To view the decision memo in full, click here.

Full-Court Press to Consider Bidding's Effects on Small Business
WASHINGTON--With the July 1 implementation of competitive bidding closing in daily, industry stakeholders spent last week urging federal legislators to consider the impact of the program on small business.

Attendees at American Association for Homecare's Legislative Conference March 4-6 followed up congressional visits, pressing senators and representatives to sign on to letters to CMS expressing concern about what will happen to small providers under the bidding program.

The House version of the letter was authored by Rep. Jason Altmire, D-Pa., chairman of the Small Business Subcommittee on Investigations and Oversight, which last fall, convened a hearing on the program's possible effects. Sens. George Voinovich, R-Ohio, and Sherrod Brown, D-Ohio, authored the Senate version.

Addressed to Acting CMS Administrator Kerry Weems, the Senate letter states: “We believe that this payment strategy, as currently structured, could significantly reduce [DMEPOS] quality and access and have a devastating impact on small businesses throughout the country.”

The House letter, among other things, asks that CMS “provide detailed answers” to the following questions:

-- Of the 4,529 suppliers providing DMEPOS in the 10 competitive bidding areas, how many suppliers submitted bids for each of the product categories in each of the 10 bid areas? How many of those companies were small businesses?

-- In round one, how many contracts does CMS expect to issue for each product category in each of the 10CBAs? Are initial bids sufficient to ensure adequate access to each product category in every initial CBA? Does CMS have a strong indication that most of the selected suppliers will elect to participate based on the median bid price?

-- For round one, will CMS be able to meet the 30 percent small supplier participation target that was established in the final rule dated April 2, 2007, for each product category in each CBA?

-- Did CMS receive any applications from networks of small suppliers? If so, how many, for what product categories, and in what competitive bidding areas?

“We are also concerned,” the House letter continues, “that CMS is expanding the program before the first phase has started and the impact on beneficiaries' access to DMEPOS can be evaluated. Based on CMS' timetable for implementing round two in 70 areas, it is unclear how CMS can modify implementation details of round two based upon its experience in implementing round one. We recommend that CMS consider creating additional measures to ensure the healthy participation of small businesses in both rounds.”

In soliciting House colleagues to sign on to the letter, Altimire explained, “While we support efforts to improve the Medicare program and reduce costs, we must also ensure the changes do not unravel the DME small business community, and ultimately limit access to quality care for seniors.”

AAHomecare also asked providers to request that their senators and representatives send letters to Health and Human Services Secretary Michael Leavitt asking him to suspend round one of competitive bidding.

For a sample letter to HHS or to view the House and Senate letters to CMS, visit www.aahomecare.org.

Providers Question Proposed Revision to Supplier Standard No. 1
ATLANTA--With just over a week left before the comment period ends March 25, some of HME's main movers and shakers are still grappling with the potential effects of CMS' proposed revision to Supplier Standard No. 1.

As part of an overhaul of its DMEPOS enrollment standards, the agency's changes to Standard No. 1 would require that providers offering licensed services employ such personnel as W-2 employees, not 1099 independent contractors. That is a key change for the vast number of suppliers that, for example, use nurses and respiratory therapists on a contract basis.

“For the larger companies, [bringing on specialists as full-time employees] will not be much of a problem, but for the small mom-and-pop companies, which are the majority in this industry, it will definitely put a hardship on them,” said Wayne Link, president of Link Consulting Group, Columbus, N.C.

A requirement like this could put small providers out of business, Link said, “and by doing this, we all know there will be no customer service.”

Neil B. Caesar, president of the Health Law Center in Greenville, S.C, summed up the proposed measure this way:

”This change would require significant staffing changes for many suppliers who currently contract on an independent basis with respiratory therapists, nurses and other individuals subject to state licensure and other related requirements.

”In my opinion, CMS is imposing an unnecessary hardship on suppliers with this rule, because they must already be responsible for their personnel's performance, regardless of employment status. There are many less-disruptive ways for CMS to gain compliance assurances--subcontractors can be identified and listed, performance and supervision requirements could be monitored, and further, W-2 employment status does not, in itself, create a mechanism or an obligation for the supplier to ensure that the employee is performing consistent with licensure requirements.

“Regardless, if this change takes effect, that supplier's relationships with agencies or independent professional groups will change dramatically.”

Jerry Keiderling, president of Waterloo, Iowa-based VGM Group's U.S. Rehab, said there needs to be a clear understanding of how Standard No. 1 would affect rehab providers in particular.

On April 1, the CMS DME Program Safeguard Contractors will begin requiring that rehab equipment come from a provider employing an Assistive Technology Supplier who is certified by the Rehabilitation Engineering and Assistive Technology Society of North America and “who specializes in wheelchairs and has direct, in-person involvement in the wheelchair selection for the patient.”

”There are rehab providers that saw and heard from medical directors and CMS that it was permissible to contract an ATS,” Keiderling said. “Now, apparently under the new standards, you can't. Come April 1 [if this standard is finalized], those providers that have their contracts in place [with an ATS] will not be compliant.”

