Rural Exemption for Competitive Bidding?
WASHINGTON--Sen. Charles Grassley, R-Iowa, introduced a wide-ranging health care bill Tuesday that seeks to exempt rural areas from DMEPOS competitive bidding. Specifically, the measure applies to MSAs with a population of 600,000 or less. The provision is one of several initiatives outlined in the Medicare Rural Health Access Improvement Act of 2009, which Grassley said would also improve Medicare payments to rural doctors, ambulances and mid-size hospitals.

“The policy changes in this legislation go directly to the special challenges facing the health care system in rural America,” Grassley said in a press release. “They recognize the high quality of health care delivered by rural providers, embrace common sense solutions and seek equitable treatment from payment systems.”

Reaction to the proposal was varied. John Gallagher, vice president of government relations for the VGM Group, Waterloo, Iowa, believes the bill has little chance to become law. “I don’t think it has a shot,” said Gallagher. “The good thing is that Sen. Grassley understands that competitive bidding would be a nightmare for providers. What we need to ensure is that he understands that crazy competitive bidding bids will still eliminate rural providers with revised fee schedules based on the bid price.”

Grassley has introduced similar measures in the past, according to Cara Bachenheimer. However, she believes the new administration could provide an opening for another bid delay. “We must do everything we can to suspend the bidding program, which means working with the new administration and with Congress,” said Bachenheimer, senior vice president of government relations for Invacare, Elyria, Ohio. “Asking the new administration to suspend the rule could delay the program, but we are also working with Congress to develop support to further delay or suspend the bid program.”

While the Grassley bill would not solve the HME industry’s problem since it would not stop the bidding process, “the one plus is that it could help engender support from other rural members of Congress,” noted another Washington insider. “Grassley has stature in the Senate, and other members of Congress may correctly infer that this bidding program decreases access to care in rural areas, and in urban areas, too.”

As usual, the industry plate is full and extends well beyond competitive bidding. Bachenheimer pointed out that at least four key issues are high on the agenda for 2009. “First, fix the post 36-month payment issue,” explained Bachenheimer. “Second, suspend the bid program. Third, restore the 9.5 percent cut for complex rehab. Finally, enact payment reform for home oxygen therapy so the statute explicitly recognizes and pays for the services providers routinely provide to beneficiaries.”

After Congress delayed Round One of the Medicare bid in July, CMS issued an interim final rule on the program Jan. 16, in the waning hours of the Bush administration (see HomeCare Monday Special Alert, Jan. 15). But the rule, which carried an effective date of Feb. 15, is on hold pending the Obama administration’s review.

Officials from the Accredited Medical Equipment Providers of America reported Thursday that during a recent Open Door Forum, CMS representatives said it is unclear when the new administration will lift the moratorium. “CMS admitted that they are running at half strength after the inauguration, with many political positions to be filled and many former officials resigning,” AMEPA noted in a message to members.

VGM's Gallagher agreed the right move now is working to suspend and then eliminate the bidding program. “We need for [HHS Secretary-Designate Tom Daschle] to rescind the interim rule and for a champion to step forward to kill competitive bidding,” he said. “It’s bad policy that needs to be discarded.”

Complex Rehab Sector Hopes to 'Move the Needle' on Cut
ATLANTA--Struggling under a 9.5 percent reimbursement cut that took effect Jan. 1, complex rehab providers are appealing to legislators to reverse the cut, and they’re looking to consumer groups to add muscle to the message.

“What we have heard from committees on Capitol Hill is that this effort needs to be led by consumer groups. That is what is going to move the needle on Congress taking action on this issue,” said Seth Johnson, vice president for government affairs for Pride Mobility Products, Exeter, Pa.

Under the Medicare Improvements for Patients and Providers Act of 2008, the cut on Round One product categories was the payback for Congress’ delay of competitive bidding. Complex rehab was exempted from any future competitive bidding projects, but was included in the cut.

Stakeholders, who are asking for a parallel exemption to the bidding carve-out, have said that complex rehab providers operate on slim margins--as little as 2 percent--and cannot absorb a 9.5 percent fee reduction without some deep cuts of their own to service and quality of products.

