LETTER TO GOVERNOR AND STATE LEGISLATORS

(This letter was emailed to Governor Pillen on 12/24/24 and all Senators in the Nebraska Legislature on 1/8/25)​​

 

 

January 8, 2025

 

Subject: Request for Repeal/Revision of DMEPOS Limiting Fee in LB852

 

Dear Senator,

 

My name is Brent E. White. I am the General Manager of Nebraska Scooter Mart, LLC., a husband to a wife with Multiple Sclerosis, and a USAF veteran.

 

I am writing this letter so you may fully understand the negative effects and financial hardships LB852’s 15% limiting fee is perpetuating for an estimated 180,000 to 190,000 Medicare enrolled Nebraska seniors and their families, and the medical equipment industry. I am leading this effort to repeal this new law for my wife, my customers, and all Nebraska seniors that have been affected by this new unconscionable law. I know I will have the support of 180,000 plus Nebraska seniors who chose a federal standardized supplemental insurance policy when they became eligible for Medicare that covers 80% or 100% of the excess. I’m estimating less than 5% of Nebraska seniors are even aware of LB852. These seniors purchased this type of insurance plan to eliminate all of their out of pocket expenses for their medical care as they aged, now this law has countermanded their personal choice of care and financial wellbeing. This state, the first state to do so, has overridden the Centers for Medicare and Medicaid Services (CMS) law of no limiting fee on Durable Medical Equipment Prosthetics and Orthotics (DMEPOS) to the detriment of those affected.

 

I appreciate you taking your valuable time to read this extremely important letter in hope that you will understand how the Durable Medical Equipment (DME) industry works from a Medicare beneficiary’s viewpoint, not just the insurance industry’s viewpoint. It was only the insurance industry representatives and lobbyists who were given the opportunity to present their case with misleading information to the Banking, Commerce and Insurance Committee. I’ve spoken to over six hundred of my customers about LB852 in the past five months and everyone is shocked and extremely upset. I know with 100% certainty that the state’s new 15% limiting fee on DMEPOS has already, and will continue to harm Nebraska seniors and the DMEPOS industry. Here is their side of the story in my words, along with better solutions to this issue that do not hurt Nebraska seniors financially.

 

Nebraska Scooter Mart is a retail store providing and servicing medical equipment in the DME industry. We specialize in mobility assistive equipment and have served Lincoln and southeast/south central Nebraska since January 2004. Nebraska Scooter Mart is contracted with and accredited by Medicare as a non-participating provider of durable medical equipment. We are a non-participating provider who is contracted with Medicare to bill claims on an assignment, or a non-assignment basis. This claim basis informs the beneficiary’s supplemental insurer how the claim is to be paid based on their customer’s contracted insurance plan coverage.

 

I have read the transcripts from the Banking, Commerce and Insurance Committee, and general assembly meetings of the 2024 legislative session when referring to the proposed LB852. I have talked with other DMEPOS business owners, medical equipment industry support organizations, senior advocacy groups, and hundreds of my customers since I found out about this new law. I became aware of this bill on August 6, 2024 when I received a return phone call from Mutual of Omaha Insurance Company regarding a mispaid claim. I was informed of this new law by their claims supervisor and how LB852 had affected the amount they were liable to pay on non-assigned claims.

 

I wish to bring to your attention the misleading information presented to the Banking, Commerce and Insurance Committee by proponents of LB852, prior to and during testimony at the open forum committee meeting on January 23, 2024. There were false, deceptive and ambiguous statements made by the proponents who support this bill. Because of the unfair process undertaken… not informing any of the supposedly handful of businesses accussed of equipment overbilling without proof, and suppressing all the information from potential opponents to the proposed bill, this bill passed and became effective on July 19, 2024. There was no transparency regarding the proposed bill. LB852 was propositioned by billion dollar insurance companies, led by locally headquartered insurance giant Mutual of Omaha, then concealed by the bill’s sponsor before it was presented to the committee, and the full 2024 legislative body before final passage of the bill.

