AAHomecare hopes all of its member companies will work quickly and vocally to support the House legislation. You should urge your representatives in Congress to sign on to H.R. 6252 and to support final passage of the Medicare DMEPOS Competitive Acquisition Reform Act of 2008.

AAHomecare Lawsuit to Stop Competitive Bidding Makes Four
WASHINGTON--In the latest legal maneuver to block implementation of competitive bidding, last week the American Association for Homecare filed a federal lawsuit seeking an injunction against the controversial project.

The suit, filed by D.C. law firm Sidley Austin June 9 in U.S. District Court for the District of Columbia, joins three others seeking to delay the bidding program.

Administered by CMS, competitive bidding has come under increasing fire as more problems surface with everything from choice of product categories for inclusion and the bidding process itself to the selection of contract winners and beneficiary access.

“This flawed bidding program has not only been mishandled by CMS, but both CMS and [the Department of Health and Human Services] have violated the underlying statute in developing and implementing the program,” said Tyler Wilson, AAHomecare president and CEO. “The bidding program will put thousands of home care providers out of business, and patients’ access to quality home medical equipment and services will suffer as a result.”

Wilson said he expected a hearing on the request for an injunction before July 1, the start date for round one of the bidding program.

The AAHomecare lawsuit was among three filed in less than a two-week period aimed at putting the brakes on competitive bidding.

On June 3, King & Spalding, Washington, D.C., filed a request in U.S. District Court for the District of Columbia for a preliminary injunction to halt competitive bidding on behalf of two small business owners--Carolina Medical Sales and AmeriCare Health Systems, both of North Carolina--that provide diabetic supplies.

On June 11, Amarillo, Texas-based Brown & Fortunato also filed for an injunction against competitive bidding in U.S. District Court for the Northern District of Texas, Dallas Division.

Funded by Waterloo, Iowa-based VGM Group’s Last Chance for Patient Choice, an entity formed to fight competitive bidding, the Dallas suit lists five home medical equipment providers and two beneficiaries as plaintiffs: Scooters Unlimited and DME, Allen, Texas; Reliable Medical Supply, Kansas City, Kan.; Eastern Medical Equipment Distributors, Pompano Beach, Fla.; JI Medical, dba Ramat Medical, Los Angeles; Preston Mobility Plus, Richardson, Texas; Jose M. Salas, Jr., Arlington, Texas; and Charles W. Bell, Fort Worth.

The three suits join another re-filed in mid-May by Cleveland-based Walter & Haverfield, which amended a complaint initially filed in December with one plaintiff. That suit, also backed by VGM’s Last Chance, now has three additional plaintiffs and also seeks an injunction against the bidding program.

All four lawsuits list as defendants Michael O. Leavitt, HHS secretary, and Kerry N. Weems, acting administrator for CMS.

Following are key components of the latest three complaints.

AAHomecare’s lawsuit contends that:
--In direct contradiction to the statutory requirement, HHS “did not specify in either the proposed rule or final rule for competitive bidding the applicable financial standards that [HME] providers must meet in order to be awarded a contract.”
--In the proposed rule, CMS used the Small Business Administration’s definition of “small business” ($6.5 million in revenues), but in the final rule reclassified a small provider as having revenues less than $3.5 million. “The adoption by CMS of its own arbitrary size standard violated the Small Business Act, the [Medicare Modernization Act] and the Administrative Procedures Act.”

The complaint asks for an injunction against competitive bidding now and until “applicable financial standards” are specified and CMS adopts the SBA definition of a small supplier.

The Dallas suit charges that:
--In violation of the MMA, the defendants failed to assure Medicare beneficiaries access to multiple suppliers.
--Arbitrary bidding notice, arbitrary evaluation of bid submissions and denial of meaningful review place the project in violation of the Administrative Procedure Act.”
--Competitive bidding fails to provide sufficient safeguards for small businesses in violation of the MMA and the Regulatory Flexibility Act.
--The definition of “small business” is arbitrary and was selected without proper consideration, a violation of the APA.
--Minimum financial standards were not specified, a violation of the MMA.
--Although CMS created specific regulations prohibiting entities subject to common ownership or common control from submitting multiple bids through entities affiliated with them, the agency failed to enforce the regulation.
--CMS failed to require appropriate state licenses for bid applications, a violation of the MMA.
--The plaintiffs’ equal protection rights have been abridged because “section 302 of the MMA discriminates against Medicare beneficiaries and small DMEPOS providers … and favors the non-Medicare patients and mid to large DMEPOS suppliers.”

