To push for legislation that incorporates the reforms, AAHomecare has scheduled a Washington fly-in Feb. 11, “Homecare on Capitol Hill Day,” to deliver specifics about the oxygen plan to federal legislators. For information, see the AAHomecare Web site at www.aahomecare.org.

Headline News
AAHomecare, VGM to Offer Surety Bonds
ATLANTA--In an effort to aid HME providers who must now secure surety bonds if they are to participate in Medicare, two major industry organizations announced last week that providers could work through them to obtain the bonds required by CMS.

VGM Insurance in Waterloo, Iowa, and the American Association for Homecare in partnership with AON Affinity Insurance Services will offer the surety bonds. In its final rule issued Dec. 29, 2008, CMS said that as of Oct. 2, all HME providers participating in Medicare will need surety bonds for at least $50,000 per NPI number.

HME providers seeking to enroll in Medicare or providers changing ownership must have a surety bond in place by May 4.

Under the Balanced Budget Act of 1997, Congress mandated the surety bond requirement and CMS attempted to implement it in 1998, but the rule was never finalized. CMS revived the requirement with a new bond proposal in July 2007 (see HomeCare Monday, July 30, 2007).

The announcements by the two organizations could help ease at least some provider anxiety that surfaced with the final rule, which left a host of unanswered questions, not the least of which was where providers were to go to secure surety bonds. While CMS acknowledged that no such bonds now exist, “We believe that our implementation of this requirement will help create a market for sureties,” the final rule said.

The agency said such a market would have time to grow because it has delayed the effective date for nine months, and estimated the average cost for a $50,000 bond at $1,500.

Wallace Weeks of Weeks Group in Melbourne, Fla., took a more cautious view.

“Ordinarily, the CMS statement that a market will surface could have some truth,” he told HomeCare. “However, the financial markets are in turmoil and not able to accept new risk. So, if a market does surface, my expectation is that it will cost at least $1,500 and maybe $2,500 [for a surety bond].”

John Spragle, president of VGM Insurance, estimated that surety bonds obtained through his agency would cost between 2 and 5 percent of the face value. “You could pay $1,000 to $2,500 [for a $50,000 bond],” he said.

AAHomecare officials said they were focusing on providing “an inexpensive and quick industry solution.” CMS’ $1,500 estimate “could be high,” said Walt Gorski, vice president of government relations.

Both groups emphasized, however, that the cost would likely rise for companies that have what CMS calls “adverse legal actions.” CMS will require such companies to have surety bonds of elevated amounts at a rate of $50,000 per occurrence, and companies in that situation might have trouble obtaining them.

“People who have poor credit, have been audited and who have had problems, the people who have had a bankruptcy--they are going to have problems,” said Spragle.

Weeks agreed. “Those who have been in the business for less than three years, have credit blemishes, leverage ratios (debt divided by equity) of greater than 2 to 1 or audits resulting in overpayments claimed by a payer are those likely to have real challenges,” he said.

Gorski said CMS officials have told AAHomecare the agency will release more guidance in July and, at that time, will alert companies it deems high risk that they will need a higher surety bond and how much it must be.

Companies should wait to see how much their surety bond must be before purchasing one, Spragle said. “No one will want to purchase their bond before this [July 1] date,” he said, noting that providers should expect to indemnify the bond personally.

“This is not insurance,” Spragle emphasized. “A bond is a guarantee that the bonding company, if required, will pay out this amount if needed, to, in this case, Medicare. It’s a guarantee that they will get their money [back].

"All of the companies that get a bond will have to personally indemnify the bond, which means if you have a board of directors or three directors, they will have to sign their names and guarantee they will pay that money back. That’s the nature of a bond.”

The requirement is the latest in the government’s attempt to stem fraud and abuse and curtail Medicare costs, officials said. But in a statement issued after release of the rule, AAHomecare said it is concerned that “overly burdensome requirements applying a ‘one-size fits all’ approach to deter fraud have real potential to harm legitimate home care providers.” The association said it is also concerned that the new requirement could create access problems for Medicare beneficiaries.

Some providers are exempt from the requirement under certain conditions, including government-operated providers, orthotics and prosthetics providers, physicians and non-physician practitioners, and physical and occupational therapists. But the rule gives the following list of those who are not exempt:

--Pharmacies and community pharmacies;
--Publicly-traded chain DMEPOS suppliers;
--Established DMEPOS suppliers;
--Home-health agencies and hospices;
--Skilled nursing facilities;
--Rural DMEPOS suppliers; and
--Medical supplies companies that employ orthotic or prosthetic personnel.

CMS said it expects as many as 25,188 DMEPOS providers to abandon the Medicare program because of the combined costs of the surety bond and accreditation, which is required by Sept. 30.

