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Headline News
MedPAC Calls Rebate Proposal a Bad Idea
WASHINGTON--The rebate program proposed under CMS' draft competitive bidding rule for Medicare DME has the potential to induce fraud and should be eliminated, the Medicare Payment Advisory Commission told CMS.

"Although the goal of sharing potential provider profit with the beneficiaries is laudable, it is preferable to obtain the best price through competition, not through a rebate," MedPAC wrote in a June 28 letter commenting on the rule.

Under the proposed competitive bidding rule (see HomeCare Monday, May 1), winning suppliers that bid below the payment amount set by CMS have the option of offering beneficiaries a rebate, representing the difference between their bid amount and the Medicare payment. If a provider decides to offer a rebate for any item, it must be given to all beneficiaries--but a provider cannot advertise that it is offering a rebate.

"A rebate program will complicate the design and administration of the program and possibly induce additional demand for DME, as well as raise the risk of fraud and abuse as noted in the proposed rule," wrote MedPAC, which advises Congress on Medicare policy.

"If beneficiaries' cost-sharing were reduced or eliminated, demand for DME may be induced (allowing a beneficiary to be paid to purchase DME if the rebate exceeded cost sharing would be even worse)," the commission continued. "Demand could be channeled to more expensive substitute items if rebates made those items less expensive for the beneficiary. Induced demand and item substitution could increase rather than decrease Medicare spending."

Also in the letter to CMS, MedPAC recommended:

• eliminating an automatic payment update. In the draft rule, CMS proposes that item prices be increased annually over the three-year life of the contract using the Consumer Price Index for Urban Consumers. If the annual inflation update is frozen, it is possible for prices to rise faster within the competitive bidding areas than in other areas using the fee schedule.
• expanding criteria for the ranking of metropolitan statistical areas. In addition to ranking MSAs on the total number of DMEPOS suppliers, CMS also should consider the number of suppliers of constituent categories of DMEPOS, for example, oxygen supplies or hospital beds. If there are enough suppliers to support competition in each of the constituent markets within an MSA, it should be included in the competitive bidding process.
• defining competitive bidding areas to be equal to MSA boundaries for the first round of MSA selection. The draft rule proposes that competitive bidding areas could be equal to MSAs, larger than MSAs or smaller than MSAs.
• clarifying how physicians will provide DME in competitive bidding areas. The self-referral law that prohibits physicians from supplying most DME items seems to conflict with the rule's requirement that all bidders must bid on all items within a category of DME. MedPAC suggests that CMS allow physicians to continue to supply a limited range of items and not require them to bid.
• accepting bids that include some items with prices above the current fee schedule as long as the total bid would result in lower spending. "Allowing this variation is likely to give CMS the most accurate price signals for both over- and under-priced items," MedPAC said. Also, "if the bidders are not permitted to bid a higher price for items that cost them more to supply than the current fee schedule allows, then they will not offer the program substantial discounts on the items that are currently priced too high."

To download a PDF of the Morrison Informatics study, called "A Comprehensive Cost Analysis of Medicare Home Oxygen Therapy," visit www.aahomecare.org. To view H.R. 5513, the Home Oxygen Patient Protection Act, click here.

MMA Work Group Wants Health Care for All by 2012
WASHINGTON--Giving all Americans access to core health care services by 2012 is just one of the interim recommendations issued last month by the Citizens' Health Care Working Group.

Authorized under the Medicare Modernization Act, the group is comprised of 14 members appointed by the U.S. Comptroller General, and its mission is to foster a nationwide public debate about improving the health care system with an action plan for Congress and the president to consider.

The group's interim recommendations reflect input from more than 20,000 citizens who took part in more than 75 community meetings nationwide or who commented online, and include "a public policy that all Americans have affordable health care" and a "core benefits package for all America" by 2012.

"Across every venue we explored, we heard a common message: Americans should have a health care system where everyone participates, regardless of their financial resources or health status, with benefits that are sufficiently comprehensive to provide access to appropriate, high-quality care without endangering individuals or family financial security," the group's report stated.

The recommendations also include guaranteed financial protection against very high health care costs; development of integrated community health networks; more intensive efforts to improve quality of care and efficiency; and new ways to provide and finance palliative care, hospice and other services so that people living with advanced incurable conditions have access to them in the environment they choose.

The group's final recommendations are to be issued at the end of September and will be sent to Congress for hearings. The public has until Aug. 31 to comment on the interim recommendations, which are posted on the work group's Web site at www.citizenshealthcare.gov.

"This survey suggests a tremendous need for patient education, as well as a significant business opportunity for home medical equipment providers," Farrell said. "Many HME providers recognize the benefits of providing a high level of patient education and service, which drives trailing revenues through mask replacement and multiple usage. We hope this survey serves as another reason for providers to grow their businesses by delivering regular follow-up care."