That is already occurring, some said.

“Certainly the choice of product has been much more limited than it was,” said Jim Greatorex of Black Bear Medical, Portland, Maine. “The other thing that we are doing is, upon delivery with any custom rehab product, we are letting folks know that if we need to do warranty service on any product, it has to come into the shop or the people will be charged a service charge.”

Black Bear has been working for two years to get people to bring their products into the shop for repair and has a 75 percent success rate, Greatorex said. “We’ve had good response to that,” he said. But the product limitations are distressing to beneficiaries. “We’re getting a little squawk back when folks [realize] they can’t get the products they are used to,” he noted.

Greatorex has also challenged his employees to achieve a 12 percent sales increase without incurring any new overhead or adding any new employees. “That is the other thing we have to do to remain stable,” he said.

Black Bear Medical isn’t the only company cutting back.

“Providers … were forced to look at everything they do that was not required by Medicare policy,” said Johnson. “Trial equipment has largely gone away and repairs are not required, so a lot of providers are not repairing chairs. Many are asking patients to bring chairs into the company so they don’t have the travel time and the cost [to and from the patient’s home].”

It’s even gone further than that for some providers, according to Sharon Hildebrandt, executive director of the National Association for Assistive and Rehab Technology. “Some providers are thinking of selling. I would expect to see more consolidations in the field when it comes to rehab,” she said.

In a recent HomeCare survey, more than 10 percent of responding complex rehab providers said they would not remain in the business (see “2009 Forecast Survey” in HomeCare’s January issue).

The results of the cut, what Johnson calls “unintended consequences,” have garnered the concern of consumer groups that are getting frustrated calls from Medicare beneficiaries.

Last month the ALS Association sent a letter to the Senate Finance Committee “pointing out the problems that have evolved with access to service,” Hildebrant said. Both she and Johnson said more consumer groups are expected to take similar action in the next week or so.

That’s good news to Tim Pederson, president and CEO of WestMed Rehab, Rapid City, S.D., who heads the American Association for Homecare’s Rehab and Assistive Technology Council. “No matter how good our argument is as providers, it has the potential to come across as self-serving if we are the ones to ask for that,” he said.

Input from consumer groups on the effects the cut has on their members will likely carry the most weight with members of Congress, he said. “There’s very little we as providers can do to lift the ball on this,” he said.

But that hasn’t stopped advocates from at least trying to push the ball forward. Pederson said RATC and NCART are seeking ways to coordinate their priorities for the coming year and keep the momentum going.

“The number one priority for AAHomecare [regarding complex rehab] is to achieve a parallel exemption and it is the number one priority for NCART, as well. If we have a united effort and a concerted effort, then we have an opportunity to do something about this 9.5 percent cut,” he said.

But Pederson cautioned against thinking the cut could be repealed anytime soon. “We’re working on this, but we need to accept the constraints of our current reality right now and make plans to deal with it. We don’t see a comprehensive solution forthcoming in the near future,” he said.

Pederson added he doesn’t expect legislation that could carry a repeal of the cut to come until later in the year, and that could be the massive Medicare reform package.

Hildebrandt said stakeholders are looking for congressional supporters of the idea. “We are trying to find champions on the Hill who will help us with this issue,” Hildebrandt said. “Right now, they are very preoccupied with the economic stimulus package.

“Unfortunately,” she added, “it’s a waiting game right now. We’re trying to find champions knowing that the cut is in effect and is wreaking its havoc and not wanting to wait, but being told that no one wants to focus on it as this particular point.”

Greatorex said he has hopes that the attempt to overturn the cut will eventually be successful “It’s too early to tell where the chips are going to fall. I don’t have a good read. But based on past experience, I would say we have a fairly easy-to-understand case and it should resonate with most legislators.”

Still, he sees a tough year ahead. Medicaid, he noted, is following the Medicare path, so cuts are looming there.

“I think people are getting tired of fighting,” Greatorex said. “Most of us just want to … do a real business plan and get back to doing business. It’s fatiguing. Why should you have to fight for your money all the time? I have high hopes that, at the end of this year, we would have some stabilization.”

