“Every patient in every hospital or nursing home dreams of one thing: going home. Home care is the only trifecta in the health care system--it is patient preferred, has better clinical outcomes and is significantly more cost effective than institutional care,” Mixon told the group.

During the two-hour discussion, DeParle, director of the White House Office of Health Reform, heard views from the diverse roster of 33 execs representing patients, providers, insurers, drugmakers and other stakeholders--and most pointed out problems with the nation’s ailing health care system. The group focused on the growing incidence of chronic disease, skyrocketing costs, coverage and the complexity of health IT, among other issues.

Some, including Mixon, also pointed to solutions. Home care “clearly lowers cost,” he said. “With the technology that is available we can now create a hospital room in the home.”

Kenneth E. Thorpe, executive director of the Partnership to Fight Chronic Disease, said innovative ways to prevent chronic illnesses must be found, such as getting schools involved in children’s care, launching more community programs and getting workplace employers to address the issue.

Pharmacy benefit manager Medco Chairman David Snow said the country could save $350 billion a year by better managing the treatment of chronic disease, and another $200 billion by instituting medical malpractice reform. He also said Medicare could save $130 billion each year by coordinating care delivered to beneficiaries in the last year of their life.

After the meeting, Mixon said, “The thing about it that amazed me was how many connected points there were to home care,” noting comments on rehab and chronic care issues from those representing patient groups such as Easter Seals. “I think things will be different in this reform. There’s a lot of momentum to do something … I think home care will get a lot of attention,” he said. However, he added, “once they design this thing, the elephant in the room is who's going to pay for it and how are you going to pay for it."

In her closing remarks, DeParle acknowledged “the devil is in the details” and asked participants to “stay with us” as Congress works to craft and pass reform legislation. “But the great news is … maybe we are finally at the point when we are in the details,” she said. “Congress is working and you’re all at the table helping.”

House and Senate Democratic leaders have told President Obama they will have health reform bills on his desk by August.

"Nancy-Ann has given us her phone number and email and encouraged us to keep up dialog ... so I’m going to continue communicating with her,” Mixon said.

Read an HHS blog on the event at www.healthreform.gov.

CMS Answers Questions on Wheelchair Repairs
ATLANTA--In late February, the DME MACs issued a new billing and payment policy for wheelchair repairs based on standardized labor times that left providers with a number of questions. Last week, the MACs answered with an FAQ on the policy, which took effect April 1.

Among the questions the MACs addressed:

If a beneficiary refuses to bring their equipment to the supplier location, can they be charged a fee for this service?
Answer: No, Medicare's payment for repairs, i.e., parts and labor, is all-inclusive. There is no separate payment for travel time, service charges, fuel surcharges, etc. On an assigned claim, suppliers may not charge a beneficiary for these costs. On a nonassigned claim, the beneficiary will be responsible for the difference between the submitted charges for the repairs and the amount Medicare pays.

The reasonable useful lifetime for durable medical equipment is 5 years. If an item that is less than 5 years old needs to be repaired because of "wear and tear" (rather than a specific incident) and a thorough evaluation reveals that the cost to repair the equipment exceeds the cost to replace the equipment would Medicare consider payment for a replacement piece of equipment?
Answer: No, according to Medicare statute, during an item's reasonable useful lifetime, payment can only be made for repairs up to the cost of replacement.

If the equipment has been repaired on several different occasions, is in need of repair again, and no single repair has exceeded the cost to replace the equipment but the cumulative repair costs will exceed the replacement cost, would Medicare consider payment for a replacement piece of equipment?
Answer: No, according to Medicare statute, during an item's reasonable useful lifetime, payment can only be made for repairs up to the cost of replacement.

What percentage of repair to replacement cost would Medicare consider acceptable to deem the purchase of a replacement item more cost effective?
Answer: There is no provision for replacement due to "wear and tear" prior to the end of the item's useful lifetime.

Under the billing policy, one unit of service equals 15 minutes. A table in the policy notice contains repair units of service allowed for commonly repaired items. Read the policy notice on the Cigna (Jurisdiction C) Web site.

Read the full FAQ.

