Medicare Cuts Will Trigger An Exodus Of Wheelchair Providers and Reduce Patient

[Guest guest]

Economists Predict That Medicare Cuts Will Trigger An Exodus Of

Wheelchair Providers And Sharply Reduce Patient Access, USA

http://www.medicalnewstoday.com/medicalnews.php?newsid=55727

The American Association for Homecare (AAHomecare) today released a

detailed economic study concluding that cuts to the Medicare power

mobility benefit scheduled to take effect on November 15 will have a

devastating impact on both the industry and beneficiaries who need

wheelchairs. The study forecasts an exodus of at least 1,500

wheelchair suppliers and a net cost increase to the Medicare system

of $2.7 to $5.9 billion over the next eight years.

The study indicates that Medicare's direct expenditures on power

mobility will decline but notes the reimbursement cuts of 21 percent

to 41 percent amount to price controls. The cuts to the mobility

benefit will ultimately increase Medicare expenditures for

hospitalization, physician services, and homecare services for

beneficiaries who qualify for power wheelchairs but won't acquire

them because the cuts will " impose massive short-run shutdowns of

supplier firms. "

Conducted by economist Clifford L. Fry, Ph.D., and his team at RRC,

Inc, the study recommends that the Center for Medicare & Medicaid

Services (CMS) rely on market forces, and not price controls, for

Medicare's provision of products and services. " Price controls will

impair the functioning of market forces and decrease access to power

mobility…. " the study said.

" This comprehensive study by Dr. Fry provides important information

that will help CMS, Congress, and stakeholders to fully gauge the

impact of the cuts to power mobility that are scheduled to take

effect on November 15, " said Tyler J. , AAHomecare's President

and CEO.

The study found that:

-- Medicare is imposing price controls below market price for power

mobility and the services necessary for the qualified beneficiary to

obtain the power mobility device;

-- While Medicare's direct expenditures on power mobility decline

there is a risk that price controls will impose massive short-run

shutdowns of supplier firms as they escape the costs of providing

services for which they will not be reimbursed;

-- The analysis suggest that there may be declines on the order of

30 to 50 percent in power mobility access in response to the new

regulation due to the assessment that many firms will cease

providing power mobility and the services connected with it, and

that beneficiaries will not be able to provide mobility services for

themselves.

-- The change in reimbursement policy will likely impose a net cost

on Medicare in the range of $2.7 billion to $5.9 billion in present

value terms for the period 2007-2015. The higher Medicare costs are

due to higher Medicare expenditures for hospitalization, physician

services, and home health care services for those qualified for

power mobility but who cannot acquire it.

-- There could potentially be an exodus of at least 1,500 power

mobility providers from major metropolitan areas and additional

numbers from rural markets. The remaining suppliers will reduce

services and not replace services lost by exiting firms.

-- Medicare's proposed reduction in prices will not cover the total

cost of providing power mobility, which includes the services

necessary for many to acquire power mobility. The services provided

by suppliers are necessary, and in many cases required, and cost of

these services is not covered by the proposed Medicare reimbursement

rates. Until these costs are part of an assessment of pricing,

Medicare would best delay the reduction in reimbursement rates.

-- Medicare should rely on market forces, not price controls, for

provision of products and services. Price controls will impair the

functioning of market forces and decrease access to power mobility

more severely than would a simple reduction in Medicare's

reimbursement amounts.

" The study raises legitimate questions about whether CMS had

sufficiently examined the impact of their price cuts on access to

power wheelchairs for the Medicare beneficiaries, " Dr. Fry said. " It

certainly seems that they have overlooked the impact of having 1,500

or more suppliers abruptly leave the market, and the long-term

impact of paying more in healthcare costs for beneficiaries who

don't have the power wheelchairs that they need. It is hard to argue

why these cuts would be seen as good public policy. "

The study is posted at http://www.aahomecare.org.