“If [providers offer HME] more as a convenience, they may decide they don’t want to continue with this,” said AAHomecare’s Gorski, referring to such companies as small pharmacies that offer aids to daily living.

In its final rule, CMS addressed the access issue this way: “While we believe that some DMEPOS suppliers will make the decision to withdraw from the Medicare program due to the additional costs associated with the surety bond, we believe that Medicare beneficiaries will not encounter barriers to care.” The agency said it expects “the remaining DMEPOS suppliers would offer the products and services similar to those of the exiting DMEPOS suppliers.”

VGM Insurance has established a hotline to answer questions about the surety bond requirement at 866/497-0472; access the company's Web site at www.vgminsurance.com.

For a quote on the AAHomecare-AON Affinity Insurance Service surety bond, call 800/544-2672 and reference source code AAHC.

To view a PDF of the surety bond final rule, published in the Jan. 2. Federal Register, click here.

CMS to Assess Providers’ ‘Potential for Fraud’
BALTIMORE--In a transmittal issued on New Year’s Eve, CMS said the National Supplier Clearinghouse Medicare Administrative Contractor will begin a “fraud potential analysis” of all DMEPOS applicants and current providers.

According to the 27-page document, the NSC MAC will develop a “fraud level indicator” representing “the potential for fraud and/or abuse” of each provider, using four levels ranging from low risk to high risk.

CMS gave the following examples of the risk level indicators:

1. Low Risk (e.g., national drug store chains);
2. Limited Risk (e.g., prosthetist in a low fraud area);
3. Medium Risk (e.g., midsize general medical provider in a high fraud area); and
4. High Risk (e.g., very small space diabetic supplier with low inventory in a high fraud area whose owner has previously had a chapter 7 bankruptcy). High fraud areas shall be determined by contractor analysis with concurrence of the NSC MAC’s project officer.

In assigning a fraud level indicator, CMS said factors to be considered would include experience as a DMEPOS provider with other payers, prior Medicare experience, the geographic area, the fraud potential of products and services listed, site visit results, inventory observed and contracted and accreditation.

Based on the fraud level indicator, a “review plan” will be set up including the frequency of unscheduled site visits, maximum billing amounts before recommendation for prepay medical review and maximum billing spike amounts before recommendation for payment suspensions/prepay medical review, etc.

The fraud level indicator will be updated annually for each enrolled supplier. The NSC MAC will also monitor geographic trends to assess areas with a higher potential "for having criminals posing as legitimate HME providers,” the instruction said.

A special alert code will be used for any provider that meets the supplier standards “but appears suspect in one of the areas that are verified by the NSC MAC,” according to the document. The alert will be shared with the DME MACs and with Medicare’s Program Safeguard Contractors (PSCs) and Zone Program Integrity Contractors (ZPICs), and “notifies the contractors that a supplier may be inclined to submit a high percentage of questionable claims.”

Additional alert codes will be used for circumstances such as violation of the supplier standards or a sanction by the Office of Inspector General. A note in the transmittal said while the alert codes will have no effect on claims payment, the DME MACs may use them as guidance in their review of claims payment or any claims-related initiatives or investigations.

With its instruction to take effect Feb. 2, CMS said an MLN Matters article on the new fraud level indicators would be available shortly.

To view the Dec. 31 transmittal, click here.

Comments on Oxygen Rule Blast CMS
ATLANTA--CMS got an earful from home medical equipment providers, respiratory therapists, physicians, beneficiaries and a host of other entities that weighed in with comments about the agency’s 2009 physician fee schedule final rule, which includes payment policies that apply to reimbursement after the 36-month oxygen cap.

Implemented Jan. 1, provisions in the final rule mandate that providers continue service to Medicare oxygen patients for up to 24 months past the rental cap with no payment. They also require providers to continue service to patients who move out of their service area or who travel.

In public comments ranging from lengthy and detailed to brief, the writers--including the American Association for Homecare and the Council for Quality Respiratory Care--were almost universally unsupportive of the rules surrounding the cap, calling both for their repeal and for reform of the oxygen system. The vast majority of comments, which were due Dec. 29, centered on the costs of service that will not be covered post-cap, access issues for beneficiaries, increased emergency room visits and hospitalizations--and CMS’ apparent inability to understand that oxygen is not on par with a walker.

“In order for Medicare to appropriately provide a home oxygen therapy benefit, the program should be completely reformed in a manner that increases provider accountability, recognizes the service component and links reimbursement to patient need,” wrote the CQRC, a coalition of oxygen manufacturers and providers. Current policy does not differentiate among beneficiaries based on their needs and activity levels, the CQRC said, and it overlooks the service component entirely.

The group said the new rule “takes an unprecedented step in the history of the Medicare program and indicates that suppliers do not need to be compensated for the services and supplies they provide to beneficiaries.”

