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| May 5, 2008 | Volume 15, Number 19 |
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Table of Contents - Heat Is On for Tomorrow's Hearing on Competitive Bidding - Rehab Carve-Out Gets Boost from Senate Trio - Pride Calls for Investigation in Riverside CBA - Competitive Bidding Training Call, Open Door Forum Set May 13 - VGM's Bendell: 'Bid Wisely, Bid Appropriately' - Check NPI on 'Legacy Free Day' - Apria, Lincare, Invacare Post Q1 Results - Newsmakers For more industry news, features and highlights from our latest issue, please visit our Web site at www.homecaremag.com. Headline News Heat Is On for Tomorrow's Hearing on Competitive Bidding WASHINGTON--The HME industry’s cries may not have stymied competitive bidding, but at least Congress is listening. The House Ways and Means Health Subcommittee has scheduled a hearing on the Medicare bidding program tomorrow, sending advocates into high gear urging stakeholders to contact their representatives immediately to air their views. “We have heard from both suppliers and beneficiary advocates that the DMEPOS competitive bidding program is not working as well as it is supposed to,” said subcommittee Chairman Fortney “Pete” Stark, D-Calif. “I look forward to hearing their concerns, as well as from CMS, as we consider whether changes need to be made before the program is further expanded.” For months, an array of industry organizations and advocates has encouraged providers to educate legislators on problems with the bidding program and ask them to slow its implementation. Lighting up the phone lines apparently helped, as the Ways and Means hearing advisory cited concerns that “some suppliers were improperly excluded from the bidding process and beneficiary access to certain types of equipment could be reduced in areas affected by the program.” In addition, industry complaints about an inventory of problems with the bidding program--the overlooking of small providers, a flawed certification/application process, unfair bidder exclusions and an excessively short period (10 days) for contract acceptance in round one--have also gained attention, and inquiries to CMS from both congressional chambers have risen steadily in recent months. House Minority Leader Rep. John Boehner, R-Ohio, has called on Department of Health and Human Services Secretary Michael Leavitt to delay round one “until the mistakes and irregularities can be remedied.” Last month, a group of eight senators led by Sen. George Voinovich, R-Ohio, fired off a letter to Leavitt seeking a meeting to address what they termed “widespread issues” pertaining to the DMEPOS bid. And last week, officials at Pride Mobility notified Leavitt of "potential problems" with power wheelchair bids in the Riverside, Calif., CBA and called for a full investigation, adding to the mounting pressure for government officials to respond (see story in this issue). Nevertheless, CMS leaders have said repeatedly they intend to implement competitive bidding as planned, with round one to take effect July 1. The agency has scheduled a national provider training call about the program for Tuesday, May 13. At tomorrow’s hearing, the American Association for Homecare will present testimony along with senior officials from CMS and other invited witnesses. But industry stakeholders must also keep up the pressure, AAHomecare urged. In a special Friday edition of its newsletter, the Midwest Association for Medical Equipment Services implored members to continue the fight against competitive bidding. “It does impact everyone even if you are not in round one or two,” MAMES said. “We are hearing every day throughout the country that local state payers are beginning to adopt some of the fee schedule items for round one competitive bidding.” The National Association of Independent Medical Equipment Suppliers has issued a similar warning, pointing to a recently amended United Mine Workers of America contract that applies round one fees to any patients living in a competitive bidding area. The contract states that suppliers will be paid the lesser of the contract fee or the competitive bid fee for patients living inside or moving inside any of the 80 CBAs targeted for the program. “This is another unintended and serious consequence of competitive bidding,” said Wayne Stanfield, NAIMES president and CEO. “We have been concerned about this happening; it just came sooner than expected.” The organization said last week it has mailed a “STOP Competitive Bidding” pack to all 100 members of the Senate--which is currently working on Medicare legislation--including a CD with a 5,200-signature petition asking Congress to stop the program. In light of tomorrow’s hearing, the packs have also been sent to all members on the House Ways and Means Committee. To support its testimony in tomorrow afternoon’s hearing, AAHomecare is asking “all providers and manufacturers to contact their members of Congress prior to the event to state their concerns with the flawed bidding program. This is especially important for those whose representative in the U.S. House sits on the Ways and Means Health Subcommittee.” Those congressional representatives are:
