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

Headline News
Industry Reels from Another Shot at HME
WASHINGTON--After a scathing article in the New York Times blasting what reporter Charles Duhigg described as Medicare overpayments for home oxygen, the American Association for Homecare issued a statement late Friday explaining HME companies' services in providing the therapy and asking for "a genuine debate" about appropriate payment for oxygen.

In the Friday newspaper article, titled "Oxygen Suppliers Fight to Keep a Medicare Boon," Duhigg said the government program spends "more than double what somebody might spend at a drugstore" for home oxygen equipment. In addition, the article said, "Medicare spends billions of dollars each year on products and services that are available at far lower prices from retail pharmacies and online stores."

But in its statement, AAHomecare said the article "paints an extremely biased and misleading picture" of the health care sector that provides home oxygen therapy to Medicare beneficiaries.

AAHomecare "welcomes a genuine debate about appropriate Medicare payment policy for oxygen therapy," the statement said. "In fact, the association and companies providing oxygen therapy have been working for more than a year to design alternatives to existing Medicare policy for Congress to consider. Unfortunately, both the New York Times article and federal policymakers have focused only on the equipment costs associated with home oxygen therapy rather than the complete therapy, which requires numerous services ...

"The fundamental flaw" in the article, the statement continued, "is the dangerously simplistic assumption that oxygen therapy delivered to Medicare patients in their homes should cost the same as the Internet or eBay price to buy the equipment only."

The association pointed to a 2006 study by research firm Morrison Informatics--which analyzed data from home care providers collectively serving more than 600,000 Medicare home oxygen patients--that found 72 percent of the costs of providing the therapy represents services, delivery and other operational expenses, while the equipment itself represents only 28 percent.

For the second time in as many months, the industry has had to beat back the notion that Medicare is overspending on its reimbursements vs. Internet prices.

AAHomecare and other home care supporters responded in November when an Office of Inspector General report compared Medicare fees for power wheelchairs to Internet prices for those products. (See HomeCare Monday, Nov. 5.)

"Internet purchasing and the Medicare provider model are completely different," the association wrote in a Nov. 12 letter to Inspector General Daniel Levinson, noting that HME providers must shoulder expenses such as evaluating the beneficiary's specific needs, delivering the equipment, performing on-site training and processing insurance claims.

"Any accurate analysis of costs required to provide the expected Medicare standard of care must take into account these services and administrative costs, which are distinct from the costs of acquiring the equipment," the letter pointed out.

Friday's newspaper article comes just as Congress returns from its Thanksgiving recess to finish up work on key spending bills. The Senate Finance Committee plans to mark up a Medicare bill this week or next that stakeholders fear could include another oxygen reimbursement cut.

In a posting on its Web site, Waterloo, Iowa-based buying group VGM--which conducted a Washington call-in Nov. 14 to rally support for several industry-backed bills and ask for no further cuts to oxygen--labeled the article "hack journalism" and said it planned to respond. The call-in generated more than 8,100 calls to federal legislators.

AAHomecare said its response had been sent to the national media. If the Times article is picked up in local papers, the association said, it has prepared points that providers can use to write their own responses in a letter to the editor.

The National Association of Independent Medical Equipment Suppliers sent a memo to its members on Friday to "email, call or write this reporter with your response to the story.

"As an industry, we must respond to such stories in the strongest manner possible," read a message from NAIMES' Wayne Stanfield, president and CEO, who said the recently formed provider organization would prepare its own response to the article.

According to the Council for Quality Respiratory Care, which also issued a response to the story on Friday afternoon, the New York Times article "omits salient facts about home oxygen therapy and the critical role it plays in keeping some of Medicare's sickest beneficiaries in their own homes as they manage the effects of debilitating and irreversible lung disease.

"The story inappropriately treats home oxygen therapy as though it is nothing more than the rental of inert equipment, when in fact home oxygen is a prescribed therapy, that when properly administered, requires both medical devices and myriad patient services," the CQRC said. The group is comprised of 11 of the nation's leading home oxygen providers and manufacturers.

To read the New York Times article, click here.

For AAHomecare's full response, click here.

For CQRC's full response, click here.

The caller was advised to send an email to CMS for a response to the problem.

Bidding Timeline, Fraud Demo Discussed at CMS Open Door
BALTIMORE--While there were no big explanations at CMS' Open Door Forum last week, HME stakeholders did glean a few nuggets of information on the agency's national competitive bidding project and its ongoing fraud demonstration.

