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Medical Technology Manufacturers Call on CMS to Postpone Round Two
WASHINGTON--AdvaMed, a 1,600-member medical technology innovator and manufacturer association, has added its voice to those urging CMS to postpone competitive bidding.

The Washington, D.C.-based organization, whose members produce nearly 90 percent of the health care technology purchased annually in the United States--and more than 50 percent of that purchased annually worldwide--has called on CMS to refrain from implementing round two of bidding until the effects of round one, scheduled to go into effect July 1, can be analyzed. CMS has already announced the next 70 areas in which round two will be implemented.

“We are concerned that patient access to life-saving, life-enhancing durable medical equipment may be compromised through the DMEPOS competitive acquisition program,” said Stephen J. Ubl, president and CEO of AdvaMed.

“We urge CMS to postpone expansion of the program to 70 additional areas under round two until it fully evaluates the impact of patient access to the most appropriate treatment,” he added.

Ubl said AdvaMed was concerned that patient access might not be ensured under competitive bidding.

“Many of Medicare's elderly and disabled patients will lose their current supplier,” Ubl said. “It is essential that these patients continue to receive high-quality care without threatening patient access to important products, which can often mean the difference between a patient being able to remain in their own home or being forced into a nursing home or hospital.”

Added Wanda Moebius, AdvaMed spokeswoman, “We are very concerned that while this program is moving forward at a very rapid speed, it doesn't seem like a lot of patients understand that, effective July 1, there could be a very significant change in their medical supplies and how they receive them ... We're just asking [CMS] to slow down and assess how this program is impacting beneficiaries.”

Ubl also questioned competitive bidding's impact on research and development of new products.

“This system may discourage investment in new, superior products,” he said, because low Medicare prices wouldn't cover such innovations or improvements.

“AdvaMed continues to advocate for revisions to improve the competitive acquisition program as it is implemented to ensure patient access to the full array of therapeutic options,” Ubl said.

AdvaMed has been lobbying against competitive bidding for some time, officials said. Last October, AdvaMed board member Richard Saxon, president and CEO of Vista, Calif.-based Biomedical Life Systems, testified before the House of Representatives' Subcommittee on Investigations and Oversight.

Saxon challenged competitive bidding on several fronts, including quality of care, access to appropriate equipment, CMS' decision not to grandfather enteral nutrition patients, the lack of recourse for providers and the elimination of some providers from the Medicare program.

“A bidding process that limits the number of suppliers providing access to these technologies may also threaten patients' access to better technology and customized DMEPOS products,” Saxon said.

He also questioned the program's impact on technological innovations. The level of research and development in the medical devices and diagnostic industry is more than three times the overall U.S. average, Saxon said, but competitive bidding could change that.

“If competitive bidding reduces prices for DMEPOS products to a point where the ability to reinvest in additional R&D is eliminated, the patient will suffer,” he said, noting that “access to quality DMEPOS and related services can often mean the difference between a patient being able to remain in their own home or being admitted to the more expensive--and in consequence, higher cost to the Medicare program--treatment care of a nursing home or hospital. DMEPOS products enable providers to give essential care to many of the frailest and sickest Medicare patients.”

Another troubling consideration, Saxon said, is that the competitive bidding process “limits the ability of small manufacturers to compete to supply these innovative and unique technologies.”

Saxon reported the medical technology manufacturing industry directly and indirectly created 1.96 million jobs; payrolls totaling $93 billion; and $355 billion in shipments/sales, making it a major player in the U.S. economy in terms of revenue and jobs.

Ruling on Labs Bidding Demo Could Help HME; Baird Plans to Refile Lawsuit
SAN DIEGO--A federal court ruling has stopped a competitive bidding demonstration for clinical laboratory services in its tracks and could open the channels for a legal battle on Medicare’s DMEPOS bidding program.

On Wednesday, U.S. District Court Judge Thomas J. Whelan granted a preliminary injunction sought by San Diego-area laboratories Sharp Healthcare, Scripps Health and Internist Laboratory to block a Department of Health and Human Services competitive bidding demonstration for certain diagnostic tests covered under Part B.

