The bottom line of the sting operation, according to the GAO: "After establishing two fictitious DMEPOS storefronts with no inventory and no clients, our undercover investigators were able to successfully complete the Medicare enrollment process.”

If You Service Hospices, You've Got a New Accreditation Deadline
ATLANTA--In a disconcerting surprise to many home medical equipment providers, those that service hospices must be accredited by Dec. 2, 2008, in order to keep their contracts, according to the finalized “Conditions of Payment” for Medicare and Medicaid hospices published recently in the Federal Register.

The COP, published June 5 and effective Dec. 2, stipulates that a hospice may only contract with a durable medical equipment suppplier that meets the Medicare DMEPOS Supplier Quality and Accreditation Standards at 42 CFR 424.57.”

That standard, noted in the special payment rules for items furnished by DMEPOS suppliers, defines accredited DMEPOS suppliers as “suppliers that have been accredited by a recognized independent accreditation organization approved by [the Centers for Medicare and Medicaid Services] in accordance with the requirements at Sec. 424.58 [of the “Conditions for Medicare Payment” for DMEPOS providers].

News of the accreditation requirement, which has dribbled out as hospices have alerted their HME suppliers, has panicked some providers, according to accreditation consultant Mary Ellen Conway, president of Capital Healthcare Group, Bethesda, Md.

“We’ve been getting tons of calls from people being contacted by hospices saying they have to be accredited,” Conway said. “I’m concerned about the number of people who have called to clarify the information and find out what they need to do to get started now.”

While some providers serving hospices are already accredited, many were shooting for the Sept. 30, 2009, mandatory accreditation deadline set for all DMEPOS providers by CMS last year. But under the new rule, for providers contracting with hospices, that deadline will not work.

“For a DME that has hospice as … a major portion of their revenue stream, this is an enormous requirement,” Conway said. “It’s fine if a provider is already accredited, but based on the number of calls we’ve gotten, it could be a problem.” State hospice surveyors, she added, “are going to be looking for that requirement of only dealing with accredited providers by that Dec. 2 date.”

Bob Floro, MSL, RRT, director of the home care accreditation program for The Joint Commission in Washington, D.C., said his accrediting organization has already gotten calls from providers seeking accreditation in order to service hospices.

“I just fast-tracked somebody last night,” he said, adding that he expects calls to increase as more and more hospices communicate the new standard to their HME providers.

Floro said it is possible for his organization to accredit a provider by the Dec. 2 deadline.

“It’s doable. There’s a very, very tight window. The surveys have to be done by October or maybe the first week in November to meet the deadline,” he said. However, he pointed out, it’s only doable if a provider understands the level of preparation it takes to become accredited and accomplishes that in two months.

Gwen Franzgrote, director of HME services for the Washington, D.C.-based Community Health Accreditation Program, said she has also received inquiries about DME accreditation to supply hospices.

“For those that are starting now, it is possible to get through the process,” she said, “but I would not encourage them to wait much longer.”

Hospices will want to be found in compliance by that Dec. 2 date, she stressed. They are thus unlikely to continue their association with HME providers who are not accredited.

Tom Caesar, president of the Raleigh, N.C.-based Accreditation Commission for Health Care, said his organization has so far received just a few e-mails on the accreditation issue. He is doubtful that ACHC would be able to accommodate any but the most prepared of providers applying now for accreditation by Dec. 2.

“We are scheduling 400 surveys right now,” he said, so the organization’s priority is to those providers already in the pipeline for accreditation. HME providers shooting for the Dec. 2 deadline, he said, “have to be ready like now, and then we can put them on as quickly as possible.”

He pointed out the probability that this won't be the only accreditation deadline to pre-date the CMS mandatory deadline. Some state Medicaid agenicies are considering or have already established their own accreditation deadlines, both he and Conway said. Conway also noted the Jan. 1, 2009, accreditation deadline “that is sneaking up fast” for providers who were enrolled with the National Supplier Clearinghouse before March 1, 2008. (Providers who enrolled on or after March 1 must already be accredited.)

“Frankly, for the folks who do DME Part B, a lof of them have waited and waited and waited to get accredited. And it’s going to work against them,” Caesar said.“The guys in the DME world might as well get accredited.”

To view the final rule for hospices, click here and scroll to section 32212 (page 126 of the PDF) for 418.106 "Condition of participation: Drugs and biologicals, medical supplies, and durable medical equipment."

