For a summary of provisions affecting HME in the new Medicare law, click here.

No M.D.? Then No Home Sleep Testing
ATLANTA--In an unexpected move last week, the four regional DME MACs issued a revised Local Coverage Determination for CPAP policy prohibiting HME providers from conducting home sleep tests.

According to the LCD, “No aspect of a HST including but not limited to delivery and/or pickup of the device, may be performed by a DME supplier. This prohibition does not extend to the results of studies conducted by hospitals certified to do such tests.”

The new LCD caught the HME industry off guard, particularly following CMS' National Coverage Determination on coverage of CPAP therapy for obstructive sleep apnea--issued March 13--which opened the door for HST. (See HomeCare Monday, March 17.)

But according to Patrick Clevidence, vice president of respiratory services, Medical Service Company, Cleveland, “In clear and precise language, the LCDs eliminated HME involvement in home sleep testing, and they further stated that only sleep physicians may be involved in the tests.”

Under the new regulation, primary care physicians, internal medicine physicians and even cardio-thoracic physicians may be unable to perform the tests.

The guidelines require all sleep tests to be interpreted by a physician who is:

--A diplomat of the American Board of Sleep Medicine (ABSM);
--A diplomat in Sleep Medicine by a member board of the American Board of Medical Specialties (ABMS); or
--An active staff member of a sleep center or laboratory accredited by the American Academy of Sleep Medicine (AASM) or The Joint Commission.

“This eliminates involvement by primary care physicians, cardiologists and other physicians,” Clevidence explained, adding that while those physicians and others can prescribe the tests, “these same physicians must defer to a sleep physician and their staff to perform the tests and interpret the results.”

Clevidence continued, “There is no doubt that many in the HME community are disappointed with this ruling, especially in light of the recent Medicare cuts and the pain of the competitive bid process. Many HMEs looked at this as a new revenue opportunity and a way to increase their sleep business. Now it is clear that this will not happen.”

However, Clevidence noted, he feels this is a sound decision that will maintain the integrity and quality of sleep testing with those specialists who know it best and can make the best therapeutic plan of care for their patients.

Reaction from other HME stakeholders was mixed.

“The whole point of the National Coverage Determination was to provide easier and earlier access to care for these patients who were entering the health care system 10 years too late and driving up huge bills because of the present comorbidities due to having their sleep apnea untreated. Now, they are again putting a barrier to treatment,” said Kelly Riley, director of the National Respiratory Network for The MED Group, Lubbock, Texas.

Carol Laumer, executive director of Rice Home Medical in Willmar, Minn., also believes providers should be able to perform the tests. “This will be difficult for them and will be a blow to their financial bottom line. I see CMS following the rule they have used with home oxygen but in a more stringent manner,” she said. “The technology is there, and if we can provide infusion medications and can do ventilators in the home, I believe we can do home sleep studies and that they can be accurate,” she said.

According to Todd Cressler, CEO of Harrisburg, Pa.-based CressCare Medical, "The result will be that home testing will move a little slower, but all the labs will eventually offer it to be competitive. Forward-thinking physicians will get on board with this and realize that home testing will get people on therapy that would normally not go into a sleep lab to get their [polysomography].”

Cressler sees the situation as an opportunity for HME providers to partner with sleep labs. “For the labs that are doing their own DME, they will not be able to do that with home testing, so that is an opportunity for us.”

Clevidence also said he is a proponent of partnering with sleep labs to help improve patient compliance and outcomes. “This decision will help foster that between the sleep labs and the HME companies. There are so many ways an HME can help a sleep lab grow their business and, thus, increase their own business. This kind of creative thinking results in a victory for both businesses but, most importantly, the patient is the biggest winner of all,” he said.

The revised LCD also changes the name of the policy to “Positive Airway Pressure (PAP) Devices for the Treatment of Obstructive Sleep Apnea.”

According to the LCD, “The change reflects the addition of coverage criteria for respiratory assist devices (E0470 and E0471) when used to treat OSA. With the addition of these coverage criteria to the PAP policy, provisions related to the use of codes E0470 and E0471 for OSA were removed from the Respiratory Assist Device (RAD) policy. A revision of the RAD policy reflecting this change will be published in the near future.”

While Riley said most of the policy is “good medicine,” she is concerned about some aspects of the LCD, especially language that states providers are “encouraged to educate physicians.”

“This is the most frustrating part, because providers are put in the position to tell physicians how to practice medicine. This is never well-received, and it is not appropriate or practical,” she said.

Some in the sleep sector said the issue of fraud may have played a role in the decision on the LCD.