The suit asks for an injunction against competitive bidding; a “meaningful” review of bidders deemed unqualified and establishment and publication of evaluation procedures for those bidders; the proper publication of standards to be used in evaluating and considering winning bids; and compliance with mandates of the APA so that proper notice and comment are allowed on the reclassification of “small suppliers.”

The suit brought on behalf of the North Carolina providers alleges that:
--Mail-order diabetic supplies “is the lone category among the numerous DMEPOS categories selected by [HHS] that is defined by mode of delivery rather than simply type of item or service” and thus, its inclusion is discriminatory.
--Inclusion of mail-order diabetic supplies in competitive bidding came only “after the agency had promulgated its rule regarding the program.”
--With the inclusion of mail-order diabetic supplies, competitive bidding “gives an immediate marketplace boost--via price advantages and unrestricted market access--to large, high overhead ‘storefront suppliers’ that offer extremely diverse product lines” and “it presses for cost reductions from the one segment least able to generate or bear significant cost reductions while letting off the hook entirely the segment with great potential for cost savings."
--Competitive bidding for mail-order diabetic supplies could result in more out-of-pocket expenses for beneficiaries because “the program will force some diabetic patients to purchase new testing equipment because the program will force them to change brands of diabetic testing supplies they receive from plaintiffs.”
--The program is already causing harm to plaintiffs that is “material, immediate and irreparable.” The suit notes that Carolina Medical, which services more than 5,000 Medicare beneficiaries, “is effectively shut out of providing mail-order diabetic testing supplies to Medicare beneficiaries in the competitive bidding areas” and will lose about 15 percent of its sales volume and 50 percent of its market value. The company will need to lay off at least 20 percent of its workforce, the suit contends. AmeriCare will lose 15 percent of its gross profits because of competitive bidding, according to the suit, and stands to lose a distribution contract, which was predicated on high sales volume, the complaint says.

The suit asks for an injunction against including mail-order diabetic testing supplies in competitive bidding.

Meanwhile, the Cleveland lawsuit cites the failure of CMS to comply with the public notice and comment provisions contained in the APA, the MMA and the RFA.

CMS Abandons NPWT in Kansas City, San Juan CBAs
BALTIMORE--In an update posted to the CBIC Web site, CMS said the negative pressure wound therapy product category will not be included in round one for both the Kansas City and San Juan, Puerto Rico, competitive bidding areas because "an insufficient number of contracts were accepted to ensure viable coverage of this product category."

According to the notice, after implementation of the program July 1, any Medicare-enrolled supplier can furnish NPWT items and services in those two CBAs, and "payment will continue to be made in accordance with the standard fee schedule payment."

That leaves only four product categories under the bidding program--standard power wheelchairs, mail-order diabetic supplies, CPAPs and walkers--out of the original 10 that were bid in the San Juan-Caguas-Guaynabo CBA.

Earlier this year when CMS posted a chart showing the number of round one contracts it had offered, a footnote explained that there were not enough qualified bidding suppliers to meet projected demand in the CBA in the oxygen, complex rehab, enteral nutrition, hospital beds or support surfaces categories. CMS had specifically designated the latter to be bid only in the San Juan and Miami CBAs. (See HomeCare Monday, April 29.)

Weems Shines Up Bidding Program in Press Briefing on Beneficiary Education
BALTIMORE--In a press briefing last week, acting CMS Administrator Kerry Weems used high gloss to paint the picture of DMEPOS competitive bidding, and, aside from a few queries concerning timing and grandfathering, most of the consumer media had no questions about problems that might surface come July 1.

In his opening remarks, Weems told reporters that competitive bidding will make changes that, CMS contends, are long overdue.

“Today we pay fee schedule amounts based on supplier charges from the mid-80s,” Weems said. “The new program represents another way to use the competitive marketplace to bring the best possible and most efficient care and services to beneficiaries.”

In an accompanying press release, Weems said, "Beginning July 1, Medicare beneficiaries will see lower costs for some of their durable medical equipment and supplies--as much as a 43 percent savings for certain items--and the assurance they will have accredited and financially sound suppliers providing them with equipment and supplies."

