To view the HHS budget in brief or for additional information, click here.

Roberts Hangs Tough for HME in Senate Budget Hearing
WASHINGTON--HME champion Sen. Pat Roberts, R-Kan., grilled Health and Human Services Secretary Mike Leavitt about cuts to the sector during a Senate Finance Committee hearing Wednesday on President Bush's 2009 budget proposal.

Roberts' remarks condemned proposals that would reduce the current oxygen rental cap from 36 to 13 months and eliminate the first-month purchase option for power wheelchairs.

"I agree that we need to return to a policy of fiscal responsibility and get a handle on the growth in Medicare and Medicaid spending so these programs are viable and sustainable for future generations," Roberts said. "However, I certainly do not want to be in the business of tying the hands of our health care providers, especially those in our rural areas, and ultimately harming our seniors and low-income populations by restricting their access to care."

Roberts told Leavitt he was "disappointed" the budget calls for further reduction in the oxygen rental period, and said he was particularly concerned about the effects of competitive bidding.

"Home oxygen patients and providers are already about to undergo tremendous change in the next 10 months due to the implementation of the competitive bidding program, which has created confusion and exasperation among home health providers," Roberts said. "In fact, we are still waiting to hear from CMS on how many contracts were awarded for round one of the program--even though CMS has announced plans to move to round two in 70 more cities later this year without any evidence of success--or failure!"

Roberts said he was going on record to oppose reductions to oxygen reimbursement and other cuts to home care until Congress can review the impact of existing Medicare regulations, including the effects of competitive bidding, describing the current squeeze on HME providers as "a perfect storm."

"What worries me is that you won't have enough home care providers to even have Medicare," he told Leavitt.

Leavitt, however, said competitive bidding would save more than 20 percent across all the product categories in round one and described the bidding program as the "fair way" to reduce DME prices in Medicare.

During the hearing, committee chairman Max Baucus, D-Mont., said the proposed budget's overall Medicare spending reduction "smacks of the meat-ax."

"You've asked for huge Draconian cuts, which this Congress is not going to make," Baucus said. "We're not going to solve the problem [of growing health care costs] by just whacking the bejeebies out of Medicare."

For a press release on Sen. Roberts' remarks at the hearing, click here.

Coram Buy Bumps 2007 Numbers at Apria
LAKE FOREST, Calif.--Apria Healthcare Group announced its financial results for the fourth quarter and twelve months ended Dec. 31, 2007, and the numbers are up.

Providing home infusion, respiratory therapy and HME through 550 locations, on Dec. 3, 2007, Apria completed its acquisition of Coram Inc., which the company said strengthened its infusion business and future earnings capacity.

Excluding Coram, fourth quarter revenues were $410.6 million, a 4.9 percent increase compared to the fourth quarter of 2006. Respiratory therapy grew by 5.1 percent, and infusion therapy revenues grew by 8.2 percent during the quarter. Including the impact of the Coram acquisition, fourth quarter revenues were $452.7 million, a 15.7 percent increase over the period in 2006, and infusion therapy revenues jumped 66.9 percent.

Net income for the quarter increased by 16.9 percent to $25 million from $21.4 million in 2006. Excluding Coram, fourth quarter net income was $24.3 million, an increase of 13.6 percent.

For the year, revenues grew 7.6 percent to $1.632 billion from $1.517 billion in 2006. Excluding Coram, revenues were $1.590 billion, a 4.8 percent increase over 2006. In 2007, respiratory therapy revenues grew by 5.3 percent. Including the Coram acquisition, infusion therapy revenues grew by 21.6 percent during 2007. Excluding Coram, infusion therapy revenues increased 6.3 percent during 2007.

Net income for 2007 was $86 million versus $74.3 million in 2006. The results include contributions from one-time positive tax benefits and the Coram acquisition. Excluding Coram, net income was $85.3 million, an increase of 14.9 percent over 2006.

