STUART, Fla. – Liberator Medical’s net sales were $18.6 million in its fiscal first quarter ended Dec. 31, 2013, up 6.2% over the same period in 2012, the company announced Feb. 13.

Net income was $2.12 million, a 56.8% increase; gross profits were $11.7 million, a 7.1% increase; and operating income was $3.5 million, a 55% increase.

Liberator Medical, which began trading on the New York Stock Exchange in November, credits its focus on maximizing reorder rates from recurring customers and its direct response advertising campaign for the positive results.

“We will continue to manage the levels of our direct response advertising spend, implement process improvements and explore potential acquisition targets to grow our business and increase operating margins during fiscal year 2014,” stated Mark Libratore, president and CEO, in the release.

WASHINGTON – HME stakeholders made their case against an audit program run amok at a forum last week.

“We need to have a resolution on how to help my providers today because we are in crisis,” said Tom Ryan, president and CEO of AAHomecare, who attended the daylong event on Feb. 12. “The system is broken and it needs to be fixed.”

The Office of Medicare Hearings and Appeals (OMHA) hosted the forum to discuss an increased workload that has led to a backlog of 460,000 appeals and the suspension of the assignment of appeals to the administrative law judges (ALJs) for up to two years.

Stakeholders received a sympathetic ear from Chief ALJ Nancy Griswold.

“She was adamant that she gets it that two or three years of holding somebody’s cash flow is going to kill some of these businesses,” said John Gallagher, vice president of government relations for The VGM Group, who also attended the forum. “They want to expedite that.”

OMHA’s presentation detailed some initiatives aimed at making the process more efficient, including the increased use of technology and a website that will allow providers to view the status of their appeals.

But after multiple stakeholders complained about claims denied due to technical reasons during a question and answer session, it became clear to OMHA that the bulk of the problems may happen before they reach the ALJ level.

“It isn’t the ALJ that is the issue, it is CMS at levels 1 and 2,” said Gallagher. “They said they didn’t know there were technical issues. Griswold said that we’ve got to be holistic and look at this from all angles.”

The bottom line is that there is simply too much audit activity on the front end, particularly with the RAC audits, says Ryan.

“Nothing is going to work if you don’t stop pushing it in at the top,” he said.

One thing the industry would like to see: a way to separate appeals for claims denied due to technical reasons from all other appeals. That would create a compelling picture of just how badly the system is broken, said Ryan.

“I am hoping we get the dialogue, but the dialogue has to be with OMHA and CMS,” he said. “We’ve got the olive branch out.”

YARMOUTH, Maine – Net revenues for 2013 didn’t meet expectations for two-thirds of the respondents to a recent HME Newspoll.

Of the respondents who reported a decrease in net revenues in 2013, a majority (58%) reported a decrease of 10% or more. By contrast, in a previous poll, 63% of respondents said they expected net revenues to hold steady or increase in 2013.

Largely to blame for the change in tide: a spike in audits and other payment delays, respondents say.

“Had our pay times not slowed, we would have been slightly down for the year,” said one respondent who reported net revenues decreased by 10% or more. “It is hard to grow business and provide more jobs or raises when you cannot get paid for the work you do.”

An example of the havoc that audits and payment delays have wrought in 2013: One respondent dropped power mobility, enteral and incontinence, and laid off one-quarter of its staff to mitigate a cash flow problem created by a year-long wait for state Medicaid to pay for three pediatric wheelchairs.

Respondents also slammed competitive bidding—not only because it reduced reimbursement, but also because it shifted the overall market.

“Competitive bidding took a huge toll as expected,” said Lori Sears of Active Home Medical Supply. “What we didn’t expect was the increase in fierce competition in other areas like contracts and referrals.”

Of the respondents who reported an increase in net revenues in 2013, a majority (43%) reported an increase of no more than 5%. They credit an increase in retail and private pay business.

As for 2014? Despite a retail store that’s doing well, Manassas, Va.-based Prince Home Medical “anticipate(s) 2014 will see even more decreased revenues due to the grandfathered patients falling off,” said Syd Fortune.

YARMOUTH, Maine – HME providers have heard it a million times: If you are getting audited, appeal early and appeal often.

But, with the recent revelation that the Office of Medicare Hearings and Appeals has a backlog of nearly half a million appeals and has stopped assigning new cases to the administrative law judges (ALJs) for as long as two years, it may be time to reconsider that, say industry stakeholders.

“When you are waiting two-and-a-half years for a decision at the ALJ, you are going to have to make some decisions,” said Stephanie Greene, president of Morgan Green Consulting. “Is it worth it?”

In cases where it’s not worth it, it may be better to treat the patient as a new patient, say stakeholders.

“If you have a claim denied, say for oxygen, you can start the patient all over,” said Kim Brummett, senior director of regulatory affairs for AAHomecare. “Go back to the physician and re-do everything.”

But that isn’t a possibility for certain items, like custom prosthetics.

“Those folks can’t just refund the money and start over,” said Wayne van Halem, president of The van Halem Group. “That’s a limb that the provider has paid, in some cases, $30,000 for and Medicare is trying to recoup $40,000.”

