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Headline News
Government Seeks Dismissal of Competitive Bidding Lawsuit; VGM Says No. 2 on the Way
DALLAS--In a move described by a VGM Group executive as expected but discouraging, the government has filed a motion to dismiss a lawsuit that challenges the constitutionality of competitive bidding. But the Waterloo, Iowa-based buying group says a second suit is on the way.

The first lawsuit, filed in June on behalf of three Dallas-area beneficiaries and three small HME companies, argues that competitive bidding violates due process and equal protection under the U.S. Constitution. The 19-page document points out that beneficiaries in competitive bidding areas will receive "a different, lower level of product and/or service quality," and that small HME businesses will be unable to compete under the program. (See HomeCare Monday, June 18.)

The government's motion, filed Sept. 12, alleges three jurisdictional grounds for dismissal: standing, ripeness and statutory preclusion of review, according to Amarillo, Texas-based Brown & Fortunato. The law firm filed the suit with support from VGM's Last Chance for Patient Choice, a non-profit formed to fight competitive bidding.

"The standing argument focuses on the idea that the plaintiffs' injuries are merely speculative," attorney Jeff Baird, chairman of Brown & Fortunato's health care group, explained in a statement. "The ripeness argument is similar to the standing argument in that it argues that the plaintiffs' case is not ripe because bids are yet to be awarded (or denied), so there is nothing for the court to adjudicate. Third, the government argues that the provision of [the Medicare Modernization Act] that bars 'administrative and judicial review' precludes the lawsuit."

Jim Walsh, president and general counsel for VGM, said the motion to dismiss the suit was not a surprise. "It was expected, but it is always discouraging to see your own government admit that it doesn't have to be fair," he said.

Walsh said the government was trying to short-circuit the process. "The motion basically is asking the court to peremptorily dismiss the suit because the government has the right to discriminate if it wants to in dealing out Medicare benefits," Walsh said. "Our suit asks that the court find it is illegal to deny full benefits via full reimbursement to some beneficiaries in some arbitrarily selected locations."

In his statement, Baird said that a response to the motion would be filed. "If the court denies the motion, then the plaintiffs will likely request a preliminary injunction hearing, in which the plaintiffs will ask the court to enjoin competitive bidding until a final judgment is rendered at a subsequent trial."

Walsh said Last Chance for Patient Choice, financed primarily by VGM member contributions, would continue to resist the government's motion. "Depending on the ruling, either party could appeal the matter to a higher court," he said. "Time will tell, but our position has always been that this is just one tool that we are [using] to convince someone that this competitive acquisition system is an unfair abomination that will decimate fair competition, quality of care and access to care in the HME area."

It isn't the last of the lawsuits, either. Walsh said Last Chance is assisting with the filing of another lawsuit in Cleveland, Ohio, that also challenges the constitutionality of competitive bidding. That suit, which will be handled by a Cleveland law firm, could be filed as early as this week, he said.

AAHomecare Challenges Surety Bond Proposal
WASHINGTON--The American Association for Homecare submitted comments on Friday calling on CMS to revise its proposed surety bond rule to target those most likely to pose risks to Medicare.

Under the Balanced Budget Act of 1997, Congress mandated the surety bond requirement and CMS attempted to implement it in 1998, then proposing that providers put up a $50,000 bond. But the rule was never finalized, so CMS is trying again and has adjusted the amount for inflation. (See HomeCare Monday, July 30.)

Under the proposed rule, which was published Aug. 1 in the Federal Register, an HME provider would be required to obtain a $65,000 surety bond for each of its National Provider Identification numbers as a condition of enrollment in Medicare. The rule aims to curb fraud and abuse by ensuring that only legitimate providers are enrolled in the program.

The proposal has not been embraced by providers. In a HomeCare Web poll in August, 70 percent of those participating said the $65,000 bond proposal was a bad idea: 45 percent said they were honest providers but couldn't afford the additional costs, and another 25 percent said they thought government contractors should be held accountable for rooting out fraud.

While the American Association for Homecare believes that every effort should be made to eliminate fraud and abuse in the industry, it also believes that the surety bond would be "more punitive than effective," said Walt Gorski, vice president of government relations.

"Our comments reflect the changing nature of the Medicare program since surety bonds were [first] called for by Congress in 1997," he said. "Since that time, Medicare has implemented new quality standards and accreditation requirements and computer systems have become far more advanced to root out fraud and abuse. We believe that CMS must more effectively use the tools that are currently on the books rather than heap another set of requirements on suppliers.

