn the seniors against you,” said former Senator Alan K. Simpson, Republican of Wyoming, who tried cutting Medicare payments while he was in Congress. “Angering seniors is the quickest route to political suicide.”
Many of those battles focus on the $427 billion Medicare program. Because of fierce patient and corporate lobbying, for instance, Medicare still pays prices for many items that are based on rates established in the early 1980s, when devices were often much more expensive than they are now.
Even as the actual cost of many machines and services has fallen, Medicare has only occasionally lowered what it pays....
Some legislators say the only way to lower Medicare’s payments is to bypass the political process altogether, to insulate individual politicians from blame.
Last year, the Centers for Medicare and Medicaid Services, the agency overseeing Medicare, announced guidelines for a national competitive bidding system for home medical equipment.
In 10 metropolitan areas, Medicare requested that suppliers of some products, like oxygen, submit bids. The agency is in the process of setting payments based on those submissions. The companies proposing the highest prices will be excluded from the program.
The national competitive bidding process was to begin last January, but was repeatedly delayed. Mr. Kuhn, the Medicare official, blamed technological difficulties for those delays.
But other high-ranking Medicare officials, speaking on the condition that they not be identified, said political pressure from medical equipment companies was also to blame for the slow start....
posted by Eric Schansberg @ 7:57 PM
1 Comments
1 Comments:
Unfortunately, the Times article by Charles Duhigg that you excerpt at length was rife with apples-to-oranges comparisons, misleading omissions, and half-truths. It's a fundamentally dishonest and misleading article that has diminished rather than enhanced the public's understanding of the Medicare home oxygen therapy benefit. This was a horrible piece in an otherwise respectable series of articles called Golden Opportunities that has been running in the NYT. Watch them submit it for a Pulitzer. But the oxygen piece alone should disqualify the series. A full statement from the American Association from Homecare, below, provides a more accurate description of the benefit and the issues. - Michael Reinemer, Am. Assn. for Homecare
Statement from American Association for Homecare on New York Times Article about Home Oxygen Therapy
November 30, 2007
The New York Times article by Charles Duhigg (“Oxygen Suppliers Fight to Keep a Medicare Boon,” November 30, 2007) paints a biased and misleading picture of the healthcare sector that provides home oxygen therapy to Medicare beneficiaries.
The article contends that Medicare vastly overpays for medically prescribed oxygen therapy delivered in the homes of Medicare beneficiaries and that Internet pricing of oxygen equipment is a more realistic barometer of what Medicare should be paying for oxygen therapy. Medical oxygen is a prescription drug that is highly regulated by the FDA. The typical Medicare beneficiary on home oxygen therapy is an elderly patient who suffers from chronic obstructive pulmonary disease (COPD).
The American Association for Homecare welcomes a genuine debate about appropriate Medicare payment policy for oxygen therapy. In fact, the Association and companies providing oxygen therapy have been working for more than a year to design alternatives to existing Medicare oxygen policy for Congress to consider. Unfortunately, both the New York Times article and federal policymakers have focused only on the equipment costs associated with home oxygen therapy rather than the complete therapy, which requires numerous services. Based on this misleading perspective, which is divorced from the realities of serving the Medicare population and COPD patients in particular, Congress has enacted numerous cuts to oxygen over the past decade, reducing Medicare payment rates for oxygen therapy by nearly 50 percent. Moreover, oxygen payments are scheduled to be reduced by an additional 19 percent over the next two years because of previous legislation, regardless of congressional action this year.
The fundamental flaw in the New York Times article is the dangerously simplistic assumption that oxygen therapy delivered to Medicare patients in their homes should cost the same as the Internet or eBay price to buy the equipment only.
The reality of serving this population is very different. A 2006 study by Morrison Informatics gathered and analyzed data from homecare providers that collectively serve more than 600,000 Medicare beneficiaries receiving oxygen therapy in their homes. That number represented more than half of the Medicare population receiving oxygen therapy at home. The study found that nearly three-quarters (72 percent) of the cost of providing oxygen therapy to Medicare patients in their homes represent services, delivery, and other operational expenses that benefit patients. Only about one-quarter (28 percent) of the cost represents the oxygen equipment itself. These service costs have not been factored in to any of the government sanctioned studies.
The article discusses lobbying expenditures by the home oxygen therapy industry. Lobbying expenditures by the home oxygen therapy sector is a tiny fraction of the total expenditures by pharmaceutical companies, hospitals, and physician groups that seek to influence Medicare policy by lobbying Congress.
It is worth noting that all home medical equipment spending by the federal government is less than two percent of all Medicare spending. Long-term oxygen therapy reduces hospital admissions. The average daily cost for home oxygen therapy is approximately $7.60 in Medicare, compared to average of more than $4,600 per day in a hospital under Medicare.
The article also mischaracterizes the Medicare competitive bidding system and new quality standards for durable medical equipment. By design, this competitive bidding program excludes many home medical equipment providers from participating in Medicare – even if the providers agree to lower prices set by the bid process. The Medicare bidding program will likely drive large numbers of providers out of the Medicare program.
The allegation by unnamed Medicare officials that the home medical equipment industry undermined new quality standards is false. In fact, the home medical equipment industry advocated for higher quality standards than those actually adopted last year by Medicare.
These and other errors, omissions, and the use of unnamed sources to make unsupported claims in the New York Times article suggest that the reporter never intended to write an objective story.
BACKGROUND
In 2006, Congress dramatically changed policy for oxygen therapy by requiring Medicare beneficiaries to assume ownership and responsibility for their oxygen system after 36 months of use. Previously, the beneficiary used the equipment as long as medically necessary and an oxygen provider took responsibility for maintenance, a back-up oxygen-delivery system, 24-hour emergency service, and other services required for proper use and patient safety.
The American Association for Homecare represents providers and manufacturers of durable medical equipment. Association 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 home medical equipment, therapies, services, and supplies. U.S. Department of Health and Human Services Secretary Mike Leavitt has called home-base care “radically more efficient” than institutional care. See www.aahomecare.org.
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