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Headline News
Lawsuit Filed to Foil Competitive Bidding
DALLAS--In a move to halt competitive bidding, a lawsuit filed last week on behalf of three Medicare beneficiaries and three small HME companies asks for a permanent injunction that would stop CMS from ever implementing the program.

Filed on Tuesday in the United States District Court for the Northern District of Texas, Dallas division, the suit challenges the constitutionality of competitive bidding, claiming that it illegally discriminates against both beneficiaries and providers.

The Amarillo, Texas, law firm of Brown & Fortunato filed the lawsuit--supported by The VGM Group and its Last Chance for Patient Choice, a non-profit formed to fight the bidding system--on behalf of plaintiffs in the Dallas competitive bidding area. Those listed on the suit include beneficiaries Gregory Hewitt, Jose M. Salas Jr. and Charles W. Bell, and HME companies Oxyonly (dba Procair), M.S.B. and Cardiorespiratory Home Systems. The suit names HHS Secretary Michael O. Leavitt and acting CMS Administrator Leslie V. Norwalk as defendants.

"The theories set out in the complaint are that competitive bidding violates due process and equal protection under the U.S. Constitution," said Jeffrey S. Baird, chairman of Brown & Fortunato's Health Care Group.

According to the 19-page document, the suit argues that beneficiaries in CBAs will receive "a different, lower level of product and/or service quality," and that small HME businesses will be unable to compete under the program.

"The bidding system is built to reward the characteristics of large DME providers by basing its ultimate decision on the bidder's ability: 1) to make the lowest bid, and 2) to service an entire metropolitan area. The per-unit expense, and thus the bid, of larger providers is almost necessarily lower than those companies that operate on a smaller scale. As if that is not enough, the requirement that the DME bidder must be able to cover the entire metropolitan area will clearly exclude smaller outfits," the suit reads.

"An area of service constrained by an artificial bidding system which rewards bidders who reduce quality of service and product and punishes providers who demand a price sufficient to maintain acceptable and equal service levels ... is inherently unjust, unequal and unnecessary."

The suit also alleges that the bid program creates two classes of beneficiaries.

"The competitive acquisition scheme will leave two disparate classes in its wake. Medicare beneficiaries in the cities using the low-bid system are left to sink or swim with the surviving DME suppliers whose sole virtue is their cheap product," the suit says, noting that suppliers that win bids "may be unable to match the quality of the goods and services, or even meet the medically necessary minimum standards" of providers that beneficiaries had previously chosen.

"In contrast, non-Medicare beneficiaries will find safe harbor in DME suppliers concerned with not only price, but quality and service," according to the suit. "Thus, the favored class, non-Medicare beneficiaries, will receive all the care their medical conditions require, while Medicare beneficiaries are left to choose among the low-quality, generic products, regardless of their individualized health care needs."

As a result, the document continues, "the competitive acquisition scheme poses an imminent threat of harm to those Medicare beneficiaries whose medical needs cannot be met by one-size-fits-all DME providers."

News of the lawsuit was announced last week at VGM's Heartland Conference in Waterloo, Iowa, the buying group's hometown. (For more on the conference, see Heartland Conference Draws 1,000 in this issue.)

"We understand from our attorneys that this will be a difficult and uphill fight for us in the courts," said LCPC President Mike Mallaro. "We feel strongly that this is very bad legislation and bad public policy, and we simply cannot allow it to go unchallenged in the court system."

"This forced 'race to the bottom' in service and quality is not what the overall Medicare law is structured on or what beneficiaries deserve," added Jim Walsh, VGM president and general counsel. "It is certainly not what anyone wants to happen to health care in this country.

"The winners in this new system will be the providers that can quickly reduce the level of services provided and substitute cheap, low-quality products for the high-quality products the system now allows them to provide to seniors--both Medicare beneficiaries and others," Walsh continued. "The losers will be seniors and their families and the companies that continue to provide high-quality services and products."

Stakeholders said similar suits might be filed in Cleveland or other cities in the 10 CBAs where competitive bidding is set to be implemented in April 2008.

Stated Mallaro: "It has to be stopped."

Kuhn said he would discuss the suggestion with CMS' program integrity office.

Home Infusion Bill Introduced in the House
WASHINGTON--Bipartisan legislation introduced June 5 by Rep. Eliot Engel, D-N.Y., would extend coverage for home infusion services to Medicare beneficiaries, a benefit currently available to most patients in the private sector.