The hearing will begin at 1 p.m. tomorrow (Tuesday, May 6) in the Longworth House Office Building. To contact House members, call the U.S. Capitol switchboard at 202/224-3121 and ask for your representative's office. To submit comments for inclusion in the hearing record, go to the House Ways and Means Committee Web site at http://waysandmeans.house.gov. Select “Committee Hearings” from the top navigation bar, then choose the May 6 hearing titled “Medicare's DMEPOS Competitive Bidding Program.” Are you hopeful that, with industry efforts in full swing, Congress/CMS will suspend round one of competitive bidding? To vote in HomeCare's monthly Web poll, visit www.homecaremag.com. Rehab Carve-Out Gets Boost from Senate Trio WASHINGTON--Complex rehab stakeholders got a big boost last week when three legislators introduced a Senate companion to H.R. 2231, the House complex rehab carve-out bill. The Medicare Access to Complex Rehabilitation and Assistive Technology Act of 2008, S. 2931, was introduced by Sens. Olympia Snowe, R-Maine, Debbie Stabenow, D-Mich., and Tim Johnson, D-S.D. Like its House counterpart, the bill would exempt complex rehab from competitive bidding. Tim Pederson, CEO of WestMed Rehab in Rapid City, S.D., and chairman of the American Association for Homecare's Rehab and Assistive Technology Council, said the bill was the result of several years of effort on the part of RATC members. “It was really tough to talk about the House version of the carve-out when there wasn't a Senate companion,” Pederson said. “And now that we do have the Senate companion, it should increase support exponentially across the board.” That could be crucial in the next few months. No one expects the carve-out measure to pass on its own. Introduced last year by Reps. Tom Allen, D-Maine, and Ron Lewis, R-Ky., the House version of the bill has picked up only 40 cosponsors. Instead, the hope is to package the carve-out with Medicare legislation currently being hammered out in the Senate. Commonly known as the “doc fix,” the Senate's Medicare bill would delay a 10 percent reimbursement cut for physicians now scheduled for July 1. “The important thing is that the Medicare legislation is going to originate in the Senate, not the House this time,” Pederson noted, “so that's good, and to already have three sponsors for the [carve-out] legislation is significant.” He added that two of those sponsors--Snowe and Stabenow--are members of the powerful Senate Finance Committee, which oversees Medicare, and that Johnson is close to Montana Democrat Max Baucus, the committee's chairman. Pederson credited RATC member Jim Greatorex, president of Black Bear Medical in Portland, Maine, with getting Snowe to sponsor the bill. He actually got the commitment during the AAHomecare Legislative Conference in March, Greatorex said. “We rearranged our meeting time twice to get to speak with [Snowe] in person,” he said, noting that he had tried in each of the three previous years but got only as far as an aide each time. But the persistence paid off. “We had a great meeting with her. She committed right on the spot ... She was supportive of everything we brought,” Greatorex said. He added the new Senate bill is proof that if you can get to the actual member of Congress, “the chances are much greater [of getting what you want] … Whether these bills go through and become part of the law or not, it at least shows our industry is doing something in Washington, and if you go to Washington and attend some of these fly-ins and conferences, your voice can be heard.” Still, while the Senate bill is exciting news to the beleaguered industry, the work for stakeholders isn't done, Greatorex said. “We need to act on this bill quickly because it appears the only avenue of getting it passed is with the doc fix bill, so we need to be really active in trying to get the signatures [of other senators as cosponsors],” he said. “What we would like to do is have [other] senators talk to Sen. Baucus and urge [him] to get the legislation added to the Medicare package,” said Sharon Hildebrandt, executive director of the National Coalition of Assistive and Rehab Technology. “We