The injunction temporarily blocks implementation of the bidding demonstration and enjoins HHS from announcing winners of the process, which was scheduled for April 11. Under the order, CMS is also not allowed to disclose any information included in the bid applications submitted in connection with the project.

The labs filed the lawsuit Jan. 29, arguing, among other things, that the bidding project threatened “irreparable harm” to labs in the San Diego area, the first site for the demonstration.

In issuing the injunction, the court found that HHS failed to comply with required federal rulemaking procedures and that, unless the project was enjoined immediately, both the laboratories and their Medicare patients would be harmed.

Whelan ruled that the labs had standing to bring the lawsuit because they were obligated to submit bids and are “now threatened with the prospect of losing their ability to participate in Medicare.” Thus, he said, they “have felt the effects of the agency’s decision in a concrete way.”

Whelan also rebutted the government’s contention that the labs should look to administrative remedies before suing, saying that if the labs lose “they cannot submit claims to Medicare and therefore, will not be in a position to obtain administrative review.”

So what does the ruling mean for DMEPOS competitive bidding?

Patric Hooper of Hooper, Lundy & Bookman, Los Angeles, lead counsel for the labs, told members of the press the decision marked the first time a court had enjoined a Medicare demonstration project because of failure to adhere to federal rulemaking procedures and called the action "a very important ruling for all providers and beneficiaries of the Medicare program."

Jeff Baird, chairman of the Health Care Group at Amarillo, Texas-based Brown & Fortunato, could not agree more. Baird said his firm plans to refile a lawsuit against DME competitive bidding, which, like the labs’ lawsuit, was initially dismissed on the premise that it was “not ripe”--in other words, there was nothing to adjudicate because bids had not yet been awarded or denied and the consequences of the government action could not be adequately surmised.

“My general understanding,” Baird said, “is that the government lawyers said [the laboratory lawsuit] is not ripe, meaning the winners and losers have not been chosen. They also said if you have a loser, the losing company has the right to an administrative appeal and therefore has some recourse. They were trying to get the judge to throw [the case] out.

“What’s significant is that the judge said ‘no.’ The judge said he wants to see what the allegations are.”

Baird’s lawsuit, filed in June 2007 on behalf of Medicare beneficiaries and providers in the Dallas CBA, is one of two backed by Waterloo, Iowa-based VGM and its Last Chance for Patient Choice, a non-profit formed to fight competitive bidding.

The second, filed in December on behalf of a provider in the Cleveland CBA by law firm Walter & Haverfield, is based on CMS' failure to follow federal law in enacting the rules related to the bidding program. That suit, according to lead attorney Michael Jordan, is “absolutely still on.” (See HomeCare Monday, Jan. 8.)

Baird said Brown & Fortunato has been following the laboratory lawsuit and is currently “reviewing the pleadings and orders in order to determine their applicability to the anticipated litigation to be filed on behalf of the HME industry.

“I believe we can use [this ruling] as precedent to the litigation we intend on refilling in Dallas,” Baird said. “We think that this will be--depending on how the court rules--persuasive to the federal court which will see our case. It’s basically the same issues.”

Baird said those issues echo many in the labs case, where the plaintiffs claim that rather than creating competition, the competitive bidding demonstration would result in fewer facilities, less competition and increases in Medicare’s expenditures.

Citing in particular questionable bid disqualifications in round one, several industry groups including the American Association for Homecare, VGM and the National Association of Independent Medical Equipment Suppliers are pondering additional lawsuits contesting the program. In an email Friday, the newly formed Accredited Medical Equipment Providers of America, whose members were disqualified in the first round, also confirmed it intends to file suit.

Congress is also becoming involved. In the wake of hearings on the labs issue last year by the House Committee on Small Business, Chairwoman Nydia M. Velazquez, D-N.Y., called Whelan’s decision “wise.”