Invacare Posts Big Q4
ELYRIA, Ohio--On Thursday, Invacare Corp. announced its fourth-quarter profit rose 150 percent to $17.5 million, up from $7 million in the same quarter of 2007. Net earnings for the year were $43.1 million versus $35.7 million in 2007. Net sales rose to $1.76 billion from. $1.6 billion, a 9.6 percent increase.

“The company delivered strong organic sales growth and robust earnings for the quarter and the year,” said A. Malachi Mixon, III, chairman and CEO, in a press release. “Adjusted earnings per share at $1.35 was within the range of Invacare’s original guidance for 2008, despite increased commodity costs during the year and weakening foreign currencies by year end. Equally important, fourth-quarter free cash flow strengthened to $56 million as a result of improved earnings and effective working capital management for the quarter, enabling the company to exceed its projections on free cash flow for the year.”

For its North America/ HME division in the quarter, the company reported sales increased 8.2 percent to $187.3 million compared to $173.1 million in 2007. Respiratory product net sales increased 15.2 percent, driven by volume increases in oxygen concentrators and HomeFill oxygen systems with strong purchases by national providers, Invacare said. Standard product net sales increased 15 percent on increased volumes in manual wheelchairs, patient aids and beds. Rehab product net sales increased by 2 percent.

For the year, sales for the division increased 10.8 percent to $741.5 million from $669.4 million for 2007.

To improve earnings in 2009, Invacare said it will continue to make cost reductions, including global rationalization of product lines “to offset the impacts from reimbursement and pricing pressures, the global economic crisis and the potential volatility of the U.S. dollar.”

Company execs acknowledged the effects of CMS’ 9.5 percent reimbursement cuts for product categories in Round One of Medicare’s competitive bidding program, along with the Deficit Reduction Act’s 36-month cap on home oxygen rental payments. “Separately, the financial crisis could impact the company’s supplier and customer base, although there does not appear to be a material change in either at this point,” the company said, adding that Invacare “intends to remain judicious in its extension of credit to customers” and to review supplier financial strength, particularly on key products and components.

Given those factors, the company said it expects organic growth sales growth of 5 to 7 percent for 2009.

“With cost reductions, including the global rationalization of Invacare’s product lines, we envision 2009 as the next step in stronger earnings at Invacare,” Mixon said.

Your Post-Cap O2 Questions Asked and Answered
AMARILLO, Texas--With all the confusion surrounding CMS’ new post-cap oxygen payment rules, it’s time for some answers. In a special series for HomeCare Monday, Lisa K. Smith, Esq., an attorney with the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas, responds to several of home medical equipment providers’ most common questions about the new rules.

Corrections and Updates: On Jan. 27, CMS issued additional guidance regarding billing for oxygen contents and replacement oxygen equipment after the expiration of the five-year useful lifetime. The guidance was issued as a listserv message with the Change Request (Transmittal) to follow. This guidance can be found online at http://www.cignagovernmentservices.com/jc/pubs/news/2009/0109/cope9216.html. Based on this information, the following Q&A’s previously published have been revised to reflect the new guidance.

Question: Does a portable unit take on the exact start date of the stationary system or can the two be unique? The situation is the physician may initially order a stationary system and a few months later the portable is added. Does the portable unit have a unique oxygen cap start/end date (36-month period), or do I start billing for portable contents once the stationary system caps?
Updated Answer: The 36-month cap period for the portable unit will be different from the 36-month cap period for the stationary system if the portable equipment is added at a later date. The supplier will continue to bill the portable unit as a rental until it reaches the 36-month cap. However, the supplier can start billing for portable contents after the stationary system caps, and need not wait for the portable unit to cap.

This means that the supplier is able to bill for both the portable rental and portable contents for that period after the stationary system caps and before the portable system caps. Once the portable system caps, the supplier can continue to bill for portable contents.