Bill Would Exempt Pharmacists from Surety Bond
WASHINGTON--On April 2, U.S. Reps. Zach Space, D-Ohio, and Jo Ann Emerson, R-Mo., introduced the Preserve Patents Access to Reputable DMEPOS Providers Act of 2009 (H.R. 1970). The bill would exempt pharmacies from having to post DMEPOS surety bonds.

"Community pharmacies want to continue providing their patients access to life-saving supplies and related services--such as diabetes testing strips--through participation in the DMEPOS program. Unfortunately, CMS' regulations require pharmacists to purchase $50,000 surety bonds to guard against fraud where there is no record of impropriety, while 14 other similarly-licensed medical providers have been exempted,” Bruce T. Roberts, RPh, executive director and CEO of the National Community Pharmacists Association, said in a statement.

When added to the DMEPOS accreditation requirement, Roberts continued, the costs “are out of proportion with the small percentage that DMEPOS represents for independent community pharmacies' overall revenue. H.R. 1970 places the surety bond payment burden where it belongs--on the backs of those who run afoul of the program.”

In rural and urban areas, the NCPA said, “independent community pharmacies are often the only health care provider that provides access to health care supplies.”

Earlier this year, Reps. Marion Berry, D-Ark., and Jerry Moran, R-Kan., introduced a bill that would exempt pharmacists from Medicare’s accreditation requirement (see HomeCare Monday, Jan. 26).

RATC Task Force Looks at Complex Rehab Benefit
ARLINGTON, Va.--Aiming to create a separate Medicare benefit for complex rehab, the American Association for Homecare’s Rehab and Assistive Technology Council has launched a task force charged with drafting legislation toward that end.

“What we’re trying to do is create a separate category in the DMEPOS benefit that puts custom rehab in its own category like prosthetics and orthotics,” explained Tim Pederson, RATC chair and president/CEO of WestMed Rehab in Rapid City, S.D. “They have their own accreditation, their own quality standards and their own certification.”

Pederson said that sets a precedent for complex rehab, which also has its own accreditation and its own quality standards, “and we’ve got the [ATP] certifications available through RESNA … We have all the fundamentals in place.”

The sector was heartened last year when the Medicare Improvements for Patients and Providers Act carved complex rehab out of competitive bidding, he noted.

“We were pleased to see the recognition in MIPPA that complex rehab is a separate service and does not belong in competitive bidding,” Pederson said. “The next logical step is to draw that correlation between the specialized nature of what we do and the specialized nature of a prosthetist or an orthotist. Once we make our case to the ones that do the regulating, then I think we can make that [legislation] happen.”

It’s early days for the task force, which Pederson said is made up of custom rehab providers who also handle orthotics and prosthetics. Other members include Tim Hatt of Wright & Filippis and John Letizia of Laurel Medical Supplies in Ebensburg, Pa. Pederson said he has already spoken with Gary Gilberti, president of the National Coalition of Assistive and Rehab Technology, about working together on the project.

“We want to work hand-in-hand with NCART,” Pederson said. “This is one of their priorities, as well.”

He also hopes to gain the aid of the American Orthotic and Prosthetic Association, as well as patient advocacy groups.

Pederson said he expected the process to take about two years as task force members review quality standards and accreditation and certification processes. Part of that effort will also be to define and clearly articulate why the benefit needs to be separate, he said.

“A change in status from supplier to provider is not one of our goals,” Pederson said. “Prosthetics and orthotics providers are considered DMEPOS suppliers and they are treated very well, so I don’t think that being called a provider is any protection.

“The thing to keep in mind is that orthotics and prosthetics is complex,” he continued. “Complex rehab is more complex than that. There are more variables. Orthotics and prosthetics has its act together. You don’t hear about fraud issues with orthotics and prosthetics. And you don’t hear about it with complex rehab. We deserve to be judged on our own merits and not the merits of the rest of the industry, just like orthotics and prosthetics.”

Pederson said the task force efforts “will be a very transparent process. We don’t want any surprises,” he said, and consensus within the industry will be essential. “This is a task worth doing well. I don’t want a do-over.”

While there are legislative and regulatory hurdles that must be overcome, Pederson said, “We’ve laid the groundwork and we’re ready to move forward. We want to get this done.”

