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Headline News
CMS Extends Bid Window after Legislators Bring Full-Court Press
BALTIMORE--After several weeks of intense pressure from legislators and months of lobbying by industry stakeholders, on Friday CMS extended its first-round window for DMEPOS competitive bidding by 60 days. (See HomeCare Monday Special Alert, July 27.)

The deadline for providers to submit bids--which had been set for 9 p.m. Friday--was extended to Sept. 25. It's the agency's third deadline extension in as many weeks, though the other two--the first to July 20 and the second to July 27--were only for a week each.

The deadline for bid registration has been pushed to Aug. 27, and the accreditation deadline for suppliers to be considered for contracts is now Oct. 31.

The latest extensions follow a concentrated lobbying effort by the industry that culminated in a letter from Senate Finance Committee officials to CMS requesting an extension of 90 days. In the July 20 letter, committee Chairman Max Baucus, D-Mont., and Ranking Member Charles Grassley, R-Iowa, said they had "serious concerns" about problems with CMS' online bidding system and asked the agency to respond by July 25.

On that day, during a confirmation hearing for CMS Administrator nominee Kerry Weems, committee members made several requests for the extension, citing providers' difficulties in bidding. Sen. Pat Roberts, R-Kan., wrapped up the hearing with a 20-minute laundry list of providers' specific bidding problems compiled by the Midwest Association of Medical Equipment Services, buying groups VGM and The MED Group and other industry associations and stakeholders from throughout the country.

Roberts read the examples of problems into the hearing record, including numerous technical difficulties and other issues with the bidding system itself, bid instructions and lack of details about the program, product category issues and changes to the process.

As part of the lobbying effort, providers were encouraged to print out actual error messages from the bidding system, which made a convincing case with legislators, according to John Gallagher, vice president, government relations, for VGM. While CMS had indicated problems with the system had been resolved, Gallagher said, when "the print screens show errors from their own system, then it's hard for them to dispute it."

On Thursday afternoon, MAMES said it had learned that as a result of the bidding issues aired during the hearing, CMS planned to announce the extension.

According to MAMES Executive Director Rose Schafhauser, a 90-day extension would have been preferable, but "you take whatever you can get at this juncture."

Since registration for bidding opened April 9, providers have reported trouble getting user IDs and passwords, not getting adequate guidance--or the wrong guidance--on questions and being shut out of the Internet-based bidding system. Such difficulties prompted MAMES to enlist the aid of Sen. Roberts, Schafhauser said.

"Our whole push through the senator's office was trying to get this thing delayed and trying to get [CMS] to understand all the issues that providers are facing," Schafhauser said.

She and representatives from Roberts' office met with CMS officials in late May about incorrect information being dispensed through the Competitive Bidding Implementation Contractor helpline. Schafhauser said she pointed out that "the people who are on the front lines don't have the knowledge [CMS policymakers do] ... What if providers are taking what these people are saying verbatim?" (See HomeCare Monday, June 11.)

Schafhauser added that she hopes CMS will use the extra time "not just to pacify folks" but to fix problems with the system and answer bidders' remaining questions.

In response to CMS' first bid extension, the American Association for Homecare joined several other stakeholder groups to go after support in Congress for a longer delay in implementation of the bidding program. Fourteen senators and 65 representatives signed letters to CMS calling for a slowdown.

Even with the bid extension, however, the association urged providers to continue to work toward completing their bids, noting that "since there is no certainty that problems faced by HME providers will be addressed during the next 60 days," they should redouble efforts for congressional action on H.R. 1845, the Tanner-Hobson bill, and its Senate companion, H.R. 1428. The bills address "many of the shortcomings with the Medicare competitive bidding system," AAHomecare said.

While CMS has not released the number of providers who have registered in the first 10 bidding areas, founder Chris Rice of provider forum competingbid.com noted a recent post from a provider who signed up to bid at the last minute (before the previous registration deadline of June 30) and was given a bidder identification number in the 900s.

"Assuming that's a sequential number, there are far fewer bidders than expected," Rice said. "However, it is probably enough for the CBIC to work with."

