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Headline News
CMS Reclassifies Some Respiratory Assist Devices
BALTIMORE--Certain respiratory assist devices, including some continuous positive airway pressure devices, are being reclassified as capped-rental items, CMS announced last week.

Effective April 1, RADs with bi-level capability and a backup rate--what used to be known as "intermittent assist devices with continuous positive airway pressure devices"--will no longer be considered DME requiring "frequent and substantial servicing for payment purposes," the agency said in a statement on Thursday.

Instead, monthly rental payments from Medicare will decrease at the fourth month of rental, and after 13 months of rental, title will transfer to the beneficiary and payments will stop altogether. Medicare will continue to pay 80 percent, and beneficiaries 20 percent, of the Medicare allowed payment amount for maintenance for the equipment after the rental payments end.

But in a response issued late Friday, the American Association for Homecare said it is "dismayed" at the rule and disagrees with CMS' assumption that patients who need this type of equipment would be able to determine when maintenance or repairs would be required and to arrange for these services.

According to the association, "These patients suffer from progressive terminal conditions that affect their ability to fill their lungs. Their conditions can vary from stable to rapidly regressive and can change from stable to rapid regression in short periods of time. They are at high risk for respiratory failure. To maintain their safety and health status, these patients require frequent monitoring, adjustment and service that would not be available under the capped rental payment category."

Cynthia Gray, RRT, vice president of respiratory and HME for Oklahoma City-based CV Medical Solutions, said that with the change, she is concerned about patient safety, especially because the agency doesn't explain how it will pay for emergency calls and repair of equipment. "They say they're going to do it, but there is no provision made to take care of it," she explained.

Gray said a portion of CPAP patients--3 percent at CV Medical Solutions--are on CPAPs with the backup feature, which will breathe for them if they stop breathing on their own. Such patients range from those who only use the machine at night to those who use it 12 or more hours a day.

Although she doesn't think the rule will affect the average user, it is a serious concern for those with special needs, such as neuromuscular patients or those with a tracheostomy, Gray said. "Unless CMS makes a provision that they will pay for clinical follow-up of these patients, you're going to have an increased number of [emergency room] and hospital visits," she said.

The CPAP also needs to be serviced every year, she continued. "Either the patient pays for it or they don't," she said. "If it's not done, there could be subsequent death."

Since 1992, RADs with a backup rate feature have been paid by Medicare on a continuous monthly rental basis. The change is being made in an attempt to save millions of dollars after an HHS Office of Inspector General report found that the RADs do not require frequent servicing. The OIG reported that supplier services consist mainly of routine maintenance and patient monitoring. "While other types of RADs have been paid correctly as capped-rental devices, the RADs with a timed backup feature were incorrectly categorized," CMS said in its announcement.

According to CMS, beneficiaries will pay less out of pocket as a result of the changes. They are now paying up to $128 a month in coinsurance, but that rate will drop to $96 starting in the fourth month of the rental and be eliminated altogether after the 13th month when patients assume ownership of the device.

The rule only applies to RADs and not ventilators, CMS noted. To view the rule, published in the Jan. 27 Federal Register, click here.

HME Stakeholders Scramble As Budget Bill Vote Looms
WASHINGTON--With Congress scheduled to vote on the 2006 federal budget reconciliation bill Wednesday, the American Association for Homecare is rushing to correct misinformation that it says is being spread in support of the bill.

The Deficit Reduction Act, or S. 1932--which contains $39.7 billion in spending reductions, with $6.4 billion in savings from Medicare and $4.8 billion from Medicaid over five years--would cap oxygen rentals at 36 months (see HomeCare Monday, Jan. 17) and rentals of most other DME, except for power wheelchairs, at 13 months.

AAHomecare, which has spearheaded HME efforts against the measure, said a document circulating in some Congressional offices last week claims that concern about the bill is unfounded.

According to the document, which is called "Reforming the Medicare Oxygen Payment System is Good Government," the Medicare program will pay for service and repairs to beneficiaries' oxygen equipment as well as continue to pay for deliveries of oxygen.

But AAHomecare argues that the bill does not contain specific assurance or directive for payment--just ambiguous language concerning "payments for oxygen" and "maintenance and service" after the purchase and transfer of title for the equipment to the beneficiary. While the bill suggests such payments "may" be available and will be determined by HHS, AAHomecare said, there are no codes or policies governing the maintenance and services of oxygen technologies in today's Medicare system.

