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

Headline News
AAHomecare Conference Bolstered by Second Competitive Bidding Study
WASHINGTON--In a spectacularly timed twist of luck, the home medical equipment industry got a tremendous boost in its battle against competitive bidding last week when a new study surfaced that takes deadly aim at the process.

The industry spent the week marshalling forces against the scheduled July 1 implementation of round one, sending letters, signing an online petition and calling legislators to appeal for its suspension. (See related stories in this issue.)

Then on Friday, just as stakeholders prepared to set off for the American Association for Homecare's Washington Legislative Conference, which begins tomorrow at the L'Enfant Plaza Hotel, they acquired new ammunition when the study--titled "Will Competitive Bidding Decrease Medicare Prices?"--came to light.

Authored by Brett Katzman, PhD, associate professor of economics at Kennesaw State University near Atlanta, and Kerry Anne McGeary, PhD, associate professor of economics at Drexel University in Philadelphia, the peer-reviewed study takes an in-depth look at the 1999 competitive bidding demonstration projects in Polk County, Fla., and San Antonio. It concludes that CMS' format for competitive bidding is fatally flawed and, in many instances, results in higher prices and poorer quality of service.

"The problem with the CMS process is that the bid scoring and price formulation procedures are inconsistent with the bidding behavior CMS wishes to induce," the authors conclude. "That is, overly complex rules for choosing winners and setting prices distort the incentives that bidders face and may actually result in increased prices for some consumers."

The study notes that, while no data on service quality was available, "there is anecdotal evidence of diminished quality that comes from CMS itself." CMS felt compelled to initiate quality check site visits for all winners and hired an independent contractor to conduct quality assurance surveys, according to the study.

"Further problems with the process are evidenced by the fact that some winning firms have attempted to withdraw from the program," the study says.

Jubilant stakeholders said the new study provides significant data for them as they gear up to meet with legislators and ask for delay or suspension of DMEPOS bidding pending an analysis of both the process and its results.

"I think it gives us a lot of really great ammunition. We are going to use it on the Hill, no question," said Cara Bachenheimer, senior vice president, government relations, for Elyria, Ohio-based Invacare.

News of the study, which appeared in January's issue of the Southern Economic Journal, spread like wildfire through the industry, which just a week earlier was buoyed by the announcement of a study by two economics professors at Robert Morris University in Moon Township, Pa. That study, commissioned by the Pennsylvania Association of Medical Equipment Suppliers, blasted competitive bidding, saying it would result in substantial market failure, the loss of 21,000 jobs and increased prices. (See HomeCare Monday, Feb. 25.)

"This dovetails exactly with the PAMS study," said John Shirvinsky, executive director of the state association. "Obviously, there is no relation between the two. This is an analysis of the demonstration projects in Polk County and San Antonio. It was four years in the making, and it is in a peer-reviewed journal. It took a year to get published. But it unveils some serious flaws in the Medicare HME competitive bidding program that have been pretty much glossed over by CMS."

The Robert Morris study, said Shirvinsky, "did a great job on what problems are going to result from competitive bidding. And lo and behold, here comes this study that no one knows about and it substantiates virtually every point that the Robert Morris study made.

"I'm hoping we get enough people fired up about what's going on here," he continued. "This new study is earth-shattering for our industry. It lends credence to every gut-checking reaction we have had on what this program will do and what it won't do. [Competitive bidding] is a sham. And it is a disgrace that [CMS is] trying to force this on the Medicare beneficiaries."

Seth Johnson, vice president of government affairs for Exeter, Pa.-based Pride Mobility, said the two studies might turn the tide for HME.

"I do think these two studies could result in a delay in round one, which would be very good. If they are closely evaluated, it could end up stopping the program altogether," he said.

"This certainly helps the cause," said Don Clayback, vice president, government relations for Lubbock, Texas-based The MED Group, adding it is particularly notable that the two studies are by "outside sources that have looked at this from a business-economic standpoint. At a minimum, you would hope that it would create some doubt in Congress' mind so that some in Congress ... will take a look."

Tom Ryan, former chairman of AAHomecare and president and CEO of Home Care Concepts, Farmingdale, N.Y., said he hoped the studies would push Congress "to slow the train wreck down."

The points made by the two studies, he said, should prompt Congress to put the brakes on "because they might not get the results they intend," he said.

The association will urge conference attendees to talk to their legislators about the issues that are most important to them, such as a reduction of the oxygen cap or elimination of the first-month purchase option for power mobility, said Michael Reinemer, vice president, communications and policy, for AAHomecare. But the overarching message of the lobbying event this week will be that competitive bidding should--at the least--be delayed.