The "Home Infusion Therapy Medicare Coverage Act of 2007" (H.R. 2567) would give home infusion services and supplies coverage under Part B, with drugs covered under Part D. The measure is a revised version of a bill co-sponsored by Engel last year that would have consolidated both the drugs and services under Part B (see HomeCare Monday, July 24, 2006).

When Congress passed the Medicare Modernization Act in 2003, lawmakers added coverage for home infusion drugs including antibiotics, antivirals and antifungal drugs, which are prescribed for patients with serious infections such as bone and skin infections, heart infections, pneumonia and urinary tract infections.

"Congress correctly understood what many private payers have realized for decades--that a home infusion therapy benefit under Medicare would reduce hospital stays and decrease costs," said Donald M. Poretz, MD, president-elect of the Infectious Diseases Society of America.

But IDSA said CMS interpreted the law to cover only the drugs but not the services and supplies associated with home infusion. "As a result, my Medicare patients must come to my office, stay in the hospital or live in a nursing home to receive antimicrobial infusion services," said Poertz, whose organization is urging support for the new bill.

The National Home Infusion Association also hailed the bill's introduction, saying that H.R. 2567 "would close a glaring and unintended gap in Medicare drug coverage that is affecting the sickest, most vulnerable patients." The group also pointed to the efficiencies of home infusion. It costs less, produces better results and does not carry the risk of hospital-acquired infections, NHIA said.

"For decades, commercial health plans have treated these individuals successfully and in a cost-effective manner by providing coverage for infusion therapies administered in the patient's home," Engel said, adding that professional services, supplies and equipment "are integral components of this therapy."

Said Engel, "Medicare is virtually the only payer in the country where home infusion therapy is not adequately covered. Our seniors deserve better."

Co-sponsors of the bill include Reps. Kay Granger, R-Texas; Tammy Baldwin, D-Wisc.; Chip Pickering, R-Miss.; Randy Kuhl, R-N.Y.; and John Tierney, D-Mass. The bill was referred to the Energy and Commerce and Ways and Means committees.

Court Puts Kibosh on Challenge to DRA
WASHINGTON--A federal appeals court has approved the dismissal of a case challenging the legality of the Deficit Reduction Act of 2005, which mandates a 36-month cap on oxygen rental and a 13-month rental cap on DME.

In March 2006, watchdog group Public Citizen filed a lawsuit in federal district court to challenge the DRA on grounds that it was not a valid law because both houses of Congress had not passed the exact version of the bill signed by President Bush.

As the original legislation was sent back and forth between the House and Senate, a typo involving the number of months of the DME rental cap was inserted into the House version. The Senate passed a version of the bill without the typo, which was then signed by the president. Under the Constitution, bills passed by both congressional chambers should be identical.

Last August, the U.S. District Court for the District of Columbia dismissed the lawsuit, citing the "enrolled bill rule" in the 1892 court case Marshall Field v. Clark. Under the rule, the signatures of the Speaker of the House, the President of the Senate and the President of the Unites States make an enrolled bill "complete and unimpeachable." Public Citizen then appealed that decision.

But the U.S. Court of Appeals for the D.C. Circuit affirmed the dismissal in a decision issued May 29.

"We are disappointed with today's appellate court decision affirming the dismissal of Public Citizen's challenge to the Deficit Reduction of 2005," Allison Zieve, the group's attorney, said in a statement. "We are also disappointed that, in this case, the courts have not been willing to stand up for a basic principle of our Constitution: the requirement that both chambers of Congress pass identical versions of a bill before that bill can be signed into law by the president."

Zieve said Public Citizen has not yet decided whether it will pursue the case further.

Heartland Conference Draws 1,000
WATERLOO, Iowa--The VGM Group's Heartland Conference 2007 started with a bang last week as attendees watched a fireworks display at the annual hog roast on opening night. But the explosive nature of the HME industry's current circumstances--and how to survive them--is what drew an estimated 1,000 providers, manufacturers and others to the members-only event, held June 11-14.

"The greatest value of the Heartland Conference was the considerable networking and relationship-building opportunities that it offered," said Cindy Ciardo, CEO of Knueppel HealthCare Services in West Allis, Wis. "That and the solidarity of our industry will be our greatest strength in the months and years ahead as we fight for our industry in general and for the needs of the people we service in particular."

The largest conference to date--nearly reaching capacity for the Five Sullivan Brothers convention facility--Heartland offered more than 100 educational sessions and exhibits from 75 VGM participating vendors. According to Carolyn Cole, vice president of VGM creative services, the number of vendor representatives doubled this year, totaling 256.