want them to talk directly to Sen. Baucus about this. That's how it is going to happen. This bill has to be important to members of the Senate; that's how we are going to get it passed.” Baucus has already gone on record as saying he wants to delay physicians' pay cuts for 18 months and, in addition, give them a 1.1 percent raise. He has also said he wants the Medicare legislation to expand beneficiary access to preventive care benefits and primary care, and to offer more financial help for low-income seniors. Whether or not Baucus and the rest of the Senate will be open to other issues is the question, said Michael Reinemer, AAHomecare's vice president of communications and policy. “The [doc fix] patch they approved last year expires June 30, so there is a narrowing window on that,” he said. “The question is, how wide does it open up to other issues? That could be a double-edged sword; it could open up to cuts as well as fixes.” Pederson said he thinks there is a good chance the carve-out bill will become a part of the Medicare package this year. “It's a benign piece of legislation,” he said. “Sen. Johnson's office shared with us that they believe the score from this bill will be insignificant. A lot of times, when a bill scores really low, they call it an asterisk. [Sen. Johnson's office staff] says this is less than an asterisk. They even called it 'budget dust.'” Hildebrandt said an industry-commissioned study estimated the carve-out would cost $46 million over five years. “That hasn't been scored by the [Congressional Budget Office], but we are in line to be scored by the CBO and that's the next step,” she said. Under federal mandate, the CBO must estimate the cost to the government of each bill. In order for a bill to be passed, it must also include a way to make up for that cost--usually by cutting from somewhere else. Hildebrandt said if the CBO finds the $46 million estimate to be accurate, “it wouldn't be that difficult to find a 'pay-for.' If we can keep it low, we have a pretty good chance of getting on the package.” In a statement introducing the bill, Snowe gave her reasons for joining the carve-out fight: “Complex rehabilitation and assistive technology products are a lifeline to severely disabled Medicare beneficiaries who seek to lead independent and productive lives. Although competitive bidding may reduce the cost of some health services, it is simply untenable to include such sophisticated and personalized equipment in the Medicare competitive bidding program. "We must ensure that these individuals living with complex disabilities will have access to the necessary medical equipment and services to fit their needs." To view the full text of S. 2931, go to http://thomas.loc.gov. Pride Calls for Investigation in Riverside CBA EXETER, Pa.--A statement issued Thursday by Pride Mobility Products Corp. said the manufacturer has uncovered potential problems in the Riverside, Calif., competitive bidding area and calls on Department of Health and Human Services Secretary Michael Leavitt to launch a full investigation into the matter. According to the statement, Pride has received reports that 18 of the winning standard power wheelchair category bidders in the CBA all had price, product supplier and consultant in common. “This information has been corroborated to us by multiple sources,” Pride Chairman and CEO Scott Meuser wrote in a letter to Leavitt. Meuser urged the HHS head to act quickly, saying “this is an important matter that requires immediate action in light of the short timeframe that exists prior to implementation of the program on July 1, 2008.” According to CMS, 19 contracts for standard PWCs, scooters and accessories were offered in the Riverside CBA. CMS data also indicates winning bids in that bidding area were 50 to 70 percent lower than current the Medicare allowable versus the national average of 25 percent, Pride said. “The information further supports the notion that the integrity of the process may have been compromised,” Pride said, adding this “strongly suggests the need for a delay so that the competitive bidding process can be fully and properly evaluated prior to implementation.” To view a chart of CMS' contract offers in round one, click here. To view CMS' round one single payment amount charts by product category, click here. Competitive Bidding Training Call, Open Door Forum Set May 13 BALTIMORE--On Tuesday, May 13, CMS will hold a National Provider Training Call to give an overview of Medicare's DMEPOS competitive bidding program. According to a notice from the agency, the national education call, which will run from 12:30 p.m. to 2 p.m. ET, is being conducted for Medicare