Rather than putting providers in the position of having to decide whether or not to appeal, the system needs to be fixed, say stakeholders.

“I would not pin this on providers,” said Steve Azia, counsel at Baker Donelson. “Are there cases where claims are going to be rightfully denied? Yes, but the cases that go to the ALJ are cases that need to be heard.”

LAS VEGAS – Sue Chen spends more than half of each year on the road, visiting providers to preach the gospel of HME retail.

But Chen isn’t a retail consultant; she’s the CEO of Nova Medical Products, a Calif.-based manufacturer of mobility, bath safety and independent living products, and an enthusiastic advocate of retail’s potential for her provider customers.

The retail “transformations” she says she’s provided for more than 1,000 providers nationwide will fuel her Medtrade Spring session titled “Give Your Store an HME 180!” Here’s an advance look.

HME News: What’s the process you go through with providers?

Sue Chen: We start with a self-assessment to determine if your store is a great place to shop. From the assessment, we’re able to create a checklist of steps for in and out of the store. We break down a budget by staff time and actual dollars. They walk away with an actual plan to implement retail.

HME: How good of a job do you think providers are doing in retail now?

Chen: There’s probably not another industry that’s as sadly shopped as ours. You’re working hard, but your mindset is focused on that Medicare fight. Your store is often reflective of the depressing attitude of our industry. When I ask providers whether their wives would be excited to shop here, 99% of them say no.

HME: What’s most lacking in the HME retail environment?

Chen: Assortment. Providers are complaining about losing sales to the Internet, but more than 75% of HME sales are made online because the consumer couldn’t find it locally. Second is the store environment. Your customer is afraid, concerned; their loved ones are sick. When they walk in, are they going to get a Nordstrom’s experience or a BMV experience?

HME: What’s holding providers back from successful retail?

Chen: There’s a massive disconnect between the people serving the customer and those running the business. That’s different from traditional retail, where managers are in front of customers in the store. It’s making a mental shift to get yourself out of the trenches and into the store.

Sue Chen

CEO, Nova Medical Products

Manufacturer of mobility, bath safety and independent living products

“Give Your Store an HME 180! Marketing Inside and Out … That Works”

Wed., Mar. 12, 8:30 to 9:30 a.m.

Contact: 310-352-3600 / suec@novaorthomed.com

ELYRIA, Ohio – Invacare will close its London, Canada, manufacturing facility by mid-2014, the company announced Feb. 12. The plant produces long-term care beds and case goods. Production of the case goods will be moved to an Invacare plant in Sanford, Fla., while production of the beds will be outsourced to a third party with facilities “around the world,” according to a press release. ''While we regret the impact that this decision will have on our London associates, we believe this is an important step for the long-term health of the company,” said Gerald Blouch, Invacare president and CEO. “We expect that this closure will result in long-term cost savings that will enhance our ability to compete in the healthcare market.” Invacare on Feb. 6 reported a decrease in net sales for 2013.

Mediware, Jaysec combine forces

LENEXA, Kan. – Mediware Information Systems has partnered with Jaysec Technologies, allowing its users to interface more directly with physicians electronically. As a result of the partnership, Mediware users will have access to GoJaysec, a software program that processes referrals electronically without the need to manually input orders, according to a release. “We are excited to help our clients ensure orders are clean so payment can be made promptly,” stated Thomas Mann, Mediware president and CEO, in a release. “One of the HME industry’s biggest challenges is to get the physician order signed and submitted with the required documentation.”

In addition to GoJaysec, Mediware users will have access to GoPatient Management, a software program that manages patient outreach with an automated option. Jaysec’s programs are only the latest arrows to be added to Mediware’s quiver. Since acquiring Fastrack and Definitive Homecare Solutions last year, the company has been busy combining the features of its various products to develop a single business management solution.

House passes sleep apnea bill

WASHINGTON – The House of Representatives on Feb. 11 passed a bill that would require the Federal Aviation Administration (FAA) to go through a rulemaking process before implementing a new sleep apnea policy. The bill, introduced by Reps. Frank LoBiondo, R-N.J., and Rick Larsen, D-Wash., will likely slow down the FAA’s plans to require pilots with a body mass index (BMI) of 40 or greater to undergo testing for sleep apnea. There’s a nearly identical bill in the Senate.

Colonial Medical forms strategic partnerships

ORLANDO, Fla. – Colonial Medical Supplies, which was awarded more than 600 contracts in nearly every competitive bidding area (CBA), has become a minority shareholder of Airlife Medical in Auburndale, Fla. Colonial Medical has been serving patients in CBAs through subcontracting agreements, but in late 2013, it began seeking strategic partners to serve patients directly. Airlife Medical represents Colonial Medical’s third such investment in 2013. Colonial Medical was awarded contracts for walkers, oxygen, CPAP, manual and power wheelchairs, hospital beds and support surfaces. “Due to the common ownership, Airlife has been added to the Medicare Provider Directory as a competitive bid winner under the Colonial contract, as well as other private insurance contracts which Colonial is contracted,” stated David Bruinsma, CEO of Colonial Medical.