Weems called the briefing to outline CMS' educational outreach in the first 10 competitive bidding areas, including sending a letter that explains competitive bidding via U.S. Mail to each beneficiary--nearly four million people, according to the release. Weems said the letters would be sent on or "around June 20," just 10 mail days before the round one implementation date.

One reporter asked if that would allow enough time for beneficiaries to gather an understanding of the program and whether they would have enough time to find, if necessary, a new, contracted provider. The reporter said she knew of one patient who receives diabetic supplies and who was having a difficult time locating a contracted provider.

Weems responded that the letters would address all beneficiary concerns.

“We wanted to mail this in time so beneficiaries had time to educate themselves but also so that it is topical. We always walk a fine line between making sure that we provide information in time and making sure that we provide it in a way that is actionable by the beneficiary,” he said.

Weems said the mailing would also include a brochure and a list of the contract winners in each bid area, along with their telephone numbers.

“Similar packets are also being sent to hospital discharge planners, physicians, physician office staff, home health agencies [and] social workers,” Weems said. “On the ground in the 10 areas, CMS regional staff is meeting with provider organizations, beneficiary advocate organizations, area agencies on aging and others to tell them about the changes.”

Further questions to CMS included: “Who is grandfathered? Who is not? And how does anyone know if they are?”

The answer: “To be grandfathered, you simply have to take advantage of the opportunity … There are different rules for different pieces of equipment. The one that is substantially high volume is oxygen. If you have an oxygen concentrator and you are still within the rental period, the 36-month period established by statute for rental of oxygen equipment, if your supplier chooses to grandfather, you will simply stay with that supplier but they will fall under the new rate … We suspect that many, many will [grandfather].”

The questioner followed up with: “So the customer has to contact the provider to find out if they are grandfathered?”

“Or it can work the other way around,” CMS answered. “That's one of the reasons we are educating both sides of the equation, the beneficiaries and the suppliers themselves.”

Weems said beneficiaries could get further information by calling 1-800-MEDICARE or from the Medicare Web site at www.medicare.gov.

A copy of the beneficiary letter and brochure is available by clicking here.

Conference Call Erupts as Suppliers Take CMS to Task
BALTIMORE--What was billed as CMS' third provider training call on competitive bidding erupted into a veritable war of words Thursday during a question-and-answer session with listeners.

Dedicated solely to the implementation of round one and aimed at referral sources and non-contract suppliers, the call began with pertinent updates, including:

--MLN Matters Article 6119 has been released, laying out phase two of manual revisions that reflect changes resulting from competitive bidding and the Deficit Reduction Act. Click here to access the article and scroll down to Transmittal R1532CP.
--A direct mail beneficiary outreach from CMS is expected to begin June 20 (see "Weems Shines Up Competitive Bidding" in this issue). A coordinated package containing information for suppliers in the CBAs should also be mailed around the same date.
--The final versions of six beneficiary tip sheets on specific types of equipment under competitive bidding should be released “within the next week or two.”
--A central mailbox for questions concerning competitive bidding has been set up at DMEcompetitivebidding@cms.hhs.gov.
--According to CMS' Joel Kaiser, “Suppliers should only be sending notifications about grandfathering to beneficiaries who are residing in competitive bidding areas.”
--Also, Kaiser said, “If a beneficiary does not get back to you, that's the same thing as not electing to receive the item from you, so you will be picking the equipment up in that situation.”
--If a beneficiary elects to stay with a grandfathered supplier, that supplier is expected to obtain detailed documentation concerning the beneficiary's decision for Medicare billing purposes.
--Clarification on providing mail-order diabetic supplies is on its way “in the near future.”

But the blows began when CMS answered questions from callers, including this exchange on contract winners for negative pressure wound therapy:

Caller: “My question is, how will you deal with a contract winner for negative pressure wound therapy that doesn't at the time of the bid have product or the competency to be able to delivery that specialty piece to the patient? And how [are] the physicians going to feel about putting these patients in the hands of subcontracted people or contractors that don't have it together? I mean, these people made bids ... that have never done it before ... How's that going to be dealt with?”

CMS: “First of all, every supplier that was awarded a contract was accredited for DMEPOS, so if you're accredited for providing products then you can provide them …”

Caller: “Accreditation does not go by pieces of equipment. Accreditation is accreditation. So if they have no experience in providing a specialty piece nor do they have the product, my concern is where are they going to get product?”