But those who were anxious to hear the next deadline for mandatory accreditation were disappointed. Rumors had circulated within the industry that the accreditation deadline for Round Two bidders--or maybe even the drop-dead date when all providers must be accredited--would be revealed at the Wednesday afternoon Open Door. It did not happen.

"We don't have any deadlines to give you for Phase Two of accreditation," said Sandra Bastinelli, director of the Division of Medical Review in the Office of Financial Management, in brief comments.

Joel Kaiser, deputy director of DMEPOS policy for CMS, was equally vague in his update on competitive bidding, advising providers to check the competitive bidding Web site--www.dmecompetitivebid.com--for a program timeline. He noted the agency is "in the middle of bid evaluation" for Round One, but should conclude the process in January when the actual contracting process for suppliers will begin.

About expansion of the national bidding project, Kaiser would say only that the next 70 cities selected for the program would be announced "in the near future." However, he added, "once we roll out the MSAs and the product categories for Round Two, that will begin the process of implementation. Shortly after that, we'll be announcing a timeline for Round Two with milestones and key dates."

Regarding the anti-fraud demonstration projects currently under way in Southern California and South Florida--which mandate that all HME providers in those areas reapply to the National Supplier Clearinghouse to be Medicare providers--CMS' Frank Whelan said letters notifying providers about re-enrollment are being sent out gradually.

"One-quarter of all DME suppliers in the targeted areas have received letters," said Whelan. A second batch of letters to the next quarter of suppliers was supposed to go out by the end of November, the third round by the end of December, he said. "By the end of January, the final 25 percent of DME suppliers will have received their letters," Whelan said.

Whelan's explanation, in response to a question about the fraud demo from Walt Gorski, vice president of government relations for the American Association for Homecare, was one of the few answers HME stakeholders got during the forum. CMS officials asked most inquirers to send emails, saying they would be routed to the appropriate person for answers.

Gorski also asked for a status report on claims-processing logjams in Jurisdiction C as a result of the transition from Palmetto GBA to Cigna as the DME MAC, as well as an update on maintenance and service payments for capped rental equipment. Those issues should be addressed in the next Open Door Forum, which is set for Jan. 9.

Yes or No to Home Sleep Testing? Maybe Some of Each, Experts Say
ATLANTA--As the industry awaits CMS' decision on coverage of CPAP therapy based on home testing, DeVilbiss Healthcare's Robert D. Hoover, Jr., MD, MPH, FACP, is optimistic about the outcome. "I believe CMS probably will provide some level of coverage for home studies," said Hoover, chief medical officer for the Somerset, Pa.-based manufacturer.

"The question is going to be how deep down in the technology it will go in terms of the type of study it will allow and what kind of hoops patients or physicians will have to jump through in order to qualify for a home study," Hoover said.

For example, he sees CMS allowing a home-based study if the patient has five out of eight subjective and objective criteria, such as a large neck circumference, a high body mass index, confirmed snoring and daytime hypersomnolence.

"Home-based testing would not be used for screening the general population, but in patients that are more likely to have obstructive sleep apnea, these tests are ... more likely to be approved," he explained.

Current policy dictates that OSA patients needing CPAP treatment be diagnosed through a sleep lab test in order for Medicare to cover the cost of treatment. But a request from the American Academy of Otolaryngology-Head and Neck Surgery asking the agency to accept in-home testing prompted CMS to open its policy for review earlier this year. (See HomeCare Monday, July 9.)

At a meeting of the Medicare Evidence Development and Coverage Advisory Committee Sept. 12, all aspects of the National Coverage Determination on diagnosing OSA were open for review. After its meeting, MedCAC voting results appeared favorable to home testing. But the panel's findings are not binding on CMS, so the outcome depends on the agency's final decision, due in March of 2008, with a proposed decision memo expected Dec. 14 this year.

According to Don Spence, president of Murrysville, Pa.-based Respironics' sleep and respiratory group, the allowance of home-based testing could increase OSA diagnosis.

"There is a large population of patients that has not been diagnosed and treated, and it's likely that if home testing is approved, it will allow some of those patients that may feel uncomfortable coming into a lab setting to consider having testing in their home," Spence said.

However, he does not see home testing as a replacement for sleep lab testing.

"I don't think this in any way says that testing in a lab won't continue," Spence said. "There is probably going to be a place for home testing under the correct clinical supervision but, ultimately, it is up for clinicians to decide what is the best way to diagnose these patients."

No matter how the decision turns out, Bob Messenger, RRT, sleep product manager for Invacare, Elyria, Ohio, advised HME providers to get ready--now.

"If I was a provider today, I would want to strengthen my personal relationships with referring labs and be prepared to offer a service they are not accustomed to--that of delivering service in the home," he said.

