With the product finally on its way to the market, observers say they are waiting to see if it meets the kind of success other home oxygen filling systems have experienced during the last year. Elyria, Ohio-based Invacare Corp. attributed growth in its North American respiratory sales--43 percent over all of 2004 and 16 percent during first quarter 2005--to its HomeFill product line, along with strong concentrator sales. Meanwhile, Chatsworth Calif.-based Chad Therapeutics said shipments of its Total O(2) Delivery System for the third quarter, which ended Dec. 31, had tripled over prior-year results.

Congress Narrowly Passes Budget With Medicaid Cuts
WASHINGTON--Congress has approved a budget plan that calls for slashing Medicaid by $10 billion over five years.

The $2.6 trillion budget, which passed Thursday by a vote of 214-211 in the House and 52-47 in the Senate, calls for the first cuts to the state-federal health program for the poor and other entitlement programs since 1997.

An earlier version of the budget included $20 billion in Medicaid savings over five years, but a compromise was reached by Senate and House negotiators just hours before the vote. A number of lawmakers, led by Sen. Gordon Smith, R-Ore.--who fought to take the program completely off the chopping block--had threatened to vote against the entire budget if Medicaid cuts were too deep. Earlier this year, Smith sponsored an amendment to the Senate's budget proposal to delay any Medicaid cuts by a year and create a commission to study long-term reforms to the program. The original budget proposal in the House left Medicaid cuts intact.

In talks to resolve budget differences, negotiators agreed to form the commission, which is expected to suggest wholesale changes that are needed to produce Medicaid savings and put the program on sustainable financial footing. The panel will recommend its first round of changes by Sept. 1. With the commission's study, Medicaid funding reductions would not take effect until 2007, allowing the commission more time to work with state governors, many of whom have already been trimming the program in their own budgets.

The Congressional Budget Office has estimated that without any cuts, the federal government would spend $191 billion on Medicaid next year and more than $1.1 trillion for the five years covered by the budget.

McClellan: Home Care Is Preferred, Cost-Effective
WASHINGTON--CMS Administrator Mark McClellan told lawmakers last week that giving patients more options for where they receive long-term care--including in the home--is one way to address the government's skyrocketing health care costs.

"We are way past the stage of talking about this. We have evidence that home- and community-based health care is clinically and cost-effective, as well as preferred by most beneficiaries," McClellan told the House Energy and Commerce Health Subcommittee at a hearing on Wednesday.

The CMS chief also called on Congress to end Medicare's "institutional bias," because the program pays for nursing home care but not community-based care. "Beneficiary control means better quality and more people served for the same or lower cost," he said.

McClellan's comments seem to indicate an acknowledgement from government officials that home care could be part of the solution to the nation's health care crisis.

Just last month, HHS Secretary Michael Leavitt said at a meeting of the National Conference of State Legislatures that home care is "radically more efficient" than the alternatives and called for more home and community-based care in Medicaid.

To revisit this news any time during the week, go to http://www.homecaremonday.com.

State News
Missouri Governor Approves DME Cuts
JEFFERSON CITY, Mo.--Missouri Gov. Matt Blunt signed Medicaid reform legislation last week that would eliminate coverage for most adult DME. While some of these services could be funded through the state legislature's budget, the governor threatened to use his line-item veto power if too many changes are made.

The new law, which takes effect Aug. 28, also will remove 100,000 beneficiaries from the program rolls and scale back coverage levels to the minimum required by the federal government.

While the law takes away the requirement for Medicaid to fund DME, the legislature appears to be willing to restore some services. Last month, the House passed a budget that would fund equipment including wheelchairs, oxygen and artificial limbs, but not other products like canes, crutches, catheters and commodes. The Senate is still debating its budget and has proposed adding even more services, which prompted a warning from Blunt: "If I received a budget that in multiple instances expanded the [Medicaid] program beyond what was in [the newly signed law], I would indeed use the line-item veto."

In protest to the signing of the legislation, eight people chained their wheelchairs to a door in the Missouri state capitol on Thursday. At one point during the more than two-hour demonstration, an estimated 100 people blocked the doorway as they chanted to meet with Blunt. Many disabled Missourians claim the legislation will prevent them from living independently and force them into nursing homes.

Vermont Considers Universal Health Plan
MONTPELIER, Vt.--The Vermont House has approved a plan that would provide health coverage to all of the state's residents.

The bill proposes a tax-financed health care system--similar to Canada's government-run health care program--that would provide universal access to primary and hospital care for all Vermonters beginning in 2007, and coverage for other medical needs by 2009. Under the plan, the state would create a Department of Health Care Administration to oversee health care regulation, planning and costs. Estimates of how much the program would cost taxpayers and what benefits would be covered will be studied by the legislature this summer and fall.

If the bill makes its way to Gov. James Douglas' desk, it may not escape his veto pen--he has said he strongly opposes the measure.

Provider News
Canadian Distributor Plans U.S. Retail Stores, Sets First Opening
VANCOUVER, British Columbia--Canadian-based AMS Homecare is expanding across the border with the Seattle-area opening this summer of its first in a planned network of retail eldercare stores.