CMS: “I would note that they have as much experience as any provider has had or is required to have in the past. But also an important thing to notice is that this is a very new market in terms of new growth and new products that are available. There are more suppliers coming into this market. It's not because of competitive bidding, it's because the market is changing and is being opened up to more suppliers and more manufacturers so it is very new for a lot of entities …”

Caller: “No. I didn't say that. What I am saying is that, by July 1, can a company find enough product and people to support the beneficiaries in the 10 top MSAs where they don't even reside?”

CMS' final reply: Because contracted suppliers were scrutinized for both estimated capacity and financial standing, these two criteria should eliminate the caller's concerns.

Responding to a question about beneficiary information on competitive bidding, CMS said beneficiaries could access information online, but a caller pointed out “the majority of our patients--the beneficiaries--don't leave their homes and are not laying in their hospital beds with the Internet on their lap. The majority of this beneficiary information plan that you have spoken about ... [is] how the patient has to contact you through the Internet ... We are greatly concerned about how these patients are going to get this information.”

According to CMS, “We have engaged in a pretty proactive outreach program for our beneficiaries for a couple of months now. Primarily it's focused on working with our partners in educating various consumer advocates … and others that deal face-to-face with the beneficiaries.” CMS noted beneficiaries also can call 1-800-MEDICARE.

Another caller, asking about the liability of large retailers in obtaining ABNs from beneficiaries, said she was having “a hard time wrapping her head around” CMS' requirement that every customer purchasing a competitive bid item be asked by a store employee about whether they are willing to purchase items that may be covered by Medicare.

"What if we have as many as 30 registers at the front of the store?” she asked.

“Everyone needs to ask them when they are carrying a box with a walker to the cash register 'Are you a Medicare beneficiary?'” was the answer from CMS. As a mass retailer, “if you're going to enroll and be given a supplier number, you don't get any waiver on the rules that apply to other DME suppliers. You are a DME supplier. You have to follow all the rules that other DME suppliers follow.”

Delivery of diabetic supplies was another concern.

CMS said it had not yet “clarified” definitions on what constitutes a mail-order supplier, but one caller pressed, “Can you give us some kind in inkling as to when [this clarification] is going to happen? Because I have emailed Joel Kaiser twice and never heard back … I emailed the CBIC on June 5 and also on May 27 and I still have not received an answer back.

“You have a ton of companies out here who are sitting in limbo that have employees on the line. Our entire future is on the line. Unemployment, health care, all on the line," the caller continued. "There are thousands of people across this country waiting for an answer to this question. I've already purchased $50,000 worth of vehicles. I have hired three full-time employees who have company-paid benefits … This is really not fair to us suppliers. When do you think you're going to have an answer for us?”

CMS dodged the question by asking the caller about her vehicles and location before answering, “We realize that this is an important issue for everyone … The clarification of the definition will affect everyone, so it is very important and we understand that and we are working on it.”

But the caller persisted, “Can you give us some kind of time frame? We have a lot at risk right now … Can you give us an answer? We're within almost two weeks now" [of round one implementation].

”You sent an email on June 5 to me? Did it include the details you have talked about today?” Kaiser asked.

Replied the caller, “Absolutely.”

Said Kaiser, “I will make sure I get to your email. I am human so I can only deal with so many messages at a time. We as an agency will be looking into this and be getting back to you as soon as possible.”

After a continued back-and-forth, Kaiser admitted he is waiting on information from the agency's general counsel before he could announce clarification on diabetic supplies. "It is important that we get this legal advice first," Kaisesr said. "Once we do, we will be making an announcement as soon as possible.”

CMS also said the agency has not further defined the term “essential services” for subcontracting--a question originally raised during a previous provider training call.

To listen to Thursday's teleconference in its entirety, call 800/642-1687 and enter passcode 49895703. The playback will be available through June 17.

Wipeout: Flood Waters Send Heartland Attendees Scrambling
WATERLOO, Iowa--Many of its expected 1,000 attendees were forced to evacuate VGM's Heartland Conference last week as floodwaters threatened downtown Waterloo, the member services group's hometown.

With heavy regional rains, rising rivers and area lift stations' inability to handle massive amounts of runoff left some visitors scrambling for safe lodging and transportation. After Waterloo Mayor Tim Hurley issued a notice to close downtown businesses, the Five Sullivan Brothers Convention Center--the event's main venue--and nearby hotels were evacuated.