Simple Math: 9.5 Percent Cut Simply Doesn't Work for Complex Rehab
ATLANTA--Even as HME providers are gearing up for a 9.5 percent reimbursement reduction in 10 product categories Jan. 1, complex rehab stakeholders are racing against the clock to get the segment exempted from the cut.

The problem is, it will take an act of Congress to do it--and Congress is in recess until September.

“Congress is really in session for only another four weeks [after lawmakers return],” said Seth Johnson, vice president for government relations for Exeter, Pa.-based Pride Mobility Products and a member of the American Association for Homecare’s Rehab and Technology Council.

When the nation’s federal legislators return to Washington after their August break, they will work on appropriation bills and perhaps another economic stimulus package; then, because it is an election year, “they are going to be gone for the remainder of the year,” Johnson said. “There’s going to be legislation that moves through very quickly. That’s why time is of the essence for us to communicate this with legislators.”

At issue is the effect a 9.5 percent cut will have on the complex rehab industry. The cut, which was mandated by H.R. 6331, delayed competitive bidding for at least 18 months and also exempted complex rehab from any future competitive bidding project. But the 9.5 percent cut includes the project category, which is known for its slim profit margins, a fact documented by the recent study produced by the University of Rochester’s Simon Business School.

According to the study, which surveyed companies ranging in annual revenue from $250,000 to $21 million, those in the small sector (less than $5 million) had a pretax profit of 3.44 percent; companies in the medium category ($5 million to $10 million) averaged 6.87 percent in profit; and large companies ($10 million and above) had profits averaging 4.83 percent.

The study, which garnered a 20 percent response rate, reported that 53 percent of the complex rehab providers fell into the “small” category; 42 percent were in the “medium” category; and five percent were large companies.

“When the average net profit is between 2 and 4 percent, and you take 9.5 percent out of that, it’s simple math. We simply cannot afford to provide all the products and services we offer if the 9.5 percent reduction goes into effect,” said Gary Gilberti, president of the National Coalition for Assistive and Rehab Technology and owner of Chesapeake Rehab in Baltimore, Md.

And it’s getting worse. Fuel and payroll costs are increasing and so are shipping costs, which manufacturers tack on to their charges, stakeholders point out. As well, there is the customization of a complex rehab product.

“There is a service component to what we provide,” said Gilberti. “You can go to Wal-Mart and buy a walker, you can go online and buy a piece of equipment, but it doesn’t get delivered, set up, all those added-on services … A custom wheelchair has to be custom fitted, put together, the electronics adjusted.”

The 9.5 percent reduction doesn’t take any of that into consideration.

“At the end of the day,” Gilberti said, “it is going to be about access. Some people might say this is a reimbursement issue, but if companies cannot afford to provide those products, they aren’t going to provide them and then it will become an access issue.”

Johnson agreed, noting, “The 9.5 percent cut is going to create the same impact as competitive bidding, because [complex rehab providers] don’t have the 9.5 percent to give.”

That message has to get to Congress, he maintained. Toward that end, members of RATC, NCART, the Rehabilitation and Engineering Assistive Technology Society of North America and other stakeholders have been meeting to develop a strategy and “ensure we are carrying a common message when we talk with legislators, consumer groups and other clinicians,” Johnson said. “It is very important how it is carried to legislators on the Hill.”

“We do run the risk of Congress looking at us as looking a gift horse in the mouth,” said Jim Greatorex of Black Bear Medical in Portland, Maine. “I do feel that people in DC feel they have done quite a lot for us [in delaying competitive bidding] and for us to be coming back and asking for more--it’s going to take some tact.

“But I do think we have something we can point out to them nicely,” he continued. “We’ve already had our prices and codes adjusted in 2006. The Simon report … certainly shows that ‘lucrative’ and ‘complex rehab’ are not words you use in the same sentence.”

Whether or not the Simon report will play a large role in presenting the message is a point of discussion.

“The Simon study is one of the data pieces that is really a critical component to this advocacy effort because it provides very recent data--2007 data,” Johnson said. “It clearly shows that the pre-tax profits are way below 9.5 percent.”

“It’s simply one of the tools we are going to have to use,” said Gilberti. “At face value, it shows the everyday challenges we have as providers.”

Sharon Hildebrandt, executive director of NCART, said she sees the study as being useful in communicating with clinicians and consumers. “It demonstrated the percentage of the expense that goes into the evaluation and the assembly and delivery,” she said. “We have always maintained that [rehab providers] have specialized staff and must do evaluations and put the products together; those are not product expenses.”