Existing regulations restrict only suppliers from performing the sleep diagnostic test, but in the July 7 Federal Register, CMS issued a proposed rule that would prohibit CPAP reimbursement if a supplier “or its affiliate” performs the test. According to the proposed rule:

We are proposing to revise the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) supplier enrollment safeguards … to protect the Medicare program and its beneficiaries from fraudulent or abusive practices that may be related to CPAP devices. We are proposing to add new definitions … to define ‘‘sleep test’’ and ‘‘CPAP device’’ and to add a new paragraph … which would establish a specific payment prohibition that would not allow the supplier to receive Medicare payment for a CPAP device if that supplier, or its affiliate, is directly or indirectly the provider of the sleep test used to diagnose a beneficiary with OSA

CMS said the agency believes that “the interests of beneficiaries and the Medicare program can be harmed if the provider of a diagnostic test has a vested interest in the outcome of the test itself.”

Laumer is not surprised. “It does seem as if they try to find ways to trip up HME providers and pay less for medical equipment. It is time [CMS] starts sharing the responsibility for fraud,” she said.

The comment period for the proposed rule is open until Aug. 29. To submit electronic comments, go to www.regulations.gov/search/index.jsp and enter CMS-1403-P in the “Comment or Submission” bar.

To read the full text of the new LCD, click here.

Round One Shutdown: What We Know So Far
BALTIMORE--CMS posted the following statement about the delay of competitive bidding on Wednesday:

The Medicare Improvements for Patients and Providers Act of 2008 was enacted on July 15, 2008. This new law has delayed the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. Items that had been included in the first round of the DMEPOS Competitive Bidding Program can be furnished by any enrolled DMEPOS supplier in accordance with existing Medicare rules. Payment for these items will be made under the fee schedule. Additional guidance regarding this new law will be forthcoming.

How exactly does the agency plan to handle all that is involved? Here is what we know so far:

--In a July 16 fact sheet, CMS said Medicare beneficiaries may now use any Medicare supplier for DME. If a beneficiary changed suppliers when competitive bidding started, they can either continue to use the new supplier or choose another supplier. The original DME payment rates in effect prior to July 1 are reinstated retroactively.

--The agency said all Medicare households in the 10 round one CBAs will be notified of the delay directly in a letter from CMS by the end of this month. A posting on www.medicare.gov tells visitors that Congress has acted to delay the competitive bidding program and directs beneficiaries to a listing of local suppliers. “Medicare is continuing to make sure you can get the supplies and services you need,” the posting says. “We will post more information about the new program in the future ...We are sorry for any inconvenience this has caused.”

--All information on competitive bidding has been removed from both the CMS competitive bidding Web site (www.cms.hhs.gov/DMEPOSCompetitiveBid) and the CBIC Web site (www.dmecompetitivebid.com). CMS told providers to be aware that any published MLN Matters articles affected by the new law “will be revised or rescinded as appropriate.”

--Accreditation deadlines associated with round two of competitive bidding have been cancelled, although the accreditation deadline for all Medicare DMEPOS suppliers--Sept. 30, 2009--remains in effect. (For more, see “2009 Accreditation Deadline Stands” in this issue.)

--As a result of the new law, the mid-year 2008 Medicare physician fee schedule rate reduction of 10.6 percent is retroactively replaced with the fee schedule rates in effect from January through June, 2008.

--The law also reinstated the therapy caps exceptions process as of July 1. Therefore, medically necessary therapy services, in excess of the therapy caps, will continue to be paid by Medicare in accordance with the exceptions process. Claims submitted with the therapy cap exception modifier will be processed as soon as the payment rates have been activated. Claims submitted without the modifier, and rejected or denied, can be resubmitted with the modifier for reimbursement. More information on therapy caps is available at www.cms.hhs.gov/TherapyServices.

--In addition to the facts coming from CMS, the American Association for Homecare has been in talks with CMS about the implications of the new law as it applies to DMEPOS.

Representatives from the group met with CMS officials last week to “begin work on clarifying issues related to the delay in the competitive bidding program,” and CMS has agreed to produce a “Frequently Asked Questions” document for provider use.

--A Friday afternoon update from AAHomecare said CMS had held its first educational conference call earlier in the day on how the agency will implement the delay. According to the update, CMS’ carriers will reprocess any claims impacted by competitive bidding between the dates of July 1 and July 15, 2008.

--The association also said CMS will look into issues related to the repeal of the oxygen equipment transfer to beneficiaries enacted in the new law, including issues of maintenance and service payments that occur once the 36-month rental cap is reached, and “respond soon.”