"This is why the main thrust of our comments recommend that CMS apply the surety bond requirement only to new suppliers entering the marketplace," Gorski added.

The association is also concerned that the proposed surety bond will increase providers' costs and paperwork burden without accomplishing the goals of the rule. According to a CMS analysis, the requirement to obtain a bond will cost HME providers approximately $198 million annually. The additional cost may result in a drop in the number of providers willing to serve Medicare beneficiaries, particularly those in rural areas, the analysis suggests.

"We are very concerned that CMS appears to be using the surety bond as a claims payment tool rather than an anti-fraud and abuse mechanism," Gorski added. "If CMS moves forward with this regulation, the surety bond should not be tapped until suppliers have had a chance to appeal earlier denials or determinations. It should be the last step; it shouldn't be the first step."

In its comments, AAHomecare is calling on CMS to revise the proposed rule as follows:

--CMS should exempt providers that have a good track record with the Medicare program.
--CMS should not impose an inflation adjustment on the amount of the bond because reimbursement for HME items since the BBA has either been cut or frozen.
--CMS should exempt rural providers and large national chain providers. Exempting rural providers, provided they don't otherwise pose risks, will ensure access to care for rural beneficiaries. National, publicly traded providers have resources to refund any claims payments they receive in error and they are already heavily regulated.
--Pharmacies, physicians and other practitioners who bill the Medicare program for DMEPOS items should not be exempted from the requirement to obtain a surety bond unless they otherwise meet the criteria for another exemption.
--A final rule must include a mechanism to protect providers in the event that the National Supplier Clearinghouse or a surety mistakenly reports that a bond has been cancelled, or the surety goes out of business. At a minimum, providers should have notice that their billing number will be revoked and an opportunity to demonstrate that they have a bond before the revocation.

To read the proposed rule, click here.

To read AAHomecare's complete comments, visit the association Web site at www.aahomecare.org.

NCART Event Spotlights Complex Rehab Carve-Out
WASHINGTON--The issue is not what will happen to complex rehab if it remains in competitive bidding, according to Sharon Hildebrandt, it's what will happen to Medicare beneficiaries who need complex rehab.

"That's the issue," said Hildebrandt, executive director of the National Coalition of Assistive and Rehab Technology. The group held a Capitol Hill press briefing on Tuesday to push Congress for passage of H.R. 2231, the Medicare Access to Complex Rehabilitation and Assistive Technology Act of 2007. The proposed legislation would exempt those products from competitive bidding.

A dozen complex rehab users who joined NCART members, congressmen and other advocates backing the carve-out bill told the press that the Medicare bidding program would undercut the quality of life for thousands of people with disabilities by creating a "one size fits all" category for the equipment.

Consumer Selene Faer Dalton-Kumins, a 20-year disability advocate with spinal muscular atrophy and the director of Washington's MetroAccess, spoke of her experience in one wheelchair that didn't fit properly. She lost the use of an arm, Hildebrandt said.

The ALS Association and people living with amyotrophic lateral sclerosis (Lou Gehrig's disease) also urged passage of the bill at the press event.

"People with ALS who have lost the ability to stand, walk, use their arms and hands, and even breathe on their own, require the use of wheelchairs that are far more complex than those typically needed by most Medicare beneficiaries," said Steve Gibson, vice president of government relations for the association. "Unfortunately this new program does not recognize the complexities of ALS or take into account the significant cost of these chairs and the services that are required to ensure they meet the specific medical needs of people with ALS."

Complex rehab and assistive technology products "are highly individualized and must be assembled, adjusted, programmed, modified and monitored to accommodate each beneficiary's individual needs," said Rep. Tom Allen, D-Maine, who co-authored the carve-out bill. "Competitive acquisition does not work well when unique products, configurations or specific combinations of products are needed to meet the clinical needs of an individual."

With five of the bill's 21 cosponsors in attendance and a number of publications represented from throughout the country, Hildebrandt called the press conference a success. "I think it raised the visibility of the issue," she said, adding that "we got a great picture in Roll Call (a popular Capitol Hill newspaper), so I know visibility is increasing."

The next step, she said, is to get companion legislation introduced in the Senate, and to keep awareness high should Congress tackle Medicare legislation later this session.

