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Deadline Looms; Legislators Ask CMS to Extend Bidding Window
WASHINGTON--With just days left before Medicare's first-round competitive bidding window closes, there is blatant evidence that many providers still have critical questions and concerns about the bidding process.

But neither those concerns nor the glitches in the bidding system itself will be enough to stall the bidding deadline, a CMS official indicated last week.

A last-minute bidders' conference call sponsored July 9 by CMS turned into a blitz of questions on all aspects of bidding. Callers also expressed frustration at being frozen out of the online system as they tried to place bids.

Joel Kaiser, CMS deputy director of DMEPOS policy, told callers that the agency had extended the time-out period so providers could stay in the system for 12 hours before being automatically logged off. But he offered providers no hope for a bid submission reprieve. The deadline to submit bids still stands at 9 p.m. prevailing Eastern Time on July 20. (See HomeCare Monday Special Alert, July 10.)

Even as the clock winds down, attempts are still being made to modify or halt DMEPOS bidding.

While "all suppliers must operate under the assumption that the bidding deadline closes as announced," cautioned Walt Gorski, vice president of government affairs for the American Association for Homecare, he added that "we are seeking congressional help through [letters] to the CMS administrator requesting that certain fundamental questions be addressed before the implementation of competitive bidding."

Separate House and Senate letters from a bipartisan group of legislators point out that the 60-day bid window does not provide enough time for providers to get information about the details of bidding and to get their questions answered, Gorski said. Those questions relate to product categories and codes--which the letters say "are too broad and inconsistent to adequately describe products"--the compressed timeline to submit bids and calculation of the median price.

Signed by 14 senators and sent out late Friday, the Senate letter also says the short bid window particularly affects small suppliers that wish to participate in bidding networks because they "must develop new business organizations, implement untried computer systems and address a large number of unresolved policy issues, including potential violations of antitrust laws."

"Transitioning to competitive bidding is a significant and highly complex undertaking," according to the lawmakers. "While Congress instructed CMS to begin competitive bidding in 2007, we strongly believe that due to its direct impact on daily patient care, it must be implemented carefully and with significant attention to the effect on patients."

A similar letter from 52 members of the House was expected to be delivered today to acting CMS Administrator Leslie Norwalk, Gorski said. The letters were shepherded by Reps. Tom Allen, D-Maine, and Sam Johnson, R-Texas; and by Sens. Kent Conrad, D-N.C., and Pat Roberts, R-Kan.

The association and other industry stakeholders also continue to seek sponsors for legislative efforts including H.R. 1845, the Medicare Durable Medical Equipment Access Act of 2007, also known as the Tanner-Hobson bill; H.R. 621, the Home Oxygen Patient Protection Act (also known as the HOPP Act); S. 1428, the Senate companion bill to Tanner-Hobson; and H.R. 2231, the Medicare Access to Complex Rehabilitation and Assistive Technology Act of 2007.

In addition, Gorski said stakeholders are pushing for inclusion of the provisions of each bill in the Medicare packages that both the House and the Senate are currently drafting.

The Tanner-Hobson bill and its Senate companion would allow qualified providers who submitted bids below the allowable to continue to participate in Medicare; it would require a complete analysis of the impact of competitive bidding once it has been fully implemented in the first 10 cities; and it would prohibit expansion of the competitive bidding program or the application of the bid rates to non-bid areas unless specifically authorized by Congress.

The HOPP Act would rescind a provision in the Deficit Reduction Act of 2003 that gives ownership and responsibility for oxygen equipment to patients after 36 months of rental through Medicare.

H.R. 2231 would carve out complex rehab equipment and assistive technology from the competitive bidding program.

"We are at the initial stages of this process," Gorski said about appealing to congressional members to include the provisions. "There will be opportunities to influence the process as these issues work toward conclusion ... congressional action may start becoming more clear as the packages are developed later this week."