In its comments, the CQRC asked for a per-month rate to support emergency maintenance and services, and for disposable supplies and nonwarranty parts of not less than $25 a month. “CMS has clear authority to pay for them,” the CQRC said.

The American Association of Homecare drove home the point and said there is a "mistaken assumption that Medicare pays too much for equipment without accounting for the support services that are bundled into the monthly fee schedule amount.”

AAHomecare also asked for revisions in the final rule, including reimbursing providers for nonroutine services and resetting the payment cap for beneficiaries who relocate outside their provider's area. “The policy is completely unworkable because suppliers may be unable to operate in the beneficiary's new location as a result of licensing or regulatory requirements,” AAHomecare said.

On Friday, the association released a detailed proposal for reform of Medicare's oxygen benefit.

Tom Coogan, director of industry affairs for Care Medical and Rehabilitation Equipment in Portland, Ore., reminded regulators the cost of providing oxygen largely lies in the service.

“Only 28 percent of the true costs associated with providing these services are in the acquisition costs of the equipment. The remaining 72 percent of actual costs is associated with delivery, pick up, operations, maintenance, repairs, and customer service,” he noted. (For more on a study from Morrison Informatics on which these figures are based, see HomeCare Monday, July 10, 2006.)

Coogan added that CMS “constantly” compares industry pricing to online wholesalers “who do not provide comparable services or products. Internet dealers who ‘drop ship’ product do not include delivery or pick-up, do not meet the mandated 25 quality DME Supplier Standards, do not maintain adequate inventory, generally must sacrifice both quality and safety to reduce pricing, often utilize Internet sales to circumvent state taxation schedules, provide no maintenance or service to the patient and do not bill insurance that can often take 60-120 days for payment.

"This dramatically reduces overhead to lower pricing while ignoring CMS’ mandated requirements, and yet CMS continues to apply fallacious reasoning that compares ‘apples and horses’ rather than ‘apples and apples.’”

In addition, Coogan said, “Oxygen equipment is mechanical in nature, and thusly demands occasional repairs and routine services. Much like an automobile, if regular maintenance and service is neglected, oxygen systems will not operate efficiently or correctly. Utilizing this analogy, CMS is forcing home care providers to yield free extended warranties, free replacement parts beyond the initial manufacturer’s warranty, free roadside assistance, free in-home maintenance and service with free rentals if necessary, free travel rentals and free payments past 36 months for 24 additional months at deeply discounted prices that are below our actual costs. Needless to say, this policy is shortsighted and punitive to beneficiaries and providers alike ...

“Unfortunately, legitimate providers like Care Medical are now being forced to decide whether patients will get life-sustaining services or not dependent on costs.”

Excerpts from a sample of additional comments follow:

--David Petsch, Georgia: “I am certain that this bureaucratic department is in total breach of contract to the government and taxpayers and should be held liable for the damage and injury to occur to any of these Medicare recipients. Under their own accountability, they themselves, years ago, determined that oxygen was a drug that needed to be handled under different life-threatening rules. Instead, now, they themselves are suggesting it be bought and sold as any other commodity on the Internet and the streets. For this they should be held accountable.”

--Hal Freehling Jr., Ohio: “The rule imposes new obligations on suppliers that, under any measure, exceed what the Medicare program demands from any other provider. Among the extraordinary new obligations facing suppliers are requirements to provide emergency services and disposable supplies without compensation for as long as 24 months after Medicare payments cap and a requirement to continue serving beneficiaries who move or travel outside the supplier’s service area ... Under the new rule it will also be next to impossible to continue to support and service patients that travel outside a supplier's service area. Oxygen is not a long-distance service.”

--Sandra McCune, Michigan: “As a hospital [registered nurse] care manager, I see many potential problems with these new rules regarding discharge planning and access to oxygen for patients. We will be caught in the middle of patients who have the right to choose any DME provider, and DME providers who won't accept patients who are well into or past their 36 months. There will be delays in discharge, confused and upset patients, and we will have to waste time on this that could be much better spent. If the discharge plan is for the patient to move to a different area, it would be an even bigger nightmare.

“How is the DME provider supposed to find a new supplier for the patient when that supplier will not be paid? For that matter, how are DME providers expected to provide free services and supplies for possibly decades for these patients? I urge you to rescind this ill-conceived regulation.”

--Beth Blair, Kentucky: “Not only will Medicare patients be the ones to suffer from less service due to companies not being able to stay in business due to the cap, it is unreasonable for CMS to think a company can continue to do business for a patient for five years when you only get paid for three!"

--Daniel Shields, Pennsylvania: “I am afraid that removing the ongoing rental revenue stream will place many companies in the position of having to not accept Medicare patients or decrease the services we currently provide to them. This would effectively ‘chain’ a patient to their concentrator or induce a patient to go without their portable oxygen. This would result in increased emergency room visits and hospitalizations. One day in the hospital is more expensive than one year of home oxygen.”