The conference included information in nine tracks, among them products and technology, regulatory and reimbursement. "[Providers] have viable businesses, and their businesses will continue to remain viable," said Ron Bendell, president of VGM & Associates.

Confirmed attendee Wilson Rogers, business development manager, Rogers Home Medical, Victoria, Texas, "After listening to speakers at Heartland last year say you have to put out and display products to sell products, such as lift chairs, we have done that and have increased our gross sales by 50 percent."

But as at other recent industry gatherings, competitive bidding and accreditation proved to be the top-of-mind issues.

According to Mark Higley, VGM's vice president of development, providers are still looking for information on the final rule, how to prepare and submit a bid and the long-term impact of competitive bidding. With CMS' bid window set to close July 13, Higley said providers in the first-round MSAs need up-to-date information on their options, and "those who will be next in line should be able to prepare their businesses and restructure their operations to be ready when it is time."

Heard at Heartland
"Once we heard of the requirement that HME providers be accredited, we immediately went through the process as we are in Houston and thought it would be in the first round of competitive bidding. Since we now know we are in the second round, we have plenty of time, but we are making changes now such as streamlining our organization and preparing to bid financially. Also, for the first time, we are getting involved politically, approaching congressmen and senators in our district and visiting representatives in Washington with groups like VGM and AAHomecare. In the past, we left it up to everyone else, but now you can't do that--you have to be proactive. One of the biggest changes we have made is to put our time, resources and finances towards being politically active." --Jason Hall, Texas Home Medical, Conroe, Texas

"A lot of people seem to think mandatory accreditation is not going to happen, that there is going to be some kind of stay of execution on it and on competitive bidding. We are not looking at it that way at all. Currently, we have a branch in Dallas, which is one of the first [competitive bidding areas]. We are also looking at bidding in Kansas City and some other markets. People are making a mistake if they do not bid; it is not going to go away. We are very optimistic. Any time there is change, to me, there is opportunity." --Scott Higley, COO of Adorno Rogers Technology, Brentwood, Tenn.

"CMS' forecast is that 50 percent of the suppliers will be eliminated [with competitive bidding], but with the number of baby boomers coming our way, we should actually have more suppliers than less. Decreasing supply in the face of increasing demand is contrary to the most basic laws of business." --Wayne Sale, president and CEO of Health First Home Medical Equipment and chairman of the National Association of Independent Medical Equipment Suppliers, Richmond, Va.

"I am an enormous supporter of accreditation. I think it is going to give us a professional look to Congress and to our patients. It is a good thing. Although it is expensive, it is a cost of doing business, and we have to absorb that cost." --Joan Cross, co-owner of C & C Homecare, Bradenton, Fla.

"Attendance at the Heartland conference shows the enthusiasm that remains in this business. By coming together, we can do a lot to preserve the financial success of the independent provider, starting with getting the Tanner-Hobson bill passed. We need to get providers to go into their home states and get their congressmen and senators signed onto this bill. [The 'any willing provider' provision] means that all companies can stay in the game, and Congress has to reauthorize any further movement toward competitive bidding." --Mal Mixon, chairman and CEO, Invacare Corp., Elyria, Ohio

In Brief
The American Association for Homecare said about two dozen new cosponsors have signed on to industry-backed oxygen and competitive bidding bills following its Washington Legislative Conference, which culminated in 272 meetings with U.S. House and Senate offices June 7. Those include 16 new cosponsors for the Medicare Durable Medical Equipment Access Act of 2007, known as the Tanner-Hobson bill (H.R. 1845); one new cosponsor for its Senate companion the Hatch-Conrad bill (S. 1428); and eight new cosponsors for the Home Oxygen Patient Protection Act (H.R. 621). For information on the bills, visit http://www.aahomecare.org.

Co-owners Rob Brant and Ron Bibace of North Miami Beach, Fla.-based City Medical Services report that the Small Business Administration has forwarded 20 formal complaints to CMS about the national competitive bidding final rule from small HME providers in Florida. The providers are working through SBA to combat the rule, which they argue is unfair to small businesses (see HomeCare Monday, May 21), and are planning a meeting next week in Hollywood, Fla., to "discuss moving forward for our survival." For more information, visit www.dmeopen.com.

According to news reports, the Senate Finance Committee has set a hearing next month for Kerry N. Weems, President Bush's nominee to head CMS. Weems is currently deputy chief of staff at HHS, where he has worked in various jobs for 24 years. The nomination must be approved by the entire Senate.

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