In other words, stationary and/or portable contents can be billed after the stationary system has reached the 36-month cap. Stationary and/or portable contents cannot be billed during the 36-month rental period for the stationary system. This means that when a supplier replaces the stationary oxygen equipment at the end of the five-year useful life and starts a new 36-month rental, it cannot continue to submit claims for portable contents.

Question: When billing for oxygen contents after the 36-month cap period, can the supplier bill for a month’s content if it did not make a delivery in that month? In other words, can a supplier deliver oxygen contents for multiple months at one time and then bill for contents for each of those months?
Updated Answer: Yes, the supplier is not required to deliver oxygen contents during the month in order to bill for contents for that month, so long as the supplier delivered oxygen contents for that month at an earlier date. For example, a supplier can deliver a three-month supply of portable tanks on Jan. 15, and then submit monthly claims for portable contents with dates of service of Jan. 15, Feb. 15 and March 15.

The new CMS guidance states that a maximum of three months of oxygen contents can be delivered at one time. It further states that “in order to bill for contents for a specific month, you must have previously delivered quantities of oxygen that are sufficient to last for one month following the date of service on the claim.”

Question: What are the logistics for providing replacement equipment after the end of the five-year useful life period? What documentation is required? Will the patient need to see the physician and is a new CMN required?
Updated Answer: The five-year useful life period begins when the oxygen equipment is first delivered to the patient and ends at the point when the equipment has been used by the patient on a continuous basis for five years. It does not restart if there has been a change in oxygen modality, change-out of equipment or change in supplier.

As to CMN and testing requirements, CMS states: A new certificate of medical necessity (CMN) is required in situations where oxygen equipment is replaced because the equipment has been in continuous use by the patient for the equipment’s reasonable useful lifetime or is lost, stolen, or irreparably damaged. New testing, however, is not required unless it is necessary in order to meet existing medical review guidelines for oxygen and oxygen equipment. You should continue to follow the existing guidelines requiring recertification CMNs for all situations in which oxygen equipment is being replaced. The most recent qualifying value and testing date should be entered on the CMN.

It is not clear whether the reference to a “new” CMN means a new initial CMN, recertification CMN or revised CMN, and we have sought clarification from CMS.

Regarding additional documentation requirements, CMS states that the supplier must maintain proof-of-delivery documentation showing that replacement oxygen equipment has been provided. CMS states that the supplier must also have proof-of-delivery documentation that demonstrates that the oxygen equipment being replaced has been in use for at least five years. While this may not be a problem for a supplier who has had its equipment with the patient for the full five years, it could easily be a problem if the patient has changed suppliers during the five-year period. We are seeking clarification from CMS concerning alternate forms of documentation that would demonstrate that the equipment has reached its five-year useful life, such as the initial CMN on file with the DME MAC.

Claims for replacement oxygen equipment for the first month of use only must have the RA modifier for dates of service Jan. 1, 2009, or after, or the RP modifier for dates of service prior to Jan. 1, 2009. The supplier must also include on the first month’s claim a narrative explanation stating that the five-year useful life of the prior equipment has expired, and include the date that the beneficiary received the original equipment that is being replaced.

CMS states: When submitting claims electronically for replacement of oxygen equipment, you may use, for the narrative explanation, loop 2400 (line note), segment NTE02 (NTE01=ADD) of the ASC X12, version 4010A1 professional electronic claim format. If you are billing using the Form CMS-1500 paper claim, you may report this information in item 19 of the claim form.

Lisa K. Smith, who is Board Certified in Health Law by the Texas Board of Legal Specialization, represents HME companies, pharmacies, hospitals and other health care providers throughout the United States. She can be contacted at lsmith@bf-law.com.

