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Headline News
Home Care Stakeholders Testify to Congress: Competitive Bidding Will Hurt Small Providers
WASHINGTON--While CMS' Laurence Wilson presented the agency's view of competitive bidding, a string of HME stakeholders told an entirely different story to members of a House of Representatives subcommittee last week.

Representing the American Association for Homecare, Georgie Blackburn testified before the House Small Business Committee's Subcommittee on Investigations and Oversight Oct. 31 that unless Congress modifies the program, competitive bidding for HME will hurt small providers and "undermine the nation's home care infrastructure."

The program will "jeopardize patients' standard of care, choice of provider and access to the medical equipment and services they need," said Blackburn, vice president of government relations and legislative affairs for Blackburn's, Tarentum, Pa.

"Those who are not selected as winning bidders will not be able to provide competitively bid equipment or services to Medicare beneficiaries. Since Medicare payments typically comprise 35 to 50 percent of a small provider's revenue, " Blackburn explained, "losing the ability to provide competitively bid items for a three-year contract period is essentially a death knell."

The association pointed out that the competitive bidding rules are stacked against small providers, who do not have the economies of scale to negotiate lower prices from manufacturers or the physical size to cover an entire bidding area.

Blackburn testified that "even with the small business protections included as part of the program, such as the ability to form networks or the 30 percent set-aside for small businesses, the bidding program will still radically reduce the number of suppliers that exist today."

But Wilson, director of the Chronic Care Policy Group for CMS, told the subcommittee the agency had taken adequate steps to help small providers. Although he acknowledged there could be fewer companies eligible to serve Medicare beneficiaries as a result of the bidding program, he said that the providers CMS selects as bid winners will be accredited and there will be a better environment for providing care.

Wilson revealed that the agency received 6,300 certified bids from the first round of bidding. While that number is higher than industry insiders had predicted, it is still much lower than CMS' estimate that it would get nearly 16,000 bids. Wilson said the numbers were closer than they might appear, however, because suppliers could submit one bid for multiple sites under common ownership.

Wilson noted that three-fourths of the winners in CMS' two previous competitive bidding demonstrations--in San Antonio and Polk County, Fla., in 1999-2002--had been small suppliers. This time, he said, CMS made some special provisions for small suppliers, such as setting the small business revenue ceiling at $3.5 million and allowing the formation of networks to serve an entire CBA.

He also said CMS is working on improvements to the bidding system before publishing a request for bids in the second round.

But that comment prompted another from subcommittee member Rep. Charles Gonzalez, D-Texas (who represents San Antonio): While CMS is on a learning curve, he said, small businesses could go under.

In fact, in its report on the hearing, AAHomecare characterized the subcommittee as "friendly." Chairman Jason Altmire, D-Pa., called the hearing to shed light on the small business dimensions of the bidding program, the association said.

AAHomecare asked the subcommittee for support of H.R. 1845, the Tanner-Hobson bill, which would:

--Exempt smaller, rural areas from competitive bidding;
--Allow all qualified providers who submit a bid to continue doing Medicare business at the bid rate;
--Restore providers' rights to administrative and judicial review; and
--Exempt Medicare items and services unless a savings of at least 10 percent can be demonstrated.

In addition to Blackburn, five others representing various industry sectors testified at the hearing, including John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers; Carol Gilligan, president of Health Aid of Ohio, Cleveland; Richard Saxon, president and CEO of BioMedical Life Systems, Vista, Calif., on behalf of the Advanced Medical Technology Association; Dr. Ross Taubman, president-elect of the American Podiatric Medical Association; and Jose Navarro, RPh, of Navarro Discount Pharmacies in Medley, Fla., on behalf of the National Association of Chain Drug Stores.

"While CMS has made some noise about addressing small business issues, I don't believe that CMS has taken any meaningful steps to address the special needs of small business and our ability to participate in the program," Gilligan said in written testimony. Describing the individualized products and services required to service her high-end rehab customers, Gilligan said, "As a small business, I believe we are disproportionately negatively impacted by this bidding program."

Navarro testified that some provisions of the bidding program "could prevent pharmacies from effectively serving their Medicare patients," such as establishing national or regional competitive bidding areas for mail-order suppliers that could significantly limit participation in the program by small pharmacies and reduce patient access.

According to PAMS' Shirvinsky, "What CMS is doing is a formula for certain higher prices down the road. Competitive bidding for DMEPOS is not good business. It is bad news. The most responsible thing that this Congress can do on this count is to admit that a previous Congress made an error in approving a poorly considered provision."