Moreover, the association said, the bill provides no guidance for many service components--such as disposable accessories, 24-hour emergency service and equipment replacement--that are currently required and incorporated into Medicare oxygen rules and payment.

"Once the patient owns items such as oxygen cylinders, the delivery and filling of such will become the beneficiary's responsibility," AAHomecare said. "There are numerous state and federal regulations governing the safe handling, filling and transport of medical oxygen that will be complicated with this change in ownership."

According to its proponents, however, the Deficit Reduction Act changes oxygen payment from perpetual rental to a rent-to-own program because Medicare currently pays significantly more than the retail price to buy oxygen equipment--and that payment system needs reform.

For example, according to the document, under current law, "Medicare pays indefintely for the rental of oxygen equipment at a rate of approximately $200 per month (CMS). So after five months, Medicare has paid for the piece of equipment. Yet the program continues to make payments for the equipment--and beneficiaries continue to pay coinsurance. Medicare beneficiaries who need oxygen rent the equipment and use it for an average of 30 months, according to CMS. This means that Medicare and beneficiaries will pay several times the cost of the equipment over the course of the rental period."

The document points out that provisions of the budget bill change this system by transferring ownership of the equipment to the beneficiary after 36 months of rental, so that neither Medicare nor beneficiaries "continue to pay for equipment that has been more than paid for."

To access the full text of "Reforming the Medicare Oxygen Payment System is Good Government," click here.

To access the full text of AAHomecare's "Response to Arguments in Favor of Changes to O2 Policy," click here.

To view the text of the budget bill, also known as S. 1932, visit http://thomas.loc.gov.

For further information about provisions that would affect DME in the budget bill, visit www.aahomecare.org or www.vgm.com.

To find your members of Congress, click here.

CMS: Part B Drug Benefit Remains Unchanged
BALTIMORE--Since the launch of the Part D Medicare drug benefit at the start of the New Year, there has been much confusion over which drugs should be billed under Part D and which under Part B. Callers from physician offices and pharmacies to DME companies, skilled nursing facilities and hospitals reportedly have jammed CMS' phone lines with questions.

But in an Open Door Meeting and conference call on Tuesday, CMS officials said the answer is fairly simple: If drugs were covered under Part B before Jan. 1, they should still be billed under Part B.

"If you were billing Part B in December for these drugs, they are still B drugs," according to CMS Chief Medical Officer Jeffrey Kelman.

Further, explained Craig Miner, a pharmacist in CMS' Division of Drug Plan Policy, a drug can only be covered under Part D if it is not covered under Part B.

Drugs administered through DME such as an infusion pump or nebulizer at a beneficiary's home are still covered under Part B. However, Part D may cover some drugs when the situation does not allow for coverage under Part B. For example, Part B covers albuterol solution for the home care setting but not for patients in long-term care. Also, Part B covers many drugs that are administered in a physician's office, but some of the same drugs are not covered if patients buy them at a pharmacy to self-administer.

Part D enrollment is voluntary, with the benefit administered by private prescription drug plans and managed care plans, while CMS contractors under traditional fee-for-service Medicare administer Part B claims. Because the private plans should have individual determinations for Part B versus Part D coverage, and because of state differences, CMS advised all callers to e-mail Medicare with specific questions on coverage.

To view a chart with more information about which drugs are covered under Part B and Part D, click here.

Manufacturer News
FDA OKs Powder-Based Oxygen Generator
FRISCO, Texas--OxySure Systems, which makes and markets specialty medical and respiratory products, has received FDA approval for its new catalytic portable oxygen generator.

According to the company, OxySure Model 615 will create a new category for emergency oxygen availability for people at risk for cardiac, respiratory or general medical distress who need immediate help before emergency care arrives. The company explained that, like a fire extinguisher, the portable generator can be pre-positioned in homes, buildings and other public and private settings to provide immediate medical grade oxygen in an emergency. The device can also provide temporary oxygen in hazardous exposure situations, such as in mining or military, or when long-term oxygen supplies are interrupted.