To view CMS' bid extension notice in full, click here.

For a replay of Weems' confirmation hearing, go to finance.senate.gov, click on "Hearings," then select 7/25/07.

For information on H.R. 1845 and S. 1428, visit the AAHomecare Web site at www.aahomecare.org.

To view the proposed rule, click here.

Proposed House Bill Would Shorten O2 Rental Period
WASHINGTON--The industry's worry meter flew past the red zone last week as federal lawmakers hashed out the nation's spending bills, including committee debates on health care legislation, and, in the process, brought a reduced oxygen rental period and elimination of the first-month purchase option for power wheelchairs back into play.

An update from the American Association for Homecare reported that in the wee hours Friday morning, the House Ways and Means Committee approved its version of the Children's Health and Medicare Protection Act of 2007 (H.R. 3162), which would reduce the oxygen cap period from 36 to 18 months. Referred to as the CHAMP Act, the measure would maintain the 36-month rental period for oxygen-generating portable equipment. Transfer of ownership of oxygen equipment to the beneficiary would be subject to these limits.

Another provision in the bill would eliminate the first-month purchase option for power wheelchairs.

The proposed legislation would expand spending on the State Children's Health Insurance Program, which covers 6 million low-income children whose families don't qualify for Medicaid, by about $50 billion. AAHomecare said that instead of increasing tobacco taxes enough to pay for the changes, the legislators instead decided on reimbursement cuts to DME.

Congress has already reduced Medicare reimbursement for oxygen therapy by nearly 50 percent over the past 10 years, the association pointed out. And because many power wheelchairs are individualized for the patient, eliminating the first-month purchase option would severely curtail beneficiary access as suppliers would be unable to cover the significant up-front service costs.

Earlier this year, AAHomecare said more than 95 percent of all PWCs are purchased in the first month because beneficiaries who meet the coverage criteria have long-term life needs; it makes little sense to rent the equipment.

"Both oxygen therapy and power wheelchair reimbursement have suffered numerous reimbursement reductions, which already threaten to erode patient access and quality of care," said Tyler Wilson, AAHomecare president and CEO.

A reduction of the oxygen cap to 13 months and elimination of the PWC purchase option surfaced in President Bush's budget proposal for 2008, released in February. (See HomeCare Monday, Feb. 12.)

Meanwhile, the House Energy and Commerce Committee, which shares jurisdiction with Ways and Means over the SCHIP program, is still working on its version of the CHAMP bill. The Senate is also scheduled to begin debate this week on its own $35 billion expansion of SCHIP.

To help get the oxygen cuts removed from the legislation and the PWC first-month purchase option added, AAHomecare and other industry groups have issued an urgent call to action. For talking points and telephone scripts for calls to members of Congress, visit the AAHomecare Web site at www.aahomecare.org or The VGM Group Web site at www.vgm.com.

Government Goes After DME Overpayments to SNF Benes
WASHINGTON--According to a new report from the Office of Inspector General, Medicare Part B made $100.8 million in potential overpayments to DMEPOS suppliers on behalf of beneficiaries in Part A-covered skilled nursing facilities during 1999-2002--and the government wants the money back.

Those years, according to the report, were before CMS' Common Working File edits to prevent such overpayments were operational. As a result, the DMERCs were unable to initiate recovery actions. After the edits were fully implemented, OIG's computer match identified potential overpayments of $15.4 million in 2003.

Under the prospective payment system, home medical equipment furnished during beneficiaries' SNF stays is generally included in the facilities' Part A payments, so Part B payments by any of the four DMERCs to suppliers for such items were overpayments.

Now, when SNFs submit their claims before equipment suppliers submit theirs, prepayment edits identify and deny payments for inappropriately billed Part B services before CMS reimburses the suppliers, Inspector General Daniel Levinson explained in a letter accompanying the report. When suppliers submit their claims before SNFs submit theirs, postpayment edits identify Part B overpayments after CMS has reimbursed the suppliers, and those overpayments must be recovered through offset or collection activities.

