New Federal Rule Will Lower Spending on Medical Equipment — But Will It Lower Healthcare Costs, Too?

A new federal regulation for Medicare aims to prevent fraud, but it could end up delaying coverage for vital medical equipment.

USA Today reports that the rule was passed on Tuesday, Dec. 29, to go into effect for 2016. Medicare will now require prior authorization — and earlier paperwork filing — before paying for items such as prosthetics, orthotics, certain types of wheelchairs, and other types of “durable medical equipment.”

Aaron Albright, spokesman for the U.S. Centers for Medicare and Medicaid Services, said that the rule could save the agency $10 million in its first year alone, $200 million in the next five years, and $580 million over the course of a decade. The biggest cause of Medicare’s excess spending, he explained, include issues like fraud and abuse, and even non-fraudulent improper payments and unnecessary use of such equipment costs the federal program millions of dollars.

The new rule won’t require any new forms, Albright said. Instead, doctors must simply file the necessary paperwork on behalf of their patients earlier in the claims process.

Yet advocates for disabled Americans and senior citizens said that the new process could slow down access to necessary medical equipment.

Kathy Holt, associate director of the Center for Medicare Advisory, said that the new rule “could create quality-of-life issues for people,” especially if they don’t have immediate access to assistive devices like wheelchairs or other mobility equipment.

“Rules like this will absolutely affect the patient’s ability to get equipment they need,” said Bo Brown, CEO of Mobility Healthcare. “We have already started to discuss this with our larger referral sources. Hospital and Rehab staff will have to begin the process of qualifying the patients for the equipment they will need at discharge as soon as the patient arrives at their facility. Even if they start from the very beginning there is no guarantee that the medical equipment they need will be authorized by Medicare upon discharge. This will cause longer hospital stays and it will cause patients to have to do without equipment they need if they cannot afford to pay out of pocket for this equipment.”

Increased Medicare spending may not even be an issue, if going by data from the Medicare Payment Advisory Commission. In 2014, Medicare spent roughly $6.3 billion on durable medical equipment, but that’s a significant drop from 2013, when spending totaled $7.4 billion.

Yet the 2014 spending report from Medicare found that the error rate for durable medical equipment billing was 53.1%, amounting to $5 billion in improper payments for that year alone.

Historically, the government has used Medicare as a way of determining how much Americans spend on healthcare, according to Daily Kos. But a new study shows that Medicare isn’t actually that great at predicting private-sector health spending.

For instance, in Grand Junction, CO, where Medicare spending is extremely low compared to national figures, private health spending is actually among the most expensive in the country.

The study also looked at health spending for particular procedures and found that there’s no guarantee of cost, even though Medicare sets a single reimbursement rate.

Just the cost of knee replacement surgery can range anywhere from $3,400 too $55,800, and that’s not even in the same area. Of six hospitals in the Salt Lake City area, for example, costs can vary from $21,600 to $29,500, largely because hospitals can charge private insurers however much they choose.