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Newsletters: Medicare PEN Issues 2000: Voice Your Concerns
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Medicare PEN Issues 2000: Voice Your Concerns

Alan Parver, J.D. National Alliance for Infusion Therapy

At this year’s Oley conference, the discussion in one plenary session revolved around “The Bigger Picture:” the broader, non-medical issues that challenge homePEN consumers, including insurance coverage and employment. The article below covers panelist Alan Parver’s comments on public policy and Medicare coverage and relates to the Legislative Update mailed to you about one month ago. Alan is a lawyer who has more than 15 years experience representing the providers and manufacturers involved in the provision of parenteral and enteral nutritional therapies. The session was facilitated by Lyn Howard, MD, Medical and Research Director, The Oley Foundation. A video tape of the complete session will be available this fall.

It’s a pleasure to be here at the Oley conference. This morning I’d like to talk about how you, consumers and caregivers, can affect public policy. Specifically how we can work together on the issues affecting Medicare coverage. This discussion should apply to non-Medicare issues just as well since most private insurance coverage for homePEN is based on Medicare coverage.

Let me start with my basic premise: The PEN community shares a number of common interests on some very important issues, and the community should act on those issues together. What I mean by the community are: the patients, clinicians, providers and manufacturers of homePEN products and services.

Now there are many issues where we have common interests. The four most obvious are:

• That payers and policy makers understand the clinical value of PEN.

• That there should be a common definition of what PEN therapies are.

• That there are quality standards reflecting the community standards of care for PEN therapy

• That there can be patient care consequences to changes in coverage and payment policies.

There is no question that our chance for success is much improved if we act together. This may sound corny to some, but the PEN community has to be just that, a community that together addresses the fundamental public policy issues before us. It’s important that the patients, the consumers, be heard. Look at some other groups like the cancer community, a very powerful constituency. There is an issue pending in Congress now, regarding Average Wholesale Prices for Medicare and Medicaid covered drugs. Most of those drugs are targeted at cancer patients. If the payment changes under contemplation go into effect, it could really decimate the provision of outpatient cancer care in this country. The cancer community generated 41,000 letters in one month’s time to Congress. Congressmen read their mail. They know that if something can generate that response, then they need to rethink what they are doing. We can’t generate 41,000 letters in the PEN community probably, but we can be more effective at how we use all of the resources around us.


Legislative Background

First I’m going to talk about the issues specific to PEN that are on the table right now, and the general policy environment in which we are working. You’ve probably heard a lot about the outpatient drug benefit that is under consideration. A bill passed the House of Representatives in late June. While that’s garnered the most attention, there is a good chance that it’s not going to be enacted this year. It’s too controversial and too good an election year issue.

But where there is more room for Congress to run, is on another type of legislation, which is referred to as the “BBA Giveback” or “Refinement” legislation. In 1997 Congress passed the Balanced Budget Act (BBA). The purpose of that bill was to rein in the growth of the Medicare program significantly. That was done by reining in the payments for providers. As a direct consequence of that bill, 3000 home health agencies closed, many nursing homes have sought bankruptcy protection, and rural providers have been thinned, even decimated, in some areas. It’s very clear that Congress went too far.

So in 1999 Congress enacted the Balanced Budget Refinement Act. This is Washington speak for “Whoops, we’d better fix this.” The idea was to soften some of the cuts that were made in 1997, to give some money back. Well this year it looks like there is going to be another “refinement” or “give back” bill. The President has proposed an additional $21 Billion for Medicare this year, and Congress is likely to ask for even more than that.

There is a good chance that something is going to pass here for two reasons. First because more relief is warranted, and secondly, the money is there. You may have read recently that they expect a $1.8 trillion budget surplus over the next 10 years. Even in Washington, this is a lot of money. So there is probably going to be some kind of “give back” bill. Now that means that some positive provisions can be included. It also means there may be some negative provisions included. This is a bill we have to watch this year.


Medicare Definition of PEN

To understand where we have to go, you need to know that PEN is covered by Medicare under Part B under the prosthetic device benefit. Now that may seem counter intuitive, but back in 1980 the Health Care Financing Administration (HCFA) decided to cover PEN in the home setting as a prosthetic device, using the theory that the tube is a replacement for a body part. They also decided that if they cover the tube, they should cover what flows through the tube, if it is to have any meaning. That is the basis of coverage for PEN under the Medicare program.