The OIG undertook the review, Levinson said, to determine the amount of overpayments before the edits were in place, and to figure out how much of the overpayments had been recovered after the edits became operational.

According to the results, a statistical sample showed that the DMERCs had not recovered approximately 69 percent of the potential overpayments for 2003. "This problem occurred because two of the four DMERCs did not implement procedures to process and recover the backlog of overpayments created by the new edits. As a result, we estimate that the DMERCs did not recover $11.2 million of the $15.4 million in potential [2003] overpayments," Levinson said.

Based on its findings, the OIG recommended that CMS direct its contractors to:

--Review the $100.8 million in potential overpayments for 1999-2002 and make appropriate recoveries;
--Initiate recovery of the estimated $11.2 million in 2003 overpayments; and
--Ensure that they have established proper controls to recover overpayments that the Common Working File edits identify.

According to the OIG, CMS concurred with the recommendations.

To view the report, click here.

OIG Challenges Effectiveness of CMS PSCs
WASHINGTON--The Program Safeguard Contractors hired by CMS to detect fraud and abuse are showing only "minimal results," and the agency must be more diligent in its oversight of these contractors, the Office of Inspector General said in a July 20 report.

While the PSCs are supposed to be one of CMS' major tools in fighting fraud, the OIG report challenged their effectiveness, saying most PSCs "had minimal results from proactive data analysis." In addition, according to the report--"Medicare's Program Safeguard Contractors: Activities to Detect and Deter Fraud and Abuse"--the PSCs displayed vast differences in the numbers of new investigations and case referrals to law enforcement.

The report was based on reviews of 17 PSCs and their fraud detection activity in 2005. According to the study, the PSCs produced between 18 and 3,707 new Part B investigations, with a median of 196. Of those, the PSCs referred between 2 and 39 Part B cases to law enforcement, with a median of 13.

The OIG questioned the huge differences, noting: "Although PSCs might be expected to differ from one another in workload activity levels, neither the size of a PSC's budget nor its oversight responsibility (dollar amount of Medicare paid claims) was strongly correlated with the number of new investigations or the number of new case referrals to law enforcement produced in 2005."

Based on its findings, the OIG recommended that CMS review PSCs with no activity or low levels of activity to "determine whether these PSCs have taken all the necessary steps to identify potential fraud and abuse." CMS should remedy the situation by providing more guidance to PSCs and even consider contract termination, the OIG said.

Investigators were also troubled by minimal results from PSCs' proactive data analysis. As part of their duties, the OIG noted, the contractors are expected to use data analysis to "identify previously unidentified patterns or instances of fraud and abuse."

But 13 of the 17 PSCs studied reported 18 percent or less in new investigations stemming from data analysis, the OIG said. Two of the 17 produced no such investigations, and seven had 8 percent or less. Nearly half of the PSCs made only a single case referral to law enforcement originating from proactive data analysis. One had none.

The OIG noted that the reports submitted to CMS by the contractors were inconsistent in the level of information provided and it could not determine whether the contractors were performing data analysis that did not yield suspected fraud cases--or whether they were not performing the proactive analysis at all.

CMS needs to require its PSCs to provide more detailed explanations of their work in their monthly reports, the OIG concluded, including information about investigations, case referrals and proactive data analysis projects.

In response to the report, CMS said it was difficult to compare performance of the PSCs because workloads vary among them. But the agency pointed out that it is in the process of aligning PSC jurisdictions with those of its Medicare Administrative Contractors, which handle payments, to allow for better evaluation and easier comparison of the contractors to each other.

HME Draws FDA Interest; Conference Set in Houston
HOUSTON--With the aim of promoting the safe use of medical equipment in the home, the U.S. Food and Drug Administration is partnering with the University of Houston to sponsor a conference for HME stakeholders Sept. 17-18.

"Home Healthcare Technology: How Safe is Your Medical Device When Used at Home" will feature two days of speakers and discussions on topics ranging from respiratory therapy and infusion devices to screening devices used in the home. The conference will also address the need for updating HME that does not require FDA regulation (walkers, wheelchairs, hospital beds, etc.).

