To read the OIG report, click here.

U.S. Health Care Spending Headed to $4.3 Trillion by 2017
WASHINGTON--U.S. spending on health care is expected to double by 2017, reaching $4.3 trillion and accounting for nearly 20 percent--$1 for every $5 spent--of the gross domestic product, according to a CMS forecast published in the journal Health Affairs.

Health care spending is expected to increase by an average of 6.7 percent annually--nearly three times the rate of inflation--over the next decade, according to the report. And estimates say health spending per person will cost about $13,101 in 2017, up from $7,026 in 2006 when spending was $2.1 trillion.

Medicare spending will increase to $844 billion in 2017 compared with $427 billion in 2007. Medicaid spending is expected to more than double from $338 billion in 2007 to $717 billion in 2017, accounting for one-sixth of U.S. health care spending by that time, the report said.

According to CMS, the increases are largely driven by higher prices and increased demands for care. Another contributing factor is the aging population.

The report said the "impact of the population aging is expected ... to have a substantial influence on the public share of spending growth, as the leading edge of the baby-boom generation becomes eligible for Medicare."

The oldest baby boomers will turn 65 and begin to enter the program in 2011.

Home health spending growth is expected to slow, although it remains one of the fastest-growing health sectors, growing at 7.7 percent annually and reaching $119 billion by 2017. Medicare and Medicaid, the primary payers in this sector, will account for 84 percent of home health care spending by 2017.

CMS said nursing home spending growth is projected to increase to 3.8 percent in 2007 and then to accelerate to 5.3 percent annually through 2017. Medicaid is expected to remain the largest payer, paying for 43 percent of all such care during the decade. According to the report, the impact of the baby-boom generation on nursing home spending is likely to be small, even at the end of the projection period, since nursing home use is highest for people age 85 and older, and the oldest baby boomers will be just 71 in 2017.

Additional report findings:

--Projected out-of-pocket spending is expected to reach $269.3 billion in 2007 with a growth rate of 5 percent. Growth in this area is expected to average 6 percent each year to reach $464.3 billion in 2017.
--Physician services and clinical services will grow at a 5.7 percent rate--up to $473 billion--in 2007. Growth rates are expected to average 5.9 percent per year, down from 6.6 percent over the past 11 years.
--Hospital spending will increase 7.5 percent in 2007, up from 7 percent in 2006. But over the next 10 years, hospital spending is expected to decrease as demand for services slows.
--Prescription drug spending will slow to 6.7 percent in 2007 from 8.5 percent in 2006. But for 2008 through 2017, spending will escalate due to a projected leveling off of growth in the generic dispensing rate and evolving treatment guidelines that call for earlier introduction of pharmacotherapy.

Acting CMS Administrator Kerry Weems said the report "reminds us that we need to accelerate our efforts to improve our health care delivery system to make sure that Medicare and Medicaid are sustainable for future generations of beneficiaries and taxpayers."

To view the report, click here.

Standards 28 and 30: What the Changes Could Mean for You
By all accounts, the effects of CMS' proposed revision and expansion of supplier standards for DMEPOS will be far-reaching. 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 several provisions of the draft rule. This week, Caesar's comments are directed to proposed new standards 28 and 30, which have to do with day-to-day operations.

Standard No. 28 focuses on record-keeping. It requires that certain records be maintained for seven years after a claim has been paid. The specific records that must be kept [include] all information regarding how the HME was ordered, how it was referred and who referred it, and the National Provider Identifier. This would enable CMS to track what equipment was ordered and by who, including physicians, nurse practitioners, physician assistants, clinical social workers or certified nurse midwives.

CMS contends that "all DMEPOS supplies are ordered and referred by [the above listed practitioners]." Consequently, CMS states, "we believe that it is essential that DMEPOS suppliers maintain documentation regarding the specific individual who ordered or referred a Medicare beneficiary for DMEPOS." CMS further contends that the seven-year requirement is merely "codifying" a pre-existing seven-year rule.

This requirement will have significant implications for many suppliers. The obligation to identify all information regarding the ordering and referring of the equipment--including identifying from where the orders came--is interpreted by CMS to cover notes and other data that adequately supports medical necessity for the DMEPOS item.