The problem with the prosthetic device benefit is that it only covers explicitly the nutrients, supplies and equipment. There is no recognition of professional services and no recognition of any education, training, troubleshooting, or interaction with other clinicians. There is no recognition that this might be a service intensive area or at least a service involved area. This definition is at the root of most of the issues we have to discuss today.


Legislative Priorities 2000-2001

The primary issues on the table for the PEN community this year and next are as follows:

• inherent reasonableness

• competitive bidding

• PEN fee schedule

• Institute of Medicine study of PEN


Inherent Reasonableness

“Inherent reasonableness” is a short hand phrase used to describe the authority that HCFA has to put aside payment rates if it or its carriers conclude the payment rates are inherently unreasonable. It’s a very broad authority, but for years there were always procedural steps that had to be undertaken, analyses that had to be done, and data collected to justify that certain standards were met. HCFA complained that this was too hard and it took too much time. In 1997 as part of the Balanced Budget Act, Congress loosened the requirements. For payment adjustments of 15 percent or less annually, HCFA would not have to jump through all of those hoops. HCFA could simply meet criteria that it itself creates. This was very broad authority to put aside statutorily created payment rates.

The first time HCFA tried to use this was at the end of 1998. They looked at five different areas, one was enteral nutrition, the semi synthetic formulas. What HCFA and the carriers did was send in people to various drug stores, Wal-Marts, and supermarkets, and ask “What’s the cheapest we can get an enteral formula?” They arrayed that data, identified the mean, and concluded “that’s what we should be paying.” And because of the definition of PEN under the prosthetic device benefit, there was no effort to figure in the cost of professional services, or the cost of providing these products to Medicare beneficiaries. In our view they looked at the wrong products and went to the wrong places to find them. They did not look at products that were provided by tube, (and Medicare only covers EN when it’s provided by tube, it doesn’t cover oral supplementation) and they did not look at the places where HEN consumers would normally obtain them. We went to Congress about that. The Ways and Means committee agreed that this looked a little “off” and asked the General Accounting Office (GAO) to look into it.

Meanwhile, as part of the Balanced Budget Refinement Act of 1999, Congress told HCFA that when it uses inherent reasonableness in the future, it has to use valid and reliable data. It’s hard to believe that would have to be stated in a statute, but it was. The statute also prohibited HCFA from using inherent reasonableness on anything until the GAO issues its report and a new rule.

So HCFA got its knuckles slapped and for the time being it cannot use the authority. However, that report is going to come out this summer, and there may be more legislation this year on this issue. (In fact, the report did come out right after the Oley Foundation meeting, and the GAO concluded that HCFA’s approach to enteral nutritional formulas was seriously flawed, and that HCFA should redesign its data collection approach for enteral nutrition if it wishes to apply inherent reasonableness to enteral nutrition in the future). Our problem is not just that inherent reasonableness exists. Our problem is that inherent reasonableness exists and PEN is interpreted to mean simply the delivery of things.


Competitive Bidding

The second issue on the table is competitive bidding. It sounds very private sector oriented. It makes sense. We as consumers of health care, as taxpayers, should get the benefit of competition. No one disagrees with that. The problem we have with HCFA’s interpretation of competitive bidding is that it is competitive bidding without quality standards. Without meaningful quality standards, a supplier who simply has a truck that delivers things to people is going to be in a far better competitive posture than a supplier or provider that has invested in Joint Commission Accreditation; a supplier that has brought on a staff of professionals; or a supplier that’s available 24 hours a day, educates and trains patients, and works with their clinicians. All of those things that I think are in the best interest of the patient and the program are not rewarded in competitive bidding that has no quality standards.

The Clinton Administration is in love with competitive bidding, and every year there has been a proposal to give HCFA unfettered authority to use competitive bidding under Part B (which would thus apply to Medicare coverage of PEN) whenever and wherever HCFA thinks it’s appropriate. This year the Clinton Administration is once again seeking authority for competitive bidding, and again, because we’re not defined correctly, we are vulnerable on that score.


PEN fee Schedule

Another provision of the 1997 Balanced Budget Act, is to put PEN, which is one of the last areas reimbursed on the basis of reasonable charges, on a fee schedule to be developed by HCFA. This fee schedule has not been issued yet. There wouldn’t be any major changes initially. However, with the definition of the prosthetic device benefit covering only the nutrients, supplies and equipment, who is to say that down the road the fee schedule won’t reflect an effort to carve away costs that are associated with services, education and training — all of those things that the program does not explicitly recognize?