fee-for-service providers and will address “some of the situations you may encounter as the program is implemented July 1, 2008.” The Competitive Bidding Implementation Contractor (CBIC) will make a presentation, and CMS subject matter experts will be available to answer questions. A PowerPoint presentation will be posted on the CMS Web site prior to the call. To participate, you must register for the call at http://www2.eventsvc.com/palmettogba/051308. Registration will close at 12:30 p.m. ET on May 12, or when available space has been filled. No exceptions will be made, so CMS advises that listeners register prior to this time. A replay option will be available after the call from 2:30 p.m. ET May 13 until 11:59 p.m. ET May 17. For the replay, call 800/642-1687 and use passcode 45744159. To review before the training call, CMS has issued three articles through the Medicare Learning Network that contain a substantial amount of information about the bidding program, including: --MLN Matters Special Edition Article # SE0805, "Overview of New Medicare Competitive Bidding Program for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)," posted on the CMS Web site at http://www.cms.hhs.gov/MLNMattersArticles/downloads/SE0805.pdf; --MLN Matters Special Edition Article # SE0806, "Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program: Grandfathering, Repair and Replacement, Mail Order Diabetic Supplies and Advanced Beneficiary Notices (ABNs),” posted at http://www.cms.hhs.gov/MLNMattersArticles/downloads/SE0806.pdf; and --MLN Matters Special Edition Article # SE0807, "Important Exceptions and Special Circumstances that Occur Under the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program," posted at http://www.cms.hhs.gov/MLNMattersArticles/downloads/SE0807.pdf. Immediately following the training call on May 13, CMS will hold a Home Health, Hospice and DME Open Door Forum at 2 p.m. ET. To participate by phone, call 800/837-1935 and reference conference ID 41864430. To access the replay of the Open Door session, call 800/642-1687 and use the same conference ID number. The replay will be available beginning two hours after the session has ended and will expire after three business days. VGM's Bendell: 'Bid Wisely, Bid Appropriately' In Atlanta April 17 during a stop on the VGM Group's National Competitive Bidding Seminar tour, VGM President Ron Bendell took time out for a Q&A with HomeCare Monday, and he had some advice for providers: Pay attention to costs, get your business in order--and take heart in the industry's future. Q. With competitive bidding imminent, what do you see in the
future for small HME companies?
Regardless, there have been reports that have come out that say with the population aging, there isn't going to be an adequate supply of medical professionals. That's something that Congress is going to have to face up to and our whole government system is going to have to face up to, so with the large numbers of baby boomers coming into the system, there's going to be plenty of opportunity for the HME provider to survive. Q. Assuming they bid but do not win a contract under competitive
bidding, do you think most providers could make it on grandfathering
patients or subcontracting or with some other strategy?
This will all sort out; it's the latest thing people gloom-and-doom about in our industry, but we've always survived and we've always thrived, and that's going to happen again. Q. Do you think there will be some providers that don't make
it?
Q. The government has estimated that after the competitive bidding
program is fully implemented, there will only be half as many DMEPOS
suppliers doing business with Medicare as there are currently. Do you
think that is an accurate estimate?
If you look right now, there are 117,000 Part B numbers out there that CMS considers “suppliers.” Many are grocery stores and small pharmacies and audiologists, so I think the statement that 50 percent of “suppliers” will go out of business is accurate because a number of these suppliers will not want to become accredited, they will not want to purchase a surety bond should that become finalized, and some of them arguably should not be in the DME business in the first place. That's where I think you will see the fallout … but of the true HME providers--that this is what they do on a day-in and day-out basis, taking care of the beneficiary to the best of their ability--it's not going to be anywhere near 50 percent … It will be much, much lower. Q. With the pricing that has been set for round one, do you think
companies that accepted contracts will be able to service those
contracts, or do you think we'll see some providers dropping out?