"The issue is what's going to happen to those beneficiaries," Hildebrandt continued. "They are not going to get the technology that is most appropriate for their needs. For current Medicare beneficiaries, if they need replacement chairs or systems, they are not going to be able to continue to get what they have. Their options are going to be greatly reduced, and the amount of service they get is going to be greatly reduced.

"Suppliers are not going to be able to be as attentive as they have been in the past because they won't be able to afford to," she added, "so it's the Medicare beneficiary who's really going to suffer."

For an NCART position paper on H.R. 2231, click here.

For a letter from The ALS Association endorsing H.R. 2231, click here.

Registration to attend the meeting is required by 5 p.m. Oct. 5 at www.blsmeetings.net/H1102.

Doors to Medtrade 2007 Open Tomorrow
ORLANDO, Fla.--The doors to Medtrade 2007--and, attendees hope, to some answers on doing business in HME's uncertain future--open tomorrow at the Orange County Convention Center.

Some 14,000 industry stakeholders are expected to attend the annual trade expo, which runs Tuesday through Thursday, according to Kevin Bird, group show director-healthcare, for Medtrade producers Nielsen Business Media.

"We will end up with around 750 exhibiting companies for the year," he added.

Attendees will also have access to 160 seminars in more than a dozen tracks, including competitive bidding, accreditation, current legislative issues and sleep-disordered breathing.

To kick off the event, keynote speakers via video will be Reps. John Tanner, D-Tenn., and David Hobson, R-Ohio, authors of H.R. 1845--the Tanner-Hobson bill--which would alter the competitive bidding program to ensure beneficiary access and allow all qualified providers to participate in Medicare at the bid rate. The address will be shown at 7:30 a.m. Tuesday in Room W110 A/B.

This year's Medtrade comes at a critical juncture for the HME industry. The bid window for CMS' initial round of competitive bidding closed just last week, leaving providers in the initial 10 MSAs stuck in a wait-and-see mode. While proposed legislative cuts to oxygen and power wheelchair benefits appear to have been averted in Congress' fray over funding for the State Children's Health Insurance Program, at least temporarily, the fate of H.R. 1845 and other bills introduced to protect patient access to HME--and the industry itself--still hangs in the balance.

"Clearly there is a buzz that is affecting management across the HME industry," Michael Farrell, senior vice president of Poway, Calif.-based ResMed's sleep strategy business unit, told HomeCare. "Many are watching to see if legislation may slow down or stop implementation of competitive bidding beyond the initial 10 MSAs; they are waiting to see how the bidding process unfolds before making minor investments or significant costly changes to their operations."

Medtrade's Bird said the focus for attendees would depend on whether they were part of the first round of bidding or not.

"For those that were involved, it will be more focused on operation efficiencies and new opportunities in the event that they do not win the bid," he said. "For the industry as a whole, there will be a strong focus on legislative and regulatory issues, as well as reimbursement, sales and marketing and creative ways of improving their business."

Bird said he anticipated that providers attending Medtrade would also "seek new alliances and solutions to all the challenges that they face in the industry today."

Carol Laumer, executive director of Wilmar, Minn.-based Rice Home Medical, said she is looking forward to networking "and just taking a breath and getting revitalized again.

"I know they talk doom and gloom, but I get among my peers and I get revved up again. It's a little mental health for me," Laumer said, adding that she will also be looking for information on wound care products.

For the first time this year, the show will feature both a New Product Pavilion and an Industry Trend Pavilion where providers can check out the latest products and get a sense of where the industry is going from a product standpoint.

And with experts predicting that mandatory accreditation is just around the bend (although CMS has not yet announced a deadline for all providers to be accredited), attendees can get help at Accreditation Central. Many of CMS' approved accrediting organizations will be on hand to offer seminars and answer individual questions. Sponsored by HomeCare, Accreditation Central will be open all three days of the show.

For more information about the event, go to www.medtrade.com.

Trade Show Offers Crash Course in Competitive Bidding
ORLANDO, Fla.--While the "Closed" sign may be on the bid window for the first round of competitive bidding, it is not a closed issue. With CMS set to add 70 cities in the program's 2009 second round, it is likely that the subject will be at the top of the list for providers attending Medtrade as they work to figure out how to keep their businesses viable.