Liberator reports increases across the board

STUART, Fla. – Liberator Medical’s net sales were $18.6 million in its fiscal first quarter ended Dec. 31, 2013, up 6.2% over the same period in 2012, the company announced Feb. 13. Net income was $2.12 million, a 56.8% increase; gross profits were $11.7 million, a 7.1% increase; and operating income was $3.5 million, a 55% increase. Liberator Medical, which began trading on the New York Stock Exchange in November, credits its focus on maximizing reorder rates from recurring customers and its direct response advertising campaign for the positive results. “We will continue to manage the levels of our direct response advertising spend, implement process improvements and explore potential acquisition targets to grow our business and increase operating margins during fiscal year 2014,” stated Mark Libratore, president and CEO, in the release.

Judge rules against whistleblowers in Liberty case

WILMINGTON, Del. – A bankruptcy judge has disallowed several whistleblower claims in Liberty Medical Supply’s Chapter 11 bankruptcy case. Former employees Deborah Loveland and Lucas Matheny had alleged that Liberty received millions in overpayments from Medicare and Medicaid, which it never repaid, and covered up it all up by tampering with data, according to Law360. U.S. Bankruptcy Judge Peter Walsh ruled that Loveland and Matheny provided no proof of a false record or statement, no proof that Liberty had any knowledge of false records and no proof that Liberty had circumvented monetary obligations to the government. Despite receiving more than 4 million documents, database information and witness depositions, “their claims remain unsubstantiated,” wrote the judge. Liberty, which filed for Chapter 11 bankruptcy protection in February 2013, had asked the court in October to render a summary judgment on the whistleblower claims, which were filed in Florida in 2008.

MAC publishes prepay reviews for support surfaces, glucose monitors

INDIANAPOLIS – The claim error rate for Group 2 pressure reducing support surfaces (E0277) was 74% between July 1, 2013, and Sept. 31, 2013, according to a prepay review by National Government Services (NGS), the DME MAC for Jurisdiction B. NGS reviewed 275 claims: 239 were denied and 36 were approved. It found that 21% of claims were denied due to no response to the additional documentation request letter…The claim error rate for glucose test strips (A4253) was 98.5% between Oct. 1, 2013, and Dec. 31, 2013, according to another prepay review by NGS. During that time, NGS developed 7,952 claims for additional documentation: 7,831 were denied. It found that 60% of claims were denied due to lack of medical necessity.

Verus Healthcare adds plans, makes acquisition

NASHVILLE, Tenn. – Verus Healthcare, formerly Sleep Nation, is now in-network with one of the largest health plans in the country and the largest Blue Cross Blue Shield (BCBS) plan, it announced Feb. 11. The provider has also completed another acquisition, bringing its total to 64. "As Verus Healthcare grows through acquisitions and internal growth initiatives, gaining full access to service more patients by being in-network with health plans is critical," stated Richardson Roberts, CEO of Verus Healthcare, in a release. The provider now has access to 26 BCBS plans across the country.

Minnesota Medicaid could have saved millions with bid pricing, OIG says

ST. PAUL, Minn. – The Minnesota Medicaid program could have saved an estimated $2.27 million in one year by establishing a DME competitive bidding program similar to Medicare’s, according to a new report from the Office of Inspector General (OIG). The OIG determined that average Medicare payment rates obtained through competitive bids for 42 selected DME items were significantly lower than Minnesota’s average Medicaid payment rates. The state agreed that it could achieve lower rates of payment for selected DME items; however, it did not concur entirely with the recommended approach.

Heritage acquires MedCare

WICHITA FALLS, Texas – Heritage Home Medical Company has purchased MedCare Medical Supply, according to news reports. Graham, Texas-based MedCare will take Heritage’s name. “This means that the Graham location will now get the responsiveness and customer service that all of our clients in Wichita Falls have been receiving since 2005,” said Heritage President Don Dobbins in the Graham Leader. “We feel that we provide better customer service than companies that do the same thing as we do.” Heritage provides wheel/lift chairs, hospital beds/supplies, bathroom aids, walking aids/orthotics and daily living aids.

Prism completes acquisition of MedCare

TORONTO, Ontario – Prism Medical has bought an additional 51% ownership interest in MedCare Products, making the company a wholly-owned subsidiary, according to a Feb. 10 release. At the end of 2012, Prism purchased a 49% stake in MedCare, as well as the Burnsville, Minn.-based company’s manufacturing assets and inventory. MedCare supplies ceiling and floor lifts, slings and transfer aids. "The acquisition of 100% of MedCare is an important transaction for us as it meets a number of key strategic objectives and builds shareholder value," said Andrew McIntyre, Prism Medical chairman, in the release. "MedCare will continue to operate as before from its base in Burnsville, Minn., relying on the strength of its local personnel, reputation for service, enhanced product offering and its strong customer base.” Prism bought the remaining 51% of MedCare for $268,000. Additionally, the remaining holdbacks from the 2012 acquisition were settled for $532,000.

DME provider publishes caregiver guide

EL PASO, Texas – BEK Medical’s “Finding Independence at Any Age: A Caregiver’s Guide to Independent Living and an Introduction to Home Medical Equipment,” is now available for download. The book is a guide to caring for the people who are newly homebound, and shows caregivers the various types of equipment available to make care easier. Dora Williams, president of BEK Medical and author of the book, talks about her won personal experience as a caregiver and recounts her own struggles.