--AAHomecare said CMS plans to hold a provider call to answer questions related to the ending of round one “in the near future.”

For now, AAHomecare pointed out the following important facts for providers to note:

• The cost of the competitive bidding delay will be offset by a nationwide 9.5 percent reduction in current payment rates for round one DME items, effective Jan. 1, 2009.
  
• The law repeals transfer of ownership of oxygen equipment that was enacted in the Deficit Reduction Act of 2005. After the 36th continuous month during which payment is made for oxygen equipment, the supplier will continue to maintain ownership of the equipment. Payments for oxygen contents will be made after the 36th month. However, rental payments for oxygen equipment are still subject to the 36-month cap. Maintenance and servicing payments after 36 months are still under development by CMS.
  
• The law terminates contracts under round one and will restart the contracting process in 2009, delaying program implementation for 18 months. The round two contracting process begins in 2011. Payment adjustments in non-bid areas may not take effect until round two is completed.
  
• In 2010 through 2013, all items would receive a Consumer Price Index (CPI) update.
  
• In 2014, items that had been subject to the 9.5 percent reduction would receive an additional 2 percent update over the CPI except in areas where competitive bidding contracts are already in place.

More details are available in a full summary on the AAHomecare Web site at www.aahomecare.org.

2009 Accreditation Deadline Stands
BALTIMORE--The passage of the Medicare Improvements for Patients and Providers Act has competitive bidding on hold, but CMS is reminding providers that the mandatory accreditation deadline of Sept. 30, 2009, still stands.

As a result of the competitive bidding delay, however, the accreditation deadlines associated with round two of the program--one that would have been effective today--have been cancelled.

According to a notice issued Friday afternoon, CMS said:

The Medicare Improvements for Patients and Providers Act of 2008 was enacted on July 15, 2008. This new law has delayed the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. As a result of this delay, the special accreditation deadlines previously established for the second round of the program have been cancelled. Specifically, prior to enactment of this new law, suppliers must have been accredited or have applied for accreditation by July 21, 2008, to be eligible to submit a bid for the second round of competitive bidding and must have obtained accreditation by Jan. 14, 2009, to be eligible for a second round contract. Both of these deadlines have been cancelled and no longer apply.

The deadline of Sept. 30, 2009, that was previously established by which all DMEPOS suppliers must be accredited is still in effect.

In the third in a series of four planned accreditation teleconferences last week, CMS' Sandra Bastinelli reminded providers that anyone providing HME must be accredited by Sept. 30, 2009. No exceptions.

“This is not competitive bidding. And I think you already had many calls on competitive bidding and you know where that stands,” Bastinelli told listeners.

“Who does the [accreditation] law actually relate to? It relates to anyone [providing DMEPOS items], she continued. "And the majority of the questions that we received were 'We are in this practice or we are in that practice. I only bill for two supplies a year, and I only have this one supply.' The statute does not say anything about volume or site of care. What it states is all DMEPOS suppliers must comply with quality standards--and that means to be accredited--in order to retain or obtain a Medicare Part B payment for DMEPOS.”

The teleconference, held June 15--just hours before Congress voted to override President Bush's veto of the new Medicare legislation--outlined the basic requirements for accreditation, and stressed that all entities providing HME must be accredited by one of CMS' selected 10 accrediting bodies. But despite CMS' clarity on the issue, many providers called asking variations of the same question: “Do I need to get accredited?”

Other questions included how much accreditation costs and which accrediting body provided accreditation “the fastest.”

CMS responded that accreditation costs vary among accrediting bodies. As for which accreditors are quickest? “If you're looking for the shortest way, you are missing the point,” said Bastinelli, emphasizing that accreditation is meant to ensure that patients are receiving the highest quality of care.

She advised providers should expect at least six months to complete the accreditation process.

A replay of the teleconference is available through July 22 at 800/642-1687. Use passcode 49364905.

Bid Winners Wonder: Who Pays for Their Costs?
ATLANTA--While the suspension of DMEPOS competitive bidding generated cheers that reverberated across the industry last week, it was a bittersweet result for the 325 round one suppliers who won contracts in the 10 competitive bidding areas.

On Friday afternoon, information was still dribbling out of CMS about how reimbursement issues would be addressed for contract providers. As they waited to hear how some of their questions would be answered, those providers also were wondering if there was any ability to recoup the thousands--in some cases, hundreds of thousands--of dollars they had invested in preparing for business under bidding.

“They have mixed feelings,” said Rose Schafhauser, executive director of the Midwest Association of Medical Equipment Services. “The delay was good for the entire industry. I think those folks that did win contracts understand it, but they are out lots of money.

