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Headline News
CMS Releases Financial Yardstick for NCB; Bidders' Conferences Start Today
BALTIMORE--In a flurry of activity related to the implementation of national competitive bidding, CMS has scheduled a series of bidders' conferences, posted bid limit revisions for some HCPCS codes and released the measuring stick it will use to evaluate bidders' financial stability.

With its 60-day bidding window to close July 13, the agency has set three educational teleconferences for bidders this week. Each call will last approximately one hour, including time for questions and answers. The following calls are scheduled:

--Submitting Your Bid: Today, 2 p.m. ET - This conference is designed to help bidders navigate the competitive bidding submission system.

--Understanding the Bidding Rules: Wednesday, June 6, 2 p.m. ET - Officials will discuss issues such as common ownership, the types of financial documents that must be submitted as part of an application, small business provisions, the bidding evaluation process and time frames.

--Product Categories: Friday, June 8, 2 p.m. ET - Topics will include how product categories were selected, what constitutes the mail-order diabetic testing supplies category and what is included in the grandfathering provisions.

There is no charge for the teleconferences, but providers must register for the calls in order to receive the dial-in number and a pass code.

Last week, CMS also released the measures that will be used to evaluate the financial stability of providers who compete in the bid. According to program requirements, all bids must include financial documentation in order for a provider to be considered for a contract.

According to the release, "CMS and its Competitive Bidding Implementation Contractor (CBIC) will evaluate each bidder's financial documentation to determine whether the supplier will be able to participate in the program and maintain viability for the duration of the contract period."

The agency said the measures it will use are "standard accounting ratios commonly used to evaluate financial health." Those ratios include:

• Current ratio = current assets/current liabilities
• Collection period = (accounts receivable/sales) x 360
• Accounts payable to sales = accounts payable/net sales
• Quick ratio = (cash + accounts receivable)/current liabilities
• Current liabilities to net worth = current liabilities/net worth
• Return on sales = net sales/inventory
• Sales to Inventory
• Working capital = current assets - current liabilities
• Quality of warnings = cash flow from operations/ (net income + depreciation)
• Operating cash flow to sales = cash flow from operations/ (revenue - adjustment to revenue)

To get contact information for members of Congress, visit www.house.gov or www.senate.gov.

16 Charged in $101 Million S. Florida Fraud Sweep
MIAMI--In another south Florida sweep, federal officials have charged 16 people with committing $101 million in DME health care fraud in Miami and Tampa.

Early last month, officials announced that 38 DME and infusion therapy providers had been arrested and $142 million in billing fraud uncovered by a Medicare Fraud Strike Force formed in south Florida. (See HomeCare Monday, May 14.)

The U.S. Attorney for the Southern District of Florida announced the new charges, which resulted from joint investigations by that office, the FBI, the HHS Office of Inspector General, U.S. Immigration and Customs Enforcement and Florida's Attorney General.

On May 22, a federal grand jury returned a 46-count indictment against eight defendants in a billing fraud scheme connected with Miami-based All-Med Billing Corp., which allegedly submitted $80 million in false claims on behalf of 29 DME companies from 1998 to 2004. Medicare paid the companies about $56 million for equipment that had not been ordered by a physician and/or had never been delivered to patients, according to a government press release.

Among the defendants are Abner and Mabel Diaz, the husband-and-wife team who ran the billing service, and employee Suleidy Cano. The Diazes were additionally charged with money laundering proceeds from the scheme.

Other defendants include Amry Garcia, Davel Hernandez and Rene Raimundo Hernandez of A-1 Durable Medical Equipment and Supplies, a Miami DME that took in $2.1 million from claims submitted by All-Med, officials said.

Jose Luis Palma Jr., and Luis Gonzalez of Simply Medical Services, Miami, were also charged in the indictment. Gonzalez was additionally charged in relation to another DME company, Premier Medical Service. Medicare paid over $3.7 million as a result of fraudulent claims allegedly submitted by All-Med on behalf of Simply Medical and Premier.

If convicted, each of the defendants faces a maximum of 10 years' prison time per count. The Diazes could get an additional 20 years on the money laundering charge. The indictment also seeks forfeiture of the fraud proceeds and substitute assets, including real estate of the Diazes.

According to the release, additional actions included the following:

--A May 22 indictment charged Jose Tomas Iglesias, Marco Antonio Marrero and Leslie Gonzalez of Bridge Medical Equipment in Miami with submitting $6.8 million in bogus DME claims last year for which Medicare paid $1 million. Iglesias was separately charged with laundering the proceeds by cashing or depositing checks and with identity theft by using another's Florida driver's license in the scam.