AAHomecare Investigates Costs of Eliminating NCB
ARLINGTON, Va.--The American Association for Homecare reported last week it has retained a Washington health care consulting firm to develop several cost estimates for eliminating national competitive bidding. In developing the estimates, the firm will mirror methods used by the Congressional Budget Office, which works up the costs of legislative proposals before Congress.

The association has asked the firm to perform four estimates:

1) Cost estimate for eliminating competitive bidding: The firm will produce a 10-year, CBO-style estimate of the federal cost of completely eliminating competitive bidding for DME. The spending model will incorporate the estimated savings from the impact of the 9.5 percent cut required by the Medicare Improvements for Patients and Providers Act of 2008 and the lack of CPI updates.

2) Cost estimate for excluding oxygen from competitive bidding: The firm will create a 10-year estimate for excluding oxygen equipment and services from the bidding program, using the same baseline for spending as the first estimate.

3) Cost estimate of restoring payments for complex rehab services: MIPPA excluded complex rehab from the bidding program but included it in the category affected by the 9.5 percent cut. The firm will estimate the 10-year cost of exempting complex rehab services from that cut and restoring prior payment levels.

4) Cost estimate for delaying competitive bidding for three to four years: This estimate will look at the cost of various scenarios to pay for a delay in competitive bidding.

Braff Group: 2008 Nose Dive for HME M&A Activity
PITTSBURGH--The Braff Group said earlier this month that even amid a worldwide recession, there were a record number of mergers and acquisitions in some sectors of home health in 2008. Home medical equipment, however, was not one of them.

In its fourth quarter report for 2008, the investment banking company, which handles mergers and acquisitions involving HME, home health agencies, hospice, staffing, infusion therapy and specialty pharmacy, said the home health sector did not “escape the malaise that has settled over the merger and acquisition environment.”

Still, health care M&A activity for the year was off only 7 percent from 2007, compared to the 37 percent plunge the U.S. recorded in total M&A activity for 2008. Altogether, there were 224 health care service transactions last year compared to 240 in 2007.

Three sectors--home health, hospice and staffing--actually posted increases, according to the company. There were a record 119 total HHA deals, a 3.5 percent increase over 2007’s 115. Hospice activity spiked 36.4 percent, from 11 deals to 15, and staffing increased 4.3 percent from 23 to 24.

HME, on the other hand, ended the year with 34 deals, a 29.2 percent drop from 48 in 2007. Infusion therapy dropped from 27 deals to 19, 29.6 percent less than in 2007, and specialty pharmacy fell 18.8 percent, from 16 deals to 13 in 2008.

In describing HME’s M&A activity for the year, the Braff report pointed to Congress’ delay of competitive bidding, “a delay that was financed by a 9.5 percent cut in reimbursement. With competitive bid pricing in the first 10 MSAs averaging about 26 percent below then-current Medicare rates--and with many believing that momentum is gaining to eliminate competitive bidding entirely in exchange for less draconian reimbursement concessions--from a financial perspective, this could be viewed as a big win for the industry. But from an M&A perspective, it is not.

“In our view,” the report continued, “the driving force behind the plunge in deal volume from a peak of 97 and 95 in 2004 and 2005 respectively to 34 transactions in 2008 is due to the 36-month cap on oxygen reimbursement. A cap, we might add, that many wish to ratchet down further to 13-18 months. Absent a complete elimination of cap language (a revision that, considering the delay in competitive bidding, will be that much more challenging to negotiate) we don’t anticipate any significant uptick in HME consolidation activity.”

Among other notable M&A events last year, Braff included Blackstone Group’s acquisition of Apria on its Top 10 list. “While this may appear to be a home medical equipment event, we believe it is far more noteworthy from an infusion therapy perspective,” the report said. It noted that Apria’s 2007 acquisition of Coram, one of the nation’s largest home infusion companies, offered Blackstone a “back-door” entry into the field.