According to a statement from Velazquez, who introduced the Community Clinical Laboratory Fairness in Competition Act (H.R. 3453) calling for the repeal of the labs bidding program, “CMS’ ill-conceived program would have compromised access to services for many Medicare recipients and put many great laboratories out of business.” The result would be that larger firms will shut out smaller competitors, the statement said.

“When it comes to medical services, quality is what matters--not size,” Velazquez said. “CMS’ pilot bidding program allows the government to pick and choose the winners and losers arbitrarily. That’s unfair to small firms and bad for patients.”

Whelan’s ruling is subject to appeal by HHS, which means the labs bidding demo may still go forward.

'Doc Fix' Is Back, and So Are Possible Cuts
WASHINGTON--The so-called “doc fix” is back. And, once again, that could mean trouble for HME.

Unless Congress acts, a 10.6 percent pay cut for Medicare physicians will take effect July 1, with additional cuts to follow in 2009 and after. The reduction had originally been scheduled for Jan. 1 of this year but, shortly before Christmas, Congress passed a law that put it off until July.

The six-month patch gave this industry a short reprieve. But now that federal legislators are again hunting for ways to fund the "doc fix," HME could be back on the chopping block in the form of a shortened oxygen rental cap and elimination of the first-month purchase option for power wheelchairs.

Last week, Montana Democrat Max Baucus, chairman of the powerful Senate Finance Committee that oversees Medicare, told reporters he wants to block the docs’ pay cuts for 18 months and, in addition, give them a 1.1 percent raise. He also wants the legislation Congress crafts to expand beneficiary access to preventive care benefits and primary care, and to offer more financial help for low-income seniors.

While the scale of the Medicare package remains in question, reimbursement for other providers could be reduced to help pay for it no matter what it includes.

“I continue to hear from staff that no specifics have been determined yet as to provisions to be included in the package, and that everything remains on the table for potential inclusion as the negotiations continue over the next week or so, including elimination of the power wheelchair purchase option and further reductions to oxygen,” said Seth Johnson, vice president of government relations for Pride Mobility Products, Exeter, Pa. He added that many on Capitol Hill agree the final package may contain only the 18-month fix for physicians “and very little else.”

Baucus noted that managed care funding cuts could help in financing the legislation. However, he continued, “There are lots of ways to skin a cat. There are all kinds of ways to find solutions around here. That’s our job, to find compromises and accommodations.”

Johnson said the Medicare package could be considered by the full Senate as early as mid-May.

Kansas Company Bids Adieu to Medicare Oxygen; Will Others Follow?
LEXANA, Kan.--When Gerald Sloan saw the new oxygen allowable under round one of competitive bidding, he knew he was out of the oxygen business with Medicare.

Sloan, the owner of Progressive Medical Equipment in Lenexa, Kan., had bid on oxygen in the Kansas City CBA but was not awarded a contract. And the new rate under competitive bidding--$149.40 in Kansas City--sealed the deal. There would be no grandfathered patients for his company, no subcontracting for a bid winner.

“When I saw what the allowable was for O2 … we were $20 above the allowable. And to me, that was our bottom dollar to do it efficiently, effectively and still make money and provide the kind of service we are accustomed to providing for our customers,” Sloan said. “So come July, we are going to drop all of our Medicare [oxygen] patients. We are going to tell them they are done with us and need to find a new supplier.”

He is not the only provider poised to pull out of the Medicare oxygen program. Rose Schafhauser, executive director of the Midwest Association of Medical Equipment Services, said she has talked to providers across the United States since CMS released the round one contract rates in March. (See HomeCare Monday, March 24.)

“Every single one who did not win a bid has said they do not want to continue servicing those oxygen patients,” Schafhauser said, adding that the providers were not interested in hanging on to their current oxygen patients who could be grandfathered in, or in subcontracting with another provider to help service oxygen patients.

It isn't just the competitive bidding rates for oxygen that are spawning talk of pulling out of the Medicare oxygen business. It is also the looming 36-month cap. On Jan. 1, 2009, Medicare will stop paying rental fees for those patients using oxygen for 36 months as of that date, and ownership of the equipment will transfer to the Medicare beneficiary.