The proposed changes were published Jan. 25, and at press time on Friday, industry groups including the American Association for Homecare, the National Association of Medical Equipment Suppliers, VGM and Lubbock, Texas-based The Med Group were still finalizing their comments to send to CMS.

In its rough draft, however, AAHomecare said it generally supports Standard No. 1, but noted:

”The proposed regulation would require suppliers to furnish directly through employees any items or services for which a state requires a professional license. For example, if a state requires that a respiratory therapist set up oxygen patients, the supplier would be required to furnish that service directly through an employee rather than under arrangements with a subcontractor. Suppliers should have the ability to adjust staffing based on the demands of the markets in which they operate. We request that CMS clarify that this standard can be met through the use of part-time or per-diem employees as long as these individuals are W-2 employees.”

AAHomecare added: “Our interpretation of the proposed rule is that the prohibition on subcontracting applies only when state law would require that a licensed professional provide an item or services. In other words, if the state law is silent on whether a professionally licensed individual must furnish an item or service, then a supplier may furnish that item or service under arrangements with a licensed professional.”

For their part, representatives from RESNA and the National Registry of Rehabilitation Technology Suppliers noted that requiring providers to keep licensed employees on staff can only serve to help Medicare beneficiaries.

“RESNA believes that this will benefit the consumer because there will be better continuity of service,” said Anjali Weber, director of certification. “Our concern is also that sometimes subcontracted individuals may be available for the evaluation but not for the follow-up service, so you have a disjoint. In-house capability to address needs from start to finish, including modifications, repair and service to complex DME ensures that consumers are better served.”

Weber went on to say that, while there may be a negative financial impact on HME providers, Standard No. 1 would also benefit Medicare by helping to eliminate fraud.

“We do recognize that there is a financial impact on the suppliers to earn certification, but there is a need for a quality standard. This offers another level of protection--another consumer safeguard--from fraud and abuse. Complex rehabilitative equipment requires specialized skills and knowledge for individuals with changing, long-term needs to ensure a good outcome from evaluation to final follow-up.”

While NRRTS Executive Director Simon Margolis also said certified staff could only improve services offered to Medicare beneficiaries, he pointed out that CMS' proposal could cause “an access problem.”

“On one side, in the smaller rural areas and even in some smaller cities, there just are not enough of these people. In the Unites States, there are only about 2,000 ATSs and ATPs. Of those 2,000, about 80 or 90 already work for suppliers so they can't do the evaluations,” Margolis said. “On the other hand, it's important to have the contractor on staff to ensure that continuous service is not broken by a broken contract.”

Whether or not providers support the revision to Standard No. 1--or any of CMS' proposed standards changes--they should “get involved" in shaping the outcome with their comments before the March 25 deadline passes, Link said.

For Neil Caesar's complete analysis of Standard No. 1, click here.

Standards 10 and 12: What the Changes Could Mean to You
By all accounts, the effects of CMS' proposed revision and expansion of supplier standards for DMEPOS would 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 center on proposed changes to Supplier Standards No. 10 and No. 12, which cover a supplier's insurance and equipment delivery and beneficiary instruction.

Prior Standard No.10 deals with liability insurance. Currently, the standard requires that the supplier have comprehensive insurance for at least $300,000 and that this insurance covers “both the supplier's place of business and all customers and employees of the supplier. In the case of a supplier that manufactures its own items, insurance must also cover product liability and complete operations.”

CMS proposes an expansion of this requirement to require insurance of at least $300,000 per incident, not just in the aggregate. CMS also continues that the NSC must be listed on the policy as a certificate holder. This is to enable the National Supplier Clearinghouse to contact the underwriter to verify coverage, and also to keep the NSC on the disposition list for any communications from the insurer.

However, CMS also proposes a change to this notification requirement. Specifically, suppliers would now be responsible for providing the NSC with contract information or an individual employed with the underwriter who can verify coverage. The NSC wants to be able to verify coverage with an agent or, when necessary, with the underwriter.

Moreover, CMS proposes that a supplier should be required to obtain this insurance coverage prior to submitting its Medicare enrollment application and supporting documentation to the NSC. CMS' justification is that there can be up to a 90- day lag between the issuance of a policy and notification to the underwriter that the policy has been issued.

The agency proposes that insurance be obtained early to ensure that, when the NSC contacts the underwriter, enough time will have passed so that the underwriter will know about the insurance coverage. CMS' position is that, if the underwriter cannot verify coverage, the application will be denied and/or the supplier's billing privileges will be revoked.

This proposal, of course, raises the possibility that a new supplier coming to the Medicare program for the first time may have to purchase insurance whose value is premised on obtaining a Medicare supplier number that may or may not be issued. This would have to be viewed as a business risk for any new supplier.

It is possible that an insurer would be willing to postpone activation of the policy until the issuance of a supplier number, thereby intentionally saving the applicant some premium costs. Research would be necessary in this instance to verify that this type of activation postponement would still allow the underwriters to be told about the policy, so that they might confirm coverage should the NSC come knocking.

Prior Standard No. 12 deals with the delivery of product. It currently states that the supplier must be responsible for Medicare-covered items and must maintain proof of delivery.

