For more industry news, features and highlights from our latest issue, please visit our Web site at www.homecaremag.com.

Headline News
Health Care Spending to Double By 2016
WASHINGTON--U.S. health care spending will nearly double by 2016, reaching $4.1 trillion from $2.1 trillion in 2006--and the fastest-growing sector is home health care.

According to a report from CMS' National Health Statistics Group, health spending will remain relatively steady from 2007 forward with average annual growth at 6.9 percent, and by 2016, will account for 20 cents of every dollar spent. That works out to $12,782 per capita, up from $7,498 projected for this year.

The report, published online last week in the journal Health Affairs, said that home health spending is expected to increase 1.4 percent over 2005 to 12.5 percent in 2006, making it the fastest-growing service in health care. The increase is being driven by Medicaid spending in the sector, which is projected to increase from 14 percent in 2005 to 19.8 percent in 2006.

Total growth of home health spending is expected to average 7.6 percent annually from 2007 through 2016, with the strongest growth coming from Medicaid.

DME spending for 2006 is expected to be $25.2 billion, up from $24 billion in 2005. Spending on DME will hit $26.3 billion in 2007 and $37.6 billion by 2016, according to the report.

Meanwhile, overall national health spending is projected to remain steady at 6.9 percent each year from 2007 through 2016.

Other projections in the CMS report include the following:

• Growth in spending for nursing home care is projected to decelerate from 6 percent in 2005 to 3.4 percent in 2006. But from 2007 through 2010, nursing home spending will remain steady at 5 percent a year before a gradual acceleration through 2016 due to the aging population.
• Hospital care costs are expected to be $651.8 billion for 2006 and will hit $1.3 trillion by 2016.
• Medicare spending for 2006 is expected to be $417.6 billion compared to $342 billion in 2005. Spending for the government program is projected to reach $862.7 billion by 2016.
• Combined state and federal Medicaid spending is anticipated to be $313.5 billion in 2006, nearly the same as in 2005. The program's spending growth is expected to be 7.3 percent in 2007, then average 8.2 percent per year from 2008 through 2016.
• The nation's prescription drug spending will more than double by 2016, reaching $497.5 billion from $213.7 billion in 2006.

Palmetto will continue to operate the National Supplier Clearinghouse and as the Statistical Analysis Durable Medical Equipment Regional Contractor until CMS settles those contracts.

Thomas Takes on New Role in Washington
WASHINGTON--Bill Thomas, former chairman of the powerful House Ways and Means Committee and a long-time foe of the home medical equipment industry, will make his first public speech today as a visiting fellow of the American Enterprise Institute for Public Policy Research.

Thomas, considered the father of the cap on Medicare oxygen reimbursement, signed on to the D.C.-based conservative think tank earlier this month as a scholar focusing on tax, health care and trade policies, as well as elections and the legislative and political process. He joins a long list of conservative public policy experts, including former Speaker of the House Newt Gingrich and former CMS Administrator Mark B. McClellan, M.D.

Thomas is scheduled as the keynote speaker today at "How Will the President's Tax Deduction for Health Insurance Work," an AEI panel discussion of President Bush's proposal to provide a standard tax deduction for those buying health insurance. The event will be held at the Wohlstetter Conference Center in Washington.

AEI, which a spokesman describes as "a university without students," says its purposes are to "defend the principles and improve the institutions of American freedom and democratic capitalism." The private, not-for-profit organization offers its resident and visiting fellows a forum from which to comment on issues of government, politics, economics and social welfare. As a visiting fellow at AEI, Thomas will be involved in researching his areas of expertise, writing papers and participating in conferences.

"We are very proud to welcome Bill Thomas to the AEI team," said Christopher DeMuth, president. "Both his intellect and his vast legislative experience will be an enormous asset to AEI."

Stakeholders in the HME industry were less enthusiastic.

"Mr. Thomas is still a force to be reckoned with. He won't have the same direct power he wielded as Ways and Means chair, but at AEI, he will probably influence the way members of Congress and the administration approach issues such as Medicare," said Michael Reinemer, vice president, communications and policy, for the American Association for Homecare. "I suspect his zeal to 'reform' entitlement programs has not diminished since leaving office."

"He certainly has been a problem for the HME community regarding understanding of home care costs and services," said Robert Achermann, executive director of the California Association of Medical Product Suppliers. Whether Thomas' position at AEI will influence future legislation remains to be seen, he said.

Thomas' federal legislative credentials reach back to 1979, when he joined the U.S. House of Representatives as a Republican from California. He retired in January after serving as chairman of the Ways and Means Committee for six years. During that tenure, he became known as a champion of HME cuts, most notably the administration's proposed 13-month cap on Medicare oxygen reimbursement.