Q. Do you think we'll see the same type of bidding in round two
that we've seen in round one?
Q. What is the most important issue providers should be paying
attention to today among all the changes they are facing?
Q. Do you think Congress will come around to the understanding
that home care is a cost-effective solution to some of our health care
problems, yet that is in direct opposition to the policies we see the
government putting into effect that restrict this industry?
Check NPI on 'Legacy Free Day' BALTIMORE--CMS, in collaboration with the Healthcare Information and Management Systems Society (HIMSS), has requested that on Wednesday, May 7, providers billing Medicare should submit claims with the NPI only in all provider identifier fields for which they have been using NPI/legacy pairs. The purpose of “Legacy Free Day” is to test NPI numbers to make sure everything is running smoothly before the NPI implementation deadline on May 23, when only claims submitted with NPI numbers will be accepted. CMS said it hopes feedback from the test will alert providers if there is a problem with their NPI before the deadline, giving them time to remedy the issue before the NPI-only implementation date. To address additional questions regarding NPI implementation, CMS has scheduled a national NPI Roundtable from 2 p.m. to 3:30 p.m. ET on Wednesday, May 14. To register for the call, go to http://www2.eventsvc.com/palmettogba/051408. Registration closes at 2 p.m. ET on May 13, or when available space has been filled. A replay of the roundtable will be accessible after the call until 11:59 p.m. ET May 19. The call in data for the replay is 800/642-1687 and the passcode is 45142409. For more information about “Legacy Free Day,” click here and select “CMS Communications” in the left column on the page. Apria, Lincare, Invacare Post Q1 Results Apria Healthcare Group, Lake Forest, Calif., reported that for the first quarter ended March 31, revenue grew by 35.1 percent to $528 million from $390.8 million in the first quarter of 2007. First quarter net income was $20.8 million, which was flat compared to the first quarter of 2007. As expected, due to the acquisition of infustion therapy giant Coram last year, the company's gross margin decreased in the first quarter of 2008 to 61.1 percent compared to 65.6 percent reported in the first quarter of 2007. Days sales outstanding (DSO) were 49 days at March 31, 2008, and March 31, 2007. The provision for doubtful accounts as a percentage of revenues was 2.0 percent for the first quarter compared to 2.5 percent in the corresponding period last year. Selling, distribution and administrative expenses were 50.9 percent of revenues, 1.9 percent lower compared to 52.8 percent in the first quarter of last year. "Home oxygen revenues grew four percent over last year, which is in the range we expected. In addition, our oxygen patient census reached a new record in the first quarter," said Lawrence M. Higby, CEO. "Growth in other respiratory products, including CPAP, bi-level and high-tech ventilation therapies, was also positive. Unfortunately, growth in these areas was offset by certain Medicare payment reductions, which began last year, as well as lower growth rates in low margin inhalation therapy drugs and home medical equipment. In addition, positive growth rates were posted in our specialty infusion services and enteral nutrition products. " Lincare Holdings, Clearwater, Fla., said its Q1 revenues were $415.4 million, a 10 percent increase over revenues of $378.5 million for the first quarter of 2007. The company estimates the increase was comprised of approximately 11 percent internal growth, partially offset by Medicare price reductions of approximately 1 percent taking effect in 2008. Net income for the quarter was $60.7 million compared to net income of $53.9 million for the first quarter of 2007. Lincare added 10 new operating centers in the first quarter derived from internal development. The total number of Lincare locations expanded to 1,029 at the end of the first quarter. Lincare generated $126.4 million of cash from operating activities during the quarter and invested $29.5 million in net capital expenditures. The company repurchased 1,009,250 shares of its common stock during the quarter for $35.2 million, and common shares outstanding at March 31, 2008, were 73,206,626 shares. As of March 31, 2008, total debt outstanding was $828.2 million, cash and short-term investments were $104.2 million and long-term investments were $98.1 million. As a result of recent developments affecting