Manufacturers Form Sleep Alliance
SAN DIEGO--Nine HME manufacturers have teamed up to create the Sleep Manufacturers Alliance, designed to be an advocate for issues related to sleep-disordered breathing.

Manufactuers in the group include Embla (formerly MedCare), Fisher & Paykel, Invacare, Pro-Tech, Puritan Bennett, ResMed, Respironics, Sunrise Medical and Viasys.

At its first meeting in May, the alliance said it will focus on education, reimbursement, legislative and clinical issues. The group also identified four goals:

• identify continuum of care models that could be used with both Medicare and commercial payers to improve the overall awareness of sleep-disordered breathing;
• provide conference planners at the American College of Chest Physicians Sleep Institute a list of issues that are important for the ACCP Sleep Institute to address at its September 2006 conference;
• submit formal comments to CMS regarding proposed rules for competitive bidding as they relate to sleep-disordered breathing. The alliance also will encourage solicitation of comments from the pulmonary medicine societies, American College of Chest Physicians, American Thoratic Society and the National Association of Medical Direction for Respiratory Care.
• develop educational materials for alliance customers regarding CMS' proposed rules for competitive bidding and its impact.

The alliance expects to have a Web site up within the next 30 to 60 days.

In Brief
The deadline for submitting comments on the U.S. Food and Drug Administration's draft rule on labeling requirements for medical gases is today at 5 p.m. EDT. To view the proposal, click here. To comment, click here. The American Association for Homecare has posted a sample letter and comments on its Web site at www.aahomecare.org.

CMS has posted its technology assessment for long-term oxygen therapy for severe COPD, available by clicking here.

A bipartisan group of 44 senators sent a letter June 28 asking HHS Secretary Mike Leavitt not to implement planned Medicaid spending reductions--totaling $12.2 billion over five years--because the cuts would jeopardize the quality of health care for more than 50 million low-income Americans. On June 27, the National Governors Association sent HHS a similar letter, and in May, 82 Republications from the House did the same.

The desire to age in place is fueling "explosive" growth in eldercare products and services, according to ElderCarelink, an Internet eldercare referral service. A trend toward postponing moves to assisted living has led not only to an increase in home care divisions at nursing homes but also has caused expansion in businesses like concierge, personal chef, transportation services, adult daycare programs, home modifications for seniors and reverse mortgages, the company notes. There also has been an upsurge in certified senior advisors and geriatric care managers as people search options that allow them to stay at home. At ElderCarelink, the company says in-home service requests outweigh nursing home requests by three to one.

The Centers for Disease Control and Prevention reports that Americans made more than 1 billion visits to doctors' offices, emergency rooms and hospital outpatient departments in 2004. According to several reports on ambulatory care issued by the National Center for Health Statistics at CDC, essential hypertension was the most frequent primary diagnosis, but significant increases were found over the last decade for most of the leading primary diagnoses at ambulatory care visits, including diabetes, up by 117 percent, and spinal disorders, up by 94 percent. The amount of waiting time before a patient saw an emergency department physician in 2004 was 47 minutes, up from 38 minutes in 1997. The time a patient spent face-to-face with a doctor in an office visit averaged 16 minutes.

HHS Secretary Michael Leavitt said that promoting full disclosure of prices charged by health care providers and their quality performance measures will be a top health care policy priority for the remainder of the Bush Administration. Leavitt made the remarks at the American Health Lawyers Association annual meeting last month in Philadelphia. "Very few people know what they pay for health care," Leavitt told the group, adding that HHS intends "to use the paying power of the federal government" to promote "transparency." HHS has begun a series of demonstration projects with providers, insurers and large employers to identify cost and quality measures, with pilot projects underway in Phoenix, northern California, Minneapolis, Milwaukee, Boston and Indianapolis. On June 1, Medicare began posting public information on the Internet on the prices it pays for 30 elective hospital procedures.

Coming Up
CMS will hold a Home Health, Hospice and DME Open Door Forum Tuesday at 2 p.m. EDT. To participate by phone, call (800) 837-1935 and use reference ID 8268037.

The American Association for Respiratory Care (AARC) will hold its Summer Forum Friday through Sunday in Phoenix. For more information, call (972) 243-2272 or visit www.aarc.org.

"Successful Elements of HME Sales," sponsored by the Pennsylvania Association of Medical Suppliers (PAMS) and DMETrain, will be held July 18 in Carlisle, Pa. For more information, call (407) 895-5573 or e-mail brownbag@dmetrain.com.

The Virginia Association of Durable Medical Equipment Companies (VADMEC) will hold its summer meeting July 26-28 in Virginia Beach. For more information, call (919) 387-1221 or visit www.vadmec.org.