To read the OIG report in full, click here.

VGM Calls on Providers to Shut Down the Switchboard
WATERLOO, Iowa--To draw attention to the home oxygen bills in Congress, VGM Group will sponsor Enough is Enough: Shut Down the Switchboard Day on Nov. 14.

The goal is to get 50,000 people to call the U.S. Capitol switchboard on that day to urge members of Congress to cosponsor the Tanner-Hobson bill and the Home Oxygen Patient Protection Act.

The Tanner-Hobson bill--H.R. 1845 in the House and S. 1428 in the Senate--would amend the competitive bidding program to allow all qualified providers who bid to continue doing business with Medicare at the bid rates that are set, even if they don't win contracts. The Home Oxygen Patient Protection Act--H.R. 621 in the House and S. 1484 in the Senate--would repeal the Deficit Reduction Act's 36-month rental cap on home oxygen and restore ownership of equipment to providers.

The passage of these bills would ensure that Medicare beneficiaries get the care that they deserve, the Iowa-based buying group said. Callers are also encouraged to tell Congress that further cuts to oxygen and power mobility should not be included in any upcoming Medicare reform.

"It is time to speak up and to raise awareness of the home medical equipment industry," reads a press release on the VGM Web site. "Enough is enough. Medicare beneficiaries should not have to be burdened with additional cuts, and deserve the right to be able to choose their own local, small-business provider."

At latest count, H.R. 1845 had 134 cosponsors and S. 1428 had 13; H.R. 621 had 126 and S. 1484 had seven. At least 217 cosponsors are needed for both House bills, and 36 are needed for both Senate bills, according to VGM.

"We've got to get motivated," John Gallagher, VGM vice president of government relations, implored providers at Medtrade last month. "This is our Stalingrad, our last stand.

"You have to go back to your employees, go back to your family members, go back to the beneficiaries and ring the phones off the hook so that members of Congress say 'No, I'm not going to support [competitive bidding] or any cuts to oxygen or power wheelchairs.' If we don't do anything in 2007, then in 2008 it's the next 70," Gallagher said, referring to the next round of cities where competitive bidding will roll out.

During the call-in on Nov. 14--chosen in honor of World COPD Day--an interactive component will be featured on VGM's home page. To assist callers, members of Congress will be listed by state, and a live commentary will be provided to keep participants fully informed of the day's activities.

To help providers rally support from beneficiaries and the public, a sample press release is available at www.vgm.com. Additional talking points about the bills can be found at www.lastchanceforpatients.org.

Supplier Anti-Fraud Demo Begins in Florida, California
BALTIMORE--CMS said it had instructed the National Supplier Clearinghouse to begin its anti-fraud demonstration project on Nov. 1.

Announced in July, the demonstration will involve all South Florida DMEPOS suppliers in Miami-Dade, Broward and Palm Beach counties, and Southern California suppliers in Los Angeles, Orange, Riverside and San Bernardino counties. (See HomeCare Monday, July 9.)

The project's three major components were described in a notice about the demonstration as follows:

1. Immediate submission of CMS 855S application--Each DMEPOS supplier in the demonstration locales will be required to submit a CMS 855S Medicare enrollment application to the NSC within 30 days after the NSC requests such data.

The NSC will notify suppliers by letter to submit the CMS 855S. The letter will contain instructions and indicate a date by which the form must be received by the NSC. If the form is not received timely, the supplier's billing privileges will be revoked. No extensions will be granted. The NSC will begin mailing these letters on Oct. 31, 2007.

Note: In order to properly administer this project, please do not submit a CMS 855S reenrollment application until notified to do so by the NSC.

2. Revocation of billing privileges--Under this demonstration, a DMEPOS supplier's Medicare billing privileges will be revoked in the following circumstances:

--The DMEPOS supplier failed to submit a CMS 855S application within the aforementioned 30-day timeframe.
--The DMEPOS supplier failed to report a change in ownership or address at least 30 days prior to the effective date of the change.
--The DMEPOS supplier failed to obtain accreditation from an approved DMEPOS accrediting organization within 120 days of notification from the NSC to do so.

Note: Not every DMEPOS supplier will be required to obtain accreditation under this demonstration. Only those that are notified by the NSC to become accredited will be subject to that requirement.

--The DMEPOS supplier has an owner or managing employee that has had a felony conviction within the last 10 years.
--The DMEPOS supplier no longer meets each and every requirement necessary for enrollment as a DMEPOS supplier.
--If the supplier's billing privileges are revoked, CMS will implement recoupment measures as appropriate.