Medicare reimbursement for certain respiratory drugs, Lincare now estimates that revenues in 2008 will be negatively impacted by approximately $100 million compared with its previous guidance of $65 million to $70 million of Medicare price reductions. Invacare, Elyria, Ohio, reported net sales for the quarter increased 11 percent to $416.3 million versus $374.9 million last year. Foreign currency translation increased net sales by five percentage points and acquisitions increased net sales by less than a percentage point. Organic net sales for the quarter grew 5.8 percent over the same period last year driven primarily by performance in North America/Home Medical Equipment and Europe. In North America, net sales increased 8.7 percent to $175.8 million compared to $161.8 million in the same period last year, driven primarily by sales increases in rehab, standard and respiratory product lines. Excluding consumer power products, rehab product line net sales increased 10.2 percent compared to the first quarter last year, driven by volume increases in custom power and custom manual wheelchairs as well as seating and positioning products. Standard product line net sales increased 9.5 percent compared to the first quarter of last year, driven by increased volumes in manual wheelchairs, patient aids and beds, while pricing was stable. Respiratory product line net sales increased 2.8 percent, driven by volume increases in oxygen concentrators and strong purchases by national accounts. These benefits were partially offset by pricing declines and 3 percent lower net sales of the company’s HomeFill oxygen systems, which were in line with plan for the first quarter. "We are gratified by Invacare's strong first quarter improvement in adjusted earnings before income taxes. The company's operating results are on plan for the first quarter. Invacare's net sales performance in the quarter was better than expected in a number of divisions, but particularly in the North America/HME segment which benefited from strong volume increases in each of its primary product lines--rehab, standard and respiratory,” said Invacare Chairman and CEO A. Malachi Mixon III. Commenting on anticipated results, Mixon said, “We remain cautious regarding the impact of the potential reimbursement changes in the U.S. market and continued pricing pressures. However, with continued focus on cost reduction and reducing our debt levels, 2008 should be a strong recovery year for Invacare." Responding to some analysts’ reviews of its first-quarter posting, Invacare reiterated that its quarterly results were on plan and that the company “remains confident in its projected range for adjusted earnings per share for the year with most of the earnings attributable to the second half of the year.” Newsmakers Lake Forest, Calif.-based Apria Healthcare Group has appointed Daniel E. Greenleaf to head its Coram Specialty Infusion Services division as president, replacing John Arlotta, who is scheduled to depart the organization in June. Greenleaf, who will be based in the Coram division office in Denver, Colo., most recently served as president and CEO of VioQuest Pharmaceuticals, a New Jersey-based biopharmaceutical company focused on oncology drug therapies. Prior to his role at VioQuest, Greenleaf was president of U.S. operations for Celltech Biopharmaceuticals, which, before its sale to UCB in 2004, focused on diseases such as central nervous system disorders, rheumatoid arthritis, Crohn's disease and multiple sclerosis. Brian Sharpe will take over duties as Southeast regional manager for The MED Group, Lubbock, Texas. He has most recently been with Medical Services of America as director of sales. Sharpe started in the industry with Invacare before moving to Pride Mobility and The MED Group in 2006. U.S. Rehab, a division of VGM Group, has appointed Elizabeth W. Cole, MSPT, as its new director of clinical rehab services. Most recently, Cole was a senior consultant with The Orion Group, Denver, where she provided reimbursement and clinical consulting services to equipment providers and clinicians. She was previously director of education for Sunrise Medical and, earlier in her career, served as senior physical therapist/wheelchair clinic coordinator at Northeast Rehabilitation Hospital, Salem, N.H., and was a physical therapist/spinal cord injury resource clinician at The University Hospital, Boston. Cole is a member of RESNA, an active participant on the Clinicians Task Force and a Friend of NRRTS. ADVERTISEMENT |
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