People news

Owings Mills, Md.-based The Board of Certification/Accreditation (BOC) has hired Carrie Green as its marketing manager. Green is responsible for developing and implementing BOC’s marketing strategy to improve communication with stakeholders and uphold customer satisfaction. She replaces Carli Cohen…Louisville, Ky.-based M. Joseph Medical has named Julie Norris CEO. She succeeds company founder Michael Bartlett…New Berlin, Wis.-based Home Care Medical has a new member on its board of directors: Kathy Bechtel, vice president of patient care services and chief nursing officer for Froedtert & The Medical College of Wisconsin…Inventory Solutions, Inc. has hired Lynn Corsale as its sales representative for New England. Corsale has been an independent sales rep for the past 18 years covering Connecticut, Massachusetts, Rhode Island, Vermont, New Hampshire and Maine…Varilite has promoted Nicole Muehlenhaus to director of medical. Previously, she was global product manager. In her new role, Muehlenhaus will set the future course of the company, as well as take over responsibility for Cascade Designs’ Medical Division, including sales, marketing, international distribution and customer service.

WASHINGTON – The week after a scathing forum on audits, CMS on Feb. 18 pledged to make a number of changes to the recovery audit contractor (RAC) program in 2014.

The change with the biggest potential impact on HME: CMS will require the RACs to wait 30 days before sending a claim to the MAC for adjustment to allow for discussions. Industry stakeholders say providers can use this defined window to try and clear up claims that have been denied due to technical reasons.

“If they say I don’t have a signed delivery ticket and it’s just an oversight—it could be on the provider’s part or the carrier’s part—and I can keep it open as opposed to having it sent to the second level of appeals, the Qualified Independent Contractor (QIC), it could prevent a lot of claims going down that path,” said Kim Brummett, senior director of regulatory affairs for AAHomecare.

At the Feb. 12 forum, hosted by the Office of Medicare Hearings and Appeals (OMHA), stakeholders made their case for why the audit program has run amok, resulting in a backlog of 460,000 appeals and the suspension of the assignment of new appeals to the administrative law judge (ALJ) level for up to two years.

Right now, providers almost always work their way up the appeals chain because the RACs aren’t willing to discuss denials and it’s the only way to keep the overpayment process from kicking in, stakeholders say.

“That’s one of the reasons things are so backed up,” said Ryan Ball, director of state policy for VGM & Associates. “Providers say they have no choice.”

CMS also plans to keep the RACs from collecting their contingency fees until the second level of appeal is exhausted. That doesn’t go far enough, stakeholders say.

“We know the true ability to turn over a claim is at the third level, the ALJ level,” Brummett said. “Their scope is different; they can look at medical necessity.”

Two other changes in the works will have less impact on HME providers, stakeholders say: revised additional documentation request (ADR) limits that will be diversified across different claims types (e.g. inpatient, outpatient); and adjusted ADR limits based on denial rates.

WASHINGTON – Industry stakeholders caution HME providers against putting too much stock in CMS’s announcement last week that it will not initiate new audits as it transitions to new recovery audit contractors (RACs).

“Essentially, this is common that a contractor slows down their new workload so they can finish it out before their contract ends,” said Wayne van Halem, president of The van Halem Group. “So, unfortunately for the DMEPOS industry, I believe it’s just the calm before the next storm.”

Here’s how CMS plans to wind down operations for the current RACs: Feb. 21 was the last day the RACs could send a post-payment additional documentation request (ADR); Feb. 28 is the last day the Medicare administrative contractors (MACs) can send prepayment ADRs for RACs to review; and June 1 is the last day RACs can send improper payment files to the MACs for adjustment.

While it could be several months before the new RACs are in place and new audits are initiated again, claims submitted during that time period will be fair game, stakeholders point out.

“Unfortunately, once the new RAC contracts are signed, the new audit contractors will have the ability to go back and review claims submitted throughout the hiatus,” said Ryan Ball, director of state policy for VGM & Associates.

For HME, CMS’s transition to new RACs in 2014 means a national contractor dedicated to just HME and home health. That’s the next storm van Halem refers to.

“I think we will see the volume increase once the workload is transitioned,” he said.

LAS VEGAS – Any fan of the 1984 movie The Karate Kid remembers the way wise Mr. Miyagi trained young Daniel in karate by having him master basic steps and repeating them over and over.

It can be a lesson to HME providers in the way they manage their inventory, says Brightree’s Ryan McDevitt, who will present a session at Medtrade Spring in March titled “Lean Mean Fighting Machine–How to Get Your Inventory Into Shape.”

Start with the fundamentals of inventory control by evaluating the revenue created by each SKU to create a plan for efficiency and profitability, McDevitt says. Here’s a preview:

HME News: Why do you say so many providers’ inventories are “out of shape?

Ryan McDevitt: Many providers keep a back stock of goods that are “what if I need this?” items. In a respiratory business, that might be a percussor. They’re devices you’ve purchased over time and you might use once a year.