Institute of Medicine (IOM) Study

The last item on the agenda offers some hope. As part of the Balanced Budget Act, the Institute of Medicine (IOM) was asked to do a study of Nutrition Services in this country, including PEN. The IOM is a well regarded, competent organization. So when they say something, it usually is listened to. The study came out at the end of 1999, and it said that HCFA doesn’t regulate PEN very logically. IOM was concerned that there was no explicit recognition that PEN is more than a delivery of things. It was concerned that there was no explicit understanding that there are professional services involved; that PEN is people oriented, rather than equipment oriented.

Also, because the prosthetic device benefit is the mechanism for coverage, IOM noted that short term PEN is not covered. There has to be a diagnosis of at least 90 days need for the therapy. IOM wanted to know why HCFA would discriminate against the short term need. There might be patients who would benefit from that.


The Self-fulfilling Prophecy

All of these things are in the air as we proceed to this year’s close of the legislative session. Now we did not fare too poorly in the Balanced Budget Act. But because things like inherent reasonableness and competitive bidding are out there, and because of the lack of a proper definition, we do have serious issues. All of these things I described earlier are threats to us, except for the IOM study, because of the way Medicare has defined PEN.

So what are the common elements of all of this? To me it comes down to this: What does Medicare think it’s buying when it pays a claim? Does it think it’s just buying these nutrients, supplies and equipment? Or does it think it’s buying something more? This is where I think HCFA needs to be prodded by Congress. And that won’t happen unless we get Congress to intervene.

The concern that I have personally, is that this could become a self-fulfilling prophecy. If the policies continue to focus only on the tangible items, and the payment policies continually move to reflect that, one day it’s going to be accurate. The people in the business are going to be only those people who drop products and equipment off at houses or nursing homes. They aren’t going to offer other services because those other services aren’t valued by the program, and the payment policies would not give them much room to finesse that.

So the challenge is to fix this definition before it becomes a self fulfilling prophecy. The trends and the tools that HCFA has to change payment make it something on our horizon. This is where I’d like to suggest there is an opportunity for consumers to play a role.


Where Consumers Fit In

Medicare was created for patients — not for providers, not for manufacturers. And at the end of the day, patients are the ones who should be heard on issues like this. You need to be talking to policy makers about your issues. Often you’ll be talking to staff. If anything that should make it easier, because you’ll likely be talking to a young person, and you should not feel at all reluctant to do that. Many of the staff people are there because they want to make a difference. Your visit or call will go a long way towards getting them to help.

Another way of thinking about it, is that other groups are doing these things. It’s important to be heard, because there is a competition for attention, for policies, and even for fund-raising. Policy makers have got to see and hear you.

Paper is important, but people learn more from their eyes, when they see something real. It is quite important for the members of Congress and their staffs to understand exactly what’s at play here. For years, we’ve been bringing Congressional staff to home care company settings to show them what PEN looks like, what it feels like, what’s involved. They see how solutions are mixed, etc. Then, when the tour is over, we sit them down and make them hook themselves up. They do everything but stick themselves. You see them fumbling around and they realize that maybe they’d need more than to just have these products dropped off at their houses. It’s probably the best teacher — let them see it, let them do it.

They also need to know the patient care consequences. Again, no one is asking consumers to advocate for reimbursement issues, but where you can be very effective is to talk about what the therapy is, what’s involved and what it means to you. That’s the stuff that will speak volumes and would complement what we are trying to say. But your participation would do more than just round out the circle. You could be the focal point for what everyone is trying to do here, which is to make sure PEN is understood properly, defined properly, and regulated properly.


Voice Your Thoughts

There are various ways to communicate with policy makers. One way is through the Oley Foundation. Another way is to do it yourself. Senators and representatives all have E-mail now, but your correspondence should be in your own words. If they sense yours is a form letter, it loses a lot of credibility. You can also send a letter or telephone them. Again your credibility is the strongest when you tell them what your involvement is with the therapy and what’s important in terms of its delivery.

Another approach is to send a letter to the editor of the local paper, or to speak with the local press. Members of Congress read local papers. They want to know what their constituents are thinking and reading.

The most effective communication, though, is to meet with your congressmen or staff member. You don’t have to go to Washington. Call their home office and ask for a visit. I’m not talking about making a fancy proposal, just sitting down one-on-one and telling them about your therapy. Tell them what you need and how it works. Show them you are a functional member of their community. If you can, come in hooked up or bring in a sample of your equipment and supplies. Make it real for them.