For information on competitive bidding, its effects and strategies to survive, Medtrade will offer the following sessions:

--What in the World Is Going On? A Medicare Update, Andrea Stark, Medicare consultant, MiraVISTA
--Survival after Competitive Bidding: Operations and Marketing Strategies That Set You Apart, Miriam Lieber, president, Lieber Consulting, and Colette Weil, managing director, Summit Marketing
--Joint Ventures and Competitive Bidding Networks for HMEs, Amy Leopard and Robert Crump, partners, Walter & Haverfield
--Complex Rehab and Assistive Technology Competitive Bidding Update, Cara Bachenheimer, Esq., senior vice president of government relations, Invacare Corp
--The State of the Power Mobility Device Industry, Dan Meuser, president, Pride USA, and Seth Johnson, vice president, government affairs, Pride Mobility Products
--Retail HME Strategies Panel, Moderated by Jack Evans, Global Media Marketing
--Power to Compete, Wallace Weeks, president, Weeks Group
--The Current Status of Legislative Activity, John Gallagher, vice president of government relations, The VGM Group
--Structuring Competitive Bidding Networks and Subcontracts, Neil B. Caesar, JD, president, Health Law Center
--Facing the Industry, Walt Gorski, vice president, American Association for Homecare
--Demand Will Only Increase: Growing Your Business in a Competitive Bidding Environment, Denise M. Fletcher, attorney, Health Care Group, Brown & Fortunato
--Competitive Bidding-What's It All Mean? Are You Prepared?, Cara Bachenheimer, vice president of government relations, Invacare Corp.
--Operations Checklist for the Current Regulatory Environment, Mark J. Higley, vice president of development, VGM Group

Check the conference schedule at www.medtrade.com for session dates and times.

Social Security Battles Backlogged Disability Claims
WASHINGTON--The massive backlog of Social Security disability benefit cases could soon begin shrinking nationwide now that the "quick disability determination" process has been extended to all state disability determination services.

The agency issued a final regulation last month extending the QDD process to all states after successfully testing it in New England. It will be gradually implemented over the next several months, agency officials said.

Under QDD, a predictive model analyzes specific elements of data within the electronic claims file to identify those where there is a high potential that the claimant is disabled and where evidence of the person's allegations can be quickly and easily obtained.

By utilizing the new system, 97 percent of the cases in New England were decided within 21 days; the average decision time was 11 days. About 85 percent of the cases were allowed during the initial review, and more were allowed with additional documentation, officials said.

"The quick disability determination has been very successful and efficient so far in New England and I am happy to say it will help people filing for disability benefits anywhere in the United States," said Michael J. Astrue, commissioner of Social Security, in announcing the final rule.

Social Security receives more than 2.5 million new disability cases and more than 2.3 million Supplemental Security Income cases each year. Pending hearings have doubled since 2001, even though administrative law judges who hear the cases have a high productivity rate, Astrue said. In July, Social Security had a backlog of about 738,000 cases that were awaiting hearing decisions; those cases had an average waiting time of 505 days, the highest in Social Security history.

"The length of time many people wait for a disability decision is unacceptable," said Astrue. "I am committed to a process that is as fair and speedy as possible. While there is no single magic bullet, with better systems, better business processes and better ways of fast-tracking targeted cases, we can greatly improve the service we provide this vulnerable population."

Astrue said he was particularly proud of the diminishing pending disability cases that had reached 1,000 days.

"We have aggressively worked on these cases and now have fewer than 600 pending, down from more than 63,000 cases in October of last year," he said.

In addition to extending the QDD nationwide, Astrue said he also hopes to expand the system to incorporate as many diseases as possible. He said Social Security was "committed to pushing the number of cases that can be decided through the model as high as we can possibly go while maintaining accuracy."

For more information about Social Security's disability programs, go to www.socialsecurity.gov.

Manufacturer News
DeVilbiss Considers Outsourcing to China
SOMERSET, Pa.--DeVilbiss Healthcare announced last week that it was considering the relocation of some manufacturing operations--specifically oxygen concentrators, oxygen transfilling systems, vacuum/suction pumps, as well as plastics and electronics--to a DeVilbiss-owned facility in China.

"Our home health providers are continually struggling with the costs of servicing their patients," commented Kees Regeling, president and CEO, in a statement. "Add the real and threatened reimbursement cuts to that, and it's clear that manufactures have to be particularly flexible if we are going to continue to meet the needs of our customers."

While the decision was not easy, Regeling told reporters, it is necessary to remain competitive.

"We have concluded that it is impossible for us to continue in the marketplace where our competitors are selling for less. We have to look at alternatives," Regeling told The Tribune-Democrat, a Johnstown, Pa., newspaper.