“They have spent a lot of money and spent a lot of time and hired staff,” she continued. “And what now? How do they recover the expenses they incurred? They are the good ones that literally got hurt from this. They are basically the sacrificial lambs in this whole process.”

Interviewed by HomeCare Monday last week, here is what several bid winners had to say:

Georgie Blackburn, vice president of government relations for Blackburn’s Pharmacy in Tarentum, Pa., awarded six contracts: “You’re the winner of six contracts one day and you wake up the next day and you’re not,” said Blackburn. “There were doors that were opened that were not there before.

“But are we still glad [about the delay]? Yes. The bottom line is, we weren’t happy to be signing contracts in a system that was so plagued with flaws. It wouldn’t have been a good program down the road for our patients.”

Blackburn said she had been concerned about the unfair elimination of providers from the bidding process, the loss of small businesses and the quality of service that would result from competitive bidding.

“I was especially concerned with contractors who won contracts and had never provided the equipment before,” she said, adding that she was also appalled that at least one company with a corporate integrity agreement “hanging over its head” had won several competitive bidding contracts.

Beyond the suspension of the competitive bidding program, the new law (the Medicare Improvements for Patients and Providers Act) has many pluses, Blackburn said. For example, it mandates the removal of complex rehab from any potential competitive bidding project.

“That’s outstanding,” she said.

And she was relieved at the 9.5 percent reimbursement cut that providers across the nation will feel in 10 product categories come Jan. 1, 2009.

“The 9.5 percent cut is a huge improvement over the 27 percent [average cut] in the Pittsburgh [competitive bidding area],” she said.

CMS had said the average savings through competitive bidding reimbursement cuts across all product categories would be 26 percent. But in some areas and some categories, the cuts were in excess of 40 percent.

Blackburn said she looks forward to the prospect of Medicare reform next year. “This is the first step in making a wrong right,” she said. “The next step is doing the reforms … [with] the right people at the table [working] to save dollars. I hope we can be part of that process.”

Jeffrey Holman, president of First Priority Medical Services, Hollywood, Fla., awarded five contracts: “I’m very disappointed in the Senate, that they allowed big business to attach [the delay in competitive bidding] to a bill that has nothing to do with it,” said Holman, an attorney who, with his wife, father and business partner, owns the small mom-and-pop.

Holman said he viewed the project as a way of banishing fraud and abuse from the industry. “Competitive bidding never seemed like the best way from the beginning,” he acknowledged, “but it seemed like a necessary evil to clean up this industry and be on a level playing field where we can do business the right way with other people who are doing it the right way.”

Instead, he said, he finds himself in a position where he is not going to be able to build his business as he anticipated, and he’s out a lot of money because of the delay in competitive bidding. “My expansion plan that I put into Medicare accounted for a 100 percent expansion,” he said. “We were actually prepared to go to 400 percent. We hired new people, our warehouses were filled to the hilt.”

Now, Holman has to backpedal. “The thing that disturbs me the most is not only the rigorous process we went through to bid, but we hired new staff, installed a new phone system,” he said. “Now we have to fire people, and what are you going to do with a phone system you don’t need? It’s an $8,000 paperweight.”

From his vantage point, CMS should never have implemented the program, which for weeks prior to the July 1 start date, was being seriously questioned by Congress.

“They could have, frankly, saved the 325 [contracted] suppliers maybe over $100 million by not taking the program live,” Holman said.

He is sure, he said, “that there will be meritorious lawsuits” filed by providers attempting to recoup their losses. “I do not know if I will take part. I am more hopeful that Medicare or Congress or whoever will simply step up and give us some sort of format by which we can recover our losses,” he said.

Round one providers may be able to claim damages from the government resulting from the delay or loss of contract. CMS has as yet issued no guidance as to how those claims can be made.

Meanwhile, Holman is distressed at the turn of events. “It’s not just the financial,” he said. “I feel so disappointed, so disillusioned with the Senate. I am so disheartened by the way this issue was handled and was not decided on its merits. It’s awful. It’s terrifying. The company goes from being extraordinarily valuable because of the contracts to being worth nothing. It’s an unbelievable reversal of fortune.”

Raul Lopez, director of operations for Bayshore Dura Medical in Miami Lakes, Fla., and president of the Florida Association of Medical Equipment Services, awarded eight contracts: “It’s a mixed bag. Obviously, there was an enormous amount of relief that we had won the contracts, disappointment as to the amount of revenue under the contracts and concerns about servicing patients.”