--Alejandro De La Victoria, the owner of Miami DME Precise Medical Services, was indicted May 22 for submitting $3 million in false Medicare claims last year and receiving approximately $1.4 million in payments.

--Maria Oliveros-Garay was indicted May 15 on four counts of health care fraud involving Miami DME Abue Medical Equipment. According to the indictment, Oliveros-Garay submitted approximately $3.8 million in fraudulent DME claims in 2006, of which Medicare paid $1.5 million.

--Mario Mira was charged with fraud in connection with Mario & Clara Medical Supply, Miami, which submitted $2.5 million in fraudulent DME claims to Medicare in 2006, the release said.

--Eduardo Ruiz was charged with fraud in connection with EZ Medical, a Tampa DME. In 2005, Ruiz alledgedly submitted $5.3 million in false DME claims by using the Medicare identification numbers of Miami-Dade beneficiaries. Medicare paid out $1.38 million on the claims, according to the release.

CMS Asks for Comment on the ABN--Again
WASHINGTON--A notice published in the May 25 Federal Register announced the start of a second public comment period on additional revisions to the Advanced Beneficiary Notice.

CMS said the new ABN package reflects changes made after the first round of public comments about its February proposal to combine two versions of the form--a general and a laboratory-specific--into a single notice. ABNs are used to warn beneficiaries before a procedure or service that Medicare likely would not cover it, giving them the opportunity to forgo the service or to assume the financial responsibility themselves.

CMS said in the notice that it expected compliance with ABN requirements would involve more than 4.7 million hours and more than 1.2 million respondents annually, with a total of more than 40 million responses.

The proposed changes to the ABN include:

--Replacing the term "items/services" with a customizable blank so that users can insert a description most appropriate to their specific businesses.

--Streamlining text as much as possible to include more "beneficiary-friendly plain language."

--Replacing the label "supplier/provider" with the more generic "notifier," since this term captures disparate groups such as physicians, practitioners and various provider and supplier types.

--Changing the label "beneficiary name" back to "patient name" in response to comments that the simpler language in the current ABN be maintained. (CMS said it had proposed the change to "beneficiary" to make it clear that the notice is only required from Medicare, which the agency said was a repeated point of inquiries.)

--Shortening the paragraph above the items and service box to clarify that Medicare does not pay for all services, even if recommended by a health care provider.

--Re-ordering the options box so that the first option is the one that makes beneficiaries aware of their right to receive services and appeal to Medicare should they be denied.

--Wording would note that beneficiaries are still responsible for payment if Medicare does not pay; provide information on the Medicare Summary Notice as the vehicle informing beneficiaries of official payment decisions and appeal rights; be adjusted so that non-participating providers are less likely to have beneficiaries seeking refunds from them inappropriately; and add information on Medicare cost-sharing amounts that are not refundable when Medicare pays.

--Replacing the label "other insurance" with "additional information." CMS said many commenters opposed the mandatory inclusion of information about other insurance, since there is no requirement that they bill such insurers.

--Adding 1-800-MEDICARE contact information.

--Removing the heading "Privacy Notice" from the disclosure statement.

During the comment period, CMS said providers should continue using the existing ABNs until a final combined notice is approved.

To view the entire list of proposed ABN changes, go to http://www.cms.hhs.gov/PaperworkReductionActof1995, click on PRA listing and scroll down to CMS-R-131.

Comments must be received by 5 p.m. on Sunday, June 24, 2007.

NPI Numbers Available on the Internet
WASHINGTON--Beginning June 28, providers will have access to the NPI numbers for their referral sources, CMS said last week.

May 23 was the official deadline to begin use of the new national provider identification numbers, a system that replaces all other identifiers for health care providers.

In several national roundtable calls on the NPI, providers had asked for a registry of the numbers in order to submit HIPAA-compliant claims, for which they need the numbers of physicians and other referral sources. In response, it will make "[National Plan and Provider Enumeration System] health care provider data available on the Internet," CMS said in a notice published in the May 30 Federal Register.

The data, which will disclose only information obtainable through the Freedom of Information Act, will be available in downloadable files and in a query-only database. Users will be able to query by NPI or provider name to access the information, and data will be updated monthly, according to the notice.

The notice also encouraged health care providers who have been assigned NPIs to review their NPPES and make any changes before June 28. It also reminded providers that they are required to update their data within 30 days of any change.

In addition, CMS said that providers could delete any NPPES data that was not required in order to obtain an NPI if they prefer that information not to be disclosed.

Meanwhile, new FAQs regarding the data dissemination, including just what information will be disclosed, along with a tip sheet on compliance, have been posted at www.cms.hhs.gov/NationalProvidentStand.