Dubbed 65 Plus, the stores will be geared toward the elderly and disabled, and will include a pharmacy, private consulting area, DME and other devices such as hearing aids. The first store is slated to open in Bellevue, Wash., this June in a leased 2,500-sq. ft. space, although subsequent units may be larger, the company said.

"We believe the elderly and disabled represent an underserved market. There is no single location at which they can find all the products they need to maintain their mobility and quality of life," said AMS CEO Harj Gill. "We are bringing together those products in a store that offers a convenient and dignified setting. The 65 Plus store will provide a new departure in service to this growing segment of the population."

In December, the company's U.S. subsidiary signed a letter of intent with a Canadian pharmacy to form a joint venture to enter the U.S. retail market. The pharmacy company will advise on U.S. pharmacy start-up procedures, and assist in hiring pharmacists. "The synergy of providing pharmaceutical services with our products--which are designed primarily for the elderly and others with mobility difficulties--will be a natural fit with our target market," Gill said at the time, adding that AMS will use expertise from its distribution business in supplying the store. Locating the first store in Washington makes sense because "we are just a couple of hours from Washington," he said. "We ran a marketing test in this area recently, and we were quite satisfied with the results."

AMS provides mobility equipment, other medical products and patient monitoring technology to a base of 300-plus dealer customers in Canada.

Arcadia Acquires Southwest Florida Respiratory Company
SOUTHFIELD, Mich.--Arcadia Resources, through its subsidiary Beacon Respiratory Services, has acquired United Health Care Services, a respiratory supplier with operations in Fort Myers and Port Charlotte, Fla. The company plans to operate the business under the Arcadia H.O.M.E. (Home Oxygen Medical Equipment) name.

"United Health Care has a long history of profitability," said Larry Kuhnert, president of Arcadia Resources. "With an established infrastructure and client base in Southwest Florida, United Health Care Services represents an opportunity for Arcadia to build rigorous sales in the high-margin, direct-to-patient DME industry."

In Brief
People who don't get enough sleep--or too much sleep--may be at increased risk of developing diabetes and impaired glucose tolerance, according to a new study. Researchers at the Boston University School of Medicine found that among 1,486 subjects the risk of diabetes was increased by 2.5-fold in those sleeping less than six hours a night and 1.79-fold for those sleeping nine or more hours. The authors of the study, which was published in the Archives of Internal Medicine, recommended that sleep levels should be tested as a non-drug treatment strategy for patients with diabetes or impaired glucose tolerance.

Here's another reason to get a good night's sleep: Scientists have found a link between sleep disturbances and metabolic syndrome, a cluster of conditions shown to increase risk of heart attack and stroke, the National Institutes of Health reported. An NIH study suggests that the brain system controlling the sleep-wake cycle might play a role in regulating appetite and metabolism. The finding could help explain why disrupted sleep patterns--particularly when combined with a high-fat diet--are associated with excessive weight gain and metabolic syndrome.

Obesity causes about 112,000 deaths a year, according to a study published in the Journal of the American Medical Association. This is far fewer than the 400,000 annual deaths estimated last year by the Centers for Disease Control and Prevention. Katherine Flegal of the National Center for Health Statistics, which led the latest study, attributed the difference to better, more recent data, and the fact that changing lifestyles may be reducing the obesity epidemic. Still, "This shouldn't be interpreted to mean obesity isn't a problem anymore," Flegal told the Washington Post. "Obesity certainly is still a problem."

Newsmakers
Waterloo, Iowa-based The VGM Group has promoted Debbie Hunter to vice president of operations for Homelink, the buying group's managed care division. She joined the company in 1994 as patient care coordinator and was promoted to associate vice president-patient services in 1999. The company also has promoted Lucy Choplin to controller and vice president of corporate accounting.

The board of directors at A&D Medical recently appointed Teru Moriya as the company's new president and CEO, succeeding retiring President and CEO Paul Huber. Moriya has been with the company since June 2002.

Tarrytown, N.Y.-based Viterion TeleHealthcare, a Bayer-Panasonic Co., has appointed Robert Dean as director of sales and service. Previously, Dean served as vice president of sales for MedAptus. Before that, he was director of sales for MisysHealthCare Systems.

Billings, Mont.-based Computers Unlimited has promoted David Schaer to director of new business development. The company also has promoted Davis Almanza to pharmacy development manager, where he will oversee operations for CU's pharmacy and home-infusion software business.

Mundelein, Ill.-based Medline Industries' Vice President, Clinical Education Cynthia Fleck has been elected to serve as a nurse member on the board of directors for the Association for the Advancement of Wound Care.

Coming Up
The American Association for Homecare will hold its Washington Leadership Conference June 7-10 in Washington, D.C. Highlights include speakers Rep. Mike Ross--the only home care provider in Congress--and former CMS Administrator Tom Scully, as well as a day on the hill to meet with Congressional officials. For more information, visit www.aahomecare.org or call (703) 836-6263.

Visit this week's sponsor at www.mrnmanager.com.