 

The first DMEPOS company to become aware of the proposed legislation was Triumph Home Health Supplies in mid-January 2024. Triumph Home Health found out about this proposed bill in a January newsletter from AAHomecare, a national association that represents providers and manufacturers of home medical equipment, which Triumph is a member of. Triumph passed that information on to the executive director of MAMES (Midwest Association for Medical Equipment Services & Supplies), Rose Schafhauser. Rose was able to submit a brief letter to the Banking, Commerce and Insurance Committee opposing the bill in time for the open forum committee meeting on 1/23/24. Nebraska Scooter Mart LLC is not a member of AAHomecare or MAMES, only VGM & Associates. VGM is another national association representing this industry. MAMES did contact VGM regarding this bill, but VGM failed to notify their members in Nebraska. Therefore, Nebraska Scooter Mart and many other businesses had no opportunity to oppose this legislation.

 

First lets learn about how all this misinformation started. A representative from Mutual of Omaha contacted Senator Mike Jacobson in the summer of 2023 claiming there were “a handful” of DMEPOS businesses in Nebraska that they claimed were overcharging for the medical product the customer chose without any proof. The representative convinced Senator Jacobson that the CMS rule of “no limiting fee” they applied only to DMEPOS, not doctors, hospitals and therapist, was a “loophole” in the federal governments law regarding excess coverage payments by supplemental insurers who sell these excess coverage plans. This loophole notion is a farce. CMS had a logical, common sense reason for excluding DMEPOS with their 15% above Medicare’s allowable law. I will give you the reason with the following example. If you went to 5 different doctors, or hospitals, or therapists in your area for the same exact check up, test, procedure, therapy, etc., you would not find a big variation in pricing from those providers for that service. This is because you are paying for their time and expertise with whatever they are doing for you. That is why CMS put a 15% cap above Medicare’s allowable for everything a doctor, hospital and therapist can bill claims and collect for. It was to protect the patient from being overcharged for the provider’s time. CMS did not put that 15% cap on DMEPOS because Medicare is paying for a specific product within a product category, not someone’s time for a procedure or office visit. Within each category of a DME product, there is a significant range and variety of products to choose from, with each product within that category having a difference in quality, durability, overall function, features, product weight and cost. This give the Medicare beneficiary the freedom to choose the item best suited for their individual needs.

 

As far as I can tell from my research, Senator Jacobson did not reach out to any DMEPOS provider in Nebraska, or senior citizen advocacy group to hear their input on the proposed legislation. How can you come up with the best solution for both sides on an issue if you don’t allow the opposition a seat at the table. I’m fairly certain he was given the names of those providers who the insurance representative’s were referring to in regards to their belief of overcharging on products. I believe Nebraska Scooter Mart may have been one of those handful of companies they claimed were overcharging for products. The reason why they may think this is because way we are required by Medicare to bill the claims. Our responsibility to our customer is to verify the customer’s coverage, inform them how Medicare and their supplemental insurance plan pays, and tell them they can chose any product within the product category that best suites their needs. The claim for their choice of equipment is then billed with all the excess above Medicare’s allowable in the first month of Medicare’s 13 month capped rental program. We were never given the opportunity to explain why insurer’s are coming to their conclusion of being overcharged and how the DMEPOS industry actually works. Our industry works very differently than doctors, hospitals, and therapists.

 

I would like to now point out all the misleading and false information given by the proponents of this bill at the Banking, Commerce and Insurance Committee open forum meeting on January 23, 2024. I will briefly touch on the main four false statements by the insurance industry lobbyists and representatives at this meeting, which mislead the senators of this committee to believe this bill was fair and would help Nebraska seniors. I will also provide you with a copy of the attached 2024 legislative transcripts on LB852 highlighting this misleading and inaccurate information along with my side notes.

 

The most inaccurate and reiterated falsehood by every proponent of this bill, including Senator Jacobsen, was calling the federal government’s CMS law of imposing no limiting fee on DMEPOS a “loophole”. It is absolutely not a loophole. The definition of a loophole is an ambiguity or inadequacy in the law or set of rules. This law is not open to interpretation and is specific and perfectly adequate for the DMEPOS industry. This law is not a mistake by CMS, it was carefully studied and researched before the law was established, and here is why. CMS used logic and common sense when establishing this law as mentioned in paragraph 8 of this letter. CMS sets payment allowables for doctors, hospitals and therapist based on time/expertise, and DMEPOS based on the least costly out of the box piece of equipment within a equipment product category. The five doctors, hospitals and therapists example I gave in paragraph 8 versus a DMEPOS item within a product category is why CMS did not impose a limiting fee on a customer’s freedom to choose a piece of equipment that will best serve their individual needs.