"Revenue grew in the second half of the year due to a heightened focus on sales force training, development and retention, as well as the expansion of the sales force," said Lawrence M. Higby, Apria CEO. "Additionally, the cost-reduction initiatives we implemented during the year contributed to our strong financial results. Strategically, with the fourth quarter acquisition of Coram, we also positioned the company for long-term success by diversifying our therapy and payer mix and significantly enhancing our position in the home infusion industry."

Based on recent performance and a strong start to the integration process, Apria said it now expects the acquisition of Coram to be neutral to earnings in 2008. Including the impact of anticipated Medicare reimbursement reductions and the impact of Coram from the date of acquisition, management estimated 2008 revenue growth will be in the range of 33 to 35 percent.

In 2009, Apria said the combined impacts of the Coram acquisition, organic revenue growth and cost-saving initiatives will mitigate a portion of the anticipated effect of expanded competitive bidding and the implementation of the Deficit Reduction Act.

R.E.S.T. Aims to Aid Travelers with Sleep Apnea
RENO, Nev.--With an eye toward easing travel difficulties and improving compliance, a new firm will specialize in sending sleep apnea equipment and disposable supplies to a CPAP patient's destination.

The Respiratory Equipment Supply Team, or R.E.S.T., is set to open by March 1 in Reno, said co-owner Christopher Depew.

"We'll provide a CPAP unit with humidification as well as a disposable mask, filter and tubing [to travelers]. We'll send the box to their destination with the equipment already preset by a respiratory therapist; [the customer] fills the chamber with the bottle of water, plugs it in and uses it," he explained.

With seven days' notice of their destination, physician contact information and mask size, customers can request specific masks or equipment. The company has agreements with major manufacturers such as Respironics, ResMed, Fisher & Paykel and Puritan Bennett to carry their products, Depew said.

When the trip is over, the customer tosses out disposable items, packs up the remaining equipment in a pre-addressed, postage-paid box and leaves it to be mailed at the hotel front desk.

This eliminates the burden of carting a CPAP and supplies on an airplane, which is not only cumbersome but can be awkward for patients, according to Depew. Depew said his father uses a CPAP device and was so embarrassed at having to open the box, take everything out and explain it to security officers while traveling that he stopped using it on trips.

"And then he was out of compliance," Depew said, adding that his father had also tried checking the equipment with his luggage, but it got broken.

Depew, a former branch operations manager for a national HME company, and his partners--a respiratory therapist and a customer service supervisor--saw first-hand the frustrations of patients trying to stay in compliance with their CPAP therapy while on the road.

"We see it without fail every day: 'I traveled with my CPAP and I broke my mask; can you send me a new one?'" Depew said. Often, that request for a new mask becomes snarled in red tape "and it ends up costing them $249 for a mask," Depew said.

Under R.E.S.T.'s system, the customer's mask information will remain on file to be sent immediately if needed for the price of the mask and a shipping fee.

"We want to make it easy, and we want to make it affordable," Depew said. The company will not accept Medicare or insurance, but it will take Visa or MasterCard.

Depew said he expects the bulk of the company's initial business will come from travelers headed to Las Vegas. But already, a businessman who regularly travels to the United Kingdom and wants to make use of the company's service has contacted R.E.S.T.

"I think it's really fulfilling a need," Depew said. "We have an office in Reno close to the airport, but [we're already looking] to expand to a larger distribution center."

Standard No. 11: What the Changes Could Mean for You
In a special series for HomeCare Monday leading up to the March 25 deadline for comments, health care attorney Neil B. Caesar, president of the Health Law Center, Greenville, S.C., will help provide clarification and insight on CMS' proposed revision and expansion of the DMEPOS supplier standards. This week, Caesar's comments are directed to changes in existing standard No. 11, which deals with methods of contact with Medicare patients:

This standard apparently deals with cold-calling, the circumstances under which sales reps may solicit new business from potential customers.

