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Headline News
Gain One, Lose One: CMS Remembers Orlando, and Two Accrediting Bodies Merge
ATLANTA--The Centers for Medicare and Medicaid Services has quietly added another city to the list of potential sites for national competitive bidding.

At a mid-December meeting with accrediting organizations, agency officials handed out a list of 19 possible metro areas that could be selected for bidding this year. But in a recent notice sent to accreditors, CMS said it had mistakenly left off Orlando.

"From what I understand, they just forgot to put Orlando on the list," said Tom Cesar, president of the Accreditation Commission for Health Care, one of the accreditation organizations given deeming authority by CMS. "We're not really surprised because it has actually been talked about as one of the top 10 [metropolitan statistical areas]."

Orlando had been included on a previous list made public by the agency (see HomeCare Monday, Jan. 8). Its reinsertion brings to 20 the number of cities that could be one of 10 sites chosen for the inauguration of NCB.

The other cities are: Miami (which accreditors said they were told would definitely be among the first sites); Charlotte, N.C.; Dallas-Ft. Worth; Riverside, Calif.; Pittsburgh; Kansas City (Missouri and Kansas); Cincinnati; San Juan, Puerto Rico; Cleveland; San Francisco; Atlanta; Houston; Detroit; Seattle; Baltimore; Philadelphia; Phoenix; Boston; and Tampa.

It's been a tense waiting period for HME stakeholders who have expected CMS to issue the final rule for months, as well as announce the 10 MSAs. Based on the agency's current timeline, the bidding program will be implemented in October. CMS has said it could decide to phase in the initial locations.

In any case, the addition of Orlando means that there are now 20 cities in which unaccredited Medicare Part B providers must pursue accreditation. CMS has said providers in the areas it chooses for 2007 bidding should be accredited by spring.

And while the list of prospective MSAs grew by one, the list of DMEPOS accreditors shrank by one.

The Board of Certification in Pedorthics has merged with the American Board for Certification in Orthotics and Prosthetics. The merger, which became official Jan. 1, was approved by 89 percent of the two agencies' members, said Tom Derrick, public relations, marketing and professional discipline manager for ABC.

"It's a good step in the right direction," Derrick said, noting that the integration of the two bodies further streamlines the credentialing and accreditation processes for orthotists and prosthetists, as well as pedorthists.

The organization will likely change its name at some point to the American Board for Certification in Orthotics, Prosthetics and Pedorthics, Derrick said.

That name would join the list of nine other CMS-approved accreditors, which also includes: Accreditation Commission for Health Care (ACHC); Board of Orthotic/Prosthetic Certification (BOC); Commission on Accreditation of Rehabilitation Facilities (CARF); Community Health Accreditation Program (CHAP); The Compliance Team; Healthcare Quality Association on Accreditaiton (HQAA); The Joint Commission (JCAHO); National Association of Boards of Pharmacy (NABP); and The National Board of Accreditation for Orthotic Suppliers.

For contacts and information about what each organization is approved to accredit, visit http://www.cms.hhs.gov/CompetitiveAcqforDMEPOS.

"This is Miami's problem now, but if you are in [an MSA for competitive bidding], it will soon be your problem as well."

OIG's 2007 Work Plan Includes Focus on DME
WASHINGTON--In a 94-page document issued last week, the HHS Office of Inspector General outlined its work plan for 2007 and said it will look into a number of aspects of Medicare and Medicaid programs related to DME.

The OIG said the wok plan projects best identify "vulnerabilities" in the HHS programs. After its investigations, the OIG will make recommendations for improvements.

The OIG said it will examine the following areas this year:

--DME payments for beneficiaries receiving home health services: The OIG will review medical records for DME items and supplies furnished to beneficiaries receiving HHA services to determine whether the items and supplies were reasonable and necessary for the beneficiaries' conditions.

--Medicare payments for therapeutic footwear: The OIG will determine whether therapeutic footwear furnished by individual suppliers was reasonable and necessary for the beneficiaries to whom it was provided. Medicare payments for therapeutic footwear totaled more than $130 million in 2003. A previous OIG report indicated that a significant percentage of payments made for therapeutic footwear did not have adequate documentation to support the beneficiaries' medical need for the footwear.