 

The second falsehood was telling the committee that this bill would lower Nebraska Medicare beneficiary’s supplemental insurance premiums. Sounds good on the surface. These supplemental insurers would then have less financial liability to pay on claims beginning 7/19/24 and it would save them money. We are almost six months into this new law, and I’ve spoken to over 600 of my customers about their insurance premiums. Not one single customer stated their insurance premiums have gone down since July, with 40% of them stating their premiums actually went up. So much for that misleading testimony from the insurance proponents to be truthful or accurate. Any savings from paying out claims just goes to the insurance company’s stockholders, the only people insurance companies honestly care about. I’ve never heard of an insurance company losing money to a point where they go out of business, their algorithms are set up to not fail.

 

The third example of misinformation given to the committee by the Mutual of Omaha representative was calling a $46,000 piece of equipment a scooter, when in fact she was referring to a power wheelchair. Medicare only pays for mobility assistive equipment if they qualify for needing it inside their home and the equipment has to be able to fit and maneuver inside that home or facility. The maximum retail price for a scooter that would work inside someone’s home is around $5,500. A $46,000 scooter does not exist, but by calling it a scooter it mislead the committee members into thinking that a provider was insanely overcharging for a piece of equipment. Power wheelchair manufacturer’s suggested retail price can be as high as $60,000.00 plus for patient’s who are quadriplegics, paraplegics, have polio, ALS, MS, Parkinsons, or had a stroke, or anyone with a progressive neurological or neuromuscular disorder. This bill actually affects seniors with more serious medical issues harder than others.

 

The last intentional and misleading statement made by Kellie Harry, senior associate counsel with Mutual of Omaha in the transcript from 1/23/24, page 8 of 32, was to state “there are eight other states that already have legislation in place that addresses balanced billing”. I contacted AAHomecare who monitors all proposed and in place legislation in all 50 states. (See attached sheets regarding balanced billing) I also contacted MAMES who did their own research regarding the eight other states with legislation in place. Both AAHomecare and MAMES informed me that there are eight states who have addressed some issues regarding balance billing for doctors, hospitals and therapists, but none of those eight states mentioned anything about DMEPOS, or have implemented any limiting fee on DMEPOS. Nebraska is the first state in the country who has passed a law overridding the federal government’s law with a limiting fee on DMEPOS.

 

Though there are several other statements by the proponents in the 1/23/24 transcripts that are misleading, they are not as serious as the four I’ve outlined above, but you can read my notes about these on the attached transcripts.

 

Insurance companies, just like any for profit company, push and sell their most expensive and best coverage/benefits supplemental insurance policy plans to Medicare beneficiaries, which is currently a Plan G policy. A plan G policy, just like the old Plan F and Plan J policies that are grandfathered in, is an insurance plan that pays the 20% of Medicare’s allowable for that item, and 100% of the excess on that item up to the patient’s responsibility when the claim is billed in as a non-assigned claim to Medicare. An estimated 7 out of 10 Nebraska Medicare beneficiary’s have this type of plan excess charge coverage. These excess coverage plans cost two or more times what a standard supplemental insurance plan costs. The overwhelming reason given by my customers the past 21 years for choosing this type of supplemental insurance coverage was to eliminate the possibility of having to pay any out of pocket expense for medical care as they aged. Most of them stated they would likely be on a fixed income and would prefer to pay for this type of monthly premium insurance coverage opposed to possibly having to pay too much out of pocket expenses for medical situations which could lead them into bankruptcy and possibly ending up in a nursing home.

 

Here are some facts that you were not presented with prior to voting on this bill that you should have been made aware of.