The conference was sparked by increasing reports of adverse effects from medical devices used in the home, according to the FDA's Center for Devices and Radiological Health, which is mandated to regulate medical devices. Conference officials noted "the challenge lies in safely operating medical devices in the home that were initially approved for use in a clinical setting by health care professionals."

That is, in fact, a key concern about Medicare's plan to pass ownership of oxygen concentrators from HME providers to patients after a 36-month rental period. The industry is seeking repeal of the provision, which is part of the Deficit Reduction Act, through passage of H.R. 621, the Home Oxygen Patient Protection Act.

"CDRH wants to decrease the number of problems that occur in the home environment," the agency said in announcing the conference. "To be successful, the government agencies involved in home care need to collaborate with relevant stakeholders: manufacturers, distributors, health care professionals, health care organizations, accrediting bodies and human factors experts."

The agency wants to bring all the parties together to "identify the problems with a safe migration into the home, identify barriers to change and discuss meaningful technology and other actions that will promote the safe use of devices in this environment."

Another catalyst for the conference is the anticipated growth in home health care.

"As the U.S. population ages, home health care will grow by leaps and bounds," said Isaac D. Montoya, clinical professor in the UH College of Pharmacy and the conference moderator. "Home health care and the medical devices needed to sustain it provide a welcome respite for patients and their care providers who want to benefit from safe medical treatment in a home environment. As this phenomenon continues to grow, however, the FDA, industry and home care interest groups may need to better collaborate to assure the safety of products for home use."

The conference will be held at the Hilton UH Hotel and Conference Center. For information, go to http://www.uh.edu/pharmacy/hht/.

For information on the Home Oxygen Patient Protection Act, click here.

Manufacturer News
Anodyne Acquires PrimaTech
LOS ANGELES--Anodyne Medical Device, which makes specialty support surfaces and patient positioning devices, announced its acquisition of PrimaTech Medical Systems earlier this month.

Anodyne, which has a strong position in the acute care market, said the new addition would underscore its commitment to growth in the home care and long-term care sectors. Oklahoma-based PrimaTech is a value supplier of electronically specialty support systems in those markets with mattress replacements, overlays and seating systems, along with a distribution network that extends through North America, Europe and Australia.

The acquisition also solidifies an exclusive partnership with Taiwan-based Suzric Enterprise to continue manufacturing products for PrimaTech, according to Mark Bidner, Anodyne chairman and CEO. The relationship will enable Anodyne to marry its technology with Suzric's low-cost manufacturing capabilities "to provide quality product at competitive pricing in the home care and long-term care marketplace," Bidner said.

"This is exciting," said PrimaTech's Dikran Tourian, who has been named executive vice president of sales and marketing for Anodyne. He added that the company "can now offer the marketplace a complete product line encompassing all technologies that, until now, was impossible to obtain through a single source. We now can offer the acute care, home care and long-term care market participants a complete line of foam, gel, air and air/foam combination support surface products."

The Compass Group International and Hollywood Capital formed Anodyne in early 2006. In addition to PrimaTech, Anodyne's portfolio of companies includes AMF Support Surfaces, Anatomic Concepts and SenTech Medical Systems.

Covidien Separates from Tyco
PEMBROKE, Bermuda--Covidien began trading earlier this month on the New York and Bermuda stock exchanges, marking its debut as an independent health care products company.

The business, formerly known as Tyco Healthcare, recently spun off from Tyco International.

With brands that include Autosuture, Kendall, Mallinckrodt, Nellcor, Puritan Bennett, Syneture, U.S. Surgical and Valleylab, Covidien products compete in the medical device, imagaing, pharmaceutical, supplies and retail markets. In the latter, the company is the sole or multi-source supplier of private-label adult incontinence and infant care products in 17 of the top 20 U.S. retailers.

With 2006 revenue of nearly $10 billion, Covidien has more than 43,000 employees worldwide, and its products are sold in over 130 countries.