On yet another front, DME suppliers and beneficiaries who filed a lawsuit on June 12 seeking to prevent implementation of competitive bidding are awaiting a response from the government.

"The U.S. Attorney's Office has 60 days from the time the suit was filed to respond," said Jeffrey Baird, chairman of the Health Care Group at Brown & Fortunato, PC, Amarillo, Texas, which filed the suit. "Accordingly, we expect the U.S. Attorney's Office to file an answer to the suit in early to mid-August, although it is possible the government could respond any day now."

New Study Shows $1.5 Billion in Cuts to Oxygen Benefit
WASHINGTON--More than $1.5 billion will be slashed off the Medicare home care oxygen benefit by 2010, thanks to the combined effects of legislative and regulatory cuts initiated over the past several years, according to a new study released last week.

Totaling $710 million in 2009 and $855 million in 2010, the funding reductions amount to an 18.8 percent reduction in the reimbursement rate, according to "Home Oxygen Therapy/An Analysis of Recent Medicare Payment Policy," a data analysis conducted by Avalere Health LLC. In addition, some 1.4 million Medicare beneficiaries will be affected by the cuts, which average $325 per patient, the report says.

The report was commissioned by the Council for Quality Respiratory Care, a coalition of 11 home oxygen therapy providers and manufacturers including Air Products, AirSep, American HomePatient, Apria, Invacare, Lincare, Pacific Pulmonary, Praxair, Respironics, Rotech and Sunrise Medical.

The study looked at the effects of changes to home oxygen reimbursement from 1997 to 2010 brought about by the Balanced Budget Act of 1997, the Medicare Modernization Act of 2003 and the Deficit Reduction Act of 2005, including competitive bidding and the 36-month oxygen cap. Its results provided sobering data for HME stakeholders.

"When you consider these cuts in a historical context, the severity is particularly significant," said John Richardson of Avalere Health, one of the analysis' authors. "Not adjusted for inflation, the average Medicare home oxygen payment by 2010 will be almost half what it was in 1997."

"While we knew these funding cuts were on the horizon, until now we had no idea of their true severity since the Congressional Budget Office, which determines costs of legislation, has never had the correct data to determine their impact on the home oxygen benefit," said Peter Kelly, chairman of CQRC.

"It's unfathomable to think that, even with these debilitating cuts looming, there could be additional reductions with which to contend as well, cuts that will further jeopardize vital patient services and caregiving staff," he added. CQRC said as many as 15 million Americans have been diagnosed with COPD.

Lisa Getson, executive vice president, government relations, investor services and compliance, for Lake Forest, Calif.-based Apria Healthcare, said those involved in the home oxygen sector expected the cuts from the DRA mandate would be deep, but now they have hard data that show just how deep.

"It is important to have a well-respected health care policy and analytics firm such as Avalere confirm what we had suspected all along--that the total cuts associated with the DRA for oxygen alone would far exceed any estimates initially provided by the [CBO]," Getson said.

"By the time both the DRA and competitive bidding's savings are incorporated into the system, Medicare's daily expenditures for oxygen will continue to decrease from Avalere's estimated $7.62 today to the $4.50 to $5 range," she added.

The study also examines how many patients on a state-by-state basis will be affected by the 36-month oxygen rental cap, which kicks in on Jan. 1, 2009.

According to the study, Medicare's home oxygen benefit will decrease almost 19 percent from 2008 to 2009 as a result of the 36-month capped rental policy alone. Florida will be hit hardest--some 19,700 Medicare beneficiaries will be affected by the cap. Texas follows with nearly 17,400 patients, and California is third on the list with 13,900 beneficiaries.

"We estimate that the 36-month-capped rental period policy will permanently reduce Medicare expenditures for home oxygen by approximately $400 million to $500 million per year, beginning in 2009," the report states.

The Avalere report provides key information that must be somehow transmitted to policymakers, said Walt Gorski, vice president of government affairs for the American Association for Homecare.