“It was an economic decision,” said Sloan. While oxygen was not a huge part of Progressive Medical's business, “it was certainly a moneymaker for us,” he said, noting that his decision would affect between 30 and 40 Medicare oxygen patients. “Rather than going ahead and grandfathering these people in and letting them cap out in January, it makes more sense for us to pull in our equipment. Otherwise, it'd just be gone.”

He can use that equipment. Sloan said he services other oxygen patients for payers besides Medicare, and he also services oxygen patients through the company's St. Louis, Mo., branch, which is not in round one and also isn't among round two's 70 MSAs. “It makes sense for us to pull in our resources and regroup and put them where they can make us some money,” he said.

It may have been an economic decision, but it wasn't an easy one. “We felt like every one of our clients was our personal friend,” Sloan said. “They were someone we got to know personally. But that's not the way this business model can be done anymore. It's a very sad day for us and a very sad day for our beneficiaries. But that is what the government wants.”

Tom Pontzius, president of VGM's Nationwide Respiratory in Waterloo, Iowa, believes other providers could, like Sloan, decide to quit the Medicare oxygen business. “There will be a number of providers who choose not to do anything,” he said. “It depends on what percentage Medicare is of their business. I think that you will find companies that do not want anything to do with Medicare oxygen. However, we are still in a decision process ... does it make sense to subcontract and does it make sense to grandfather?”

Pontzius said he hasn't yet heard of too many oxygen providers opting out of Medicare. “I believe that is yet to come out in the wash,” he said. “I think we have a number of people that are holding on to the hope that CMS will do something to rectify the problems that came out surrounding the [round one] bid submission paperwork. In addition, there are some strong possibilities with regard to legislation that I believe people are holding out hope for. One of those things is the elimination of the 36-month cap and the other is the 'any-willing-provider' legislation.”

The latter, H.R. 1845, the Tanner-Hobson bill, includes a provision that would allow any qualified provider that bid and was not awarded a contract to continue service to Medicare patients under the prevailing bid rates.

“We are finding more people who are looking at different delivery models that will help them stay in business for as long as they are able,” Pontzius said.

Sloan believes he has identified such a business model, and it doesn't include the Medicare oxygen business in Kansas City. Progressive Medical is primarily a rehab company, and it was offered that contract. Even though the rehab allowable is “way below what we already deemed our bottom dollar,” Sloan said he has positioned his company to remain successful.

“We have been looking at this for several years,” he said. He and his staff have calculated how much business Progressive Medical does with Medicare in the competitive bidding categories. “All of the categories added up to only 11 percent of our total business,” Sloan said, “so we have other options.

“I think we will prevail. We're planning on it.”

Note to Providers: Don't Miss Out on CMS Education
BALTIMORE--Providers who are not tapping into CMS' educational articles might be missing critical information that could help them do business better in the competitive bidding environment, according to Mark Higley, vice president of development for Waterloo, Iowa-based VGM Group.

On April 2, CMS launched a series of articles via its Medicare Learning Network. The MLN Matters articles focus on round one implementation of the bidding program and offer tips to providers who are involved.

“Personally, I am impressed by these initial articles,” said Higley, who for the past two months has been traversing the country for a series of VGM-sponsored competitive bidding seminars. He has heard providers' questions and concerns. “The material is presented in an articulate manner. It is not too lengthy or full of legalese … If Medicare continues to distribute the information to the provider community in a timely and straightforward manner, it will be one of the first instances in which CMS' implementation of the competitive bidding program appears appropriate.”

The educational campaign is scheduled to continue up to the implementation of round one on July 1.

The three articles released so far have provided helpful information, Higley said. He noted one of the articles, an overview on how competitive bidding might affect beneficiaries, gives a good summary of the grandfathering process and also contains some key clarifications.

“For example, many [providers] were under the impression that, as non-contract providers in a certain product category, they would be unable to service Medicare beneficiaries other than completing current rental agreements via the grandfathering procedures,” he said.