Ohio Company Indicted in 'Power Chair Scooter' Billing Scam
CINCINNATI--Ohio company Active Solutions of Worthington conspired to defraud Medicare and Medicaid through a "bait-and-switch" scheme that selectively targeted people who wanted portable scooters, according to a federal indictment unsealed Wednesday.

Filed in U.S. District Court for the Western District of Virginia, the indictment accused the company of deceptively billing the government programs for power wheelchair claims totaling $25.9 million from 2002 through 2005.

Michael Cowen, one of Active Solutions' two owners, was charged under the indictment with 32 criminal counts, including conspiracy to commit health care fraud, conspiracy to launder money, mail fraud, telemarketing fraud and obstruction of justice.

According to the indictment, the company advertised lightweight portable scooters on television, implying the cost would be covered by Medicare and Medicaid, to interest beneficiaries. Once they called for more information, beneficiaries were screened to see if their diagnosis would qualify them for a power wheelchair.

If so, company sales reps would set up a three-way call with the beneficiary and their physician to obtain a prescription for a "power chair scooter." The reps would then prepare a power wheelchair CMN for the doctor to sign.

The indictment alleged Cowen coined the term "power chair scooter" to confuse both beneficiaries and physicians, knowing that the scooters featured in Active Solutions' ads are considered convenience items and are not routinely covered by Medicare and Medicaid.

On delivery, "most beneficiaries were dissatisfied, since they were expecting to receive a lightweight, portable power scooter as shown on the television advertisement and not the heavier and less transportable motorized wheelchair," the indictment said, noting that some of the units were placed in basement apartments or mobile homes where limited space made it impossible for the PWCs to maneuver freely.

The indictment alleged that, in anticipation of beneficiary complaints, Active Solutions' delivery staff "learned how to close the sale by providing information, some of which was false and misleading, including: power scooters tend to tip over easily; the motorized wheelchair is what your doctor ordered and your doctor knows your physical situation best; the motorized wheelchair is paid for and costs you little or nothing at all; Medicare will not pay for scooters;" and "your physician is looking at the future as well as the present."

In addition, during DMERC audits and appeals of denied claims, files sent to the auditors and Administrative Law Judges "were 'seeded' with documents, such as the CMN instruction sheet, which was never provided to the physicians during the sales process," the indictment charged.

Cowen and others enjoyed the proceeds of the scheme, according to the indictment, through the purchase of various vehicles, investing in securities and leasing a Cessna Citation jet for $1.09 million, among other things.

Cowen has been arrested in Florida and will be extradited to Virginia, prosecutors said.

Jan Michael Bliwas, Active Solutions' other owner, pleaded guilty in September to conspiracy to commit health care fraud, telemarketing fraud, mail fraud and money laundering. Bliwas is scheduled to be sentenced Dec. 20 in the Roanoke federal court.

Mixon Receives OAMES Lifetime Achievement Award
COLUMBUS, Ohio--The Ohio Association of Medical Equipment Services has presented Invacare Chairman and CEO Mal Mixon with its first lifetime achievement award.

Given at its November annual meeting, the award was created "to thank an individual whose contribution to home health care is arguably unsurpassed by anyone working in the field today," according to the association.

"OAMES chose to present Mal with the lifetime achievement award to express our immense gratitude for his support of this association over the 27 years of our existence. But more importantly, we thank him for his undying dedication to his customers and the patients that receive the benefit of home care throughout the world," said Kam Yuricich, executive director of OAMES.

During the presentation, Mixon was acknowledged for his forward-thinking and steadfast leadership to the HME industry and Ohio's business community.

"Having worked for OAMES over the past 21 years, I've witnessed Mal and Invacare's immeasurable generosity to our state association first-hand for more than two decades," Yuricich said. "While OAMES is an organization long blessed with exceptional leaders and active, dedicated members, having Invacare in our ranks to help with the heavy-lifting of our advocacy work has been one of the biggest blessings of all. Mal is enormously respected by his peers, a fighter in the field and an inspiration to all who meet and work with him."

Provider News
Marra's Recognized with Patriotic Employer Award
WATERTOWN, N.Y.--On Nov. 19, Marra's Homecare Equipment & Supplies received the U.S. Department of Defense's prestigious Patriotic Employer Award, presented by the National Committee for Employer Support of the Guard and Reserve to employers going above and beyond the requirements for granting leave for military duty.

Tom Williams, representing the ESGR/DOD, presented the award to Marra's owner John Marra in support of employee Jeff McMahon, who returned from active duty earlier this year to his position as a technician.