While some attendees left town Tuesday, said Carolyn Cole, VGM vice president of corporate communications, “those who stayed [were] being brought to VGM in big tour buses" as staff members rebooked flights to get them out of area airports.

Those who couldn't leave were booked into rooms outside the downtown area, and, according to Cole, some attendees were even offered lodging in the homes of VGM staff.

On Wednesday, VGM issued an update on its Web site confirming that all attendees had been accounted for and that “guests who were staying in downtown hotels [were] safely transferred to the main VGM campus.”

The Heartland event, which kicked off Monday night, had been scheduled to run through Thursday.

”The ironic thing is that Tuesday, as the [Cedar River] rose dramatically, was one of the most beautiful, sunny and mild days we've had all spring. So many conference-goers wandered down between sessions to watch history in the making,” said Cole.

“My husband and I have both lived here for 50-plus years, and witnessed the horrible floods of the early '60s that resulted in our flood control system,” she continued. “Among our concerns is that more severe weather is forecast with 'locally heavy rains' possible … Much of the state has been declared a disaster area, and entire counties have been closed to travel. It's a nightmare, and will continue through the weekend,” she said Wednesday.

The area also suffered major flooding in 1993.

“It's kind of scary,” said Jaime Blomme, executive administrator for government relations and regulatory affairs for VGM. “In Cedar Falls, which is right next to Waterloo, their water levels broke records,” she said.

At least six bridges in Waterloo were closed, and two shelters were established to aid stranded persons. Across Iowa, nine rivers were at or above historic levels.

Despite the chaos, Cole said, a Wednesday night gala that had been planned for the event, the group's seventh annual conference, went ahead as scheduled. ATS/ATP training continued at VGM corporate headquarters, and Heartland's famous hog roast and fireworks went on as expected.

“This will certainly be a Heartland Conference to remember, and we're already talking about 'We survived the floods of 2008 and we'll be back' T-shirts,” Cole said. “We were expecting nearly 1,000 HME providers, manufacturers, speakers and friends of the industry. We look forward to welcoming them back next year.”


In Brief
John Gallagher, VGM Group's vice president-government relations, will conduct a “Lunch Bucket" legislative update Wednesday, June 18. Hours for the Web cast are 11:30 a.m. to 1:30 p.m. CDT (12:30 to 2:30 p.m. EDT). Because the event comes at the convergence of two critical industry events--the expiration of the Medicare “doc fix” and the impending July 1 implementation of the first round of competitive bidding--VGM is asking all providers to "contact their legislators on June 18 to urge them to support a delay or repeal of the competitive bidding program, and to oppose any additional cuts to oxygen, as well as the transfer of oxygen ownership from provider to beneficiary,” Gallagher said. To view the Web cast, go to www.vgmdclink.com. Those who wish to call in may dial 888/264-1979 or 706/643-9818 and use conference ID 50632979.

CMS' next home health, hospice and DME Open Door Forum is scheduled Wednesday, June 25. To participate by phone, call 800/837-1935 and use conference ID 5024882.

Permobil, Lebanon, Tenn., has announced its acquisition of Lifestand, a 30-year-old French company specializing in the design and manufacture of “stand-up” wheelchairs. As part of its international strategy, the purchase represents Permobil's "ongoing commitment to providing top-of-the-line solutions for wheelchair users," the company said. According to a press release, the combined economies of scale will allow the companies to focus on the research and development of new technologies for this increasing segment of wheelchair users. “The purchase of Lifestand allows Permobil to strengthen our product offering in the standing wheelchair category,” said Larry Jackson, president of Permobil Inc. “For years, we have fought side-by-side with our certified providers and clinicians to educate the industry and funding sources on the benefits of standing chairs. The addition of Lifestand to our product mix enables us to better serve our customers and their needs.” Lifestand's chairs, which enable a user to stand upright, can be operated manually, semi-electronically or fully electronically.

Pride Mobility Products, Exeter, Pa., has announced the addition of Mary Kay Warner as general manager for public relations and tradeshows. Warner's experience in public relations, advertising and marketing communications spans nearly 25 years, including 14 years at public relations firm Burson-Marsteller. She has assisted such clients as Akzo Nobel Salt, American Institute of Architects, AT&T, Cahners Publishing, International Salt, Owens-Corning Fiberglas and the U.S. Army.

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

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