What would you do if it was your job to cut $100 million in Minnesota health and human services’ spending? Would you look at the nearly $18 billion biennial budget of the Department of Human Services, which includes health programs in its dominion? Would you seek the causes of wasteful spending, such as the $29 million in overpayments that the Department Human Services made for chemical treatment services?

Last fall, under a legislative mandate, the Blue Ribbon Commission on Health and Human Services was formed to, among other things, identify “significant cost drivers” of state health spending and save $100 million over two years. Its report is due this fall.

More than 250 proposals were submitted. The Department Human Services and its consultant rejected the vast majority of the proposals. The department then submitted two new proposals which, not surprisingly, were among the 18 “strategies” that are now included in the draft of the commission’s final report.

One proposal would implement volume purchasing for some categories of durable medical equipment. The other would reduce Medical Assistance rates to match Medicare rates for durable medical equipment and supplies.

As an initial matter, the proposals fail to meet the mandate of addressing “significant drivers” of health care spending. Medical equipment and supplies make up no more than 3% of Medical Assistance spending. And it’s clear that the Department Human Services has no idea how much money, if any, these proposals would save. The department has asserted, without providing evidence, that the two proposals each would result in a savings of between $1 million and $10 million. Any savings from volume purchasing would be scant, because many items already are subject to volume purchasing via pricing derived from Medicare’s competitive bid program.

And because Medical Assistance already reimburses at Medicare rates for most items, little money would be saved by applying Medicare rates across the board.

But the real harm would come on the backs of those on Medical Assistance who need the special items that are not subject to Medicare pricing. The Medicare and Medicaid programs serve very different populations with very different needs. Medicare serves an elderly population while those on Medicaid include many disabled individuals who need special items for which Medicare pricing is insufficient. For example, Medicare may have one reimbursement rate for basic feeding tubes, but those rates do not come close to covering the cost of specialized feeding tubes that many disabled Medical Assistance beneficiaries require.

This seems like sparse ground for savings. But home medical equipment and supplies is a familiar target of the Department Human Services. In 2017, the department pushed through an 11th-hour proposal to balance the state budget by implementing volume purchasing of incontinence products. The Department Human Services claimed the move would cut spending for these products by 35%, and the legislation passed. But internal documents, later obtained through a Freedom of Information Act filing, revealed department officials had no idea if there would be any savings.

After stakeholders learned about the law, a groundswell of opposition and a court injunction against the Department Human Services eventually led to the repeal of that law before it could be implemented.

The latest proposals would be devastating to small businesses that already are operating under tight margins. If these businesses stop providing certain supplies or even go out of business, their patients and caregivers would suffer. Some would be left with no choice but to move out of their homes or care settings. Or, if they can’t get the medical equipment they need at home, they could wind up in the hospital. That’s the last thing anyone should want during a pandemic.

Tom Jamison is owner of Lake Superior Medical Equipment in Duluth and Cloquet (lakesuperiormedicalequipment.com) and a member of Midwest Association for Medical Equipment Service & Supplies (mames.com), a trade organization.

TO COMMENT

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The report can be read here.

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