Opened in 1987, Marra's Homecare is an independent DME and oxygen provider with three branches in northern New York near the Canadian border. The company has more than 40 employees, the majority with more than 10 years of experience each in the home care industry.

ESGR was established in 1972 to inform employers of the necessity of the volunteers that make up half the nation's military forces. Fewer than 1 percent of employers nationally are chosen to receive the Patriotic Employer Award.

Rotech on Notice from NASDAQ
ORLANDO, Fla.--Rotech Healthcare announced it received a NASDAQ Staff Deficiency Letter Nov. 16 indicating that the company fails to comply with the minimum market value of publicly held shares requirement for continued listing on the NASDAQ Global Market. The NASDAQ rule requires a minimum market value of publicly held shares of at least $15 million.

The company has 90 calendar days--until Feb. 14, 2008--to regain compliance. If at any time prior to that date the market value of Rotech's publicly held shares is $15 million or more for 10 consecutive trading days, the company will regain compliance. If not, NASDAQ will notify the company that its securities will be delisted.

Rotech said it intends to consider options if its common stock does not trade at a level likely to result in regaining compliance with the requirement.

Manufacturer News
CareCentric and Mestek Announce Investment Plan
ATLANTA--CareCentric and its parent company Mestek have announced an investment plan to accelerate the growth and development of its Ac-Cura product line in the home health, HME and pharmacy/infusion markets.

"The plan includes the capital and other resources required to position Ac-Cura as the premier multi-line of business application suite for the post-acute care market," said Stewart B. Reed, who became CareCentric's interim CEO following the recent announcement of John Festa's resignation.

The companies have also reaffirmed their commitment to enhance and support all of CareCentric's legacy product lines. According to a press release, Mestek, a $400-million company based in Westfield, Mass., envisions CareCentric as the premier provider in post-acute care software and HME billing services, comprehensive IT outsourcing and business process outsourcing for all its markets.

CHAD to Sell Oxygen Business, Focus on Sleep
CHATSWORTH, Calif.--CHAD Therapeutics announced last month that it will sell its oxygen conserver business to Inovo, a privately held manufacturer of oxygen regulators and conservers based in Naples, Fla., and instead will focus on its sleep products business.

Inovo will purchase CHAD's conserver business assets, including accounts receivable, inventory and certain equipment and intellectual property, for $5.2 million in cash. CHAD will retain the assets related to its TOTAL O2 system and in-home oxygen transfilling business as well as products in development for the sleep disorder market, and Inovo will assume certain liabilities and obligations related to CHAD's oxygen conserver business. The agreement is subject to approval by CHAD's shareholders.

"Uncertainty regarding Medicare reimbursement has contributed to operating losses at CHAD in recent quarters and clouded the outlook for the near term future of the company's oxygen therapy business," President and CEO Earl Yager said in a press release. "Given the many attractive growth opportunities we see in the multi-billion dollar sleep disorder market, we have decided to sell the oxygen conserver business in order to focus exclusively on the proprietary medical devices we are developing for the diagnosis and treatment of obstructive sleep apnea.

"We hope to receive 510k clearance from the FDA to market our initial sleep device early next year, and to submit 510k applications for two additional devices in 2008," Yager continued.

Yager said the sale would result in a significant reduction in CHAD's operating expenses. Inovo plans to operate in CHAD's facility during a transition period, which would end no later than June 2008, during which Inovo will reimburse CHAD for the costs of employees who perform transition-related services, as well as rent and other facilities charges.

According to Inovo Vice President Michael Mulroy, the acquisition of CHAD's conserver assets "fits nicely with our strategy of providing cost-effective portability solutions" for home oxygen providers and patients.

Following the sale, payment of outstanding debt and payment of severance obligations related to the sale, CHAD anticipates that its remaining assets would include the patented sleep technology the company has been developing for the past three years.

"We believe that our sleep products offer unique features that can improve the diagnosis and treatment of obstructive sleep apnea. With three products now in an advanced stage of development, a clear roadmap of additional product development opportunities based on our proprietary technology and a sound marketing plan, we believe we have the opportunity to build CHAD's position in this large and growing industry," Yager said.

Targeted for use in sleep labs, CHAD believes its FloChannel sleep diagnostic device can independently monitor left and right nasal airflow, oral airflow and snoring. The device is designed to provide constant baseline airflow volumetric sleep scoring and to evaluate the effects of nasal resistance and nasal cycling. "CHAD believes these features should provide a competitive advantage over products currently in the market, which treat the nasal passages as one airway when in fact they are two airways," Yager said.