Denials Soar for Wound Therapy Claims in Jurisdiction A
COLUMBIA, S.C.--A pre-pay probe review of Jurisdiction A claims for negative pressure wound therapy has resulted in more than three-quarters of those claims being denied, according TriCenturion, the DME Program Safeguard Contractor for regions A and B.

The review was triggered early last year by the addition of new products to the NPWT policy group.

"Data analysis identified significant increases in allowed charges in Jurisdiction A," TriCenturion officials said in a bulletin.

Because of the high rate of denials, the PSC will "continue with a widespread pre-pay review of the new suppliers billing claims with HCPCS E2402 in an effort to ensure compliance with billing practices," the bulletin said.

The overall charge denial rate was 75.55 percent. Statistics also showed that 41 percent of the claims were denied because the medical information submitted did not meet the policy criteria.

According to TriCenturion, the most common problems were: supplier-created forms submitted as a substitute for requested medical information; absence of medical information; incomplete physician orders; lack of documentation of wound measurements; unchanged wound measurements from previous month; unmet initial coverage criteria; and therapy exceeding four months.

In addition, data showed that 30 percent of the claims were denied because a request for documentation went unanswered.

To help reduce the error rate, TriCenturion offered the following suggestions to providers:

• Review all documentation prior to responding to the Additional Documentation Request letter to ensure all documentation is present (CMN, order, etc.).
• Implement a process to ensure that ADR letters are responded to in a timely manner.
• Consider obtaining information from the medical record to meet reasonable and necessary criteria at the time the order is received.
• Review the information obtained from the medical record against the local coverage determination and policy article to determine if the reasonable and necessary coverage criteria are met.
• Ensure that all appropriate employees are aware of discontinued therapy to ensure that claims are not billed after NPWT therapy has stopped.

To view the full bulletin, click here.

Zealous Anti-Fraud Activities Reap Millions for Florida
TALLAHASSEE, Fla.--The U.S. Attorney 's Office for the Southern District of Florida has filed 23 False Claims Act lawsuits against clinics and DME companies, alleging some $30 million in fraudulent Medicare claims.

The lawsuits are the latest move in "Operation Equity Excise," an anti-fraud effort undertaken by the U.S. Attorney's Office, the Department of Health and Human Services and the FBI in southern Florida.

"Operation Equity Excise has already recovered more than $10 million in fraudulently paid health care claims," said U.S. Attorney Alex Acosta. "Through the 23 lawsuits ... we hope to recover an additional $30 million to help replenish the scarce resources of the Medicare system."

Government officials said they recovered $10.5 million in fraudulent Medicare funds that were lodged in bank accounts. Many of the accounts had been set up by nominee owners of clinics or DME companies that were engaged in Medicare fraud, officials said. In some cases, the companies had abruptly closed and abandoned the bank accounts. In other instances, the signatories on the accounts denied any knowledge of the companies and any claim to the accounts.

When federal agents could not locate anyone who admitted having any responsibility for the bank accounts or operation of the businesses, investigation of those companies resulted in the lawsuits.

"The amount of taxpayer money that is stolen by criminals abusing the Medicare reimbursement system is substantial, particularly in southern Florida," said Jonathan Solomon, FBI special agent in charge. "However, with the success of Operation Equity Excise, we hope to continue recovering stolen funds. The FBI has devoted significant resources to address health care fraud and it will continue to be a top priority for the Miami FBI office."

Meanwhile, concentrated efforts by Florida fraud teams saved Medicaid $37 million in avoided costs or overpayments during fiscal year 2005-2006, according to a joint report by the Florida Agency for Health Care Administration and the Office of Attorney General.

Audits and investigations of more than 1,200 Medicaid providers reaped another $28 million in overpayments, according to the report. And more than $112 million was recovered in funds related to claims in which a third-party payer, not Medicaid, was responsible.

The 44-page report details efforts of AHCA's Medicaid Program Integrity and the Medicaid Fraud and Control Unit of the OAG to harness the overpayments. "Close monitoring of Medicaid billing, aggressive prevention measures and increased efforts to recover overpayments have strengthened the state's ability to combat fraud and abuse more than ever before," said Christa Calamas, AHCA secretary.

MPI has employed a variety of prevention measures, including prepayment reviews to identify improper claims and deny payment and recommendations for termination of providers suspected of abusing the Medicaid program. AHCA's Division of Medicaid also has implemented prevention initiatives ranging from provider site visits to identifying payment errors and inappropriate billing, according to the report.