The Simon study, she said, is “another tool we can use in explaining to them how a complex rehab company operates and what their constraints are.”

For his part, Mark Schmeler, Ph.D, OTR/L, ATP, professor and researcher in the University of Pittsburgh Health & Rehabilitation Sciences department, and new president of RESNA, said he valued the study, and its findings support his opinion that “9.5 percent is a pretty drastic cut given that there was a cut a few years ago.

“But I think we need to be cautious how we present it,” he said, noting that it’s “a good pilot study, but not very scientific,” and there is much left open to interpretation. He doesn’t, he said, want to open the industry up to potshots from CMS, a possible outcome of attempting to use the Simon study to change the industry’s status.

Schmeler said the Simon study is a “snapshot” of where the industry is today; another independently funded, more in-depth survey is under way by researchers at the University of Buffalo and Georgia Tech, and it should provide a “more systematic look at the time and resources it takes to provide complex rehab.”

The problem is, Schmeler said, it will be two or three years before it comes out. So the Simon study is the most current available. Still, while he champions the fight to get complex rehab exempted from the 9.5 percent cut, the Simon study might not be the ticket to achieve that, Schmeler said.

“This is not the proof in the pudding we think we have,” he said. “We need to take what we have and be cautious about how we present it.”

Whatever the strategy--and Greatorex believes one could be settled on as early as this week--there is some concern that the time limitations might be too tight to get anything done this year. Johnson and others, however, think it is critical that the industry tries. There may be opportunities this session for a bill to pass exempting complex rehab and the cost of the exemption is unlikely to be a stumbling block, Johnson said.

“The cost to eliminate this 9.5 percent reduction is between $7 million and $9 million a year,” he said, noting that if Congress did a technical correction, the industry would not have to find a way to make up the difference. “It’s basically budget dust. There’s not much of a concern right now about the cost in eliminating that because it’s so small.”

So rather than waiting for a new Congress to undo the reduction, now is the time for the industry to move, he said. “We have no choice. We really have an obligation to communicate with Congress in a clear manner what the impacts will be of this reduction before they happen.”

Greatorex agreed. “I do feel like there is an opportunity. If we all work together and find the best way to approach it, I think we’ve got a good chance,” he said.

HME Scorecard: Keeping Track of Industry Changes
ATLANTA--While DMEPOS competitive bidding has garnered the industry's most recent headlines, a slew of other changes has emerged for home medical equipment providers that may have gotten lost in the chaotic competitive bidding shuffle.

Industry stakeholders marshalled all their muscle this year to halt the Medicare bidding program that, in fact, went into effect July 1. It was finally rescinded July 15 when Congress overrode the president's veto of H.R. 6331--which includes a delay of the program--and the measure became law.

Since the beginning of the year, however, CMS and its contractors have issued several proposals and directives that will change the way providers do business. To help keep track, here's a roundup that includes some of them.

Supplier Standards: For years, providers had asked for further guidance and clarification of what many called vaguely written supplier standards. In January, CMS responded, publishing an 11-page draft rule in the Federal Register clarifying and expanding existing supplier standards and adding others that all HME providers must meet to participate in Medicare and retain billing privileges. Comments on the proposed standards were taken until March 25. At press time, a final rule had not been released.

Among the proposed rule's changes to the existing supplier standards:

--A change to Standard No. 1, which deals with state and federal licensure and regulatory requirements, would require that suppliers providing licensed services not contract out those services. In other words, personnel furnishing licensed services (in states that require licensing of any aspect of a provider's business) must be W-2 employees, not 1099 independent contractors.

--CMS would expand existing Standard No. 7 regarding physical facilities and appropriate sites. The agency proposed that hours of operation be posted on permanent signage at the main entrance to the supplier location, even if the business is in a building complex where it is not the only tenant.

In addition, the location must be staffed during posted hours and must be accessible “regardless of whether beneficiaries routinely visit the facility,” according to the proposal. The requirement also would apply to “closed door” businesses, such as pharmacies or suppliers providing services only to beneficiaries in a nursing home. “A supplier is not in compliance with this standard if no one is available during the posted hours of operation,” CMS said.

--Standard No. 9 would be revised to prohibit answering machines, answering services or fax machines as the primary business phone during operating hours and would also prohibit forwarding incoming calls to a cell phone or beeper.

Among new supplier standards, CMS propopsed:

--That suppliers obtain oxygen from state-licensed oxygen suppliers. The standard would apply in states that license oxygen suppliers, but when an HME company is located in a state that requires such licensing, the company must obtain oxygen from a licensed supplier, regardless of the state where the oxygen supplier is licensed.

