I recently went to a luncheon that discussed the basics of the US Health Care Reform. I found out that even though it was blasted all over the media, I knew very little, and almost nothing regarding how it would affect me.
I knew that the bill would require most U.S. citizens to have health insurance (beginning in 2014) and provide more affordable health insurance options. I knew that there were incentives for businesses to offer health insurance to their employees. I knew that the bill imposed regulations to prevent health insurers from denying coverage to people for any reason, including a pre-existing condition. That is about I all knew.
One of the biggest changes is that the new reform hopes to saves costs by changing the mentality and coverage from “fix it after the fact” to “preventive care methods.” For example, no coinsurance or deductibles will be charged for preventive services for Medicare recipients. Medicare will also cover a free annual comprehensive wellness visit and personalized prevention plan.
If you’re like me here are a few resources that might help navigate through reform changes and your coverage.
- HealthCare.gov by the U.S. Department of Health and Human Services
- The Henry J. Kaiser Family Foundation
- THE COMMONWEALTH FUND
- Your Industry’s Trade Journals: Look at your industry’s trade journals to see what is being covered regarding health coverage. For the Durable Medical Equipment industry the big topic is competitive bidding.
- Medicare.com: Get the basics to understanding your Medicare coverage and how the system works.
- State Health Foundations: Check to see if your state has a foundation that can assist in learning more about your local coverage. Not all states have foundations.
- Arizona Foundation for Medical Care
- Arkansas Foundation for Medical Care
- The California HealthCare Foundation
- Connecticut Health Foundation
- Delaware Foundation for Medical Services
- Health Foundation of South Florida
- Georgia Medical Care Foundation
- Hawaii Medical Services Association Foundation
- Illinois Foundation for Quality Health Care
- Iowa Foundation for Medical Care
- Kansas Health Foundation
- Foundation for a Healthy Kentucky
- Maine Health Access Foundation
- The Health Foundation of Central Massachusetts
- Missouri Foundation for Health
- The Caring Foundation of Montana
- Nevada Public Health Foundation
- New Hampshire’s Foundation for Healthy Communities
- New Jersey Health Foundation
- New York State Health Foundation
- The North Carolina Public Health Foundation
- Ohio Foundation for Medical Quality
- Oregon Health Care Foundation
- South Dakota Foundation for Medical Care
- Utah Healthy Living Foundation
- Vermont Health Foundation
- Virginia Health Care Foundation
- Washington Health Foundation
- Wisconsin Women’s Health Foundation
Stop by and see The ROHO Group at Abilities Expo in the Edison, NJ from May 20-22, 2011.
Abilities Expo is a conference for people with disabilities, their families, caregivers and health care professionals to see new products, attend workshops and CEU seminar and participate in other events and activities including adaptive rowing demonstrations, wheelchair dance demonstrations, Ms. Wheelchair America 2011 meet & greet and more.
Where: New Jersey Convention & Expo Center, Edison, NJ; Booth 510 near the exhibit hall entrance
When: Friday, May 20 11 a.m.–5 p.m.; Saturday, May 21 10 a.m.–5 p.m.; Sunday, May 22 11 a.m.–4 p.m.
Why do medical products cost more than consumer products, even though they may appear to be similar?
Ultimately, the cost to bring a medical product to market and the ongoing costs to produce and sell medical products are much higher than they are for a consumer product. Here are a few things to consider regarding the price differences:
- In order for products to qualify as medical products via Medicare (and most U.S. payers) they must meet specified criteria associated with performance, durability and safety.
- There are considerably more regulatory rules and oversight to comply with in producing and distributing medical products than with producing and distributing consumer products, including substantial testing, documentation and record retention.
- To be considered a “medical product” a product needs to make claims associated with their use in relationship to a medical condition/situation. These claims need to be back up with testing, studies and documentation.
- The expenses associated with legal fees, protection of intellectual property, liability insurance, etc. are all considerably higher for “medical” products.
- There is considerably more cost and time associated with managing a sale transaction through third party payers like Medicare, Medicaid or private insurance. For example:
- When someone buys a consumer product they pay for the product before they get to take it with them. For medical sales this rarely occurs. Rather, the product is normally delivered before payment (or even any guarantee of payment). In the case of Medicare, the provider cannot obtain any prior authorization and only has an expectation (hope) of payment based on the rules as they interpret them. Before they actually get paid they must compile all of the proper documentation and submit the claim… hoping that Medicare will agree and pay. This can take weeks if not months. Then, if they do get paid they may have to start the process over again with a secondary payer.
- If the primary payer doesn’t agree to pay, the process can become very long and costly, including appeals, more documentation, etc.
- If the provider never gets paid the best-case scenario for them is that they can get the product back. However, they must weigh this against the impact that it will have on their reputation. In addition, even if they do get the product back it is no longer “new” and cannot be sold as such.
- Further, payers like Medicare reserve the right to do post-payment audits for several years after the transaction is completed. In those audits if they determine that payment was made inappropriately they will insist on a refund of the payment (at the very least).
- Beneficiaries are suppose to pay any portion of the co-insurance that is not covered by their insurance, but many don’t leaving the provider with nothing but bad choices including writing the balance off as bad debt or continuing to try and collect the debt while racking up more and more expenses in doing so.
Bottom line, products designed for consumer purposes are not the same as those designed to address medical needs, and the expenses associated with developing, producing and selling medical products are all considerably higher than they are for similar consumer products.
Finally, please take into consideration that the amount that most payers (Medicare, Medicaid and third-party payers) are allowing for medical products continues to be cut more and more, even though the cost of producing these products continues to increase (raw materials, utilities, freight charges, etc.). Costs also continue to increase as manufacturing and provider companies strive to provide their employees with reasonable salaries and benefits. In ROHO’s case, we’re proud to say that our products are made in the U.S. in our Belleville, Illinois facility; but there’s extra cost associated with that decision…and we believe extra quality too!
These are just some of the things to consider regarding the price difference between medical and consumer products. Is there anything else that you would add to the list? Do you disagree with any of the things listed? We’d love to hear your feedback!
(This has been modified from an e-mail written by Dave McCausland, Sr. VP of Planning & Government Affairs)
There are at least fifty Medicaids and a myriad of third party payers in the U.S. and they are all different in coverage, reimbursement and rules. In fact, the only thing that they all have in common is their link to Medicare, and that’s why the DME industry focuses so much attention on Medicare. Consider the following:
- Medicare’s Healthcare Common Procedure Coding System (HCPCS) is used universally in the U.S.
- Every Medicaid is a cross-over payer to Medicare.
- The large majority of payers (and almost all Medicaids) look to Medicare’s coverage rules as the basis to set up their own coverage policies.
- The large majority of payers (and almost all Medicaids) use Medicare’s reimbursement rates as a basis for their own. In fact, it is not unusual for other payer’s reimbursement rates to be set as a percentage of the Medicare rates.
Medicare’s recent experiment in competitive bidding for DME is raising the stakes much higher in this pattern of other payers mimicking what Medicare does. The Medicare competitive bidding program has hardly proven itself. 166 leading economists, including Nobel Prize winners, have predicted that it has several fatal flaws and will fail. Yet, even with all its flaws, at least Medicare had the sense to implement this program in stages and affix some specific requirements and constraints on it. Unfortunately, we are already seeing other payers adopting Medicare’s pricing from competitive bidding without any apparent consideration or limitations. They appear to be focusing solely on cutting their cost for DME with little if any regard to the impact it may have on quality and access for their beneficiaries.
Bottom line, in the U.S. when Medicare gets a sniffle every other payer catches a cold… and competitive bidding may lead to pneumonia.