HME Company Newswire
SeQual Gets Its Army Wings; Bilt-Rite Buys Mastex Division
SAN DIEGO--SeQual Technologies said Jan. 15 its Eclipse oxygen concentrator has received Airworthiness certification from the U.S. Army for use aboard MEDEVAC H-60 Black Hawk helicopters. Before certification of equipment, the company said, the Army does extensive aeromedical testing that includes electromagnetic interference and compatibility, environmental, vibration and human factors testing in the laboratory as well as in-flight assessments by engineers and medical personnel under a variety of flight conditions. “Supporting our military with a first-class product is an honor. Our mission is to offer the most reliable oxygen generating system that soldiers can depend on in the most extreme situations,” said Pam Jackson, SeQual senior director. According to the company, the Eclipse can support patients "far forward on the battlefield and during medical evacuation missions. It is a small, lightweight point-of-use generator that can be moved with the patient, which produces 93%± 3 medical grade oxygen and is powered by AC/DC or battery," eliminating the safety hazards of pressurized oxygen and the logistical burden of continual resupply of oxygen cylinders.

PHILADELPHIA--Orthopedic supports manufacturer Bilt-Rite Orthopedics and Safety has acquired the Medical Products division of Mastex Industries, which makes hot and cold therapy packs, heating pads, wheelchair cushions, mattress overlays and other comfort pillow products. Mastex brands include Gel-eeze overlays and Thermalfreeze therapy packs. Bilt-Rite will move Mastex’s manufacturing operations from Petersburg, Va., to a new facility just outside of Philadelphia. “The Mastex line not only provides Bilt-Rite with new complimentary products but it also provides us with the ability to develop new products that we can make right here domestically,” said Will Palmer, Bilt-Rite operations manager.

WAYNE, Pa.--Paragon Ventures announced last week it has formed Highway Capital to provide business owners with access to broad-based capital for growth, recapitalization and expansion. According to the merger-and-acquisition firm, the new division “will serve a critical and expanding need for companies looking to monetize their equity and recapitalize their companies as the Obama economic stimulus plan unfolds and our economy recovers.” Qualifying businesses must generate over $10 million in sales and a minimum of 15 percent net cash flow.

MIAMI--Independent Living Systems, a management services company focused on introducing managed care to populations with chronic care and other special care needs, has appointed Josefina G. Carbonell as senior vice president of long-term care. Carbonell served as assistant secretary for aging at HHS for seven years during the Bush administration, and previously was president and CEO of the Little Havana Activities & Nutrition Centers in Miami-Dade County, Fla., a Hispanic geriatric health and human services organization.

In Brief
Daschle Nomination Hits Snag; NAIMES Offers Grassroots Support
As stories of a snag in his confirmation as HHS secretary floated across the Internet, ABC News reported late Friday that former Senate Majority Leader Tom Daschle, D-S.D., owed more than $128,000 in back taxes mostly on a car-and-driver service. The revelation came just two weeks after Timothy Geithner, President Obama's nominee as treasury secretary, admitted he owed $34,000 in taxes. Geithner was ultimately confirmed, but weekend press reports said it's unclear whether Daschle's nomination would be jeopardized.

After losing his reelection bid in 2004, Daschle consulted with New York private equity firm InterMedia Advisors, where he was provided with the car service, according to the ABC report. A White House spokesman told reporters that in prepping for Obama's nomination, Daschle and his accountant found the tax errors and fixed them, filing an amended return and making payments with interest. The ABC story totaled the amount at $140,167 involving taxes and interest for 2005, 2006 and 2007.

Obama's health care adviser during the presidential campaign, Daschle got the nod early on to rehabilitate the nation's health care system in a dual role on the president's Cabinet and as director of the White House Office on Health Reform. Daschle was to meet today with members of the Senate Finance Committee, which will take up his nomination, to answer questions on the tax matter.

NAIMES Offers Grassroots Support
The National Association of Independent Medical Equipment Suppliers, Halifax, Va., said it is offering its 2009 Grassroots Legislative Support Program to all NAIMES and state association members at no cost. The program includes congressional staff updates, legislators’ town hall meeting information and a “Congress tracker” that tracks activity for all members of Congress. “We have already started tracking the political landscape for the 2010 mid-term election when 36 Senate seats and all of the House seats will again be contested,” a NAIMES release said. In addition, the association said it can help with scheduling congressional meetings and provide media relations assistance.

“The purpose of our program is to assist and improve grassroots efforts in support of the DME industry, and to engage more people in the cause,” the association said. “NAIMES feels strongly that the power of the industry is at the state level … We encourage the industry to create an open dialogue to bring more ‘Warrior’s for DME’ onto the playing field." For information, go to www.dmehelp.org.