While his company, like the other members of FAMES, did not support the idea of competitive bidding, he felt it had no alternative but to participate, Lopez said, and ramped up to do it. Bayshore bulked up its inventory and added and trained more staff, so there was a significant investment in the project, he said.

Now he is left with an inflated inventory and numerous reimbursement questions. But he isn’t particularly concerned about his excess inventory.

“Will the inventory get used? In the first month of July, probably not. In the first quarter, probably,” he said.

In the end, he says, the delay, though somewhat costly, pales in contrast to what could have happened to the industry if competitive bidding had moved forward.

“We have got to get rid of it altogether,” Lopez said. “Competitive bidding is never going to work.”

Chris Rice, Diamond Care Respiratory Care in Riverside, Calif., awarded five contracts: “We hired more staff, we bought more trucks, everything you can think of, we did. We’ve got hundreds of thousands of dollars invested,” said Rice.

Never a champion of competitive bidding--he launched a Web site, www.competingbid.com, to fight the CMS program--Rice said he is unsure how he feels about the delay.

“Now that the program is undone, we have a lot of issues,” he said. “One of the rules of the program was that if you had a patient with a capped rental item and you had to replace it, you’d be paid for that item. And we’ve had that happen.”

Under the pre-competitive bidding scenario, however, the beneficiary would not have been entitled to another capped rental item, he said. So will he get paid or not? CMS has not yet said how it will resolve the issue.

Rice also has concerns about how to re-educate not only his staff but also his referral sources and beneficiaries. “We spent an awful lot of time educating [employees] on the program itself, and now we have to un-ring that bell,” he said. “And it’s not only employees, but referral sources and beneficiaries. I’m not sure the beneficiaries even know it’s been stopped.”

Like other providers, he’s waiting for further direction from CMS.

“We’re just going to have to wait and see,” he said. “I guess the real fear is that people are just going to go back to business as usual, and what will happen in 18 months?”

While some industry stakeholders believe the program will not be resurrected, Rice isn’t so sure.

“Really, I have a feeling it is going to happen in 18 months,” he said. “I hope I’m wrong, but from talking to Congressmen and everyone, they don’t seem to think that competitive bidding is a bad idea. They think it wasn’t implemented well.”

It’s going to be up to the industry, he said, to convince them otherwise.

Tammy Zelenko, CEO and president of Bridgeville, Pa.-based AdvaCare Home Services, awarded one contract: “I won a contract for oxygen, but I fought with my heart and soul to get this stopped,” said Zelenko, who objected to competitive bidding on a number of levels, not the least of which was the severe drop in reimbursement.

“To plan for a 26 percent cut is hard to do,” she said. “My bid was higher than what the allowable bid came in at.”

Retail and private insurance comprise much of the business at her three locations, while Medicare accounts for only about 12 percent, she said. “But the long-term effects of [competitive bidding] for business owners, staff and beneficiaries--every [insurance] company would be basing their reimbursement off Medicare.”

Zelenko was happy, she said, that they “put the brakes on the whole thing.”

While it was costly to go through the bidding process, she doesn’t expect the delay to cost her much money. “Fortunately, our whole infrastructure was in place,” she said. “I was not adding trucks, I was not adding facilities.”

She pointed out that another provision of the new Medicare law is worth celebrating. “The repeal of the transfer of the ownership of oxygen is not an unimportant feature,” she said.

Had the title transfer to beneficiaries gone through as planned on Jan. 1, 2009, “we would have lost not only the reimbursement but the asset. We can’t continue to do business that way.”


In Brief
Noridian Administrative Services (NAS) has been named the Pricing, Data Analysis and Coding (PDAC) Contractor by CMS. NAS will assume its duties by Aug. 18, 2008. Until the PDAC Web site is launched, (www.dmepdac.com), providers should continue to reference the SADMERC Web site at www. palmettogba.com/sadmerc for transition information.

National Government Services, the CEDI contractor, has scheduled an Ask-the-Contractor teleconference for all DME MAC electronic trading partners, vendors, billing services and clearinghouses. The Q&A call-in will be held July 31 from 1 p.m. to 2:30 p.m. ET. The dial-in number is 888/285-8453. Use conference ID number 54681328. No registration is necessary for the call.

According to a New York Times article July 5, many home health agencies have begun to reduce their services as a result of increased gasoline prices. The article is based on a survey from the National Association of Area Agencies on Aging in which half of the surveyed agencies reported they have reduced services already, and 90 percent said they plan to reduce services in 2009.

Visit this week's sponsor at www.dynamicenergy.com.