--Kathy Brewer, Florida: “Oxygen is life support, not a capital asset like a wheelchair. A cap on this service is morally reprehensible.”

--Jeff Meischen, Texas: “CMS is requiring all suppliers to be accredited in 2009. Accrediting bodies require that suppliers define their service areas and not accept or continue to service patients that do not live within those areas. In some instances, this [rule] is requiring a DME supplier to break the law. This in itself is a violation of supplier standard No. 1, which requires that suppliers adhere to all local, state and federal laws and accrediting body standards. If a patient resides in one state and moves across the country to another state, that supplier would have to be licensed in that state to provide the patient with oxygen. Since the rule only allows that the provider that was paid the 36th month can bill for portable contents, this responsibility cannot be transferred to another provider. The billing provider would have to be licensed in the state that the client now lives. However, most states will not issue a license to a company that does not have a physical site in that state. Therefore, no license can be obtained. The supplier is clearly between a rock and a hard place. Regardless of what the supplier does, they would be violating a law.”

--Tammy Horsnby, Texas: “Although the DME companies will abide by the policy and offer the patients what is needed, the ‘extra’ services that enhance the care the patients currently receive will dissolve ... The changes will stop all of the [extra] services, as well as put some DME companies in jeopardy. In today’s economy, the last thing we need is more lost jobs, but that is what will happen if this policy goes into effect. We have already heard locally of many companies shutting their doors because they can no longer afford to operate with the cap and cut.

“Until CMS has a firm understanding of how DME companies work and what our services involve, CMS will never understand how important the repeal of this policy is. It is vital to providers, as well as patients, that this cap is deleted. The repeal will not only protect patient health, but also protect jobs and families.”

As of Friday, a tally of the comments that had been received was not available from CMS, and the agency was still adding comments to its posting.

To view comments on the rule, click here, then click docket CMS-2008-0073.

Providers Work to Implement Oxygen Rules, Get Cap Repealed
ATLANTA--As the 36-month oxygen cap kicked in Jan. 1 and CMS' new post-cap payment rules took effect, beleaguered providers struggling to implement those rules said they still have unanswered questions about procedures, billing and the like. They also said they're not giving up on getting the cap repealed.

“What’s going on with providers right now is a lot of confusion,” said Sean Schwinghammer, senior advisor for the Accredited Medical Equipment Providers of America, Miami. “We are getting calls from providers, from billing agents. We have inquiries that have gone to CMS and we are not getting answers.”

On Jan. 2, the day after the cap was implemented, Rob Brant of North Miami Beach-based City Medical Services and president of AMEPA, wrote the following letter to Joel Kaiser, deputy director of DMEPOS policy at CMS:

“Dear Mr. Kaiser,
As of yesterday, we have begun the era of capped oxygen equipment. My understanding is that patients who have been using prescribed oxygen for over 5 years, beyond the 'useful lifetime' of the equipment, are entitled to have their 5-year-old equipment replaced. I have the following questions regarding this rule.

For all of these examples, the patient had an oxygen concentrator initially delivered on March 15, 2003.
1) In this case, are we entitled to replace the patient's oxygen concentrator with a fresh, restart of the 36-month billing period as of Jan. 2, 2009?
2) Do we need a statement or documentation that the patient's equipment is not functioning properly?
3) Assuming the patient is entitled to a new oxygen concentrator, do we obtain a new CMN with an initial date of Jan. 2, 2009; or do we use a new CMN with an initial date of March 15, 2003, and a revised date of Jan. 2, 2009?
4) In order to qualify for the replacement oxygen concentrator is a new ABG or oximetry test required as well?
5) When billing the replacement oxygen concentrator, how are the new modifiers used with the E1390?

Thank you in advance for your time. Unfortunately, these questions are no longer hypothetical, as I have already received a call yesterday from a patient with a problem with their oxygen system. I needed clarification as soon as possible, if they were entitled to a new oxygen concentrator.”

As of press time Friday, Brant said he had received no response.

Cara Bachenheimer, senior vice president of government relations for Invacare, Elyria, Ohio, said the biggest unanswered questions relate to specific documentation requirements at 60 months, when replacement equipment is provided.

"We understand CMS will soon issue instructions and [the DME MACs] will shortly follow with more details,” she said, adding that she believes the documentation requirements will relate to both medical need and that delivery did occur.

Along with trying to get their questions answered, providers also are working on both legal and legislative fronts to get the cap repealed.

Brant said his association was in the process of evaluating a legal analysis it received last week from the Miami-based law firm Greenberg Traurig about the possibility of a lawsuit against Medicare over the oxygen cap.

