Head banging

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07/28/2017

In case you missed it, the Medicare Payment Advisory Commission (MedPac) in June published “A data book: Health care spending and the Medicare program.”

Durable medical equipment has no section of its own (unlike hospitals, inpatient psychiatric facilities, physicians, skilled nursing facilities, home health agencies, inpatient rehab facilities, etc.), but it was included in a number of graphs detailing trends in Medicare spending, one of which is a real head scratcher.

According to Chart 1-5, Medicare represents only 16% of the DME spend, with Medicaid and CHIP representing 15% and “other” representing 68%. Other includes private health insurance, out-of-pocket spending, and other private and public spending, MedPac says.

I asked on twitter if anyone else was floored by this, and I got a few yeses. I also got a “Pfft, that’s what happens when Medicare bennies lose access to service across the U.S.”

Yes, it would be nice to see some historical data here, preferably pre- and post-competitive bidding. Would it show, say, that Medicare represented 60% of the DME spend in 2006 vs. 16% in 2015? But the report, to my knowledge (granted, I didn’t read ALL 214 pages), doesn’t make that comparison.

The report does have some interesting historical data on another point, though: that Medicare spending is concentrated in certain services and has shifted over time, as detailed in Chart 1-2.

As you see, total Medicare spending in 2006 was $402 billion and in 2015 it was $638 billion, but DME’s share of that spending dropped from 2% to 1% during that timeframe, a 50% reduction. Note home health in a similar predicament, with 4% in 2006 vs. 3% in 20015.

So where is Medicare spend concentrating and shifting to, if not in DME and home health? Well, managed care appears to be the big winner here, increasing from 16% in 2006 to 27% in 2015, more than a quarter of all spending.

This could be a scary trend for HME providers, as evidenced by recent stories like this.

In conclusion, if Chart 1-5 is a head scratcher, then Chart 1-2 is a head banger. Now I’ll let your peruse this data for yourself. Just don’t hurt your head.