"We are recommending ... that Congress urge CMS to suspend round one. That will be particularly important for providers in the 10 round one metropolitan statistical areas," Reinemer said.

"The message right now is to delay round one," echoed Clayback. "The second message is: Don't move on to round two before you've digested what's happening in round one. The whole program needs to have more parameters, more analysis, more due process for bidders."

A delay of the program could work in the industry's favor, Bachenheimer said. "Some people have been pretty negative about this delay tactic," she said, "but delay buys us time; time is opportunity."

The conference is expected to draw at least 350 providers and other HME advocates. In addition to meeting with their legislators, attendees will have opportunities to learn more about the legislative and regulatory sides of HME. Guest speakers include Laurence Wilson, director of CMS'chronic care policy group; keynote speaker Sen. Pat Roberts, R-Kan.; Rep. Jason Altmire, D-Pa.; Jim Nussle, director, Office of Management and Budget; Sen. Ken Salazar, D-Colo.; and Kristen McCosh, Ms. Wheelchair America.

In addition, Brian O'Roark, PhD, and Stephen Foreman, PhD, JD, MPA, authors of the Robert Morris University study, and PAMS' Shirvinsky will speak.

For further information on the conference, visit www.aahomecare.org.

"The message can't be 'We failed, 1845 is dead,'" said Gallagher. "We got this much carried to the middle of the mountain; what can we get carried to the top?"

NAIMES Launches Petition to Stop Competitive Bidding
HALIFAX, Va.--In just two days last week, more than 1,000 HME providers and beneficiaries signed an online petition to stop competitive bidding, said Wayne Stanfield, president and CEO of the National Association of Independent Medical Equipment Suppliers.

The petition notes that if competitive bidding is implemented, "many suppliers will be eliminated from participating in Medicare, threatening the viability of their business and eliminating jobs."

It also lists patient risks such as loss of choice, inconvenience, the potential of have to deal with multiple providers and dramatic cutbacks in service, availability and responsiveness.

As well, the petition says, economic risks loom, such as higher long-term Medicare costs and the potential for hundreds of small business failures and job losses due to elimination of independent competitors.

NAIMES introduced the petition on Thursday. By Friday at 5 p.m., 1,035 people had signed it.

"The comments on there are phenomenal," said Stanfield. "Almost 50 percent are adding lengthy comments, and there is tremendous passion in the comments. The biggest thing is patient choice and the small provider."

Stanfield said the organization is aiming for 30,000 signatures in the next 60 days, but when he attends this week's American Association for Homecare Legislative Conference in Washington, he'll take however many signatures he has.

"I fully expect by Tuesday we will have 3,000 to 4,000 signatures on this," he said. "And I am going to print it and hand carry it to [Rep.] Jason Altmire."

Altmire, D-Pa., chairman of the House Small Business Subcommittee on Investigations and Oversight, convened a congressional hearing last fall on the effects of competitive bidding on small business, and has pushed for investigation of the economic and health care impacts of the program.

"I think [the petition] is going to be a cornerstone to getting his message out and getting his message to the people who need to know," Stanfield said.

The online petition is accessible at http://thepetitionsite.com/petition/141840894.

Senators Push to Prevent Oxygen Cuts
WASHINGTON--With a "Dear Colleague" letter sent last week, Sens. Blanche Lincoln, D-Ark., and Pat Roberts, R-Kan., urged the Senate Budget Committee to reject the cuts to home oxygen proposed in President Bush's 2009 budget.

In the letter, Lincoln and Roberts state: "The President's FY 2009 budget proposal includes reducing the rental period for oxygen equipment from 36 months to 13 months. We have yet to even see the effects of the 36-month cap, passed as part of the Deficit Reduction Act of 2005, on beneficiary access and care. This, combined with other provisions passed over the last several years, will reduce Medicare reimbursement for home oxygen therapy by an estimated 20 percent over the next several months, which we believe could jeopardize care for some patients and make benefit reform much more difficult to achieve."

Lincoln and Roberts encouraged fellow senators to add their support through a sign-on letter directed to Senate Budget Committee Chair Kent Conrad, D-N.J., and ranking member Judd Gregg, R-N.H.

"Home oxygen therapy, when properly prescribed and used, can slow lung degeneration and prevent hospitalizations, saving scarce Medicare dollars. Since 1998, the home oxygen payment system has been subjected to repeated changes and cuts," the sign-on reads. "We ask the Committee to weigh the cumulative effect of these cuts and reject assumptions of additional funding reductions."

Both letters can be viewed on the AAHomecare Web site at www.aahomecare.org.