A final decision on layoffs is expected this month, the paper reported, and the company will retain about half of the 160-180 manufacturing jobs at its Somerset headquarters. According to the company, the manufacture of oxygen conserving devices, CPAP devices and professional atomizers will remain in Somerset indefinitely.

Earlier this year, Sunrise Medical, Longmont, Colo., which had operated DeVilbiss as its respiratory division since acquiring it in 1993, reorganized into two separate businesses; Sunrise now concentrates on mobility products while DeVilbiss is focused on respiratory products and services. (See HomeCare Monday, May 14.)

Drive Sets Second European Acquisition
PORT WASHINGTON, N.Y.--Drive Medical said Friday that it will acquire a major European manufacturer and distributor of power mobility products, lift chairs, patient aids and bath safety products. The company distributes its products throughout Europe, including Germany, Austria, Belgium, the United Kingdom, Spain and Greece and other countries.

Drive entered the European market through its acquisition of Peter Endres, GmbH and Co. KG, a German manufacturer and distributor of bath lifts and mobility aids, on Dec. 31.

According to President and CEO Harvey Diamond, "The acquisition, along with our previously completed acquisition of Endres, will provide Drive Medical with a substantial platform in Europe from which to launch new products, enter new markets and implement growth initiatives on an international scale."

The acquisition is expected to be completed on or before Oct. 31.

Inspired Technologies Gains Approval for Oxygen Liquefier
NORTH HUNTINGDON, Pa.--Inspired Technologies announced Monday that it has obtained FDA 510(k) approval for its VIAspire Liquefier, which makes liquid oxygen in the home.

"Oxygen providers no longer have to choose between patient care and operational excellence. We deliver both," said Dan Easley, president and CEO. "The entire VIAspire Personal Oxygen System will give patients the freedom and confidence to lead more active lives. It also enables our provider network to focus on superior patient results, while strengthening their business model."

According to the company, the VIAspire maintains two liters of liquid oxygen that are always available to the patient. Oxygen portables (pending 510(k) approval) in three different sizes are compatible with the liquefier. Equipped with proprietary technology called SmartDose, the portables are the first devices "to sense and adapt to the patient's respiratory needs, especially during exercise, a key to improving patient outcomes," the company said.

The company began shipping the product last week.

Harvard Honors Invacare's Mixon
BOSTON--At a ceremony on Thursday before 900 students, faculty and staff, Invacare Corp. Chairman and CEO Mal Mixon was honored with the Harvard Business School Alumni Achievement Award. Presented to five HBS alumni whose lives and careers epitomize its mission to "educate leaders who make a difference in the world," the award is the school's highest honor.

"These awards recognize an extraordinary group of graduates who embody the highest standards of accomplishment and integrity," said HBS Dean Jay Light. "The recipients have all contributed immeasurably to their profession, their industry and their community. They personify what this school stands for. They inspire all those who aspire to have an impact on both business and society."

In 1979, Mixon parlayed $10,000 of his own money to engineer the purchase of an Ohio-based wheelchair maker. Today with 5,700 employees, Invacare is the world's leading manufacturer and distributor of home medical products, marketing its products in 80 countries. The company puts a premium on new product development and innovation while providing help and hope to people of all ages with disabilities.

Mixon also chairs the boards of two institutions with worldwide reputations--the Cleveland Clinic Foundation and the Cleveland Institute of Music. To help Cleveland's minority businesses, he created a $25 million investment fund called Minorities with Vision.

Others honored with the 2007 award include Donna L. Dubinsky, Sir Martin S. Sorrell, Hansjorg Wyss and Jaime Augusto Zobel de Ayala.

In Brief
CMS will hold its next Home Health, Hospice and DME Open Door Forum on Oct. 10 at 2 p.m. ET. To participate by phone, call (800) 837-1935 and reference conference ID 17456028.

Have lunch with Louis from 11:30 a.m. to 1 p.m. ET on Nov. 1, 8 and 15! Grab a sandwich (or morning coffee if you're on the West Coast) and gather around the speakerphone for the first complete Sales Training Strategies program presented as a live teleconference series with HME sales training guru Louis Feuer, Dynamic Seminars & Consulting. Don't let competitive bidding and constant industry changes allow you to lose focus on what builds business--a well-trained sales team. With three individual sessions, it's never been easier and more convenient to train your sales staff. You need them now more than ever. For more information, click here.