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May 4, 2009 Volume 15, Number 19

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Table of Contents
- First Surety Bond Deadline Today; Carriers Report Brisk Business
- Keep Those Hands Washed, Health Officials Say
- Consumers Take Masks into Their Own Hands
- Flu Outbreak Underscores Home Care's Role
- HME Advocates Call on Sebelius to Follow Through on Bid Review
- New PAOC Members Hopeful as First Meeting Approaches
- RAC 'Em Up: CMS Continues New Audit Program Outreach
- Health Complex Medical Turns 25; DM Marks 30 Years

For more industry news, features and highlights from our latest issue, please visit our Web site at www.homecaremag.com.

Headline News
First Surety Bond Deadline Today; Carriers Report Brisk Business
BALTIMORE--As of today, HME companies applying for a new National Provider Identifier must have a $50,000 surety bond in order to be approved as a Medicare provider.

In a final rule published Jan. 2, CMS mandated that existing DMEPOS providers obtain a surety bond by Oct. 2, 2009. New providers, those adding locations and those changing ownership were required to obtain the bond by May 4. (In a recent clarification, CMS said providers with 25 locations or more need not meet the May 4 deadline, but must submit one surety bond per practice location by Oct. 2 with pending applications for new locations.)

In establishing the bond requirement, CMS said the agency hoped to stem fraud and abuse and curtail Medicare costs. Its final rule also said CMS expects more than 25,000 HME providers to abandon the Medicare program because of the combined costs of the surety bond and accreditation, which is required by Sept. 30, 2009. Still, the agency said, it did not anticipate any access issues for beneficiaries.

In spite of the predicted provider fallout, representatives of organizations offering DMEPOS surety bonds reported brisk business leading up to the May 4 deadline.

Warren Freeman, director of sales and marketing for VGM Insurance in Waterloo, Iowa, reported the company has issued bonds to about 28 percent of those that CMS expected would seek an NPI by May 4.

“We feel good about those numbers,” he said. “The bulk of [the companies seeking surety bonds by May 4] had existing locations and they were adding a location. They needed a new number and were going through the process. Behind them, there were new providers and then third were the ones changing ownership.”

Freeman was encouraged by the number of new providers breaking into an industry that is grappling with competitive bidding, mandatory accreditation, a 36-month oxygen rental cap and a 9.5 percent reimbursement cut.

Many of the new providers, Freeman said, “realize that in a particular city there is a niche they can fill, and that’s where they are going. It’s neat to see a pharmacy that has had a location for 22 years and they are just now opening another location--at this time.”

One glitch: The National Supplier Clearinghouse, which issues the NPI, did not notify potential candidates they would need a surety bond, Freeman said. So those who had downloaded an application some months ago did not realize that the application had been changed and a surety bond was now required.

“I think we are going to see some people have their applications rejected because they didn’t submit a surety bond,” Freeman said.

The American Association for Homecare, which is issuing bonds through AON Affinity Insurance Services, also reported brisk surety bond traffic.

“I think we’re getting what we thought by this point,” said Sue Mairena, AAHomecare COO. “We’re seeing providers opening new locations. It could be a large provider who has had a location in the works and it has fallen on this deadline.”

Mairena said she expected a much larger number of providers seeking surety bonds in time for the Oct. 2 deadline. “Some of the larger providers are taking a wait-and-see approach hoping that they can get discounts for having so many locations,” she said.

And some are waiting for more clarification. Although CMS has issued FAQs about the surety bonds, there are still questions. “This is still a pretty fluid process,” Mairena said. “It’s not black and white. I still think it’s the early stages of this.”

According to Tilly Gambill, AAHomecare manager of marketing and communications, the association is awaiting responses from CMS to the following questions:

--If you are processing a re-enrollment for existing supplier numbers, do you have to have the surety bond in place for the re-enrollment by May 4 or Oct. 2?

--The provider may have multiple NPIs based on other payers’ requirements. For example, some state Medicaid programs and third-party payers require multiple NPI numbers for different product lines. Florida currently has a state surety bond requirement of $50,000 for both home health agencies and HME. This is overly burdensome on providers who must comply with the federal requirement as well.

--If a multi-location entity (with one NPI per location, each of which requires a surety bond) has a final adverse action against it, which would require an elevated bond amount, would the entity be required to obtain a higher bond amount for each location or only for the location against which the final adverse action was taken? Similarly, if an entity has one location (with two NPI numbers, each of which requires a surety bond) and a final adverse action against it, would the entity be required to obtain an elevated bond amount for each NPI number?