HME: What should providers do with those kinds of items?

McDevitt: One of the things I used in my business as an HME provider is a red tag sale. Go through your inventory from the least dispensed items forward, and tag anything that hasn’t been used in 12 months. Ask yourself, what’s the revenue I’ve been able to create on those items? Have I made my money back to pay for this SKU? If I decide to phase it out, what do I have to lose?

HME: What’s an example of a solution for such inventory practices?

McDevitt: It’s very risky to buy just on price. You have to negotiate prices that make sense for your revenue cycle. You might end up forgoing a vendor relationship that’s lasted years and years that was based on high volume. You can’t do that anymore.

HME: What are the barriers to improving inventory control?

McDevitt: The habits of yesteryear are the biggest obstacles. Being a kid who grew up in Detroit watching what happened to the automobile industry, I understand industries that stay in their old ways, while the world changes around them. It’s about changing your mindset.

Ryan McDevitt

Major accounts manager, Brightree

Business management software provider

“Lean Mean Fighting Machine – How to Get Your Inventory Into Shape”

Wed., Mar. 12, 8:30 to 9:30 a.m.

Contact: 678-243-1135 / rmcdevitt@brightree.com

WASHINGTON – HME industry stakeholders are keeping a close eye on the “doc fix,” a bill that could hold either potential or pitfalls. Stakeholders see the bill as a vehicle for key points of their market-pricing program to replace Medicare’s competitive bidding program, but rumors abound on the Hill that lawmakers are considering applying bid rates to Medicaid to pay for the fix. “It’s difficult to know what’s going to happen,” said Cara Bachenheimer, senior vice president of government relations for Invacare. “We are doing what we can to make sure we stay out of the pay-for package.” As recently as Feb. 5, CMS officials were called up to brief members of the House Ways & Means Committee on the program. “CMS said everything is great, but several members voiced opinions about problems,” said Bachenheimer. The industry’s efforts got a nice boost on Feb. 12, when Rep. Renee Ellmers, R-N.C., published an op-ed in The Hill, calling for reform of the bidding process. “The conversation is alive and CMS is on the defensive,” said Bachenheimer.

F&P raises earnings guidance

IRVINE, Calif. – Fisher & Paykel Healthcare announced Feb. 18 that it expects net profit after tax to be NZ$97 million for the financial year ending March 31, 2014, NZ$7 million more than it expected. F&P had previously projected a net profit of NZ$90 million to $95 million. “Demand during the second half has been very encouraging, particularly for our Simplus, Eson and Pilairo Q masks, which are used for the treatment of OSA,” stated CEO Michael Daniell in a release. F&P also announced plans to expand its manufacturing facility in Tijuana, Mexico. It will spend NZ$4 million to increase the size of the facility by two-thirds to accommodate the installation of additional manufacturing equipment for breathing systems and masks. “We have brought forward the expansion of the Tijuana facility to ensure that we can meet anticipated demand as a result of strong customer acceptance of products, such as our new masks and Optiflow oxygen therapy system,” Daniell stated.

Jaysec partnership marries HME, home health

KNOXVILLE, Tenn. – Jaysec Technologies has teamed up with Intrepid USA, a national home care, hospice and private duty company. The partnership allows doctors to order, manage and complete all required initiating orders and face-to-face documentation for HME and home health using one system, according to a press release. “When our doctors asked us to offer the same beneficial solution for their home health ordering process as we did for DME, it was a no brainer,” stated Dan Dillon, CEO of Jaysec, in the release. Intrepid was impressed by Jaysec’s ability to streamline the referral process for doctors and HME providers. “After learning of the impact that Jaysec was able to have on days to signature for DMEs from an average of 45 days to an astonishing 1.2 days, we couldn’t not pass up the opportunity to try for the same results in home health,” stated Wes Perry, CEO of Intrepid.

DHS secures ‘amazing advantage’ in New Jersey

HARRISBURG, Pa. – Dynamic Healthcare Services (DHS) has made its second buy in as many months. DHS, which is backed by private equity firm GMH Ventures, has acquired Reliable Medical in Hackensack, N.J., it announced today. Reliable, a full-line HME provider covering the northern New Jersey and New York metropolitan areas, was awarded an oxygen contract in Round 2 of competitive bidding. "Reliable's presence in the northern New Jersey market and their Round 2 competitive bid contract in the southern New York Metro CBA, combined with the northern New Jersey Metro CBA contract that DHS was already awarded, gives us an amazing advantage across the New York and New Jersey metro market,” said Michael Holloway, president of GMH Ventures, in the release.The deal is the latest in a string of acquisitions for DHS. In January, the company acquired Clarion, Pa.-based Progressive Home Medical Equipment, a full-line provider serving Pittsburgh and western Pennsylvania. In 2013, DHS acquired APO2; and in 2012, it acquired HomeTown Oxygen and Evanko Respiratory, all in Pennsylvania.Reliable Medical founders Rob O’Connor and Deon DeFreitas will continue to manage operations. Terms of the deal were not disclosed.