--Medicare payments for DME Claims with ZX, KX, and KS modifiers: The OIG will determine whether DME suppliers that filed claims with ZX, KX, and KS modifiers appropriately billed Medicare. Under the Medicare program, a DME supplier may use these modifiers to indicate that it has the appropriate documentation on file; upon request, the supplier will provide the documentation to support its claim for payment. Reviews by several CMS DME regional carriers of suppliers who had used the ZX, KX, and KS modifiers found that suppliers had little or no documentation to support their claims. This suggests that many of the claims submitted may have been invalid and should not have been paid by Medicare.

--Medical necessity of DME: The OIG will determine the appropriateness of Medicare payments for certain DME items, such as power wheelchairs, wound care equipment, and supplies or orthotics. It will assess whether the suppliers' documentation supports the claim, whether the item was medically necessary and/or whether the beneficiary actually received the item.

--Medicare pricing of equipment and supplies: The OIG will compare Medicare payment rates for certain medical equipment and supplies with the rates of other federal and state health care programs, as well as with wholesale and retail prices. Its review will cover such items as wheelchairs, parenteral nutrition, wound care equipment and supplies, and oxygen equipment and supplies.

--Billing for DME in hurricane-affected areas: The OIG will examine payments for DME supplies and equipment in the areas affected by the recent hurricanes. According to DMERC officials, suppliers in the hurricane-affected areas were not to bill for equipment until they could make contact with the beneficiary to be sure the equipment was still medically necessary and that the beneficiary had the equipment in use.

To review the OIG's full work plan, click here.

AAHomecare Comments on Need for Levalbuterol
ALEXANDRIA, Va.--On Friday, the American Association for Homecare submitted comments to CMS regarding the agency's current review of levalbuterol in the treatment of COPD.

In a six-page letter directed to CMS Acting Administrator Leslie Norwalk, the association said: "While it may be argued there is only modest evidence demonstrating the benefits of levalbuterol over racemic albuterol in COPD, it is important to note that the absence of voluminous published clinical studies does not by itself establish a lack of clinical efficacy or medical need. This kind of extrapolation on limited data is purely speculative and conflicts with current standards of clinical practice, which defer to the patient's physician the selection and prescription of the most clinically appropriate drug therapies."

After review of the relevant science by its members with clinical expertise, the association said, it concluded that the studies, as a whole, "demonstrate that the use of beta agonists, including levalbuterol, for the treatment of lung disease is reasonable and necessary and should by covered by the Medicare program."

AAHomecare made the following points:

--Approximately 15 million Americans have been diagnosed with COPD, and an estimated 15 million more have undiagnosed COPD. The disease is the leading cause of morbidity and mortality worldwide.

--COPD is responsible for a significant part of all physician office and emergency room visits and ranks third in acute hospital admissions among Medicare-aged persons. The average length of stay for a COPD admission is 5.1 days at the rate of $4,000 per day. Medicare payments to hospitals for routine COPD admissions alone exceed $1.5 billion, and the disease costs the U.S. economy more than $18 billion a year in direct medical costs and an estimated $11 billion in indirect costs.

--The scientific evidence, national and world-wide expert panel recommendations and the current standards of care all recognize the vital role inhaled bronchodilators play in the safe, effective, and economically sound management of persons with COPD.

--While inhalation drugs do not specifically cure COPD, they can effectively manage its core symptoms in the outpatient/home setting and substantially reduce the need for more expensive and comprehensive medical interventions requiring ER visits and acute hospital admissions.

Invacare Issues Financial Guidance, Outlook for 2007
ELYRIA, Ohio--Last week Invacare Corp. said it expects to post lower year-over-year sales for 2006 as a result of Medicare reimbursement cuts and other changes in the HME landscape.

In a guidance statement issued Wednesday, Chairman and CEO Mal Mixon ticked through several of last year's events, noting reimbursement cuts for home oxygen; a capped rental reduction for basic DME from 15 months to 13 months; and cutbacks to power wheelchair reimbursement "with onerous new application requirements which have slowed demand in the current environment."

The company said it anticipates net sales of $1.49 to $1.50 billion against $1.53 billion for 2005.

The statement noted that excludes a fourth-quarter charge relating to "accounts receivable collectibility issues" arising primarily from Medicare reimbursement reductions for power wheelchairs.