Even though the answers are outstanding on these questions, Mairena encouraged providers to start the surety bond process as early as possible.

“The application process does not take long,” she said, noting that it can require as little as 15 days. But depending on the financial information the bond issuer might require, it could take longer. “You don’t want to wait until two weeks before the Oct. 2 deadline,” she cautioned.

Freeman agreed. “From here on out, we now have a backlog of people who need [surety bonds] by Oct. 2,” he said, so starting the process soon would be a wise move.

For a list of approved surety bond carriers, see the Department of Treasury Web site.


Do you support the New Oxygen Coalition reform plan for Medicare's oxygen benefit? To vote in HomeCare's monthly Web poll, visit www.homecaremag.com.


Keep Those Hands Washed, Health Officials Say
ATLANTA--The H1N1 flu continues to spread across the United States. As of yesterday, the Centers for Disease Control and Prevention had confirmed 226 cases in 30 states and one death, a 23-month-old Mexican toddler visiting Texas with family.

While only 30 of the cases have required hospitalization, health officials said it is too soon to be certain exactly how serious the new virus, which contains strains of human, avian and swine flu, will be. The only wise course, President Obama said Friday, was to prepare for the worst.

"It may turn out that H1N1 runs its course like ordinary flus, in which case we will have prepared and we won't need all these preparations," Obama said of the government's swift response. But he added that even if the current outbreak turns out to be mild, the bug could return in a more virulent form during the next flu season.

On Thursday, more than 12,000 people logged onto an HHS webcast with Dr. Rich Besser, acting head of the CDC, who emphasized most of the cases in this country have so far been mild compared to those in Mexico, where H1N1 seems to have originated. The infection rate in that country appears to be slowing, although restaurants, schools and government offices will remain closed until May 11.

Also on the webcast, Health and Human Services Secretary Kathleen Sebelius, on the job for a day after being sworn in Tuesday night, noted there are 36,000 deaths from seasonal flu every year in the U.S. Both she and Besser said it was hard to predict how this flu would progress.

Besser said the incubation period for U.S. cases is “about a week,” although patients are contagious before they begin to feel sick or show symptoms.

While lab tests show the new virus is treatable with the drugs Tamiflu and Relenza, the health officials stressed basic preventive measures such as avoiding close contact and washing hands often. Besser suggested people sing "Happy Birthday" to make sure they've washed their hands long enough to get rid of germs. He also said he keeps hand gel in his pocket for between-washings.

HME providers should take the same precautions, according to HomeCare Editorial Advisory Board member Mary Ellen Conway, RN, BSN.

“If you are a DME provider interacting with customers on a daily basis, take the time to review with your staff your infection control practices and make sure that they understand the risks,” said Conway, president of Capital Healthcare Group in Bethesda, Md., and an expert in accreditation standards including infection control.

“The number one way to prevent the spread of infection is to wash your hands in soap and warm water for two minutes and dry with paper towels anytime you’re near a sink,” she said. “Alcohol gel is great, but it is meant to be a substitute for the times you can’t get to a sink with soap and water.”

Providers should also stock up on PPE (personal protective equipment), if the outbreak in this country worsens, Conway said. She added that "a respirator mask is the most effective with viral illnesses but only used in clearly identified circumstances [such as TB]."

Conway advised providers to contact their public health department, particularly if located in an outbreak area, to find out what precautionary measures are being taken and to keep up with news if the disease begins to affect more people.

For the most current information on the H1N1 flu, including guidance for health professionals, check the CDC Web site, or visit www.homecaremag.com for the CDC’s 2009 flu widget.

For an FAQ on the H1N1 flu from the World Health Organization, which on Sunday confirmed 898 cases in 18 countries, see www.who.int/csr/disease/swineflu/faq/en/index.html. To monitor the global situation, see the WHO main Web site at www.who.int/en.


Consumers Take Masks into Their Own Hands
ATLANTA--As the federal government rolled out a massive effort to contain the H1N1 flu last week, consumers across the country went on a buying spree for masks and hand gel in an attempt to protect themselves from the virus.

John Woolard of Concord, Calif.-based Home Med-Equip said the company’s retail store in Modesto sold 245 masks in three days.

“People were calling and asking for them, so we got them in,” Woolard said. But when his supply ran out, he couldn’t get more. “We tried to reorder, and every single supplier we use was out of them,” he said, adding that he had also seen an increase in glove sales.