Overall, the report said, 245 providers were placed on prepayment review during the year, thus preventing $5.5 million from being paid out to "abusive" providers, and 194 were terminated.

Provider News
Walgreen Co. to Acquire Assets of Familymeds Group
DEERFIELD, Ill.--Walgreen Co. has announced it will buy some assets of Familymeds Group, a specialty pharmacy and medical specialty product provider, for approximately $60 million. The deal is expected to close in the second quarter of calendar 2007.

The transaction includes 53 company-owned pharmacies in 11 states under the Familymeds Pharmacy, Ethical Pharmacy, Worksite Pharmacy and Arrow Pharmacy & Nutrition Center names.

Walgreens said it would continue operating a majority of the locations, and that all of the 500 Familymeds employees are expected to be offered positions with Walgreens.

Walgreens said it plans to open about 500 new drugstores this year, with a net increase of 400 stores after relocations and closings. Walgreen Co., which had fiscal 2006 sales of $47.4 billion, operates 5,611 stores in 48 states and Puerto Rico.

Arcadia Completes Buy of PrairieStone Pharmacy
SOUTHFIELD, Mich.--Arcadia Resources has completed its acquisition of PrairieStone Pharmacy, a Minneapolis-based company that operates 200 retail pharmacies in grocery stores in the central and eastern United States.

Arcadia said its in-store CareClinic minor care concept, combined with PrairieStone's Automated Pharmacy, will allow a grocer to place a "complete health care offering" in the same space typically earmarked only for pharmacy. The locations will be staffed with a pharmacist and a nurse.

Over the past several years, Arcadia has continued to expand its consumer-focused medical and wellness services, opening HME stores in Sears and Wal-Mart, and offering non-urgent medical care in Meijer locations in Michigan and Indiana.

Arcadia posted net revenues of $41 million in the third quarter of fiscal 2006, compared to revenues of $33.3 million for the same period in the prior year, an increase of 23 percent.

Manufacturer News
Eli Lilly Launches Insulin Pen With Memory
INDIANAPOLIS--Eli Lilly has introduced the HumaPen Memoir insulin pen, designed for diabetics who take several shots of mealtime insulin each day. It has a digital display that allows patients to record and review their last 16 insulin doses, including the priming doses.

Since many insulin users need multiple shots per day, the ability to record doses and the time of the dose could help simplify daily management of the disease, according to a company press release.

Precise meal-by-meal blood sugar management is important in diabetes management, the company said. But despite new treatment options that have become available during the past few years, the American Diabetes Association's recommended blood sugar goal--an A1C level of less than 7 percent--remains elusive for many diabetics. Fewer than half of Americans who have been diagnosed with and are being treated for the disease are achieving the target. (A1C is a measure of average blood glucose levels over a two-to-three-month period.)

Developed in partnership with Batelle Medical Device Solutions, Columbus, Ohio, the Memoir is designed to resemble a writing pen, which the company said would allow more discreet injections in public compared to using a vial and syringe. The new pen is available for use with Humalog mealtime insulin.

Lilly also said that in April it will launch the HumaPen Luxura HD, an insulin pen that delivers Humalog in smaller increments.

According to the Centers for Disease Control and Prevention, diabetes affects nearly 21 million Americans. Approximately a third of those, or six million people, do not know they have the disease. Diabetes is the sixth leading cause of death in the United States and costs approximately $132 billion a year in direct and indirect medical expenses.

Inogen Picks Up $22M in Funding
SANTA BARBARA, Calif.--Inogen has secured $22 million from a group of investors led by Novo A/S. The company said it will use the funds to support new manufacturing capabilities and expand into international markets.

Novo A/S, based in Denmark, and Arboretum Ventures, based in Michigan, are first-time investors in Inogen, the company said. Other participants in this round of funding are existing investors Versant Ventures, Avalon Ventures and Accuitive Medical Ventures.

"We believe that Inogen is at the forefront of a paradigm shift in home oxygen therapy," said Heath Lukatch, a partner at Novo who will serve on Inogen's board of directors. "The Inogen One device has the potential to obviate the need for expensive home oxygen tank delivery services, while allowing COPD patients greater flexibility and freedom in their day-to-day lives."

According to Inogen CEO Kathy Odell, "This latest financing round reflects our investors' confidence in our approach to meeting the needs of a rapidly expanding COPD market." She added that as COPD prevalence escalates, the company expects to continue its "strong momentum" by capitalizing on the increased adoption of portable oxygen concentrators and recent changes to Medicare reimbursement.

The U.S. oxygen therapy market is growing at a rate of more than 10 percent a year, according to the company.