"Due to recent changes in Medicare reimbursement regulations, specifically changes to the qualification processes and reimbursement levels of power wheelchairs, there is increased collectibility risk to Invacare," the statement continued, adding that the company is reviewing accounts of customers that are "most exposed to these issues" and is working with some in an effort to help them reduce costs, including product line consolidations and introduction of simplified pricing.

Invacare said it is implementing tighter credit policies with many of these accounts.

The company said it is undertaking additional cost reduction actions, and that these initiatives, along with previously announced plans to reduce manufacturing and distribution costs, will result in approximately $38 million in savings for 2007, and thereafter, about $50 million annually.

The initiatives include:

-- Product line simplification. The company plans to simplify its product lines and pricing processes to reduce costs and improve service levels.
--Improving product gross margins and reducing fixed costs through further product and sub-assembly outsourcing. The outsourcing of commodity products and sub-assemblies will be accelerated, and Asian sourcing is planned to double over the next three years.
--Rationalization of facilities. Today, Invacare's primary manufacturing facilities include 14 integrated fabrication plants and two assembly plants worldwide. Invacare will continue the move from integrated fabrication plants to assembly plants and is finalizing plans to close and/or consolidate several locations beginning this year through 2009.
--Product platform standardization. To further simplify and reduce production costs, as well as to leverage development and tooling investment, the company has begun the process of standardizing some of its product platforms globally.

"While the pace of change has been grueling" Mixon said, "we are confident our restructuring plans are achievable and will put us back in front of the curve by year end, with net year-over-year improved operating income."

Earlier this month, the HME manufacturing giant said it would restructure its North American HME business into a "more cost-effective and efficient business model" and that its rehab, respiratory, standard and sleep product divisions would be reorganized into an umbrella organization called the HME Group. (See HomeCare Monday, Jan. 8.) For 2007, the company projected organic growth in net sales from 0 to 2 percent.

The company also said it has received a subpoena from the U.S. Department of Justice seeking documents relating to three long-standing promotional and rebate programs. Invacare said it believes that the programs described in the subpoena are in compliance with all applicable laws and is cooperating fully with the government inquiry.

In Brief
According to an Associated Press report, New Hampshire's Department of Health and Human Services, which administers the state's Medicaid program, has added to the list of items excluded from coverage, including power wheelchairs. While the state's previous list excluded 11 categories from coverage, the updated version has 80 exclusions, also including adult diapers. Advocates for the disabled have protested to state lawmakers, the news report said, arguing that the state should pay for more equipment, not less, if it wants beneficiaries to stay out of nursing homes and remain at home with their families. A state official said the updated list simply codifies current state policy.

SeQual Technologies said last week that Southwest Airlines has approved its portable Eclipse oxygen system for use on board all of the carrier's flights. In a final rule effective August 11 last year, the Federal Aviation Administration said oxygen patients could take certain portable concentrators aboard commercial aircraft. (See HomeCare Monday, July 18, 2006.) In September, the FAA cleared the Eclipse. Before the FAA ruling, patients who wanted to fly had to pay extra fees of $100 or more for oxygen on each leg of their flights. They and their providers had to arrange for multiple oxygen cylinders for use en route or while awaiting takeoff, as well as arranging for delivery of oxygen at their destination. Since the ruling, AirSep's Lifestyle and Freestsyle, Inogen's Inogen One and Respironics' EverGo also have been approved for flight.

A group of the nation's biggest technology companies and health care organizations is offering free electronic prescribing for every physician in the country. The National ePrescribing Patient Safety Initiative--launched by Allscripts, a health care information technology company, and Dell Computers--is the first nationwide effort to improve patient safety by preventing medication errors. With support from other heavy-hitters including Microsoft, Intel, Google, Aetna and Wellpoint, the backbone of the program is eRx NOW, Web-based software that requires no download, no new hardware and minimal training. Under the program, secure electronic prescriptions can be sent to more than 95 percent of the country's pharmacies and are instantly checked for potentially harmful interactions with a patient's other medications. Preventable medication errors injure at least 1.5 million Americans and claim more than 7,000 lives each year, according to a study by the National Academy of Sciences and the Institute of Medicine, which has called on the nation's physicians to adopt electronic prescribing by 2010.

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