California had 16 confirmed flu cases on Friday. “The closest confirmed case is in Sacramento, which is 60 to 70 miles away from us,” Woolard said. “The majority of our customers just seem to be being cautious. Some people are even buying a box (35 masks) and shipping them out of the country.”

But even some areas with no flu cases saw a rush on masks. Lorrie Guthrie, manager at Kelly’s Medical Equipment and Supply in Davenport, Iowa, said her store did have a supply--in one box that had been sitting untouched in the same spot for a year.

“That box went quickly,” she said. “We had to bring in masks from another location. We have had the bare minimum in stock and now we are ordering stock. This has not happened to us before.

“We’ve had a lot of health facilities order that are trying to protect their own people,” Guthrie continued. “We even have a large order from the Rock Island Arsenal. All these people are coming in, low-key, just wanting masks.”

Information on the Centers for Disease Control and Prevention Web site said no mask or respirator can completely protect against contracting influenza. But health officials have said if used correctly, a mask rated N95 or above that fits snugly on the face can filter out small airborne particles.

As the flu spread last week, traditional retailers also were running out of masks. Drugstore giants CVS and Walgreen sold out on their Web sites, along with some brands of hand gel. The N95 mask, often used in construction, was also out of stock online at Home Depot.

According to a Bloomberg.com report, manufacturer Cantel Medical Corp.’s Crosstex unit, Littlefield, N.J., received requests for 1 million N95 masks last week, about twice what it had on hand. “There just isn’t enough capacity in the industry to supply everyone in the country with an N95,” a company spokesman told the news service.

Flu Outbreak Underscores Home Care's Role
ARLINGTON, Va.--Last week the American Association for Homecare noted the current flu outbreak is a reminder of the key role that home care providers will likely play in responding to an influenza pandemic.

Two years ago, the association participated in the development of a report prepared by the Agency for Healthcare Research and Quality, which points out an expected shortage of health care professionals during a pandemic could leave family and friends to care for flu-stricken patients.

The AHRQ report, “Home Health Care during an Influenza Pandemic: Issues and Resources,” summarizes what home health care workers can expect during a pandemic, noting they will be called on to provide care for two main patient populations:

--Medical and surgical patients, not hospitalized because of the pandemic, who are well enough to be discharged early to free up hospital beds for more severely ill patients; and
--Patients who become or already are dependent on home health care services (predominantly elderly persons with chronic disease) and will continue to need in-home care during the influenza pandemic, whether or not they become infected with the flu virus.

According to a Friday report from the Los Angeles Times, emergency facilities across the country are already "straining at the seams" even though the current flu outbreak "is relatively small and the federal government has launched a mammoth disease-control effort."

Of the nation's confirmed H1N1 cases, relatively few have required hospitalization. By contrast, the newspaper reported, HHS' "moderate pandemic influenza model, based on the last flu pandemic in 1968, envisions 90 million Americans becoming infected and 865,000 requiring hospitalization."

“The nation’s infrastructure of home medical equipment providers represents a critical piece of any front-line response to pandemic flu,” said Tyler Wilson, AAHomecare president. On Thursday, the association sent a survey to its members "to get an accurate picture of what is occurring in the home medical community nationwide with respect to preparations for emergencies."

According to a message from the VGM Group, Waterloo, Iowa, this is a good time for HME providers to remind members of Congress of the important part HME providers play in taking care of home-based patients. “It is important for congressional members to understand this,” the message said. “Inform them that programs such as competitive bidding would not be beneficial in times of a pandemic.”

HME Advocates Call on Sebelius to Follow Through on Bid Review
WASHINGTON--With the government’s response to the H1N1 flu outbreak in full swing, newly sworn in Health and Human Services Secretary Kathleen Sebelius can begin to focus attention on other matters. And not a moment too soon, HME observers say, as CMS is waiting in the wings on a restart of competitive bidding.

The former Kansas governor, confirmed in a 65-31 vote by the Senate on Tuesday, is charged with shepherding the Obama administration’s ambitious effort for a complete health care system reform, which the president has said he wants completed this year. She will also play a pivotal role in determining the future of Medicare's DMEPOS competitive bidding program.

One of her first tasks, insiders say, will be to choose a new administrator for CMS, which has been rudderless since Kerry Weems left the agency’s top spot in January. With no permanent leadership, CMS has plunged forward with its interim final rule on competitive bidding. Issued Jan. 16--literally in the waning hours of the Bush presidency--the IFR, which calls for a rebid of Round One this year, took effect April 18.