 

1. Durable medical equipment (DME) accounted for approximately 1.35% of Medicare spending in 2020-21. We are the small guys on the block so it is easy to pick on this industry. (See attached AAHomecare graph)

 

2. There are 372,288 Nebraskans with Medicare coverage as of mid-2023. 29% of those Nebraskans have a Medicare Advantage plan, therefore, do not have a supplemental insurance plan unless they are on Medicaid, with some exceptions. This leaves 264,325 Nebraskans on federal Medicare who have supplemental insurance coverage. 7 out of 10 Nebraskans on Medicare with a supplemental insurance plan own an excess coverage policy based on my years serving this population. The final tally is there are an estimated 185,027 Nebraskans on federal Medicare with an excess coverage protection policy that this new law has stricken.

 

3. Supplemental insurance policies, referred to as Medigap plans, were standardized by CMS in 1992. (See attached Medigap Basics sheet) The variety of supplemental insurance plans a Medicare beneficiary can choose from cover different services and have some differences in benefits. A beneficiary can choose whichever plan best suites their needs. In 2020, a national study was conducted and found that 58.8% of individuals nationwide who first became eligible for Medicare, chose a Plan G policy. This is a plan that pays either 80% or 100% of the excess above Medicare’s allowable. Medicare beneficiaries will tell you they chose this plan for their personal financial reasons, and now LB852 has taken away this option to purchase an insurance policy that protects them financially from out of pocket expenses for their medical care needs. LB852 has altered a supplemental insurance company’s financial liability on how much a Medicare beneficiary’s personal insurance contract with a private company pays on claims. After speaking to a few attorneys, I’m not even sure states have the legal right to interfere or alter a private citizen’s contract with a private insurance company by creating a new law, or if their policy would be grandfathered in prior to the new law becoming effective. Since the bill became effective, about half of the payments we have received from supplemental insurers, they are still paying claims as if LB852 does not exist. Therefore, they believe their customers are grandfathered in, this law is unconstitutional, or they have no knowledge of LB852.

 

4. Most DME products categories are billed to Medicare on a 13 month capped rental program. Medicare does not offer the ability to do a one time purchase of these products. The products Nebraska Scooter Mart offers in this scenario include heavy duty walkers with a seat, manual and transport wheelchairs, Group 1 and 2 scooters and power wheelchairs, hospital beds and patient lifts. The provider has to bill a claim every month for 13 months to get paid in full for the equipment they provide. During the capped rental period, the equipment is still owned by the provider, and once all 13 months are paid in full, the equipment becomes the property of the beneficiary. If a beneficiary is placed on hospice, or in a nursing home, or passes away during the capped rental period, Medicare requires that the provider stop billing for the equipment and pick it up. The beneficiary or their family has the option to buy out the remaining months of the capped rental if for whatever reason they want to keep and own the equipment. Capped rental equipment gets returned about 18% of the time, and if the beneficiary or family does not want the equipment, we get a used piece of equipment back, and don’t get paid the full price for that product. The value of used equipment in today’s market is minimal at best. This is why Nebraska Scooter Mart and other DME companies bill in all the excess of claims in the first month of the 13 month capped rental. This tends to lead supplemental insurers into believing providers are overcharging for their products, when in fact they are billing all the excess in the first month to protect their customers and their business.

 

5. Based on the Nebraska Insurance Federation findings (See attached MAMES article dated 1/22/24), the amount of excess above Medicare’s allowable for DMEPOS products paid by supplemental insurers for Nebraskans was only $300,000 in 2022, and $400,000 in 2023. Nationally those numbers were $2.5 million in 2022, and $4 million in 2023. These yearly excess claim payments are spread over about 42 different supplemental insurance companies that we work with every year. This information tells me that on the national level, the DMEPOS providers in other states are not explaining the benefits of these excess coverage plans correctly and doing a disservice to their customers.

 

6. The two largest insurance company’s, AARP and Blue Cross Blue Shield spent $24,049,150.00 lobbying in 2024. (See attached Top Spenders Lobbying List) Maybe they should cut their spending on lobbyists a couple hundred thousand each to offset the amounts they pay in claim excess charges. This way they would not have to threaten Nebraskans with higher premiums to get a new law passed.