CMS is proposing to clarify this standard. Specifically, CMS specifies that the supplier is responsible for maintaining proof of delivery in the beneficiary's file; must furnish information at the time of delivery as to how the beneficiary can contact the supplier by telephone; must provide the beneficiary at the time of delivery with instruction on how to use the equipment safely and effectively; and must document that this instruction has taken place.

Most advisers have specifically counseled that this [proof of delivery and instruction on how to use the equipment] is addressed by the supplier and the beneficiary at the time of delivery, and that this documentation be maintained in the beneficiary's file. CMS has now verified that this course of action is mandatory.

CMS also confirms that it will allow a supplier to contract out the delivery of Medicare-covered items to another individual or entity. The NSC has gone back and forth on this question over the years, so it is good to see it has finally confirmed that the delivery process may be subcontracted.

However, CMS cautions that the DMEPOS supplier has ultimate responsibility for ensuring the delivery in accordance with this standard and for maintaining all necessary documentation to demonstrate that the beneficiary received the Medicare-covered item and appropriate instructions for its use.

This means any subcontract for delivery services must include strict protocols on paperwork, prompt return of documentation, etc. Specifically, while the delivery will be by common carrier, I advise suppliers to deal with the paperwork requirements by direct communication with the beneficiary. Your mileage may vary.

Finally, note that CMS characterizes its requirements for this standard as a “clarification.” This means that the rule is in effect right now. Any noncompliant supplier should promptly address sufficiencies in their delivery documentation and beneficiary instruction.

To view the proposed standards, click here.

Comments are due by March 25. Electronic comments 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.

HME Company Newswire
Accurate Biomed Tapped for HomeFill Service
BETHANY, Mo.--Accurate Biomed Services has been named to service Invacare HomeFill units for customers served by three Invacare repair locations. The company will also provide pickup and delivery services for these units.

Accurate Biomed has repair facilities in the Kansas City, Mo., Indianapolis and the Ocala, Fla., areas that together provide pickup and delivery service to over one-third of the contiguous United States.

LifeGas Acquires Sky Oxygen's Medical Business
ATLANTA--LifeGas has announced its acquisition of Sky Oxygen's medical business effective Feb. 29.

Sky Oxygen of Carnegie, Pa., an independent gas and welding supply distributor, serves Pennsylvania, Ohio and West Virginia. With the transaction, LifeGas acquires two of Sky Oxygen's locations in Akron, Ohio, and Erie, Pa. LifeGas is also operating from Sky Oxygen's Carnegie location to service the greater Pittsburgh area. Seventeen Sky Oxygen sales and operations associates will be joining LifeGas to support and grow the medical business in these markets.

LifeGas is the U.S. medical gases business of The Linde Group providing medical gases to over 1,000 hospitals and home care providers.

Otto Bock Celebrates 50 Years in the U.S.
MINNEAPOLIS--Founded in Germany in 1919, this year prosthetic component maker Otto Bock HealthCare is celebrating its 50th year of operation in the U.S.

Since incorporation on Feb. 21, 1958, Otto Bock has grown from a handful of employees to more than 600 across the U.S. In its first decade in this country, Otto Bock introduced a new method for aligning and fitting prostheses that became the standard worldwide. The company also developed the first fully microprocessor-controlled knee, the C-Leg, which remains the most widely used computer controlled knee in the world.

“We have remained true to the vision Otto Bock expressed in 1919 and continue to measure our success by how well we serve the people who ultimately use our products,” said President and CEO Bert Harman.

Otto Bock HealthCare GmbH is based in Duderstadt, Germany. The company has more than 3,800 employees worldwide and produces over 25,000 types of prosthetic and orthotic components, mobility and rehabilitation products.

RiverRock Acquires Dynamic Energy Systems
DALLAS--RiverRock Holdings, a privately held acquisition firm, said last month it has acquired HME billing software provider Dynamic Energy Systems.

The acquisition provides Dynamic Energy with an infusion of capital for future growth. In addition, RiverRock will take an active management role with Geoff Kearney, a partner, stepping into the role of CEO for Dynamic Energy.

"DES is an established company with industry recognized products whose demand shows a significant potential for growth," said Kearney. "RiverRock is looking forward to combining its business expertise and capital with DES' industry knowledge and award-winning MedAct software to jointly take the company to the next level."

United Seating and Mobility Adds Indy Location
INDIANAPOLIS--United Seating & Mobility, the nation's largest privately owned mobility and rehab equipment supplier, has opened its first branch in Indianapolis to meet the needs of clients needing complex wheelchairs.

“After careful consideration, we chose to answer the call to add this location to better accommodate clients' increasing needs. Adding Indianapolis has allowed us to reach out and service more customers by increasing our presence in the Midwest area,” said Bruce Golatka, USM Midwest regional manager.

Lynn Marschand, who comes from At Home Health Equipment, will anchor the Indianapolis office, bringing over 29 years of industry experience.

In addition to the new Indianapolis location, United Seating & Mobility has offices in 25 locations in nine states.

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

Visit this week's sponsor at www.dynamicenergy.com.