Philips Respironics recalls 600 vents

MURRYSVILLE, Pa. – Philips Respironics initiated a worldwide recall of 600 Trilogy Ventilators, models 100, 200 and 202, according to a Feb. 19 release. The voluntary recall is to address a potential defect in part of the power management board, which could cause the ventilator to fail without an alarm indicating a problem, the release says. The recall affects devices shipped between Dec. 30, 2013, and Jan. 30, 2014. Philips Respironics asks customers to stop using the devices and return them to the company for replacement. The company says there have been no reports of death or serious injury related to the problem.

ResMed founder named to CONNECT Hall of Fame

SAN DIEGO – ResMed Founder Peter Farrell has been inducted into the CONNECT Entrepreneur Hall of Fame for his work in sleep and respiratory medicine, the company announced Feb. 19. In 1989, Farrell established San Diego-based ResMed to treat sleep-disordered breathing. The eighth inductee into the CONNECT Entrepreneur Hall of Fame, he has served the San Diego community through a variety of philanthropic efforts. CONNECT supports innovative technology and life sciences work in San Diego County.

CGS launches manual wheelchair review

NASHVILLE, Tenn. – High strength, lightweight manual wheelchairs will be the subject of a service-specific prepayment review because of their high claims payment error rate, CGS, the Jurisdiction C DME MAC, announced Feb. 18. Additional documentation required for K0004 claims may include: detailed written orders; medical records showing the beneficiary meets general manual wheelchair coverage criteria and one of the two K0004 code specific criteria; documentation of an assessment showing the beneficiary’s home can accommodate the wheelchair; delivery documentation; and copy of advance beneficiary notice. Relevant medical records are physician notes, non-physician clinical notes and non-physician clinical evaluations showing the beneficiary’s condition meets coverage criteria. Those records may come from a physician’s office, hospital, nursing home or home health agency, according to the bulletin.

CGS launches review to check on WOPD

NASHVILLE, Tenn. – CGS wants to make sure suppliers are complying with the Affordable Care Act’s requirements for written orders before delivery (WOPD). The Jurisdiction C DME MAC on Feb. 18 announced plans to launch service-specific medical review edits for home blood glucose monitors (E0607), standard manual wheelchairs (K0001), standard hemi manual wheelchairs (K0002), lightweight manual wheelchairs (K0003), octogenesis stimulators (E0748), speech generating devices (E2510), and negative pressure wound therapy electrical pumps (E2402). Suppliers will have to submit additional documentation for edited claims, including detailed written orders, delivery documentation, the advanced beneficiary notice or other records, according to the bulletin.

Patent tug-of-war continues

SAN DIEGO – Apex Medical has initiated challenges to four ResMed patents, it announced today. Apex has initiated challenges in the European Patent Office, the German Federal Patent Court, and the German Patent and Trade Mark Office. In November, ResMed won preliminary injunctions in Germany against Apex and Chinese manufacturer BMC Medical, prohibiting both manufacturers from selling or making certain products in Germany without a court order. In August, Apex asked the U.S. Patent and Trademark Office to reconsider the validity of six ResMed’s patents.

CareCentrix, Cigna stick together

HARTFORD, Conn. – CareCentrix has re-upped its partnership with Cigna, inking a five-year agreement to coordinate home health services, including nursing, home infusion and HME to its members, according to a press release. CareCentrix will also provide sleep therapy management services through its Sleep Management Solutions subsidiary. CareCentrix serves more than 23 million people through a network of 7,400 providers.

INGN opens for trading

GOLETA, Calif. – Inogen (INGN) opened for trading on the NASDAQ on Feb. 14, pricing about 4.4 million shares of its stock at $16 per share, the low end of an expected range of $16 to $18. On Feb. 18, the company’s stock was trading at $15.28 per share. Inogen filed for an initial public offering (IPO) in November. J.P. Morgan was the sole bookrunner on the deal.

Sleep apnea study reaches milestone

ANDOVER, Mass. – The Sleep Apnea cardioVascular Endpoints Study (SAVE) has enrolled 2,500 patients, Royal Philips, a major sponsor, announced Feb. 18. The patients are spread across seven countries, and 84 hospitals and medical institutions. The aim of the study: to determine the effects of CPAP treatment in preventing heart attack, stroke or heart failure in high-risk patients with moderate to severe obstructive sleep apnea (OSA). In addition to sponsoring the study, Philips has played an active role in training personnel at the various SAVE sites in CPAP adherence techniques.

SAINT PAUL, Minn. – Minnesota Medicaid in February reversed a decision that would have taken 2% of nearly every Medicaid dollar paid to HME providers during the federal sequestration period.

The Minnesota Department of Human Services (DHS) in late December had announced that the state must apply the 2% sequestration cut to Medicare payments to Medicaid payments from April 1, 2013, to April 1, 2014, to comply with state law.

In response, the Midwest Association for Medical Equipment Services (MAMES) hired attorney Sam Orbovich, who has experience with state and federal laws governing health care, to help them fight the cuts. Orbovich delivered a letter Jan. 23 on behalf of MAMES members to state health officials requesting that DHS undertake several actions to confirm that the sequestration under the act does not extend to Medicaid.

That letter turned the tide, announced MAMES Executive Director Rose Schafhauser Feb. 5.