In a contention supported by the Small Business Administration, AMEPA maintains that CMS violated Congress’ Regulatory Flexibility Act, which requires a complete analysis of the benefit or harm of government mandates on small businesses. The law firm's analysis supports that contention, Brant said.

AMEPA, which received financial aid from VGM, The MED Group, Invacare, Respironics and AirSep to look into the possibility of a lawsuit, will have to assess the analysis to determine if it is in the industry’s best interest to move forward with a suit, Brant said.

One of the critical questions is whether a lawsuit would be timely, he said, pointing out that the process could take a year or even longer. Also, he noted, “It would take an effort from providers if we decided to do a suit. Providers would have to step up with the funds--a quarter- to a half-million dollars.”

If a lawsuit doesn’t turn out to be plausible, Brant said, the only recourse is Congress.

“It would be wonderful to be able to say [to CMS], ‘You violated the RegFlex rule, therefore you have to stop this.’ Unfortunately, we’ve got to plead our case to Congress or get the violation of the RegFlex rule to go through a court of law,” Brant said.

On another front, some stakeholders are pushing for legislative action to repeal the cap. The National Association of Independent Medical Equipment Suppliers last week called on providers to contact their legislators and urge them to include both a repeal of the oxygen cap and of competitive bidding in the economic stimulus bill.

“Provisions included in the stimulus package would likely be exempted from the pay/go rules,” said Wayne Stanfield, president and CEO of NAIMES. “This means that Congress would not need to find offsets to pay for the repeals.”

Stanfield said NAIMES supports reform of the oxygen benefit, but added, “We must pursue every avenue possible to stop the cap before it harms patients. We must achieve a repeal of the oxygen cap while we work toward achieving meaningful results.”

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.

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?
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. Once the stationary system caps, the supplier will continue to bill the portable unit as a rental until it reaches the 36-month cap, after which portable contents may be billed if the supplier delivers oxygen content for the portable unit.

Question: CMS states that a portable unit is a regulator, cart, tank, contents and cannulas. How many tanks are reimbursable during a month and what is the reimbursement for the contents?
Answer: The fee schedule amount for portable contents (gas or liquid) is $77.45. The HCPCS codes for oxygen contents are for one month’s supply. When billing Medicare for oxygen contents, the quantity to be billed is one unit (one month’s supply), and not the number of tanks actually provided. Therefore, Medicare pays $77.45 for all portable contents provided for a one-month period, regardless of the number of tanks provided.

Question: Can the supplier contract with the patient for a 24/7 on-call/emergency service?
Answer: No. In the CMS transmittal issued December 23rd (CR 6297), CMS states: “Following the 36-month cap, the supplier is responsible for furnishing all of the same necessary services associated with furnishing oxygen equipment that were furnished during the 36-month rental period. For example, as required by the Medicare quality standards for respiratory equipment, supplies, and services established in accordance with 1834(a)(20) of the Social Security Act, the supplier shall provide services 24 hours a day, 7 days a week as needed by the beneficiary. Suppliers may not bill beneficiaries separately for these services.”

Appendix A to the DMEPOS Quality Standards contains the additional quality standards applicable to respiratory equipment, supplies and services. It states: “The supplier shall provide respiratory services 24 hours a day, 7 days a week as needed by the beneficiary and/or caregiver(s).” Respiratory services are defined as “the provision of home medical equipment and supplies that require technical and professional services” and include oxygen equipment, CPAPs, RADs, IPPBs, home invasive mechanical ventilators and nebulizers.

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.

Pharmacists Grill CMS on Accreditation Call
BALTIMORE--With 340 listeners on the call at a special Open Door Forum Thursday, CMS’ Sandra Bastinelli, who has oversight of the agency’s DMEPOS accreditation program:

--Reminded providers that the mandatory accreditation deadline is Sept. 30. “If [you are] not exempt and you are billing, or have a billing number (which is your DME enrollment number) or you wish to obtain one between now and the deadline, or keep it after Oct. 1, in order to bill for DMEPOS you need to be accredited.”

--Encouraged providers to get a completed application into an accreditation organization by Jan. 31 to ensure an accreditation decision by Sept. 30. “If you’re thinking, ‘What if I send my application in February … Will they still get it?’ Yes, [accreditors] will still accept it. However, just note it’s taken in order of how they come in and when they are completed, so the later you wait, the greater the possibility the accrediting organization will not be able to process your application. They will let you know at that time.”

--Noted that accreditation cannot be used as a "bargaining chip" in a potential sale. “If you are looking to sell your company, I would not get accredited because you can’t transfer that accreditation decision. Once you sell your company, that accreditation decision is null and void.”