The current standard tracks long-standing policy and requires that sales reps only contact potential Medicare customers if: they have given written permission to be contacted; if the supplier has furnished a Medicare-covered item to them and is calling to coordinate delivery, etc.; or if the supplier has previously supplied a Medicare-covered item within the past 15 months and is now calling about a different purchase or rental.

CMS now proposes to extend the existing three exceptions to a broader array of contact methods to clarify that suppliers "cannot directly solicit patients, which includes, but is not limited to, a prohibition on telephone, computer email or instant messaging, coercive response internet advertising on sites unrelated to DME POS products, or in person contacts."

This change is significant in several respects. First, CMS characterizes the explicit expansion to most forms of communication as a "clarification" of the standard and not a "modification." That means CMS' position is that this rule is already in effect, though, arguably, not well-stated. This is important, because whenever CMS indicates an intent to revise one of its rules, it usually implies a particular concern with violations of that rule and abuse of the system. Thus, with CMS' emphasis on this standard, it is likely we may see an enforcement crackdown of this rule over the next year.

Second, in its commentary about the proposed revision, CMS emphasizes that violations will allow CMS or the National Supplier Clearinghouse to revoke the supplier's billing privileges and, further, to "determine if such billing may be for fraudulent or unnecessary supplies." Thus, it is clear that CMS views cold-calling abuses as evidence of potential fraud because of the potentially coercive message used.

Third, this proposed revision has significant ramifications for HME companies who lose key personnel to competitors. In many cases when an employee jumps ship, that person will try to take customers with whom he or she has had a relationship over to the competition. Often this is done in a manner that violates the employee's fiduciary obligations to the company by appropriating proprietary customer contact information. Too often, however, if an HME company tries to fight this misappropriation, the new employer will threaten to tie the fight up in expensive litigation so the previous employer backs away.

Under CMS' proposed revision, it is clear that the customer relationship belongs to the original supplier, the former employer. Therefore, if the departing employee communicates with previous customers, he or she will be engaging in cold-calling in violation of standard No. 11. Such a violation would subject the new employer to potential revocation of billing privileges and investigation for fraudulent billing. This revision thus gives employers who lose key personnel an important weapon to use when protecting their proprietary customer information.

Finally, because CMS has characterized this provision as a "revision," I believe this new weapon to use against misappropriation of customers is available immediately, regardless of whether or when the new standard takes effect.

To view the proposed rule, click here. <

To view the current supplier enrollment standards, click here.

NPI, Other Deadlines Approaching
BALTIMORE--HME providers beware: As of March 1, Medicare claim submissions must contain a National Provider Identification number or an NPI/legacy pair in the required primary provider fields or the claim will be rejected, CMS officials emphasized during a national roundtable call on Wednesday.

And on May 23, all Medicare claims submitted with anything other than an NPI will also be rejected, they said.

CMS staff again encouraged all providers to test small batches of claims by using only the NPI number. That will allow time to get any problems resolved before the May 23 date. If the claims are paid with no problem, providers should begin increasing the number of claims in the batch, CMS advised, noting only a small number of providers have so far tested claims this way.

In addition to NPI deadlines, CMS has also issued a number of dates that should be on providers' calendars. Among them:

--Accreditation deadlines: Jan. 1, 2009, for providers applying to the National Supplier Clearinghouse before March 1, 2008; on or after March 1, 2008, those seeking enrollment must be accredited prior to submitting an application; and by Sept. 30, 2009, all providers must be accredited. For a list of CMS' approved DMEPOS accrediting organizations, click here.

--Revised supplier standards draft rule comments: March 25, 2008. Comments may be submitted online at http://www.regulations.gov. Follow the instructions under the "Comment or Submission" tab and enter the file code CMS-6036-P.

--Although no firm dates for the second round of competitive bidding have been issued, CMS said it expects to begin pre-bidding activities--announcing specific zip codes that constitute the competitive bidding areas, specific items in each product category and bidder education and registration for user IDs and passwords--this spring. Bidding is expected to begin sometime this summer.