The company has 19 patents pending on the technology, which generates medically pure oxygen from two proprietary inert powders in the presence of an accelerant. The generator consists of a thermoplastic device that produces more than 90 liters of medical grade oxygen. The device can be activated in one step and uses replaceable cartridges for each use. According to the company, the technology makes oxygen delivery devices safer, easier to use and more accessible to consumers.

"This is a significant milestone for our company," said Julian Ross, OxySure chairman and CEO. "It represents a key step in our plan to pursue regulatory approvals for various products based on the OxySure technology, including, but not limited to, medical, respiratory, wound care, skin care and emergency applications."

Invacare Recognized for HomeFill Co-op Marketing Program
ELYRIA, Ohio--Invacare Corp.'s HomeFill II cooperative marketing program has garnered a 2005 Medical Marketing & Media award for "best use of direct marketing to consumers." The company's HomeFill system allows patients to fill their own cylinders rather than having oxygen delivered to their homes. According to John Ledek, vice president of Invacare Respiratory Products, "These tools allow providers to grab the attention of the approximately 1.5 million oxygen patients in the United States as well as their physicians."

Dj Orthopedics Acquires Newmed
VISTA, Calif.--Dj Orthopedics, which specializes in rehabilitation and regeneration products for the non-operative orthopedic and spine markets, has announced its acquisition of Newmed SAS. Newmed, through wholly owned subsidiaries in France and Spain, designs, manufactures and sells orthopedic rehabilitation devices, including rigid knee braces and softgoods. Dj expects the acquisition to add incremental 2006 net revenue of approximately $12 million.

State News
Missouri Senators Form Medicaid Fraud Panel
JEFFERSON CITY, Mo.--Missouri lawmakers have put together a special committee to investigate Medicaid provider fraud in the state.

The committee was formed by Missouri Senate leaders after a series of stories in The Kansas City Star reported that fraud committed by Medicaid providers could cost Kansas $220 million a year and Missouri $575 million.

"If, in fact, the figures The Star presented were anywhere close to accurate, this is a problem far greater than we believed," Missouri Senate President Pro Tem Michael Gibbons, who officially formed the committee, told the newspaper.

According to The Star, providers in Missouri and Kansas have billed Medicaid for phony prescriptions, therapy and surgery--and even for treating dead patients.

Previously, debate among state legislators and officials about Medicaid reform has centered largely on the personal responsibility of beneficiaries and ways to utilize technology to streamline costs as opposed to targeting provider fraud. Last year in Missouri, 100,000 beneficiaries were cut from the Medicaid rolls and funding was eliminated for some DME in an effort to curb Medicaid spending. Most basic DME items, including wheelchairs, oxygen and diabetic supplies, are still covered under Medicaid. But others, such as wheelchair accessories and batteries, hospital beds and orthotics, are not.

The newly formed Missouri Medicaid fraud committee will present a report of its findings and recommendations to the state's General Assembly.

In Kansas, lawmakers said The Star's investigation confirmed the need for an inspector general who would have broad powers to investigate fraud. Legislators also have proposed a law that would prohibit the filing of false Medicaid bills.

In Brief
CMS Administrator Leslie Norwalk said last week there are problems with the new Medicare drug benefit, but the agency is working "morning, noon and night" to resolve the issues. According to Norwalk, most of the problems have resulted from glitches in the computer system that provides insurers and pharmacists with information from Medicare. CMS "SWAT teams" have traveled to each state to help insurers correct errors, she said.

Nine out of every 10 Americans say the U.S. health care system is broken, and 86 percent support universal coverage, according to a Center for American Progress report released last week. Americans surveyed also rank health care costs as the top national economic threat and rate health care as their No. 1 personal economic concern. According to the poll, 53 percent of respondents have serious or very serious doubts about putting consumers in charge of their own health care through tax credits and other health savings accounts. The report, "If It's Broke, Fix It: A Progressive Response to Americans' Demand for Major Health Care Reform," lays out four principles the Center for American Progress said should be part of any reform plan: guarantee affordable coverage for all Americans, provide choice of doctors and health plans, control costs and expand preventative care. To view a summary of the report, click here.

States spend more on Medicaid than they do on elementary and secondary education, according to a new report from the State Coverage Initiatives Program. In fiscal 2004, states spent 21.9 percent of their revenue on Medicaid, while they spent about 21.5 percent on elementary and secondary education and 10.5 percent on higher education. To view the report, click here.

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