--Emphasized that if providers choose not to get accredited, they must change their 855S enrollment agreement application. “After Oct. 1, if your enrollment application still has any DMEPOS supplies on it and you are not an ‘exempt professional' or 'other person,’ you will be denied payment through your contractor.”

Nothing new. But after Bastinelli's presentation, the questions began, many from pharmacists still looking for answers about accreditation--and incredulous at its "overwhelming" demands, as one caller put it.

"Was CMS' intent with the accreditation policy to lessen competition by forcing smaller suppliers to drop out of the network?" one caller asked.

"No," Bastinelli answered, "... it's about the safety and the quality of services that beneficiaries receive."

"Could I ask your honest opinion of what you think this is going to do to the marketplace?" the caller responded. "The question is because of the burden of this on a small individual operation ... many of them are just going to throw the towel in because it's too expensive to comply with what CMS is asking us to do. Because of that you're going to be left with all the major corporations as being the only suppliers of product, and to me it looks like that was their intent, to lessen the number of billers and not have to work with as many providers."

Bastinelli said CMS estimates there are some 25,000 pharmacy locations already accredited, "so we don't see any trend of that occurring to date."

Another caller did the math. "Geez, with 25,000, that's $100 million. That's a lot of money, isn't it," he commented.

"We at CMS do not receive any of that money," Bastinelli said.

"I really didn't imply that. I just thought that was a lot of money," the caller continued. "How many pharmacies are there in the United States?"

After hearing Bastinelli's estimate of 54,000, he figured, "That's $220 million every three years, then, right?"

"I don't know. I'm sorry, I'm missing your point," Bastinelli said.

"I think everybody else is getting it, though," the caller shot back.

Bastinelli also addressed the issue of beneficiary access in this exchange with a pharmacist from a rural area:

Caller: “We’re a very rural location; we have a county of about 9,000 people. There are no DME suppliers in the county within 20 miles in every direction, and no other pharmacies within 20 miles every other direction. Right now, we are stressed just spending the hundreds of hours and thousands of dollars complying with pharmacy requirements--HIPAA, privacy, security, policy and procedures, fraud.

“We have been providing DME products more as a service to our patients than anything else. We do about $20,000 a year. It’s going to cost me over $4,000 just to apply for this accreditation. Obviously for $20,000 a year, we were barely breaking even to begin with; there was no way we were going to spend $4,000 on this.

“My question is, has CMS considered what they are going to do for my patients in my county that have no other options?”

Bastinelli: “Those issues were addressed with the competitive bidding process so far as access to delivery of supplies you offer, that is, by way of national chains or mail order supplies. We do hear you; we thought we had answered the access question, and the other is certainly a business decision, but I understand as a clinician that it is a cost issue considering how little of a volume you do provide. The only thing we can say is that we did not find anywhere in the U.S. where it was an access issue.”

Caller: “Then what do I tell my 80-year-old patient that has acute bronco spasms that the doctor needs her to head to the pharmacy for her nebulizer?”

Bastinelli: “A nebulizer is a drug, and you can still offer that as a Part B drug. That is not under DMEPOS.”

Caller: “That’s fine, [but what if] the patient comes to me and I say, ‘I have the solution, but you have to drive 20 more miles somewhere.’ It’s the same for diabetics. It’s an acute situation. You are leaving an entire county without an acute service. By the way, mail order service of these supplies does not eliminate the need to talk with these patients and fix their glucose monitors when they go bad, or change the battery, or anything. It can’t be done on a timely basis on mail order.”

Bastinelli: “Anyone we do accredit has to follow up, including mail orders. If they provide services, they have to provide care 24/7. That is a requirement. If they don’t do that, we don’t accredit them.”

When several callers posed questions about participating vs. non-participating providers, Bastinelli did not give answers and she would send clarification through CMS' list-serv.

CMS said a replay of the Jan. 8 teleconference (ID 79431075) would be available by Friday, Jan. 16, at www.cms.hhs.gov/OpenDoorForums/05_ODF_SpecialODF.asp.

Industry Weighs In on Health Reform as Daschle Hearings Begin
WASHINGTON--The Senate Health, Education, Labor and Pensions Committee held the first confirmation hearing Thursday for former Senate Majority Leader Tom Daschle, D-S.D., nominated as the new secretary of HHS.

According to press reports, during the hearing Daschle discussed the urgent need to reform health care, the growing problem of the uninsured and the need for collaboration between the incoming administration and Congress in reshaping the health care system.

On a quest for fresh ideas, President-elect Obama called for Americans’ help in reforming the system by hosting community discussions. Daschle attended an Indiana meeting, reported in the Washington Post, where he listened to stories, concerns and recommendations from the public.

Although in last week’s hearing Daschle didn’t get into specific plans for Medicare, Medicaid or SCHIP, the massive government health programs on which much of this industry depends, several HME organizations want to be sure both he and Obama’s staff understand the industry’s role and its views through community meetings of their own.