"The Avalere study is a critical document to help show the impact that changes to oxygen reimbursement have had not only on the provider community but on those who require oxygen therapy," he said. "What the study shows is that even if no congressional action is taken, there will be significant cuts to oxygen payments over the next several years. No other benefit category can make that statement. This is important information to get before policymakers."

Getson agreed, noting that the study arms the industry with "quantifiable data, rather than relying on emotional arguments.

"It should assist policymakers and their staff ... to become better educated about the value of the home oxygen benefit to the Medicare program overall," she said. Learning about the major policy and reimbursement changes may also help them understand "why patients who represent the fourth leading cause of death in the U.S. (COPD) will be the ones most impacted by any additional changes or reimbursement cuts," Getson added.

CQRC's Kelly called for Congress and the Bush administration "to protect the benefit from any further erosion."

To view the full analysis, click here.

To view comments from the NCPA, visit www.ncpanet.org.

OIG: CMS Paid $21 Million Too Much for Wound Pumps
BALTIMORE--CMS paid more than $21 million in improper claims for negative wound therapy pumps and accessories in 2004, the Office of Inspector General said in a report released Monday.

The OIG reviewed payments for the pumps after claims shot up by 444 percent between 2001 and 2005, from $25 million to $136 million.

In its report, "Medicare Payments for Negative Pressure Wound Therapy Pumps," the OIG found that nearly a quarter of all the 2004 claims did not meet Medicare requirements. Most of the improper claims had insufficient documentation, the report said. For 44 percent of the claims, supplier-prepared statements were not fully supported by patients' medical records, the OIG said.

The review was based on a random sample of 378 pump claims from CMS' National Claims History file with dates of service in 2004.

While the DMERCs had some safeguards in place to prevent improper payments, they were different among the four contractors, the OIG found.

Based on its review, the OIG recommended that CMS conduct additional medical reviews of claims for the pumps and look at medical records instead of only supplier-prepared statements. CMS should also educate suppliers and wound care providers about use of the pumps and the documentation necessary for medical records, the OIG said.

The OIG further recommended that CMS:

• consider establishing advance coverage determinations for pump claims from suppliers with a high number of claims for the equipment or who have been denied or have a pattern of overuse.
• require face-to-face exams of patients, or require suppliers to get certain parts of patients' medical records from physicians to support the medical necessity of the pumps.
• consider strengthening coverage criteria for the pumps and increase prepayment reviews of claims for them.

To download a pdf of the report, click here.

Enteral Nutrition Sector Raises Concerns about Patient Care under NCB
ATLANTA--CMS' decision not to include enteral nutrition under the grandfather clause of its final rule governing national competitive bidding--and the absence of a transition period for enteral nutrition recipients--could put patients at risk, according to HME stakeholders.

"I think there most definitely could be problems," said Georgie Blackburn, vice president, government relations and legislative affairs, for Tarentum, Pa.-based Blackburn's Medical and treasurer of the American Association for Homecare. "If indeed the patient cannot elect to stay with the current provider ... then right away there has to be some significant management of the patient's care. I don't know how that would take place."

Many providers had thought that the grandfather provision applied to enteral nutrition, one of the 10 product categories included in the competitive bidding project. Under that provision, providers who do not win competitive bidding contracts can, if beneficiaries elect to stay with them, maintain their current patients.

But during a recent conference call, CMS officials informed listeners that enteral nutrition was not among the grandfathered products. "We do not believe we have authority to allow grandfathering for other DMEPOS, such as glucose testing supplies and enteral nutrition, equipment and supplies," the final rule states.

In response to a listener's follow-up question, the agency also said it was not providing a transition time for enteral nutrition beneficiaries.

"There is not a plan for transition, but there will be enough suppliers within that area for the beneficiaries to receive their treatment plans," a CMS official said.

That was small comfort to providers, who pointed out that enteral nutrition, which is the sole source of nutrition for those receiving it under Medicare, requires oversight and frequent attention.