3. Enhanced review of "remaining" DMEPOS suppliers--DMEPOS suppliers that do not have their Medicare billing privileges revoked based on the information contained in the CMS 855S application they submitted will be subject to an enhanced review

This may include but is not limited to additional unannounced site visits and targeted claims reviews.

For more information about the demonstration project, visit www.cms.hhs.gov/MedicareProviderSupEnroll and click on the "Enrollment Demonstrations" link on the left-hand side of the page.

First-Round Accreditation Deadline Comes and Goes
ATLANTA--CMS' accreditation deadline for first-round bidders came and went last week--this time with no extension--and no rush to the finish.

After release of its supplier quality standards in August 2006, CMS named 11 approved accrediting organizations late last year to enforce them. A merger in January between two of the organizations left 10 accreditors ready to deal with what many had expected to be an accreditation rush in the initial competitive bidding areas.

But the rush never came to pass. CMS' Sandra Bastinelli, charged with running the accreditation program, announced at an Oct. 11 meeting of the Program Advisory and Oversight Committee that a total 2,200 provider locations across the 10 CBAs had been accredited. About 100 more applications were pending before the Oct. 31 deadline, she said.

Providers participating in the Medicare bidding program had to be accredited by that date in order to be considered for contracts.

"Many providers have really struggled these past few months with the accreditation deadline," said consultant Mary Ellen Conway of Capital Healthcare Group, Bethesda, Md. "Their CBA was announced in April, they had to select an [accreditation] provider, send for standards and frantically try to complete the process by July 1 to be ready for an unannounced survey by the [original] accreditation deadline of Aug. 31."

Although CMS extended that deadline until Oct. 31, the extension "did little to change that original timeframe," Conway said.

"Many providers were unprepared for their first survey, whether it was completed in July or August, and while the deadline extension through the end of October gave them some breathing room to complete their requirements, that is still only six months in total," she said. "Accreditation preparation generally takes organizations four to six months before providers ... are ready for their unannounced survey, which then occurs over the next 60 to 90 days. This tight timeline was very difficult, and there are providers who did not complete their requirements in time."

Some providers simply decided not to become accredited, noting the expense put toward a business that might not be selected for one of Medicare's three-year contracts--and that might not survive. Indeed, CMS has said it expects there will be 50 percent fewer DMEPOS providers doing business with Medicare than currently exist after implementation of the bidding program.

"Why cough up the money if you know you're going to be killed off in the fight?" one oxygen provider told HomeCare Monday earlier this year, comparing competitive bidding to a "kamikaze flight."

"Who cares if you have a hole in your underwear [if] you're about to fly your plane into the ground? If I gain nothing from this other than more piles of paperwork, why would I spend the money?"

But Conway pointed out that even though CMS has yet to announce a deadline by which all providers must be accredited, HME companies--particularly those who will bid in the second round--should be prepared.

"We already know a few of the next 70 MSAs, and we learned in this round that a CBA can be a combination of several MSAs," Conway said. "New York, Chicago and Los Angeles were intentionally deferred from the first round, so we know that providers in those cities are at the top of the list. Others that were on the list of the 'Top 25' last year were Houston, Tampa, Washington, D.C., San Antonio, Virginia Beach, Atlanta, St. Louis, San Francisco, Detroit, Baltimore, Philadelphia and Boston. There is no reason why providers in these MSAs should not be underway right now.

"Don't wait for a deadline to be imposed," Conway advised providers. "Accreditation can be impossible to accomplish with very few deficiencies when you are rushing, and you will guarantee yourself an unannounced revisit if you are not prepared."

At the recent PAOC meeting, CMS' Bastinelli said a revised version of the quality standards, intended to clarify those released last year, has been sent to the approved accreditors for review. When the revised standards are ready for publication, she said, they will be posted on the CMS Web site and open for public comment.

Return to Sender: CMS Wants Its Survey Back
BALTIMORE--If you are one of the providers CMS contacted to participate in a survey about competitive bidding, then you might be getting a follow-up call if you have not responded.

While the Medicare Modernization Act mandated a DMEPOS competitive bidding program, the law also mandated that CMS study its impact. "One of the key issues that this study is designed to address is the effects of competitive bidding on product mix available to beneficiaries," the agency said in a notice sent out last week.

Fielded earlier this year, the survey was sent to 1,000 providers located both inside and outside the first 10 competitive bidding areas so the agency "can do stronger types of comparisons about isolating [the] impacts of competitive bidding," according to a CMS research analyst (see HomeCare Monday, Sept. 24).