Moderated by Medtrade Director Kevin Gaffney and American Association for Homecare President Tyler Wilson, a Dec. 22 meeting held at Medtrade’s Alpharetta, Ga., headquarters drew attendees from GF Health Products, Hometown Home Health, Merits Health Products, DME Inc., Fuller Rehab, Owen Mumford and the Georgia Department of Economic Development, among others.

In discussing how the new administration should address the HME industry’s particular needs, meeting attendees said they felt the value of home medical care is underestimated by the current health care system. Home care is less expensive than inpatient care, and there is a strong patient/family preference for care at home, they pointed out. “Home care is not ancillary to health care but should be integral,” according to a summary of the meeting, which was forwarded to Obama’s transition team.

Collectively, attendees stated “that patient care is why they are in this business, and that their willingness to negotiate, accept reimbursement cuts and trim operating costs in the face of industry regulation speaks well of the group,” the summary said. Most also reported, however, their fears of being eliminated from the health care marketplace by competitive bidding.

The National Association of Independent Medical Equipment Suppliers also held a health care reform town hall meeting on Dec. 22 that included providers, hospital staff and consumers. According to this group, key issues that need to be part of a reform plan include improving primary care access; reducing health insurance costs, waste, fraud and abuse; moving toward integrated electronic health records; and, among other things, banning direct-to-consumer pharmaceutical advertising.

Providers attending the meeting also said they were concerned about the oxygen cap and how they will be able to survive. “None had any illusions about the problems and all felt that this is a crisis that CMS and Congress has yet to realize or understand,” a NAIMES meeting summary said, adding that attendees were in agreement “that CMS and most members of Congress” are out of touch with Medicare issues.

“Congress and CMS do not understand that the equipment is the unimportant part of ‘home care,’” the summary reported. “It is the ‘care’ that not only costs the most but is what suppliers provide that sets them apart from other sources of equipment for consumers.”

Comments from its meeting will also be sent to the Obama transition team, NAIMES said.

A community health care discussion hosted by VGM, which was postponed twice due to weather, is rescheduled today in Waterloo, Iowa.

Newsmakers
LaPlaca Signs on at Invacare; Responsive Respiratory Hires Lippold
ELYRIA, Ohio--Invacare Corp. has named Anthony C. LaPlaca senior vice president and general counsel, replacing Dale C. LaPorte, who retired in December. LaPlaca will report directly to A. Malachi Mixon, III, chairman and CEO. He will be responsible for all legal affairs, risk management and intellectual property matters and will also serve as the company's corporate secretary. Previously, LaPlace served as vice president and general counsel for Bendix Commercial Vehicle Systems, a member of the Knorr-Bremse group, for six-and-a-half years. Prior to that, he was vice president and general counsel to Honeywell Transportation & Power Systems and general counsel to Honeywell Commercial Vehicle Systems, the predecessor to the Bendix business at Honeywell.

ST. LOUIS--Responsive Respiratory has hired Sara Lippold as marketing manager. She will be responsible for overseeing the development of marketing and product strategies for the seven-year-old business. Prior to joining the firm, Lippold held various positions in marketing and product management for a safety products company.

VIENNA, Va.--The National eHealth Collaborative has elected Kevin Hutchinson, president and CEO of Prematics Inc., to serve as vice chair of its 2009 board of directors. The organization is a successor to the American Health Information Community, a federal advisory committee established in 2005, and AHIC Successor, founded in 2008 to transition the AHIC into a non-profit membership organization, now known as the National eHealth Collaborative. "The Collaborative represents a shared commitment among virtually all necessary stakeholders in both private and public sectors needed to guide our country to achieving nationwide health IT interoperability," said Hutchinson, who previously served as a commissioner of the original AHIC.

In Brief
CMS Pulls Privileges of 1,000+ Providers; Signature and Date Stamps a No-No
In conjunction with its announcement of a new surety bond requirement for HME providers, CMS also said it has revoked the billing privileges of 1,139 providers in the Los Angeles and Miami areas. According to the agency, the providers, who were paid $265 million between 2005 and 2007, lost their privileges for not re-enrolling in Medicare, a requirement of the DMEPOS High-Risk Suppliers Demonstration, and not meeting the supplier standards. In a Bloomberg News report, Kimberly Brandt, Medicare’s director of program integrity, labeled a lot of the companies whose privileges were pulled as “storefront shams.” The massive anti-fraud demonstration was launched in October 2007 and covered some 7,700 providers in southern California and south Florida. At the time, CMS said the pilot project would run for two years and, if successful, could be expanded to other areas (see HomeCare Monday, July 9, 2007).