Sebelius had indicated in Senate confirmation hearings that she would review the bidding program before a restart.

“Now that there is [an HHS secretary] to weigh in with, the industry continues to ask members of Congress to request that Secretary Sebelius do a full review and be fully briefed on the problems with the IFR before she makes a determination on how and when to move forward,” said Seth Johnson, vice president of government affairs for Pride Mobility Products Corp., Exeter, Pa.

“We have also heard from others in Washington that CMS has indicated they were not planning to restart the bid process until after the [Program Advisory and Oversight Committee] has an opportunity to meet,” he added, “so there are a couple of things in play that should take place prior to any restart of the program.”

A meeting of the 17-member PAOC has been scheduled for June 4 (see related story this issue). Johnson said he expects a timeline for the Round One rebid could be presented at the meeting, along with any changes CMS may make within the current framework for the bidding program.

The industry is also hoping to take advantage of a surprise move last week by Pennsylvania Sen. Arlen Specter, who after 30 years as a Republican, changed party affiliation to the Democratic side of the aisle. That could help Democrats, now within one seat of a 60-vote, filibuster-proof majority, in moving any legislation.

The switch could also lend more weight to the industry’s push to halt the IFR with Sebelius. In March, Specter wrote then-Acting HHS Secretary Charles Johnson calling for rescission of the bidding rule.

Specter will give the keynote speech at the American Association for Homecare's Washington Legislative Conference June 3, just one day before the PAOC meeting convenes.

New PAOC Members Hopeful as First Meeting Approaches
ATLANTA--Members of the second Program Advisory and Oversight Committee said Friday they are hopeful they can have a positive impact on DMEPOS competitive bidding as the rebid process moves forward.

CMS will convene the first meeting of the new committee June 4 in Baltimore. The agency abruptly ended the term of the original PAOC members and called for new nominees in 2008, three months after Congress halted Round One of bidding (see “Call for New PAOC Puzzles Current Members,” Oct. 13, 2008). In January, CMS chose a new committee.

The group was initially established to provide CMS with advice on the implementation of competitive bidding. But previous PAOC members have been vocal in their criticism of CMS, saying that although the committee’s name indicates they had oversight powers, they did not, and while they were to function as well in an advisory capacity, CMS seldom took their advice.

New PAOC members, who will be sworn in before the June meeting begins, are cautiously optimistic their voices will be heard this time around.

“I have wide open expectations,” said Doran Edwards, MD, of Advanced HealthCare Consulting in Columbia, S.C., about serving on the PAOC. “I am looking forward to the group. I think we have some great players there and … we hope we can provide some insights to CMS on Round One if it must go forward.”

Edwards, former SADMERC director, said if CMS and Congress decide to continue with competitive bidding, he hopes the group can help establish “a more equitable playing field for all players.”

Committee member Walt Gorski, vice president of government affairs for the American Association for Homecare, said he hopes CMS “will use this meeting as an opportunity to gather feedback from the initial rollout of the program in order to modify and make corrections to problematic issues that arose in Round One.

“We also hope that CMS will explain in detail how it intends to proceed under a rebid of Round One,” he added. “There is great hope that CMS will work to correct deficiencies rather than hastily attempt to meet an arbitrary deadline.”

Gorski said he and other members of the group want to explore several questions, including why the competitive bidding program differed so dramatically from the demonstration project, particularly in regard to the number of suppliers chosen to service various areas; whether those providers would be able to survive if they only won one product category when they provided the whole complement of HME; and how under any competitive bidding program the government can set the price at a lower rate than what providers bid.

Other members of the 17-member committee include:

Peter Amico, Prime Care Supplies Inc. of Holtsville, N.Y.
Kendra Betz, U.S. Department of Veterans Affairs
Richard Boulger, University of Iowa Business Solutions Center
Sue ElHessen, Careers Unlimited Inc. of Bellflower, Calif.
Joseph Furlong, American Home Patient of Brentwood, Tenn.
Rita Hostak, Sunrise Medical Inc. of Mathews, N.C.
Thomas Jeffers, Hill-Rom, Inc. of Batesville, Ind.
Ruben King-Shaw, All-Med Services of Florida Inc.
Ann Kohler, National Association of State Medicaid Directors
Jeffrey Mansell, Texas Department of State Health Services
Sharad Mansukani, NationsHealth Inc. of Sunrise, Fla.
Thomas Milam, AmMed Direct LLC of Antioch, Tenn.
Barbara Rogers, National Emphysema/COPD Association
Esta Willman, Medi-Source, Yucca Valley, Calif.
Debra Zak, The Joint Commission, Des Plaines, Ill.