The bottom line is that you really cannot solely rely on home care companies or manufacturers to carry the ball on these issues. We can do more than we have, but you cannot rely on these groups entirely. You have got to speak up and let people know what the issues are. I learned a lot from sitting here this morning, and many other people could learn just as well by hearing from you about what the real issues are. We could work together. There are many different ways for you to be not just effective communicators, but to be the ones at the end of the day who really count.


Questions & Answers

Dr. Howard: We know from our work on the North American HomePEN Registry that Medicare pays for about 50 percent of EN consumers and 25 percent of PN consumers. It’s widely known in the field of reimbursement that Medicare has become in some areas the “best payer.” Medicare is paying one price for this therapy and yet industry is working more than half the time with private insurers and HMOs who are paying a much lower price. So why should Medicare be paying more? Also, are we seeing the kind of complications with private insurers that all of us fear could be the outcome of price cutting in Medicare? In other words, if price cutting is so dangerous, why isn’t it dangerous in the patients covered by private insurers and HMOs today?

AP: There are several things I’d like to say in response to that. First, the cost of doing business with an HMO is significantly different than with the Medicare program. The claims forms, the documentation, the waiting to get paid, the appeals process — all of which are a part of Medicare — have a cost associated with them. Second, there is a more fundamental issue here. If HCFA is going to look at ways to be more prudent purchasers in this area, they should do it knowing what the therapies are. It’s one thing to say they are going to reduce reimbursement because compared to other payers they think they are paying a little too much. It’s another thing to say they are going to pay less for PEN because they don’t want to pay for any services.

Dr. Howard: For a long time there was no compensation for physicians from Medicare for the telephone management of a home TPN patient, despite the huge time commitment it took. This led to some improper physician management fees from providers. Fortunately that has been cleaned up, and now there is a modest reimbursement mechanism from Medicare for physicians managing patients in the home. If the physician component can be handled separately, couldn’t the nursing component? Many of the long term patients are extraordinarily independent. Wouldn’t it be in their interest to preserve some of their benefits, saving the nursing payment for when they need it?

AP: Certainly there are people on the therapy who do not need all of the services I was describing, at least not all of the time. This is an area that cries out for some “unbundling.” If we had a separate nursing component, the program could save money on patients who don’t need some services and focus their resources on patients who do. Nursing services could be spelled out separately, and provided for patients when the attending physician deems them necessary.

Dr. Mark DeLegge (Gastroenterologist): As a physician in private practice, there are many difficulties. Any work I do in home care is barely reimbursed by Medicare. There is a code for obtaining reimbursement for home care which provides most physicians in the range of $50 to $60/month. However it takes an enormous amount of paperwork and if you are audited and found in error, you are liable for triple the damages.

As a gastroenterologist, a number of my patients who should have homePEN, do not require it for 90 days, nor can I say that it is a permanent malfunction, which Medicare requires in order to pay for the therapy.

In my practice we have found that patients being serviced by the low-ball bidders who win the HMO contracts and provide almost no patient education or care, are the patients with the most difficulties, the most complications.

Steve Swensen (Oley President, Parent of HomePEN Consumer): With these last few comments we have shifted focus. As a consumer group, aren’t our interests best served not by concerning ourselves with reimbursement issues either for physicians or providers, but as you say with what is actually involved in this therapy, what services and goods consumers need to make this thing happen effectively and safely?

AP: That’s correct. Consumers have a lot of credibility and the way to keep that credibility is to focus on issues that are within your area of concern and experience. Namely, what parts of the therapy are important, what you need to have and issues of patient care consequences. Focusing on that helps complete a very big part of this puzzle. It also gives the issue some real vibrancy; otherwise it looks as if it’s just some suppliers and manufacturers not happy with reimbursement.

This website is an educational resource. It is not intended to provide medical advice or recommend a course of treatment. You should discuss all issues, ideas, suggestions, etc. with your clinician prior to use. Clinicians in a relevant field have reviewed the medical information; however, the Oley Foundation does not guarantee the accuracy of the information presented, and is not liable if information is incorrect or incomplete. If you have questions please contact Oley staff.


Updated in 2015 with a generous grant from Shire, Inc. 


This website was updated in 2015 with a generous grant from Shire, Inc. This website is an educational resource. It is not intended to provide medical advice or recommend a course of treatment. You should discuss all issues, ideas, suggestions, etc. with your clinician prior to use. Clinicians in a relevant field have reviewed the medical information; however, the Oley Foundation does not guarantee the accuracy of the information presented, and is not liable if information is incorrect or incomplete. If you have questions please contact Oley staff.
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