--That suppliers be prohibited from sharing a location with other Medicare suppliers, including physicians.

--That suppliers must be open to the public a minimum of 30 hours per week (either six hours a day, five days a week or five hours a day, six days a week).

To read the proposed rule in full, click here.

CEDI: Rather than four DME MACS processing claims, CMS announced in January that a single entity would take on that responsibility. National Government Services was awarded the Common Electronic Data Interchange contract and, by mid-year, had transitioned all four jurisdictions to the CEDI program. While there were significant hold-ups in claims processing, as of Aug. 7, NGS said it was working to catch up and was finishing up paperwork received on June 27 and 30 and had begun processing paperwork that was received on July 1.

For updates, check the CEDI Web site at www.ngscedi.com. The CEDI Help Desk is available from 9 a.m. to 9 p.m. ET at 866/311-9184.

To access a CEDI FAQ document, click here.

CPAP Therapy: On March 13, CMS issued a National Coverage Determination that changed policy to allow coverage of CPAP therapy for obstructive sleep apnea if a positive diagnosis is made from a home sleep test. The decision is effective Aug. 4. However, in a recent ruling, the DME MACs refused to allow HME providers to administer those tests. For more, see "Home Sleep Testing" below.

To see the official instruction issued to the DME MACs regarding CPAP therapy for OSA, click here.

NPI and PTAN: As of May 23, CMS required that all Medicare claims be submitted with a National Provider Identification number or be rejected. As well, the agency is requiring that all providers applying for their NPI number prior to March 1, 2008, be accredited by Jan. 1, 2009; those seeking enrollment after March 1, 2008, must already be accredited.

Also effective May 23, providers are required to have a Provider Transaction Access Number to authenticate identification when they phone or submit written inquiries to a Medicare fee-for-service contractor. (The PTAN was formerly referred to as a supplier number, NSC number, Medicare provider Identifier Number or legacy Medicare Identifier). For providers enrolled in Medicare before May 23, 2008, the PTAN is their legacy number. For providers enrolling on or after May 23, a PTAN is assigned.

For more information on the NPI, click here.

CMS announced last week that it would be implementing some enhancements/updates to the National Plan and Provider Enumeration System to be effective today. For a detailed listing of the NPPES enhancements, click here.

Accreditation Deadlines: On the heels of the suspension of competitive bidding, CMS announced it was rescinding previously set accreditation deadlines for round two: July 21 for providers who wished to submit a bid; and Jan. 14, 2009, for those who wanted to be considered for a contract. CMS did, however, retain the deadline by which all Medicare providers must be accredited: Sept. 30, 2009.

For a DMEPOS accreditation fact sheet, click here.

Home Sleep Testing: Providers were blindsided in mid-July when the four regional DME MACs issued a revised Local Coverage Determination for CPAP policy prohibiting HME providers from conducting home sleep tests--or even delivering or picking them up. The industry had anticipated a different outcome since CMS' March NCD opened the door to home testing with type II, III and IV devices. But the MAC medical directors decided differently. “No aspect of a HST including but not limited to delivery and/or pickup of the device, may be performed by a DME supplier,” the LCD said. (For more, see HomeCare Monday, July 21.)

In a proposed rule published in the July 7 Federal Register, CMS would prohibit CPAP reimbursement if a supplier or its affiliate performs the test used to diagnose a beneficiary with OSA. 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.

SADMERC Change: Effective Aug. 18, the SADMERC transitions to a new carrier, according to CMS. Noridian Administrative Services will be the new Pricing, Data Analysis and Coding Contractor, taking over the duties of Palmetto GBA, the Statistical Analysis DME Regional Carrier. (See HomeCare Monday, July 28.)

Under the contract, the PDAC will be responsible for:

--Providing data analysis support to the DME Program Safety Contractors;
--Guiding manufacturers and suppliers on the proper use of HCPCS codes for Medicare billing purposes through product reviews and decisions;
--The DME coding system and the HCPCS Helpline;
--Conducting national pricing functions for DMEPOS services; and
--Assisting CMS with DMEPOS fee schedules.

For transition updates, check the SADMERC Web site, www.palmettogba.com until the PDAC Web site--www.dmepdac.com--is launched.

11 Million Uninsured Have Chronic Illness, Load Up ERs
ATLANTA--Millions of U.S. residents with chronic conditions are not receiving appropriate care because they are uninsured, according to a new study, "A National Study of Chronic Disease Prevalence and Access to Care in Uninsured U.S. Adults," published in the Annals of Internal Medicine.