The new PAOC members, to be sworn in before the June meeting begins, will serve through Dec. 31, 2011.


RAC 'Em Up: CMS Continues New Audit Program Outreach
SAN FRANCISCO--With its Recovery Audit Contractors going live in some states in March, CMS continues area outreach on the new audit program this week with three sessions at its San Francisco regional office. In-person sessions are also set for Texas this month.

The agency has planned a gradual rollout of the new audit program to all 50 states by 2010. When fully implemented, the RACs--in territories matching the DME MAC jurisdictions--will each be responsible for identifying overpayments and underpayments from previous claims in approximately a quarter of the country.

Under the program, the RACs will be paid a contingency fee based on the amount of improper payments they find and collect. In a final RFP posted on the CMS Web site, contingency fees for the RAC contracts are listed at: Region A, 12.45 percent; Region B, 12.5 percent; Region C, 9 percent; and Region D, 9.49 percent.

According to a CMS representative on a Special Open Door conference call last month, with the high volume of claims Medicare receives--about 4.5 million each workday--those claims “can’t possibly receive the type of scrutiny needed to prevent improper payment, so we have the RAC as another tool to try to fix this problem.”

On the call, officials confirmed the RAC look-back period has been limited to three years, with a beginning maximum look-back date of Oct. 1, 2007. The RACs will perform two types of reviews: automated, meaning they can make a decision without requesting a medical record; and complex, for which they will request medical records in order to make a decision.

For DME providers, the number of medical records the RACs can request is limited to
1 percent of the average monthly Medicare services per NPI per 45 days, with a maximum of 200 during that period. The RACs aren’t set up to receive electronic data interchange, so medical records must be submitted by mail, fax or CD/DVD. The provider has 45 days, plus a five-day mailing window, to submit the medical records.

CMS will have a new issue review board to provide oversight of RAC activities, and a RAC validation contractor will pull a sample of RAC claims to check their accuracy. An annual accuracy score for each RAC will be made public.

In one of the biggest changes from the RAC demonstration, a CMS official said, “One of the things we think is going to help the most to ensure accuracy is, if a RAC loses at any level of appeal, the RAC must return the contingency fee … That’s a great incentive for the RACs to double check their work.”

Agency officials have said they are encouraging the contractors to be reasonable in their dealings with providers and want to make sure the program is “fair.” But according to Walt Gorski, vice president of government affairs for the American Association for Homecare, the program could have a “devastating impact on home care providers because we will be held responsible for what is in the medical record.”

Check the CMS Web site for the RAC expansion schedule and an FAQ.


HME Company Newswire
Health Complex Medical Turns 25; DM Marks 30 Years
WATERBURY, Conn.--Health Complex Medical celebrates 25 years in business this month, founded by Jack Hogan and Ed Sklanka in May 1984. Specializing in oxygen and sleep therapy, the company now employs 60 people and has two branches serving Connecticut in addition to the main location in Waterbury. Hogan, who notes the respiratory care company "continues to have healthy growth amidst reimbursement challenges and the slowing economy," credits his staff for their dedication to the business and the industry.

DM Marks 30 Years
EVANSTON, Ill.--DM Systems is celebrating its 30-year anniversary. The company was founded in 1979 by orthopedic surgeon Denis Drennan, who, when he couldn't find a product to prevent pressure ulcers, designed a foam boot to suspend the heel. DM's Heelift Suspension Boot continues to be used. "Pressure ulcers are relevant today as they were 30 years ago, and I expect to see much more growth in the future, especially with the new CMS guidelines that don't cover pressure ulcers anymore," Drennan said.

Team Invacare's Van Dyk Wins Boston Marathon
ELYRIA, Ohio--Invacare Corp.'s Team Invacare placed first in the men’s wheelchair division and second in the women’s wheelchair division in the 113th Boston Marathon last week. Team member Ernst Van Dyk crossed the finish line in 1:33.29 for his eighth first place win in nine years. In the women’s wheelchair division, Diane Roy finished in second place with a time of 2:01.27. Both athletes competed in Invacare’s Top End OSR racing chairs.

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


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