It would seem to be a bit of a stretch to conclude that ordering and referral documentation necessarily includes evidence supporting the coverage criteria for the items ordered. Nonetheless, that is CMS' position. This will mean that suppliers must be able to demonstrate from the records in their possession that the coverage criteria have been satisfied and medical necessity has been demonstrated. A supplier would no longer be able to seek the supporting materials after the inadequate record has been identified.

An inadequate record would now be deemed a supplier standard violation. The only exception to this rule would be equipment that was known not to be medically necessary but for which a patient signed a properly executed Advance Beneficiary Notice of possible denial.

Proposed Standard No. 30 would specify that a suppliers' business must be "open to the public a minimum of 30 hours per week, except for those DMEPOS suppliers who are working with custom-made or fitted orthotics and prosthetics."

Thirty hours per week translates into six hours per weekday of "open to the public" operations. That strongly suggests very small suppliers would be unable to maintain this schedule plus handle deliveries, repairs and off-premises warehousing duties within a normal workweek. Further, for such suppliers, the new rule would mean off-premises activities such as deliveries would need to be conducted early in the morning or in the early evening.

CMS' rationale for this rule is strange. The agency first proposes that the rule makes sense because some providers "have posted business hours that are so restrictive that it makes it nearly impossible for [the NSC to conduct an] onsite visit." It is strange that CMS would choose to channel how a supplier organizes its daily activities in order to make the NSC's life more convenient.

CMS also justifies the change because "Medicare beneficiaries may not be able to find transportation during limited operating hours, [and so] the DMEPOS supplier must be open and available for periods long enough for beneficiaries to readily access their facility."

I sincerely question whether CMS' conclusion is the result of credible research, as beneficiaries should be able to work around limited hours of operation as long as they are clearly posted and consistently maintained. Probably the real reason for this proposal is CMS' belief "that most legitimate DMEPOS suppliers are open to the public for more than 40 hours per week."

From this "belief," CMS reaches its conclusion: "All legitimate DMEPOS [suppliers need] to be open a minimum of at least 30 hours per week (six hours a day for five days a week or five hours a day for six days a week) in order to attract, retain and serve Medicare beneficiaries."

This is a marked change from CMS' position of the last several years where its representatives have repeatedly stated that a supplier may have limited hours as long as they were clearly posted and honored. Further, CMS' logic ignores the needs of closed-door pharmacies and specialty suppliers who rarely, if ever, receive Medicare beneficiaries or other customers on their premises.

I believe this standard will be a proverbial "wolf in sheep's clothing" for many small suppliers.

To view the proposed standards, click here.

Electronic comments, due by March 25, can be submitted at http://www.regulations.gov. Follow the instructions under the "Comment or Submission" tab and enter the file code CMS-6036-P.

Newsmakers
AliMed, Dedham, Mass., has added Steve McIntosh to its team as the new business specialist for patient fall management. Through this hands on service initiative, McIntosh will directly assist customers with their fall management needs by providing product support.

Amoena has announced the appointment of Phillip Sporidis as general manager for Amoena USA Corp. Prior to joining the breast product maker, Sporidis was the global general manager of Cannondale’s Apparel, Footwear and Accessories division.

Cramer Decker Medical has announced the promotion of John Peterson to vice president of sales and marketing. Peterson, 37, joined the company in 2004 as director of sales.

Invacare, Elyria, Ohio, has appointed Robert K. Gudbranson senior vice president and CFO effective April 1. Most recently, Gudbranson served as vice president of strategic planning and acquisitions for Lincoln Electric Holdings in Cleveland. Prior to joining Lincoln, Gudbranson was director of business development and investor relations at Invacare. In his new role, Gudbranson, 44, will be responsible for all aspects of Invacare’s finance, treasury, internal audit, investor relations, and information technology functions. He replaces Gregory C. Thompson, who resigned as Invacare’s CFO in February to join Georgia Gulf Corp.

The government affairs department at Pride Mobility Products Corp., Exeter, Pa., has announced the addition of Julie Piriano, PT, ATP, who joins the company as director of rehab industry affairs. In her new role, Piriano will serve as an industry resource on legislative, regulatory and other issues impacting the complex rehab industry. Piriano was most recently rehab/MCO manager for Apria Healthcare. The company has also announced that Mike McCarthy, ATS, will assume the role of national sales manager for manual wheelchairs and Synergy seating products for its Quantum division. McCarthy previously worked for National Seating and Mobility in the Philadelphia market.

To revisit this news any time during the week, go to www.homecaremonday.com.

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