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The President’s proposed FY 2017 Federal Budget released today includes several provisions related to the HME sector, which are related in greater detail in the Dept. of Health & Human Services (HHS) Budget in Brief.

While Congressional Republicans have all but declared the proposed budget "dead on arrival," AAHomecare will further assess and monitor which of these proposals from the HHS Budget could gain traction on Capitol Hill in other legislation, and provide additional analysis as appropriate.  Here’s an initial rundown of ones we believe bear watching going forward.

Provide Authority to Expand Competitive Bidding for Certain Durable Medical Equipment

Since implementation, the Competitive Bidding Program for durable medical equipment, prosthetics, and supplies has saved the Medicare program and beneficiaries billions of dollars by aligning payment amounts with market‐based prices. Currently this program is restricted to certain categories of equipment, supplies and services. This proposal expands the competitive bidding program to additional categories, including: inhalation drugs, all prosthetics and orthotics, and ostomy, tracheostomy, and urological supplies. [$3.8 billion in savings over 10 years]

Repeal the Rental Cap for Oxygen Equipment

This proposal eliminates the 36‐month rental cap for oxygen equipment and reduces the monthly payment amount for oxygen and oxygen equipment by the necessary percentage to be budget neutral.  Eliminating the rental cap will improve beneficiary access to care, particularly when a patient relocates during the 36‐month period, and reduce administrative burden for both CMS and suppliers.  [No budget impact]

Assistive Technology Funding

The Budget also includes $32 million for the Assistive Technology Program, which provides states with financial assistance to increase the availability, access, provision, and training of assistive technology devices and services.  Examples of such devices include computer or technology aids, modified driving controls, and durable medical equipment such as wheelchairs or walkers.

Reduce Fraud, Waste, Abuse, and Improper Payments in Medicare

The Budget includes a number of Medicare program integrity proposals that strengthen the Department’s and states’ ability to fight fraud, waste, and abuse in the Medicare program and to reduce improper payments.  See the Program Integrity chapter for proposal descriptions. [$1.4 billion in PAYGO costs and $3.3 billion in non‐PAYGO savings over 10 years]

Note: The following seven proposals are all related to Medicare Appeals

Provide Office of Medicare Hearings and Appeals and Departmental Appeals Board Authority to Use Recovery Audit Contractor Collections

This proposal expands the Secretary’s authority to retain a portion of Recovery Audit Contractor recoveries for the purpose of administering the Recovery Audit Program.  This proposal will allow Recovery Audit program recoveries to fully fund Recovery Audit Contractor‐related appeals at the Office of Medicare Hearings and Appeals and the Departmental Appeals Board.  [$1.3 billion in cost over 10 years]

Establish a Refundable Filing Fee

This proposal institutes a refundable filing fee for Medicare Parts A and B appeals for providers, suppliers, and State Medicaid agencies, including those acting as a representative of a beneficiary, and requires these entities to pay a per‐claim filing fee at each level of appeal.  This filing fee will allow HHS to invest in the appeals system to improve responsiveness and efficiency.  Fees will be returned to appellants who receive a fully favorable appeal determination.  [No budget impact]

Establish Magistrate Adjudication for Claims with Amount in Controversy Below New Administrative Law Judge Amount in Controversy Threshold

This proposal allows the Office of Medicare Hearings and Appeals to use Medicare magistrates for appealed claims below the federal district court amount in controversy threshold ($1,500 in calendar year 2016 and updated annually), reserving Administrative Law Judges for more complex and higher amount in controversy appeals. [No budget impact]

Expedite Procedures for Claims with No Material Fact in Dispute

This proposal allows the Office of Medicare Hearings and Appeals to issue decisions without holding a hearing if there is no material fact in dispute.  These cases include appeals, for example, in which Medicare does not cover the cost of a particular drug or the Administrative Law Judge cannot find in favor of an appellant due to binding limits on authority.  [No budget impact]

Increase Minimum Amount in Controversy for Administrative Law Judge Adjudication of Claims to Equal Amount Required for Judicial Review

This proposal increases the minimum amount in controversy required for adjudication by an Administrative Law Judge to the Federal Court amount in controversy requirement ($1,500 in calendar year 2016).  This will allow the amount at issue to better align with the amount spent to adjudicate the claim.   Appeals not reaching the minimum amount in controversy will be adjudicated by a Medicare magistrate.  The minimum amount in controversy will increase consistent with the amount in controversy set for federal court.  [No budget impact]

Remand Appeals to the Redetermination Level with the Introduction of New Evidence

This proposal remands an appeal to the first level of appeal when new documentary evidence is submitted into the administrative record at the second level of appeal or above.  Exceptions may be made if evidence was provided to the lower level adjudicator but erroneously omitted from the record, or an adjudicator denies an appeal on a new and different basis than earlier determinations.  This proposal incentivizes appellants to include all evidence early in the appeals process and ensures the same record is reviewed and considered at subsequent levels of appeal.  [No budget impact]

Sample and Consolidate Similar Claims for Administrative Efficiency

This proposal allows the Secretary to adjudicate appeals through the use of sampling and extrapolation techniques.  Additionally, this proposal authorizes the Secretary to consolidate appeals into a single administrative appeal at all levels of the appeals process.  Parties who are appealing claims included within an extrapolated overpayment or consolidated previously will be required to file one appeal request for any such claims in dispute.  [No budget impact]

The American Association for Homecare represents durable medical equipment providers, manufacturers, and others in the homecare community that serve the medical needs of millions of Americans who require oxygen systems, wheelchairs, medical supplies, inhalation drug therapy, and other medical equipment and services in their homes. Members operate more than 3,000 homecare locations in all 50 states. Visit


Gordon Barnes,, 202.372.0759