But according to the article, Higley said, “[providers] can continue to service some of their Medicare-eligible patients who wish to remain with the provider (outside of the scope of the grandfathering terms) via a cash transaction, an [advance beneficiary notice] and a waiver of the Medicare claim. This was somewhat of a revelation to many during our recent VGM competitive bidding seminars.”

Higley has also found value in the articles not only for providers in round one but also for future bidders. A third article introduces providers to the new IACS, or the CMS security system known as the Individuals Authorized Access to CMS Computer Services.

“As many [providers] in the first round are aware, dozens of potential bidders were locked out of the 2007 CBSS application process to obtain bidder numbers, user IDs and passwords due to problems associated with the data not matching certain fields on the provider's 855S forms,” Higley said. “This MLN Matters article clearly sets forth which staff members of the provider are eligible to access the system and bid.”

For example, according to the article, suppliers wishing to bid in round two must register in the IACS before the opening of the bidding window. Three user roles will be available:

1) Authorized Official (AO). Each supplier's organization will be allowed one AO. The AO role can approve all other users associated with their organization who are requesting access to the bidding system. The AO will be able to input bid data, approve Form A and certify Form B in the bidding system.

2) Backup Authorized Official (BAO). Each supplier organization will be allowed to designate one or more Backup Authorized Officials (BAOs). In this role, the BAO can approve the supplier's End User registration for access to the bidding system. Like the AO, the BAO can also input bid data, approve Form A and certify Form B in the bidding system.

3) End User. Each supplier organization will be allowed one or more End User(s). The End User can input bid data, but cannot approve Form A or certify Form B.

The article also “offers good tips to ensure there will not be an access rejection,” Higley said.

While he is impressed with the content of the materials, Higley said, he is concerned about providers' ability to access it.

“I remain concerned … that many in the home care community do not have the proper information as to accessing these Internet documents and that CMS may need additional distribution outlets,” he said. “I would also hope that, once the array of providers that have accepted contract offers is finalized, these companies will receive similar hard-copy documents or direct emails that are applicable to the round one procedures.”

Click the followng links for PDFs of all three MLN Matters articles:

Click here for Medlearn Matters article SE0805.

Click here for Medlearn Matters article SE0806.

Click here for Medlearn Matters article SE0811.

CMS has also created a fact sheet that providers can hand out to Medicare beneficiaries. Called “What You Should Know if You Need Medicare-Covered Equipment or Supplies,” the fact sheet is available by clicking here.


Newsmakers
The American Association for Homecare elected a new slate of officers at its Washington Legislative Conference last month.

Alan Landauer, CEO of Landauer Metropolitan, Harrison, N.Y, will serve a second term as chairman of the association's board of directors. Joel Mills, president and CEO of Advanced Home Care, High Point, N.C., will serve again as vice chair; A.J. Filippis, president and CEO of Wright & Filippis, Rochester Hills, Mich., will serve as secretary; and Georgie Blackburn, vice president of government relations/legislative affairs at Blackburn's, Tarentum, Pa., will serve a second term as treasurer.

The association's executive committee also includes immediate past chair Tom Ryan, president of Homecare Concepts, Farmingdale, N.Y.; John Marsland, vice president and general manager of Air Products Healthcare, Conshohocken, Pa.; and Larry Higby, CEO of Apria Healthcare, Lake Forest, Calif.

At-large board members include Rose Schafhauser, executive director of the Midwest Association of Medical Equipment Services, who will chair AAHomecare's State Leaders Council. Schafhauser replaces Karyn Estrella, executive director of the New England Medical Equipment Dealers Association, who served in the position for three years. Carol Napierski, executive director of the New York Medical Equipment Providers association, will serve as the new vice chair of the State Leaders Council.

Other new at-large board members include Carol Laumer of Rice Home Medical, Willmar, Minn.; Wayne Knewasser of Premier Home Care, Louisville, Ky.; Christopher Kane of Pacific Pulmonary, Novato, Calif.; and Kees Regeling of DeVilbiss Respiratory/Sunrise Medical, Somerset, Pa.

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

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