Medicaid, SCHIP Cuts in 25 States
As of January, 45 states face budget shortfalls this year and next, and at least 25 of them have plans to--or already have--cut various public health services and insurance programs for low-income residents to reduce those deficits. According to a new study from Families USA, 12 states will reduce enrollment and eligibility, 20 will cut benefits, eight will increase out-of-pocket costs and 19 will reduce payments to providers. While the economic stimulus package, which contains $87 billion in additional Medicaid funding for all states, could help, it may not be enough to offset the shortfalls as more people lose jobs and enroll in the states' Medicaid and SCHIP programs. With every 1 percent increase in the unemployment rate, an estimated 1 million people become eligible for those programs, according to the 16-page report. Called "Critical Care: The Economic Recovery Package and Medicaid," the study is available at www.familiesusa.org.

OIG Finds No Problems with ALJ Transfer
Three years after Administrative Law Judge hearings were transferred from the Social Security Administration to HHS (as mandated under the Medicare Modernization Act), a follow-up report from the Office of Inspector General said it found no problems. Shortly after the transfer, which took place in July 2005, a report from the GAO criticized HHS for limited access to in-person hearings and said the system was suffering staffing shortages and had not yet fully implemented a case-tracking system. At the time, HHS had only four in-person hearing sites versus 141 under the SSA. In place of the in-person hearings, however, HHS said it would use videoconferencing for most appeals (see HomeCare, September 2005).

The OIG report, issued Jan. 26, compared the first and third years of operation for the Office of Medicare Hearings and Appeals--which handles the third level of Medicare's administrative appeals process--and found during the time period OMHA’s caseload increased 37 percent, from 20,676 to 28,361 cases. The report also said OMHA had improved the timeliness of its decisions. For cases with a 90-day decision requirement, OMHA decided 94 percent on time in its third year compared to 85 percent in its first year of operation. For cases without the 90-day requirement, the OIG said OMHA decided 90 percent within six months compared with 88 percent in its first year. OMHA also improved the quality of data in the appeals system, OIG said.

Braley: Let's Dismantle CMS
At a town hall discussion last month on health care at VGM Group headquarters in Waterloo, Iowa, Congressman Bruce Braley, D-Iowa, and 30 other attendees braved blizzard conditions Jan. 12 to share experiences and concerns about the U.S. health care system. “The way CMS implements rules without taking into account the practical implications is nonsensical,” Braley told the gathering. “We need to implement public policy based on reality, not frugality. If it were up to me, we would start by completely dismantling CMS and rebuilding an agency that would serve people.” Braley, who resides in Waterloo, has been appointed to the House Energy and Commerce Committee's Subcommittee on Health. VGM sponsored the meeting in response to President Obama’s call for community input on health care reform. For a video of the session, visit www.vgm.com.

O2 Denials in Jurisdiction A
In a notice issued Jan. 27, NHIC, the Jurisdiction A DME MAC, said it has found incorrect denials for 2009 oxygen contents claims billed for beneficiaries who had reached the 36-month payment cap. The claims were denied with code CO-97: The benefit for this service is included in the payment/allowance for another service/procedure that has already been adjudicated. The MAC said it is currently identifying all affected claims and corrections will be made within a few weeks.

Jurisdiction B Posts Physician Letter on Therapeutic Shoes
National Government Services, the Jurisdiction B DME MAC, has developed a letter that providers can use to help in educating physicians about documentation of the medical need for therapeutic shoes and inserts. For a PDF of the letter, click here.

Share Your Storm Stories
Providers from Arkansas to Ohio swung into action last week as more than 1 million homes lost electricity due to severe winter storms. According to press reports, many may remain without power for up to two weeks. In order to let local and national media know about the efforts HME providers make to ensure their patients' safety, AAHomecare is asking providers to share their storm stories with staff members Michael Reinemer at michaelr@aahomecare.org or Tilly Gambill at tillyg@aahomecare.org.

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

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