Signature and Date Stamps a No-No
CMS was busy Dec. 31. In yet another transmittal issued New Year's Eve, the agency clarified that signature and date stamps are not acceptable for use on CMNs and DME MAC information forms (DIFs) after Feb. 2. "The method used should be handwritten including facsimiles of original written or an electronic signature" to sign an order or other medical record documentation for medical review purposes, the agency said. Click here for the official instruction issued to the DME MACs.

CEDI Discovers Duplicate Claim Files
According to a notice from National Government Services, CEDI has discovered duplicate claim files were delivered to the DME MACs on Jan. 2. These were claims received after the last files were created for delivery on Dec. 31, 2008, through the holiday on Jan. 1, 2009, and Jan. 2, 2009. "This caused a high number of duplicate file rejection on the DME MAC Front End Error Reports with edit 20268 to be returned to our CEDI trading partners," the notice said. "The second file created by CEDI will receive the front end rejection, 20268, for a duplicate file. Please review any errors on the first instance of the file on the DME MAC Front End Error Report for any rejections to be corrected and resubmitted."

Health Spending Growth Data Shows DME at the Bottom of the List
U.S. health care spending by both the public and private sectors grew at a rate of 6.1 percent to $2.2 trillion in 2007, down from growth of 6.7 percent in 2006. In fact, based on figures from CMS' Office of the Actuary published in the journal Health Affairs, the 2007 growth rate is the slowest recorded since 1998. On the other hand, health care spending consumed 16.2 percent of the U.S. gross domestic product in 2007, an all-time high. Hospital spending increased 7.3 percent, and spending on doctors grew 5.9 percent. As for DME, a report from VGM CFO/CIO Mike Mallaro points out that with a growth rate of 0.9 percent, "the data shows that DME expenditures grew at a lower rate than any other category of health expenditures in 2007. This is the second consecutive year that DME has been the health care category with lowest growth rate."

MedPAC Raises Physicians' Pay, Cuts Reimbursements to HHAs
Last week The Medicare Payment Advisory Commission approved a recommentadion that would increase reimbursements to primary care physicians by 1.1 percent in 2010 and give hospitals a full market basket update for both inpatient and outpatient care. The commission also recommended reducing payments to home health agencies and increasing payments to long-term care hospitals and dialysis centers, according to CQ Healthbeat. In July, under provisions in the Medicare Improvements for Patients and Providers Act, Congress replaced a scheduled 10.6 percent cut for physicians with a payment freeze for the rest of 2008 and the 1.1 percent pay hike. Another bill canceling a scheduled pay cut for physicians due in 2010 is expected to be considered this year. MedPAC will include its recommendations in a report to Congress in March.

CMS Reports More Appeals in RAC Demo
Providers appealed more improper payment decisions made by its Recovery Audit Contractors than CMS first reported, the agency said last week. Of the more than 525,000 overpayment determinations made by the RACs between 2005 and 2008, providers appealed more than 118,000, or 22.5 percent. Of the decisions that were appealed, CMS said, 34 percent were overturned in providers' favor. In its initial report in July, the agency said providers had appealed only 14 percent of the determinations. In the three-year RAC demonstration, which involved six states, as of March the audits had identified more than $1 billion in improper payments, including $38 million in underpayments to providers. Those results propelled CMS to name permanent RACs, with plans to roll out the post-payment reviews to all 50 states. For more on the RAC program, see HomeCare Monday, Nov. 17, 2008.

Coming Up
On the HME Calendar
Dynamic Seminars & Consulting will hold a "Customer Service Strategies" teleconference, presented by Louis Feuer, MA, MSW, today from 11:30-12:30 p.m. ET. To register, call 954/435-8182.

AAHomecare has set a "Zero Tolerance for Fraud" teleconference Jan. 14 from 2-3:30 p.m. ET. For information, visit www.aahomecare.org.

The Georgia Association of Medical Equipment Services will hold a "Survivor Series" conference Jan. 21 in Atlanta focused on improving productivity, reducing operational costs and growing revenue. For information, call 770/578-3999 or visit www.gameshme.org.

CMS has scheduled its next Home Health, Hospice & DME Open Door Forum Jan. 22 at 2 p.m. ET. To participate by phone, call 800/837-1935 and reference conference ID 70014356.

The North Carolina Association for Medical Equipment Services (NCAMES) will hold its Winter Meeting in Raleigh, N.C., Jan. 28-29. For information, call 919/387-1221 or visit www.ncames.org.

The Assistive Technology Industry Association (ATIA) will hold its Annual Conference in Orlando, Fla., Jan. 28-31. For information, call 877/687-2842 or visit www.atia.org.

AAHomecare will host a teleconference called "Hot Button Issues in the Diabetic Arena" Jan. 29 from 2-3:30 p.m. ET. For information, visit www.aahomecare.org.

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