 

7. Attached are five documents showing how insurance companies are paying exorbitant amounts of money to settle lawsuits for being unethical in their claims payment practices. Maybe they should clean up their act to avoid paying these lawsuits, freeing up money so they can keep their premiums for insurance down.

 

Here are a few examples of DME equipment and billing that I would like you be knowledgeable about. The first product and most often prescribed category of medical equipment is a walker with a seat, or more commonly known as a rollator. We currently offer around 25 models of rollators in our store ranging in price from $99.95 to $1,389.95. The reason for the variation in pricing is mostly the weight of the item, the quality, the ease of use, and the comfort the product offers. For your information, the lighter weight the product is, exponentially the cost and retail price is much higher. Medicare’s allowable for a walker with a seat in 2025 for non-rural areas is $77.16, and $127.35 for rural areas. Medicare pays 80% of that allowable, and all supplemental insurance policy plans pay the remaining 20% of Medicare’s allowable, called the coinsurance. If the beneficiary has a supplemental insurance plan that pays 100% of the excess, a Plan F, G, or J plan, then the supplemental insurer pays the 20% coinsurance and everything above that Medicare allowable up to the price of the equipment. Therefore, the patient would have no out of pocket expense for their equipment. With this new LB852 law, now the supplemental insurer is only responsible to pay an additional 15% above Medicare’s allowable. In the case of a walker with a seat, the supplemental insurer now will only have to pay the 20% coinsurance, and an additional $11.57 of the excess above Medicare’s allowable for a total of $27.00 for non-rural customers, and an additional $19.10 of the excess for a total of $44.57 for rural customers. This leaves the non-rural customer with an out of pocket expense for any rollator, and a rural customer with an out of pocket expense, unless they choose our least expensive unit that sells for $99.95.

 

The second example is a lift chair. Medicare’s non-rural allowable for a lift chair is $333.69, and their rural allowable is $405.37. Again Medicare will pay 80% of their allowable. With this new LB852 law, the customer’s who have these excess charge coverage plans in a non-rural area will only get the 20% coinsurance and an additional $50.05 for 15% of the excess, and a rural customer will only get the 20% coinsurance and an additional $60.81 of the excess. We carry around 52 models of lift chairs ranging in price from $795.00 to $4,045.00. Prior to this new law, all customers with the excess charge coverage would have $0 out of pocket when choosing a lift chair that fit them, had the features they wanted and was comfortable. Now they will have to pay anywhere from $400.00 to $3,700.00 out of their pocket to get the lift chair that best suits their individual needs.

 

The last example I will discuss is Power Mobility Devices (PMD’s). PMD’s are scooters and power wheelchairs. Scooters that are approved by Medicare that we carry will range in retail price from $1,199.00 to $3,329.00, depending on it’s weight capacity. Medicare’s allowable for a scooter, depending on it’s weight capacity, range from $962.80 to $4,139.25. The Medicare approved power wheelchairs that we carry will range in retail price from $2,395.00 up to about $44,000.00. Medicare’s allowable for these power wheelchairs range from $2,340.83 up to about $35,000.00, depending on the quality of product, additional power functions and control mechanisms. The Medicare beneficiary can choose any of the above power wheelchairs they deem necessary to meet their individual needs. As you can see, there can be a big difference between Medicare’s allowable and the retail price of the equipment they can choose. These beneficiaries, prior to LB852, had that difference between Medicare’s allowable and the retail price of the equipment they chose, paid 100% by their supplemental insurance policy. With this new law, these beneficiaries can have anywhere from a few hundred dollars to over $25,000.00 to pay out of their pocket for the equipment that best suites their individual needs.

 

The results from this new law since it passed on 7/19/24 have been completely opposite from what the proponents promised would happen. Here is what is actually happening:

 

1. No Nebraska seniors insurance premiums have not gone down as promised, with many premiums going up even though the insurance company’s financial liability on claims has gone down.

2. Customer’s are now paying out of pocket expenses for all new medical equipment, and repairs to their old equipment, even though they purchased an insurance policy to protect that from happening.