Respironics to Build New Manufacturing Facility for Sleep Devices
MURRYSVILLE, PA--Respironics plans to build a new $32 million manufacturing facility for production of its sleep therapy devices, the company said Thursday.

The need for "a dedicated world-class plant for sleep therapy products" results from sizable growth in the global sleep market, estimated at 15 to 20 percent annually, coupled with Respironics' own growth, the company said. Since its current plant was constructed in 1990, Respironics has grown to a $1.2 billion company with a presence in more than 131 countries. It operates manufacturing sites in Pennsylvania, California, Georgia, Connecticut, Oregon and abroad.

In a conference call July 25, the company announced record growth in fourth quarter results for the period ended June 30. Net sales for the quarter totaled $332.4 million, an increase of more than 18 percent over the $280.7 million in the fourth quarter a year ago. Domestic revenues increased from $196.9 million in the fourth quarter a year ago to $224.8 million in the current year's fourth quarter, an increase of 14 percent.

The gains were led by a year-over-year increase of $21.2 million, or more than 17 percent, in domestic sleep therapy products.

According to Respironics President and CEO John Miclot, the new manufacturing facility "will enable us to further the development of our 'center of excellence' manufacturing strategy by focusing on products to support our obstructive sleep apnea business, a core growth driver of the company. It also offers us many other benefits including the potential for high-volume material logistics and production and optimization of process efficiencies."

The new 165,000-square-foot plant, expected to be completed in 14 to 16 months, will initially employ 575 workers, with anticipated growth of 20 percent in five years. The facility can be expanded to 225,000-square-feet in the future, the company said. Its current manufacturing site in Murrysville will be used as a multi-purpose facility and will continue to produce certain devices, including ventilation and neonatal products used in the hospital and home care markets.

Respironics has also relocated its Sleep and Home Respiratory group to new headquarters in Monroeville and is putting the finishing touches on a 30,000-square-foot call center in Plum Borough. It also is developing new office space in Monroeville for its Children's Medical Ventures business, which provides developmentally supportive products and services for premature babies, healthy newborns and older hospitalized infants.

Respironics employs more than 1,700 people in Western Pennsylvania and nearly 5,000 worldwide.

Coming Up
The Virginia Association of Durable Medical Equipment Companies will hold its summer meeting and exhibit Aug. 1-3 in Virginia Beach, Va. For more information, call (919) 387-1221 or visit www.vadmec.org.

CMS will hold an NPI National Roundtable/Q&A teleconference at 2 p.m. ET on Aug. 2. Participants must register 24 hours in advance. To register, go to http://www2.eventsvc.com/pamettogba.

The Pennsylvania Association of Medical Suppliers (PAMS) and Pride Mobility will hold a Documentation Seminar Aug. 8 in Harrisburg, Pa. For more information, call (717) 795-9684 or visit www.pamsonline.org.

The Arizona Medical Equipment Suppliers Association (AZMESA) will hold its annual conference Aug. 9 in Phoenix. For more information, call (651) 439-2944.

The Florida Association of Medical Equipment Services (FAMES) will hold its annual conference Aug. 15-17 in Naples, Fla. For more information, call (407) 895-5573 or visit www.famesonline.org.

The Georgia Association of Medical Equipment Services (GAMES) will hold its annual convention Aug. 26-28 in Greensboro, Ga. For more information, call (706) 651-1920 or visit www.gameshme.org.

CMS has scheduled its next Home Health, Hospice and DME Open Door Forum for Wednesday, Aug. 29. For information, visit http://www.cms.hhs.gov/OpenDoorForums/17_ODF_HHHDME.asp#TopOfPage.

National Government Services, the Jurisdiction B DME Medicare Administrative Contractor, has announced a series of "Introduction to Medicare" seminars running August through November. Registration for the seminars, which have been developed to assist new suppliers in understanding Medicare fundamentals, will be online only. For cost and other information, visit www.NGSMedicare.com, then click on AdminaStar Federal, Jurisdiction B DME MAC- Training.