"There is a lot of detail ... Sometimes there are issues with transitioning patients from one formula to another," noted Lynn Giglione, RN, BSN, general manager of Chartwell Pennsylvania, an infusion company in Pittsburgh that has about 750 enteral nutrition patients on its rolls.

"There are formulas that are very similar, but there are specialty formulas, too," Giglione continued. "A provider might not have it on their shelf and would have to get it in. If you're talking a lot of patients, that could take some time ... If you are talking about transitioning hundreds of patients, that would be monumental."

Giglione also said that patients transitioning to new providers might get different pumps, which would necessitate training on how to handle those pumps.

And then there is the quality-of-care issue. Giglione's company, like many others, offers a clinical component. "We have two dietitians on staff and we clinically monitor the patients from the day they come on," she said. "Patients are on teams so they deal with the same person day in and day out."

It would likely be confusing and overwhelming for patients, most of whom are elderly, to adapt to a completely different company and perhaps one without that clinical component, she said.

Alan Parver, a health care attorney with Powell Goldstein LLP in Atlanta, also pointed out that "enteral nutrition is the one area subject to competitive bidding where the majority of patients reside in nursing homes, not in homes."

That translates into a mix of standards, he said, because nursing homes and home care suppliers must adhere to different criteria, and the needs of the patients are different.

"When they are put into the same mix, there could be some serious issues that arise as this goes forward. There might be situations where nursing home suppliers will find themselves doing home care and home care suppliers may end up treating nursing home patients," he said. "It's a different model, a different business ... It may force nursing homes to lose suppliers they have had a long-term relationship with, that they have been comfortable with."

Parver, like other stakeholders, questioned the wisdom of including enteral nutrition in competitive bidding.

Katherine Werner, vice president of professional affairs for the National Home Infusion Association, said NHIA objected to its inclusion in the project early on.

"We didn't feel that enteral therapy was a good candidate for competitive bidding because there was such a care component over and above the equipment," she said.

Werner added that paraenteral nutrition had been removed from the Polk County, Fla., competitive bidding demonstration "and it was our understanding that it was removed from the project because of questions about care of patients," she said. That same quality-of-care issue could arise with enteral nutrition, she said.

For now, the sector is in an uncomfortable wait-and-see mode. Bid contracts are expected to be awarded in December, with implementation scheduled for April 2008.

Cannizzaro to Head Sunrise Mobility, DeVilbiss Healthcare
CARLSBAD, Calif.--Sunrise Medical Chairman Michael Hammes announced the appointment of Michael N. Cannizzaro as vice chairman, president and CEO on Thursday. Cannizzaro will also join the company's board of directors.

Cannizzaro has served as CEO of several health care businesses, including Insight Health Services, National Nephrology Associates and Beltone Electronics. Most recently, he was operating partner at J.W. Childs Associates, a Boston-based private equity firm, where he advised on acquisition and management of a variety of health care companies.

In a company statement, Hammes said the timing of Cannizzaro's appointment "relates directly to the evolution of our business strategy and direction."

In May, the company announced it will operate as two separate organizations, Sunrise Mobility and DeVilbiss Healthcare. (See HomeCare Monday, May 14.)

Cannizzaro will be directly responsible for leading the mobility business, including its Quickie, Sopur and Jay brands, as well as the recently integrated A.R.T Operations (Artistry in Rehab Technology). In addition, he will oversee DeVilbiss Healthcare, which will continue to be managed by President and CEO Kees Regeling.

"Since the time of our going private we have significantly improved our cost and market positions," Hammes said. "As a further strategic evolution, we determined that creating separate, focused businesses would improve long-term prospects and management focus. This has been the driving force behind our spin-offs of DynaVox Systems and Joerns Healthcare as well as the creation of separate organizations for Sunrise Mobility and DeVilbiss Healthcare."

Cannizzaro said he hopes to develop the businesses "into even stronger global competitors."