According to the notice, providers who were asked to participate "were scientifically selected based on a probability sample of DMEPOS claims. Therefore, if your company has been selected to participate in this study, your cooperation is vitally important!"

While the study uses a valid before/after design, the agency said, "as in all surveys, success depends on having each sample member complete the questionnaire in order to maximize the reliability of information collected."

Suppliers selected for the survey have received a request to participate from CMS Privacy Officer Walter Stone, as well as reminder emails from Abt Associates, the contractor hired to administer the survey.

"This survey is strictly voluntary," CMS said, "and the decision whether to participate and/or the answers given to the survey have no effect on the supplier's business relationship with Medicare."

The agency explained that the survey analysis and report would not examine an individual company's product mix but rather the market's product mix as a whole based on combined responses from the entire sample. Survey responses are provided via a secure online Web site, and answers are confidential, CMS said.

"We gratefully acknowledge and thank you for your cooperation in this effort to develop important information about the effects of Medicare's new competitive bidding program for DMEPOS!" CMS concluded.

For more information about the survey or if you have lost or misplaced login information, CMS asked providers to contact Brenda Rodriguez of Abt Associates at (617) 349-2544.

HME Transactions Continue Decline in Face of the Unknown
PITTSBURGH--The battered HME market continues to show wear-and-tear when it comes to mergers and acquisitions, according to a third-quarter report released by The Braff Group.

Figures from the Pittsburgh-based M&A firm show HME transactions fell 7.1 percent, from 14 to 13 in the third quarter; year to date, they toppled from 46 in 2006 to 33 in 2007, a 28.3 percent decline.

The reason?

"Reimbursement, reimbursement, reimbursement," said Bob Leonard, Braff's managing director. "It's all about reimbursement. There's been sort of an endless barrage of cuts and threats [to the HME industry], some of which have taken hold and some of which are not yet effective."

Leonard said buyers are sitting on the sidelines as they wait for the industry's unknowns to play out.

"There's the specter of competitive bidding; no one really knows what the outcome of the cuts will be," Leonard said. "The other big thing--and it's the biggest--is the oxygen cap."

The cap currently stands at 36 months and would be livable for most HME providers, he said. But Congress has bandied about the idea of an 18-month cap; the president has called for a 13-month cap.

"So what you have is a huge unknown, since oxygen is such a big piece of the world of HME," Leonard explained. "And it's [historically] carried some of the less popular sectors on its coattails. But now, you can't even model it ... It could be all or most of next year before all or most of the unknowns are known."

Leonard's comment reflected what company President Dexter Braff told an audience at a Medtrade seminar last month. "If you reflect on the merger and acquisition market of the past, what were buyers buying?" he asked. "Oxygen."

But with the threat of a much more restrictive cap, buyers are uncertain of their return on investment, and "'unknown' is the threat that drives up risk," Braff said. "We don't know what the market for our home care products is going to be. Buyers are out there, but they are feeling very paralyzed by what's going on."

Leonard said his advice to HME providers is largely, "hold on and ride that pony into the ground. Making what you can out of the business over however long might yield more money than selling it today."

Not so in the infusion segment of the home care market, however. In that arena, transactions for the third quarter doubled from four to eight, and the 20 deals logged so far this year surpassed a record of 19 deals set for the entire year of 2006, according to the report.

"Acquisition interest for infusion therapy is growing exponentially, and much like the home health sector, is coming from multiple directions," said Chuck Gaetano, the company's managing director for infusion therapy and specialty pharmacy. "While private equity continues to dominate the landscape, completing six of the eight deals announced in the third quarter, the largest transaction was Walgreen's blockbuster acquisition of OptionCare.

"Moreover," he continued, "dialysis provider DaVita's acquisition of HomeChoice Partners, and home medical equipment provider Apria's early fourth-quarter announcement of its acquisition of Coram demonstrate the interest of ancillary providers to stimulate growth through infusion therapy."

The report also showed home health agencies to be holding relatively steady, with 68 year-to-date transactions for both 2006 and 2007. While the third quarter showed a 40 percent dip in activity--from five transactions in 2006 to three for the same quarter this year--"the sector remains in reach of last year's record-setting 96 transactions," the report said.

Overall, the home health market, including hospice, home health care, infusion, specialty pharmacy, HME and medical device pharmacy and staffing, was down 7.4 percent from last quarter and 10.7 percent compared to the same period last year, according to the report. Year-to-date transaction volume is down 10.5 percent compared to 2006.

