DMERC controversy sparks response from association
A recent report from the General Accounting Office (GAO) found that the Health Care Financing Administration (HFCA) acted properly when it developed rules for cutting Medicare payments to durable medical equipment regional carriers (DMERCs) that were charging Medicare more than other payers.
The Balanced Budget Act of 1997 streamlined HCFA’s ability to use "inherent reasonableness" (IR) authority when considering Medicare payments, thereby making it easier for HCFA to reduce payments for overpriced items by up to 15% per year. In 1998, HCFA identified eight groups of DME products that it believed were overpriced, but subsequent congressional action limited HCFA’s ability to reduce payments. The American Association for Homecare, however, said that by allowing HCFA to reduce payments without adequate notice or comment, Congress is "failing to consider the effect of the reduction on quality and access." Furthermore, the group said that by allowing HCFA to apply inherent reasonableness, it "further dilutes the due process protections that existed under prior regulations."
On the other hand, the association lauded the GAO for its findings that HCFA and DMERCs used inconsistent data gathering procedures, "rendering the data [HCFA] used to support the payment reductions judgmental.’"
The GAO recommended that in the future, any IR reviews based on survey data should be conducted with a structured survey design, including sample selection, survey instrumentation, and data collection methods, and that those methods should be used consistently by all groups conducting the survey.
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