Cigna's Hoover Explains Recent Sleep LCD; 'Chill,' Says MED Group's Riley
ATLANTA--Questions were flying across the industry's sleep sector last week after a recent Local Coverage Determination declared that in-home sleep studies "are not covered."

The LCD surprised providers, particularly since CMS' proposed decision memorandum on coverage for CPAP therapy, issued Dec. 14, would allow home sleep testing.

But not to worry, according to Robert D. Hoover, Jr., senior medical director for Cigna Government Services: The LCD was a Fiscal Intermediary policy update in response to coding changes and has no bearing on CMS' National Coverage Determination--expected no later than March 13--regarding criteria for CPAP coverage.

"The contractors have a mandated schedule for updating our policies when there are HCPCS changes (within 90 days/120 days). Policies with the new CPAP HCPCS codes from Jan.1, 2008, got published without regard to the upcoming NCD. This was a Fiscal Intermediary policy, not a DME MAC update; however, I suspect their policy update is due to the same reason we update our policies--HCPCS code changes," Hoover explained.

The Jurisdiction C medical director also pointed out there could be a bit more confusion to come. With transition of medical review responsibilities from the DME Program Safeguard Contractors to the DME Medicare Administrative Contractors, official as of March 1, the current policies must be posted on the MAC Web sites.

"Once we approve, our policies will also display to the public, and the CPAP policy will be essentially unchanged except for the changes in the HCPCS codes from Jan. 1, 2008. So like the FI policy, ours, too, will still have the same language prohibiting home sleep studies."

Kelly Riley, director of the National Respiratory Network for The MED Group, Lubbock, Texas, said attendees at the network's annual meeting last week also were stumped by the LCD because it had been issued ahead of CMS' anticipated final coverage policy.

"It's just that every time we see the words 'home sleep testing,' we jump," Riley said. "But as strange as this sounds, this [LCD] doesn't have a thing to do with CPAP coverage. This LCD came from a Fiscal Intermediary ... and because of some coding changes, they had to reissue the policy. Every time there is a change in the codes, they are required to reissue the policy so everybody is clear.

"What we have to remember," Riley continued, "is that the NCD is on its way, so we as an industry need to chill."

Under current CMS policy, obstructive sleep apnea patients must be diagnosed through a sleep lab test, or polysomnography, for Medicare to cover the cost of CPAP therapy. But the agency's draft memo recommended changes, which, among others, would allow the use of home sleep testing.

Hoover said the NCD should be out this month as expected. But he speculated that, based on previous decisions, its effective date could be "out to July 1 or maybe even Oct. 1. Once the NCD is final and has an effective date, the [medical directors] will update the CPAP policy with a new effective date that coincides with the NCD effective date and update the coverage language in the policy to reflect the coverage criteria of the NCD."

"I just came out of three days of being with top industry experts on this area," Riley said of MED's meeting, which hosted attendees from more than 70 companies in 32 states, "and we talked about [this] LCD.

"If I had to put this in a simple blurb," she concluded, "I would say 'Sit tight. This LCD does not affect us, and at this point there are really no changes.' This was purely an administrative function of the Fiscal Intermediary, and we are still waiting for the NCD."

VGM Signs 10-Year Deal with Brightree
DULUTH, Ga., and WATERLOO, IOWA--Last week The VGM Group and Brightree, an HME business services company, announced an exclusive 10-year partnership that will deliver an array of Internet-centric services to providers.

"Through this partnership, we intend to create a large, virtual VGM/Brightree 'community' that can leverage a wealth of services that no individual provider could ever assemble alone," said VGM President Ron Bendell.

According to the companies, the deal encompasses VGM's Nationwide Respiratory, US Rehab and O&P organizations OPGA and POINT. The two organizations said they "will form a virtual ecosystem for HME/DME providers" through an Internet-based system that will connect them with manufacturers, Medicare, private payers and outsourcing partners.

Among the new services envisioned, Brightree and VGM will deliver key performance metrics allowing providers to benchmark their operations. Such "at-a-glance" tools will be delivered via executive dashboards and other types of "push" technologies, and will utilize actual data in Brightree and proprietary VGM information from VGM Homelink referral tools, group e-purchasing, billing and collections metrics, consulting best practices and regulatory compliance tools.

"By making a long-term commitment to each other, we can accelerate the pace of introduction and significantly raise the bar on the products and services that we deliver to our customers," said Brightree President and CEO Dave Comack.

According to Van G. Miller, VGM founder, "The bottom line--we are all overwhelmed by the pace of change in today's marketplace. The future solutions we'll create with Brightree will make everyone's life easier."