Hamilton Embarks on New Consulting Venture
CARMEL, Calif.--After years of challenging HME audiences to think big, be bold and take risks, industry icon Marilyn Hamilton is herself doing just that.

Hamilton, who has been described as the "face and the force" behind Quickie wheelchairs, has retired from Sunrise Medical, through which the groundbreaking wheelchair is marketed, to start her own business consulting company.

"For 28 years, I've been in a wheelchair," said Hamilton, who was paralyzed in a hang-gliding accident nearly three decades ago. After reflection, she said, "I thought, 'What am I going to do for the next third of my life?' Maybe it's time for me to take the next step."

Hamilton's roots in the HME industry go back to her 1978 accident, which left her a paraplegic. Dismayed at trying to get through life in an unwieldy 60-pound wheelchair, she worked on designing an ultra-lightweight chair.

Along with two friends, Jim Okamoto and Don Helman, Hamilton started Motion Designs, which turned out the first Quickie in 1979. The chair was revolutionary--it had a modular frame, was totally adjustable and seemed to reflect a sense of fun.

"Fun--that's what I've always tried to make the industry. Bring that excitement to it, break the barriers," said Hamilton, who has long been known for her lively speeches that push listeners to take risks and try new things. "When we started Quickie, the idea was commonality of parts, total adjustability and customization. That had never been done before in a streamlined base."

In 1986, Hamilton and her partners sold the company to Longmont, Colo.-based Sunrise Medical. She continued with Sunrise, serving in roles ranging from marketing and public relations to advocacy and corporate responsibility. She retired from the company as vice president of global strategic planning, focusing on education, consumer programs and issues affecting the wheelchair industry.

Hamilton's new company, Envision, builds on the knowledge she has honed in several areas, she said. It will focus on start-up businesses, marketing and business development and universal design for homes. She will also continue as a motivational speaker.

"I have some really fun experiences to draw on that can help shape other people's businesses in some dynamic ways," Hamilton said, noting that she is working with companies both within and outside the HME industry.

Hamilton, who has been recognized with several state and national awards for her work, said she is not leaving the industry. "My experience with Quickie and Sunrise Medical has been an amazing ride that has taught me so much, and it's not over--it's just changing direction," she said, adding that she will continue consulting work for Sunrise.

"My heart is here," she said, "but I know I need to stretch myself. And that's what I am trying to do."

In Brief
In response to the Southern California wildfires, CMS said last week it will consider requests for accelerated and advanced Medicare payments to providers "adversely affected by this natural disaster in keeping with established policies and procedures." A notice said HME providers should apply to their DME MAC to initiate a request.

At its annual Fall Conference in Bloomington, Minn., Oct. 25-26, the Midwest Association for Medical Equipment Suppliers marked its 25th anniversary with a banquet and surprise honor for Executive Director Rose Schafhauser. "I couldn't figure out why our members were wearing rose corsages," said Schafhauser, who then was presented with one of her own. "This conference celebrated 25 years of success for our organization," said MAMES President Barb Stockert of Merit Healthcare Accessories, Jamestown, N.D., adding that the association board felt "it was an opportune time to recognize a person that has been instrumental in the success of MAMES and helps us achieve the true mission of our association: strength through unity ... in legislative and regulatory issues, in education, in ethical issues and in meeting the future."

Shelly Sez: I'm retiring! Longtime HomeCare contributor Shelly Prial, who authors the magazine's "Shelly Sez" column monthly, has announced his retirement at the end of the year. If you have photos or "Shelly stories" you would like to share, please e-mail Editor-in-Chief Gail Walker at gwalker@homecaremag.com, or send hard-copy materials to HomeCare, 6151 Powers Ferry Rd., NW, Suite 200, Atlanta, GA 30339. In the meantime, click here to read Shelly's latest musings and sage advice.

CMS has notified providers that as of Monday, Oct. 29, electronic claims submitted to all carriers, A/B MACs and DME MACs will be rejected if their legacy and NPI number combinations cannot be validated against the NPI crosswalk. On May 23, 2008, CMS will lift its NPI contingency plan, meaning that only the NPI will be accepted on all HIPAA electronic transactions (837I, 837P, NCPDP, 276/277, 270/271 and 835), paper claims and SPR remittance advice. For more information on the NPI, click here. For an MLN Matters article on the NPI Final Implementation, click here.

Nov. 5-11 is the National Sleep Foundation's Drowsy Driving Prevention Week, an educational and public awareness campaign designed to save lives by raising awareness of the dangers of driving while sleepy. For more information and a variety of resources about the issue, visit www.drowsydriving.org.

There's still time - register today!