3. Customer’s are no longer choosing the best product that suites their individual needs, they are choosing something they can financially afford.

4. Customer’s are choosing not to repair their medical equipment when repairs are needed for safety because they can’t afford the out of pocket expense.

5. Medicare allows beneficiaries to re-qualify for a new product in the same category of equipment as their last one after five years. Most of our customer’s are no longer taking advantage of Medicare’s five year durability rule to get a new piece of equipment because they can’t afford the out of pocket costs to get a new one. They tell me they will make due with the equipment they have until they have no choice but to replace it, or until LB852 gets repealed.

6. Nebraska seniors are extremely upset the legislature interfered with their personal choice of insurance coverage protection and that you sided with big insurance. They are stressed out and worried that they may end up broke having to now pay out of pocket for DMEPOS products and repairs, with fear that they will end up in a nursing home full of staff shortages.

 

From a personal viewpoint, I will share with you how this bill will affect my wife’s care as her Multiple Sclerosis advances to a point where she will eventually be in a power wheelchair. This disease affects her left side to where she has lost about 40% of her strength and range of motion on that side. She can not propel a manual wheelchair with her left side deficits, so when the walker becomes unsafe, she will end up in a power wheelchair full time. She currently uses a walker for somewhat safe mobility in the home, and uses a scooter for distances outside the home. The scooter was paid for privately. She is currently insured through my work insurance policy. It took Nebraska Scooter Mart four months of searching to find an insurance company that would cover the infusion drug she is being treated with every six months.  She is eligible for Medicare disability, but this drug would not be covered by Medicare so she will stay on our company policy as long as I am employed here. This drug has helped slow down the progression of this disease over the last three years. 

 

Once I retire in a few years, she will go on federal Medicare and will purchase a supplemental insurance policy Plan G that pays 100% of the excess, therefore eliminating all her out of pocket expenses for care and medical equipment, and repairs to that equipment. If this bill is not revised or repealed, we will move to any of the other 49 states that do not have a limiting fee on DMEPOS. This is our only option financially if I want her to get the best quality and best suited equipment for her individual needs, and not the cheapest piece of equipment that Medicare sets their allowables by. What would you do if this was you or your spouse, or parent?

 

We are working on a campaign to inform all Nebraska seniors that have been affected by LB852 so they may contact their state senator to oppose this new law. We are working with the Lincoln Journal Star on an article regarding LB852 and will also reach out to the Omaha World Herald and other community newpapers to help spread the word. We have informed our industry partners and trade publications nationwide to keep an eye on their states legislature’s proposed bills so this does not happen elsewhere, and I promise you it won’t.

 

In summary, LB852 only benefits the insurance companies shareholders, not Nebraska seniors. The insurance industry has failed time after time to get the federal government to change their law and put a limiting fee on DMEPOS for the reasons previously stated. When the door was slammed on them by CMS in their self-serving efforts to change the limiting fee, they chose Nebraska to attempt their insane rewrite of federal law.

 

The undeniable fact is that this is not a “loophole” in the CMS law regarding no limiting fee on DMEPOS. Nebraska is the first state in the country to override the federal government’s law of no limiting charge on DMEPOS. The statements to the committee from the proponents claiming this new law will lower Nebraska seniors insurance premiums was a complete lie and mislead the senators to believing this was good for Nebraskans.

 

LB852 must be repealed or revised so the 180,000 plus Nebraska seniors with this type of supplemental insurance can have their full insurance benefits back, can choose the equipment that is best suited for their individual needs, avoid bankruptcy to stay out of a nursing home and have piece of mind again.

 

I wish to thank you for taking the time to read this important letter in hope that you now understand that your vote in favor of this bill was based on misleading and bad intel from the proponents of LB852. I have dozens of customers who would like to speak to the state legislature about how this bill is negatively affecting their lives. I look forward to meeting with each of you during the upcoming 2025 legislative session to discuss repealing this bill. If you have any questions, or would like to schedule a time to meet, please reach out to me at work at 402-464-3900, or by email at nebraskascootermart@gmail.com.

 

Sincerely,

 

 

 

Brent E. White

General Manager, Nebraska Scooter Mart LLC