For the study, researchers analyzed National Center for Health Statistics surveys of adults ages 18 to 64. They found that about 11 million people out of the 36 million who reported having no health insurance in 2004--the latest data examined in the study--had been diagnosed with a chronic condition, including high blood pressure, diabetes, asthma and emphysema, among others. The study also found that most of the uninsured with chronic illnesses forgo doctor's visits and instead rely solely on emergency room visits for care.

Researchers from the Cambridge Health Alliance and Harvard Medical School found that 22.6 percent of those surveyed with one or more chronic illnesses had not seen a medical professional in the last year, compared with 6.2 percent of those with insurance. In addition, 7.1 percent of those without insurance identified an emergency room as their standard site for care, compared with 1.1 percent of those with insurance.

A statement from lead author Andrew Wilper of the University of Washington-Seattle noted “many of these individuals end up with preventable emergency room visits, hospitalizations, amputations, kidney failure or worse because their chronic condition has gotten out of control.”

"For some of the 11.4 million uninsured Americans with serious chronic conditions, access to care seems to be unobtainable; many may face early disability and death as a result," the study's authors said.

They also pointed out their estimates could be low because the study only counted those with chronic conditions who were diagnosed by a doctor.

In Brief
Kuhn Touts Bidding; Davis Loses in Tennessee Primary--Maybe
CMS Deputy Administrator Herb Khun recently penned a letter to the editor, once again proclaiming the benefits of competitive bidding. Published Aug. 5 in the Baltimore Sun, Kuhn's letter said Medicare costs “have risen even faster than the overall nationwide health care costs--much faster,” and added that, with the impending retirement of the baby boom generation, the number of workers supporting each beneficiary will drastically decline. Kuhn noted that competition has aided in reducing Medicare Part D costs by nearly 40 percent, which he followed by saying, “Congress just axed a promising program to replace government-mandated pricing with competitive bidding” for DME. “Continued congressional inertia will only impose crushing obligations on our children and grandchildren and undermine our country's economic viability in a global economy,” he wrote.

Rep. David Davis, R-Tenn., a respiratory therapist and previous HME owner, apparently lost his re-election campaign in Thursday's Tennessee primary. Johnson City Mayor Phil Roe beat Davis by a 500-vote margin: 25,916 votes to Davis' 25,416. But according to a story in The Hill on Friday, Davis had not yet conceded defeat, and his campaign manager told the newspaper "we’re just waiting until every single vote is counted and certified.” In a House Small Business Subcommittee hearing earlier this year, Davis grilled CMS' Lawrence Wilson on the effects of competitive bidding and was a strong supporter of the industry-backed H.R. 6331, which delays the program. The primary's winner will face Democrat Rob Russell in the November general election.

In a formal response to last week's GAO report on Medicare fraud (see lead story in this issue), the Council for Quality Respiratory Care said the organization finds the report “extremely alarming” and “supports any and all efforts to strengthen the DMEPOS enrollment and inspection process.” The Council said any Medicare abuse “is unconscionable and is not representative of the thousands of honest, dedicated, hard-working men and women who serve this vulnerable population every day.” CQRC also said “the government should maintain a zero tolerance policy for any providers who knowingly and willingly break any law that is clearly outlined in CMS' Medicare supplier standards and guidelines for billing and reimbursement. These rules should be clear and unambiguous so as to avoid any question about legality, and government enforcers should have the necessary tools to fairly and swiftly prosecute to the fullest extent of the law where there is real abuse to the system.” Members of the CQRC include Pacific Pulmonary, Praxair, Respironics, Rotech, DeVilbiss, AirSep, American HomePatient, Apria, Invacare and Lincare.

CMS reminded providers last week that effective Sept. 1, all providers must begin using the new Advance Beneficiary Notice of Noncoverage (ABN) by that date. The revised ABN, released March 3, 2008, replaced the general use ABN currently used by DMEPOS suppliers, as well as the lab ABN for physician-ordered lab tests. The form and notice instructions, in both English and Spanish, are posted on CMS' Beneficiary Notice Initiative Web page at www.cms.hhs.gov/bni.

The Accredited Medical Equipment Providers of America (AMEPA) will hold a conference and luncheon Aug. 28 from 10 a.m. to 3 p.m. at the Sheraton Ft. Lauderdale Airport Hotel. For more information, email sean@amepa.us or call 305/654-5957.

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

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