The company's FloPAP therapeutic device is designed to monitor and control the left and right nasal airflows individually to create a comfortable equalizing of airflows throughout respiration. This allows for lower operating pressures, as well as greater airway support and less drying, all of which are expected to contribute to better compliance, the company said.

CHAD also is developing a diagnostic device for performing unattended sleep studies, including at-home studies.

CHAD reported net sales decreased from $4.9 million last year to $3.2 million for the second quarter of FY 2007. Net loss for the year's second quarter was $1.3 million.

Hans Rudolph Moves to New Headquarters
SHAWNEE, Kan.--To meet growing demands for space and new respiratory product, Hans Rudolph, which had been designing and manufacturing in the same location for 47 years, moved into a newly designed, state-of-the-art manufacturing facility in October. The 33,000-sq. ft. facility houses all of the company's operations, including research and development, design, manufacturing, marketing, sales, administration and shipping.

The company's new V2 Mask is the first product to come out of its new headquarters facility.

November Was Busy Month for Respironics
MURRYSVILLE, Pa.--Respironics broke ground Nov. 15 on a new $32-million manufacturing facility for the production of its sleep therapy devices.

The new 165,000-sq. ft. facility is located seven miles from the company's U.S. headquarters and current manufacturing site in Murrysville. The current 125,000-sq. ft. plant will be used as a multi-purpose facility and continue production of ventilation and neonatal products used in the hospital and home care markets.

The company said approximately 575 employees will be located at the new site, with anticipated workforce growth of 20 percent in five years. Respironics is pursuing LEED (Leadership in Energy and Environmental Design) certification for the building, reflecting its environmentally friendly design. Construction of the plant is expected to be completed in 14 to 16 months.

Since the current plant was constructed in 1990, Respironics has grown to a $1.3-billion company with a presence in 141 countries. It operates manufacturing sites in Pennsylvania, California, Georgia, Connecticut, Oregon and abroad.

"This new facility will enable us to further the development of our center of excellence manufacturing strategy by focusing on products to support our obstructive sleep apnea business, a core growth driver of the company," President and CEO John L. Miclot said in a statement.

The new manufacturing site is one of several recent facility enhancements by Respironics.

On Nov. 27, the company opened a new U.S. headquarters in Parsippany, N.J., for its respiratory drug delivery business, doubling the size of its previous site in Cedar Grove, N.J. The new 26,000-sq. ft. facility features state-of-the-art product development labs and the technology to support growing global operations, the company said.

Earlier this year, Respironics opened a 90,000-sq. ft. headquarters and distribution center in the United Kingdom to house operations for its Respiratory Drug Delivery (UK) and Center for Excellence in Aerosol Research, which provides aerosol testing and analysis services to pharmaceutical and biotech companies.

At its U.S. headquarters, Respironics expanded the footprint of its main campus with three nearby properties. It relocated its Sleep and Home Respiratory group to new headquarters in Monroeville, Pa., and opened a new 30,000-sq. ft. customer relations facility in Plum Borough, Pa. It also is developing new office space in Monroeville for its Children's Medical Ventures business, which provides developmentally supportive products and services for premature babies, healthy newborns and older hospitalized infants.

In Brief
First-quarter results of a widespread prepayment review of foam dressings, HCPCS A6209-A6214 billed with the A1 modifier, turned up a 100 percent charge denial rate in both Jurisdictions A and B. According to TriCenturion, the A/B DME PSC, the review was initiated as a result of data analysis that identified a significant number of beneficiaries who received excessive dressings compared to the LCD allowable number of services. The vast majority of claims were denied because there were no medical records submitted for review or because the information submitted did not meet policy criteria, TriCenturion said.

The Medicare Fraud Strike Force of the U.S. Attorney's Office has been named a permanent entity in the Southern District of Florida. Since beginning operations in March, Strike Force teams have indicted 120 defendants in Miami-Dade County alone. The teams, each led by a federal prosecutor with agents from the FBI, HHS Office of Inspector General and local law enforcement, operate out of the federal Health Care Fraud Facility in Miramar, Fla.

CMS released the first national list of poorly performing nursing homes last week. The list, based on health quality surveys, includes 54 nursing homes that "were consistently providing poor quality of care, yet were periodically instituting enough improvements that they would pass one [CMS quality] survey only to fail the next," CMS said in a press release. Such "yo-yo" compliance rarely addressed underlying systematic problems that were giving rise to cycles of "serious deficiencies," the agency said. For the complete list of nursing homes, click here.

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

Visit this week's sponsor at www.remitdata.com/salespro.htm.