Tyco Healthcare Changes Name to Covidien
MANSFIELD, Mass.--Tyco Healthcare said it will change its name to Covidien when it separates from parent company Tyco International this spring and becomes an independent, publicly traded company.

With 43,000 employees worldwide and annual sales of nearly $10 billion, Tyco Healthcare's product portfolio includes disposable medical supplies, monitoring equipment, medical instruments and bulk analgesic pharmaceuticals. The company said the Covidien brand will be the "master identifier" that will unite its brand names, including Autosuture, Kendall, Mallinckrodt, Nellcor, Puritan Bennett, Syneture and Valleylab.

"We're confident that our new identity as Covidien will help us strengthen our ongoing partnership in the lifesaving work of medical professionals, creating far-reaching benefits for improved patient care," said Eric Kraus, senior vice president, corporate communications, Tyco Healthcare.

As Covidien, the newly independent company will focus exclusively on health care.

In Brief
Twenty-seven members of the U.S. House of Representatives have signed on to support the Home Oxygen Patient Protection Act (H.R. 621), the American Association for Homecare reported, including three new cosponsors: Reps. Hank Johnson, Jr., D-Ga.; Ileana Ros-Lehtinen, R-Fla.; and John Tierney, D-Mass. AAHomecare is urging HME stakeholders to ask their state's representatives to support the bill, which would repeal the Deficit Reduction Act's 36-month cap on oxygen rental. To view the text of H.R. 621, visit the congressional Web portal at www.thomas.gov.

AAHomecare has also reported that the National Supplier Clearinghouse Advisory Committee has been involved in troubleshooting problems that providers have had with site visits by Overland Solutions, the NSC's contracted inspector. The committee wants to hear from companies that have had concerns with site visits, which are used to determine whether providers are in compliance with the NSC's 21 supplier standards. According to the committee, the objective is to gather specific examples of where Overland Solutions employees may need additional training to improve the inspection process for the industry as a whole. HME companies that have had issues they would like to report can fill out a form posted on the AAHomecare Web site.

HHS Secretary Mike Leavitt has announced that Alabama, Louisiana and Mississippi will get $175 million in grant funds to help hospitals and health care providers under economic pressure from Hurricane Katrina. CMS said it will allocate 45 percent of the funds to Louisiana, 38 percent to Mississippi and 17 percent to Alabama. Leavitt also established a $15 million grant for Louisiana to use for the greater New Orleans area to help attract doctors and other health care providers. HHS said the Deficit Reduction Act of 2005 provided funding for the restoration of health care in Hurricane Katrina-impacted communities.

Kaiser Permanente has launched a survey of its membership in northern California to look at how genetics and lifestyle factors influence common health problems, with information to be gathered from as many as 500,000 people. The goal, according to Kaiser, is to study which genes, and which environmental factors, are linked to specific diseases like diabetes, high blood pressure, asthma, heart disease, Alzheimer's and cancers. The organization is hopeful that its findings could lead to new ways of diagnosing, treating and even preventing some diseases altogether. For more information, visit http://www.dor.kaiser.org/studies/rpgeh/index.html.

Coming Up
The 19th Annual National Managed Health Care Congress (NMHCC) will take place March 5-7 in Atlanta. For information, call 888/670-8200 or visit http://www.iirusa.com/nmhcc/5285.xml.

The California Association of Medical Product Suppliers (CAMPS) will hold its annual convention in San Diego March 7-8. For information, call 916/443-2115 or visit www.campsone.org.

The Home & Community Care Policy Conference will be held March 8 in Columbus, Ohio. For information, call 614/885-0434 or visit www.homecareohio.org.

The Midwest Association for Medical Equipment Services (MAMES) will hold its spring convention, "Thriving in the New Reality," March 8-9 in Overland Park, Kan. For information, call 651/351-5395 or visit www.mames.com.

The 23rd International Seating Symposium is scheduled for March 8-10 in Orlando, Fla. For information, call 412/586-6921 or visit www.iss.pitt.edu.

APhA 2007, the American Pharmacist Association annual meeting, will run March 16-19 in Atlanta. For information, call 800/237-2742 or visit www.aphanet.org.

America's Health Insurance Plans (AHIP) National Policy Forum is scheduled for March 22-23 in Washington. For information, call 202/778-3200 or visit www.ahip.org.

The Illinois HomeCare Council's annual conference and expo, "Home Care: Life in the Fast Lane," will be held March 28-30 in Rosemont, Ill. For information, call 847/657-6960 or visit www.ilhomecare.org.

The Medical Equipment Suppliers Association has set its MESA All-Star Conference March 28-30 in San Antonio. For information, call 800/722-2310 or visit www.mesanet.org.

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

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