To aid with questions regarding the data dissemination, CMS has also scheduled a national roundtable from 2 to 3:30 p.m. ET on June 14. Registration information will be available soon, the agency said.

Although CMS has announced contingency plans for non-compliance, it has cautioned that as soon as the number of claims submitted with an NPI is sufficient, Medicare could begin rejecting claims without the identifier possibly as early as July (see HomeCare Monday, May 7).

Click here to read the entire Federal Register notice.

Provider News
Arcadia Increases Equity Financing
SOUTHFIELD, Mich.--Arcadia Resources said late last month that a group of investors will purchase its common stock for approximately $13 million in a private sale.

The investor group consists primarily of affiliates of Potomac Capital Management, an existing investor; an affiliate of CMS Companies, a Philadelphia-based investment fund; and several other existing shareholders. Arcadia said it will use the proceeds to repay existing borrowings and for general corporate purposes.

Over the past several years, Arcadia had completed more than 20 DME acquisitions and opened Arcadia Home Medical Supply centers in Sears and Wal-mart (see HomeCare, November 2006). But in April, the company announced it would sell most of its DME operations for $16.5 million to an unnamed buyer, described in a press release as "a regional provider of therapeutic equipment and services."

According to the release, the sale of the DME operations, along with a previously announced restructuring, "will sharpen Arcadia's focus on attractive higher-margin businesses, free up significant financial resources, strengthen cash flow and contribute to greater cost-efficiency."

The sale did not include the company's Florida DME operation, its largest, which Arcadia will continue to own.

In a separate announcement, the company said current COO Marvin R. Richardson has been named CEO and president. Previous CEO John Elliott will remain as the company's chairman, a position he has held since 2004 when he led an investor group that acquired the company.

Arcadia also operates PrairieStone, which provides pharmacy services to 200 groceries; CareClinic, which runs walk-in health clinics in 16 retail stores; and provides medical and non-medical staffing.

Southern Home Medical Moves into Staffing Venture
SPARTANBURG, S.C.--As a buffer against the effects of competitive bidding, Southern Home Medical Equipment is branching out into medical staffing.

A roll-up of three small South Carolina companies--Adaptive Medical in Spartanburg, ApneaRx in Clemson and Mobile Health Care in Greenville--that debuted as a publicly held company in December, Southern Home Medical has rapidly expanded by acquiring several additional HME businesses in the last five months. (See HomeCare, December 2006.)

Now it has launched Encore Medical Staffing, a franchise medical staffing company targeting acute care hospitals, nursing homes, rehab centers and mental health facilities.

While its roots will remain in HME, medical staffing seems to be a good hedge against the effects of legislative and regulatory mandates on HME businesses, said Greg Tucker, president and CEO.

"With our medical equipment businesses, we have the opportunity to move more into retail or expand our product mix, but the more exciting opportunity for us at this point is temporary nurse staffing, especially when you consider the fact that Encore Medical Staffing is a model we can expand through franchising on a national level," Tucker said, noting that there's less competition in that field.

However, Encore will not depend solely on franchises to extend its reach, he said. "Our nurse staffing business is scalable through franchising; however, we will also look at interesting merger/joint venture opportunities," Tucker said, adding that Encore wants people with nursing backgrounds to head up its medical staffing locations.

In Brief

After announcing the opening of DMEPOS competitive bidding at a May 15 conference hosted by the National Association for the Support of Long-Term Care, Laurence Wilson, CMS Director of the Chronic Care Policy Group, said CMS expects to award approximately 9,500 winning bids for product categories in the 10 MSAs where the program has begun. But NASL reported Wilson told the group that, at the time, only 800 to 900 suppliers had registered to submit bids.

June 1 was the effective cut-over date for the Jurisdiction C DME MAC. On Friday of last week, Cigna Government Services assumed responsibility for claims processing for the region, taking over from Palmetto GBA. There was also a workload transfer on a smaller scale from National Government Services (formerly AdminaStar Federal) to CGS for Virginia and West Virginia. According to Cigna's May newsletter, customer service and claims processing will be unavailable until June 5 as the transition is completed. More information is available at Cigna's new Jurisdiction C DME MAC Web site, which launched on Friday at http://www.cignagovernmentservices.com.

At the 12th Annual International Meeting of the American Telemedicine Association in Nashville, May 13-15, more than 2,000 attendees from the United States and 43 other countries heard 300 presentations and saw exhibits from 143 companies. The organization said it is working to change federal policy to expand Medicare reimbursement for remote medical and health services that would "allow consumers, patients and health care institutions to realize the benefits of telemedicine." For more information on the ATA, visit http://www.americantelemed.org.

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