“This is a tremendous win for MAMES members, our industry and other health care entities in the state of Minnesota,” Schafhauser stated. “MAMES is very proud of the efforts of several of our MAMES Minnesota members, along with attorney Sam Orbovich, in acting quickly to help us reverse this devastating reduction.”

The state had already started deducting 2% from HME claims as of December 2013; DHS announced in February it would soon begin reprocessing those claims.

Providers say the 2% cut would have been devastating.

“It adds up—and we’ve already had so many cuts,” said Chris Limbeck, owner of Bloomington, Minn.-based Metro Medical. “The cost of goods, the cost of shipping, the cost of gas—all my overhead keeps going up, and reimbursement keeps going down.”

Under tremendous pressure to reduce readmission rates, hospitals are more open than ever to establishing preferred provider agreements with HME providers, says healthcare attorney Elizabeth Hogue. “Providers need to understand them and actively pursue them,” she said. Here’s what Hogue had to say about the elements of successful agreements, including benchmarks, the topic of a webcast she hosted Feb. 13.

HME News: Why are these agreements becoming increasingly attractive?

Elizabeth Hogue: What underlies them is the perception that if hospitals establish relationships with one or a few providers, they will get better service and results than if they deal with a myriad of providers.

HME: I know these agreements are still fairly new on the scene, but are we starting to see data that supports that perception?

Hogue: I’ve been working with providers who have included in their agreements certain benchmarks that need to be met by each partner. A benchmark for the HME provider may be, have you provided the patient with what he or she needed within 24 hours of discharge? For the hospital, it may be, when you referred a patient, did you provide complete accurate information, so that we could service the patient as quickly as possible?

HME: Are you finding that these benchmarks are met?

Hogue: It’s turning out to be a nice two-way street. If nothing else, it opens communication at what we now know is a crucial time in the patient’s health care, i.e., a transition from one type of care to another.

HME: Besides benchmarks, what are elements of successful agreements?

Hogue: Agreements need to acknowledge the patient’s right to choice and both parties need to honor that right. They can’t involve payments between the parties. Sometimes it’s helpful to include a provision that the HME provider will be permitted on the premises, so a coordinator or liaison can have ready access to information and discharge planners. It could be a small space, a mini-workstation.

HME: OK, I’m a provider and I’m convinced this a good idea. How do I get the ball rolling?

Hogue: Typically, if they don’t know the decision maker, then they wend their way to that person through other people they know. It could be a member of the board of directors or a colleague of the decision maker. The typical things that providers do to get a hospital’s business—they do the same things here.

WASHINGTON – CMS announced Feb. 24 that it seeks public comments on how to take its competitive bidding program for DME nationwide on Jan. 1, 2016.

“While the methodology will be proposed in future rulemaking, CMS is first requesting comments on several aspects that it would consider in developing a methodology to adjust DMEPOS fee schedule amounts or other payment amounts in non-competitive areas based on the DMEPOS competitive bidding payment information,” CMS states in a fact sheet.

Specifically, the agency seeks comments on:

• Do the costs of furnishing various DMEPOS items and services vary based on the geographic area in which they are furnished?
• Do the costs of furnishing various DMEPOS items and services vary based on the size of the market served in terms of population and/or distance covered or other logistical or demographic reasons?
• Should an interim or different methodology be used to adjust payment amounts for items that have not yet been included competitive bidding? For example, items such as transcutaneous electrical nerve stimulation (TENS) devices have only been phased into the nine Round 1 areas thus far.
   

CMS also seeks public comment on whether it should consider simplifying the payment rules under competitive bidding for certain DME and enteral nutrition by making one monthly payment for all related items and services needed each month.

“Medicare allows additional payments for numerous supplies and accessories furnished for use with beneficiary-owned DME and eternal nutrition equipment,” CMS states. “Complicated claims processing systems and edits are needed to count rental months, prevent duplicate payments for thousands of separately coded items, and track utilization of ongoing replacements of supplies and accessories.”

Specifically, the agency seeks comments on:

• Are lump sum purchases and capped rental payment rules for DME and enteral nutrition equipment still needed?
• Are there reasons why beneficiaries need to own expensive DME or enteral nutrition equipment?
• Would there be any negative impacts associated with continuous bundled payments for enteral nutrients, supplies and equipment or for certain DME?

To read CMS’s advance notice of proposed rulemaking on how to expand competitive bidding, go here:

http://www.ofr.gov/OFRUpload/OFRData/2014-04031_PI.pdf. The agency expects the notice to be published in the Federal Register on Feb. 26.

WASHINGTON – The Health Care Fraud and Abuse Control Program recovered $4.3 billion in fiscal year 2013 and $19.2 billion in the last five years.

That’s up from $4.2 billion in fiscal year 2012 and $9.4 billion in the previous five years, according to an annual report released Feb. 26.

“These impressive recoveries for the American taxpayer are just one aspect of the comprehensive anti-fraud strategy we have implemented since the passage of the Affordable Care Act,” said Department of Health and Human Services (HHS) Secretary Kathleen Sebelius in a release. 