Additional events shaping health care service M&A activity in 2008, according to Braff (in no particular order):

• Barack Obama wins the presidency and the Democrats hold majorities in Congress. Because Democrats “lean more favorably to Medicare, and … are generally less inclined to support privatization initiatives,” this bodes well for Medicare-funded health care services.
• The credit crunch limits private equity’s access to debt.
• The recessionary economy has contributed to substantial state budget shortfalls. That has a trickle-down effect to virtually all health care services.
• Home Health Prospective Payment System reforms are initiated. “Our read is that, for the most part, providers feel that the revisions better match revenues and resource utilization, a positive iteration to the PPS model.”
• Publicly traded home health care providers soar while the broad markets plunge. Record growth, favorable PPS reforms and other factors could ultimately translate into more investment dollars and perhaps credit for the home health care arena.
• CMS begins collecting additional detailed information on hospice. This could indicate that CMS is planning to reform hospice payments.
• Returns on Treasury bills go negative. This “signaled an extraordinary crisis of confidence, a crisis that may give even the most confident of executives, in sound businesses, reason to pause when it comes to pulling the trigger on merger and acquisition fueled growth initiatives.”
• MedPAC considers going beyond recommending a freeze to the Medicare home health update. This prompted the industry’s risk profile to definitely tick upward.

In Brief
AMEPA Celebrates First Anniversary; CMS Call on RACs Set Tomorrow
MIAMI--The Accredited Medical Equipment Providers of America celebrated its first anniversary on Friday. It was on April 10, 2008, that “over 150 providers, manufacturers and industry representatives met at the Fort Lauderdale Sheraton to work together to stop competitive bidding from beginning July 1,” said Rob Brant, AMEPA president, in marking the association’s birthday. A year hence, he noted, once again “the interim final rule of competitive bidding is upon us.”

But the association has come a long way, Brant said. “Last March at AAHomecare’s Fly-in, only five providers from Florida and Texas were represented. Recently, 21 providers from Florida and Texas traveled to Washington to meet legislators and inform them that the interim final rule will still harm patients and communities.”

CMS Call on RAC Program Set Tomorrow
BALTIMORE--CMS has scheduled a special Open Door Forum for Part B providers on its new Recovery Audit Contractor program Tuesday, April 14, from 2-3:30 pm ET. The agency has announced four permanent RACs and will expand the program to all 50 states in a gradual rollout during 2010. To listen in, call 800/837-1935 and reference Conference ID 92489480.

Mississippi Medicaid Requires In-Person Renewal
JACKSON, Miss.--Mississippi state lawmakers have refused to repeal a state rule that requires Medicaid beneficiaries to renew their enrollment in person each year, according to an April 2 report in the Miami Herald. Data show the number of uninsured children in the state has increased by 146,000, or 72 percent, since the policy was implemented in 2005, the report said. According to Gov. Haley Barbour (R), the rule was developed with the intention of curbing fraud. But Medicaid spokesperson Francis Rullan told the newspaper while the policy has kept people not eligible for benefits off the rolls, there is no way to tell whether fraud has been reduced.

HDIS Acquires Best Buy Healthcare
OLIVETTE, Mo.--Home Delivery Incontinent Supplies will become "a broader one-stop shop for consumer health and wellness products" with its recent acquisition of Best Buy Healthcare, the company said. Founded in 1986, HDIS is a mail order marketer of specialty medical supplies for bladder control. Best Buy is a direct-to-consumer supplier of urological supplies, aids to daily living and mobility products, as well as incontinence products.

"Joining the Best Buy Brand with HDIS allows us to achieve two of our primary strategic objectives: first, building our core incontinence business by pulling together key channel leaders, and second, adding new product lines in senior home health care, a high-growth market,” said Bruce Grench, HDIS president, in a release. The U.S. adult incontinence market totals $1.5 billion.

HDIS and Best Buy Healthcare will leverage their core competencies in database marketing and customer relationships over a broader array of products, according to the release. “The Best Buy acquisition enables us to grow even more quickly, in all areas, moving HDIS much closer to our vision of being the leader in direct-to-consumer senior women’s health care,” said Grench.

There are currently an estimated 15 million Americans with incontinence, and their numbers are growing as the population ages.

RRI Expands Facilities
ST. LOUIS--Responsive Respiratory has expanded its warehouse and manufacturing facilities for the second time in two years; the company doubled its warehouse and office space in 2007. The recent increase makes room for the manufacturing of an expanded line of industrial carts and racks and the customization of products through RRI’s Private Logo Program.

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