Standard No. 29: What the Changes Could Mean for You
By all accounts, the effects of CMS' proposed revision and expansion of supplier standards for DMEPOS will be far-reaching. In a special series for HomeCare Monday leading up to the March 25 deadline for comments, health care attorney Neil B. Caesar, president of the Health Law Center, Greenville, S.C., will help provide clarification and insight on several provisions of the draft rule. This week, Caesar's comments are directed to proposed Standard No. 29, which deals with supplier practice locations.

New Standard 29 specifies that a supplier would be "prohibited from sharing a practice location with another Medicare supplier." This is actually a strangely worded supplier standard. National Supplier Clearinghouse policy already prohibits two DMEPOS suppliers from commingling their space or operations, so it is possible that CMS is simply trying to formalize ... what has been implicit in the standards as part of the NSC's ongoing enforcement policy.

On the other hand, much of the commentary to the standard suggests a broader application. For example, in discussing the scope of the new rule, CMS notes that a supplier is not allowed to share a practice location with others "including a physician/physician group."

Further, CMS elaborates: "Since we are aware that physicians and other licensed non-physician practitioners may obtain their own DMEPOS supplier number and furnish DMEPOS from their office, we are soliciting comments on whether we should establish an exception to this space-sharing proposal for physicians and non-physician practitioners and the circumstances which warrant an exception."

This language suggests that CMS intends the new standard to do no more than capture the existing NSC policy; mainly, that two suppliers may not commingle their practice locations, operations, staff, inventory and other aspects of supplier operations.

I have often worked with suppliers to negotiate with the NSC an operational sharing of certain resources between suppliers, often suppliers with related ownership. Closed-door pharmacies, for example, sometimes share personnel or real estate. If the operations and records are sufficiently segregated to enable the NSC to evaluate compliance by each supplier with all of the standards, then that should satisfy CMS' concerns.

In the past, subcontracts have been negotiated successfully to allow the efficient utilization of specialized personnel, such as knowledgeable billing staffers. When a subcontract for use of such personnel has been drafted to segregate the time spent on behalf of each supplier--so that work is not being done for both suppliers at the same time--that has typically been sufficient to placate the NSC. It remains to be seen whether such efficiencies will be permitted under the new standard.

To view the proposed supplier standards rule, click here.

Comments are due by March 25. Electronic comments can be submitted at http://www.regulations.gov. Follow the instructions under the "Comment or Submission" tab and enter the file code CMS-6036-P.

In Brief
In a notice sent last week, CMS reminded providers that as of March 1, Medicare claims are required to include an NPI and that failure to do so will cause the claim to reject. The agency said providers whose claims are rejected after that date should immediately contact their contractor before resubmitting that claim or submitting any new claims.

The National Sleep Foundation will kick off National Sleep Awareness Week at midnight tonight. For more information on the public education and advocacy campaign, click here.

As of March 1, medical review functions not for benefit integrity purposes were transitioned from the DME Program Safeguard Contractors to the DME Medicare Administrative Contractors. The MACs now have full responsibility for: Comprehensive Error Rate Testing (CERT); Local Coverage Determinations (LCDs); Advance Determination of Medicare Coverage (ADMC); Healthcare Common Procedure Coding System (HCPCS); medical review of edits and claims (not for benefit integrity); probe reviews; and supplier education.

The chance to offer input on official definitions for five key health information terms ends today, according to the Office of the National Coordinator for Health Information Technology. Health IT experts are working on definitions to end the overlapping use of the terms--including "electronic health record," "electronic medical record" and "personal health record"--in federal regulations and legislation. The latest draft definitions, dated Feb. 21, are available at http://definitions.nahit.org/doc/InterimDraftPublicComment2.22.pdf. Comments may be submitted online at http://definitions.nahit.org/reports.php.

Proposed revisions to the DMEPOS accreditation quality standards have been posted for a public comment period (only on the underlined portions of the document). Comments must be received electronically or by mail no later than 5 p.m. EST on Tuesday, March 18. Click here for guidelines on how to submit comments.

At the AAHomecare Washington Legislative Conference on Thursday morning, March 6, there will be a breakfast reception for Pennsylvania congressional candidate Dan Meuser, who is running in the state's 10th district. The PAC fundraiser is being hosted by AAHomecare's Chairman Alan Landauer, Treasurer and Pennsylvania home care provider Georgie Blackburn and President Tyler Wilson. "The home care community needs members of Congress who understand our industry and who appreciate the challenges of providing quality health care to beneficiaries within the current constraints of Medicare," said Wilson. "Dan has been involved in home care for 20 years and he knows the difficult issues that confront providers on a daily basis." For information, call (570) 696-0122.