A highlight from 2013: Strike Force teams coordinated a takedown in eight cities against 89 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $223 million in false billings.

In 2013, the Department of Justice (DOJ) also opened 1,013 new criminal and 1,083 new civil healthcare fraud investigations, and helped to convict 718 defendants of healthcare fraud-related crimes.

Also as part of fraud prevention efforts, CMS has been revalidating 1.5 million enrolled providers and suppliers under Affordable Care Act screening requirements. As of September 2013, CMS has revoked the ability of 14,663 providers and suppliers to bill Medicare.

FLETCHER, N.C. – All-States Medical Supply has laid off eight employees due to soaring audit rates and recent cuts in Medicare reimbursement, according to a release.

When All-States won a contract as part of the national mail-order program for diabetic supplies in 2013, it planned to hire 50 more employees to meet an increased in demand.

But now, as the company is dealing with the steep cuts associated with the program, audits hold hundreds of thousands of dollars in limbo, said President Jason De Los Santos in the release.

“The layoffs were a devastating decision for us, but one we had to make to keep our head above water,” he said.

All-States is diversifying into retail stores and therapeutic shoe fittings, as well as adding an on-site pharmacy to take private insurance for diabetic supplies, according to the release.

WASHINGTON – Last week’s proposal to expand competitive bidding nationwide was likely a rude awakening for HME providers who have been sitting on the sidelines thinking that the program wouldn’t directly affect them, say stakeholders.

“Many folks thought it was going to crash and burn,” said John Gallagher, vice president of government relations for The VGM Group. “Folks that haven’t been engaged better get engaged.”

Under the Affordable Care Act, CMS is required to either expand the bid program or apply bid rates to non-bid areas by 2016. In an advance notice of proposed rulemaking published Feb. 24, the agency seeks comments on developing a methodology to adjust rates in non-bid areas based on bid rates; and on bundling payments for certain DME, including complex rehab and enteral nutrition.

Stakeholders are particularly concerned about the prospect of bundled payments.

“Is their whole goal just to reduce payment levels, which is what you always suspect,” said Cara Bachenheimer, senior vice president of government relations for Invacare. “Are they looking for specific directions or just creative ways to change the payment methodology? There’s not a sufficient amount of information.”

The bundled payments would include all related equipment, supplies and service. That would make for difficult business decisions for providers, say stakeholders.

“How do I know how long this person is going to need this equipment or how many supplies they will need,” said Denise Leard, an attorney with Brown & Fortunato.

Nothing in the proposal seems to address the underlying problems with the existing program, including lack of transparency and non-binding bids, say stakeholders.

“We’re analyzing the proposal and the statute itself,” said Jay Witter, vice president of government affairs for AAHomecare. “We’ve got some concerns with the way it’s written. We’ve already talked to members of Congress about it and we need to build as much pressure as possible.”

YARMOUTH, Maine – In the wake of the Feb. 12 forum on audits, the big question is: Where does the HME industry go from here?

From a legal perspective, one of the few options is a constitutional challenge that argues the backlog in processing appeals and the delay in assigning cases to the administrative law judges (ALJs) are obstructing due process, says healthcare attorney Edward Vishnevetsky.

“But that’s an uphill and costly battle,” said Vishnevetsky, an associate with Munsch Hardt. “There are national and state groups that want to make it happen, but they don’t have the financial resources. Individual providers and manufacturers have to come up with a way to do it.”

In light of that, Vishnevetsky believes there are three keys to leveraging the momentum from the forum to forge real change: 1.) HME stakeholders need to align themselves with other Medicare Part B providers to come up with a “concerted effort”; 2.) When lobbying lawmakers, they need to make clear that they seek relief legislatively because the courts have lack of jurisdiction legally; and 3.) they need to take their case to the national media.

“If this story went on CNN, what’s happening to providers would get a lot more traction,” he said.

AAHomecare’s Tom Ryan says the association is working on all of that and more, including legislation.

“We’re trying to come up with legislative language that we can get several groups to sign on to—it’s becoming such an issue for home health, as well,” said Ryan, president and CEO. “We’re getting the final draft reviewed and then we plan to go to the executive committee with it.”

AAHomecare is also trying to arrange a sit-down meeting with stakeholders, Chief ALJ Nancy Griswold and CMS officials, Ryan says.

“While we have to be prepared with legislation, we want the olive branch out and we want to try and work within the agency,” he said.

ELYRIA, Ohio – Lou Slangen, Invacare’s executive vice president and chief product officer, will retire at the end of February after 27 years with the company, according to a Feb. 27 release. John Remmers, senior vice president of global supply chain and operations since 2010, will take over responsibility for North American commercial operations, according to the release. Since he joined Invacare, Remmers has also overseen global engineering and commercial operations for China and Top End. “He has developed a passion for the home and long-term care markets that we serve, and we believe he is the right person with the right skills and experience to lead Invacare’s North American business,” said Gerald Blouch, president and CEO, in the release. Blouch applauded Slangen’s years at Invacare, saying, “During his years of service, he has been an incredible advocate for the homecare industry and the difference it can make in people’s lives.”

All-States blames audits, cuts for layoffs

FLETCHER, N.C. – All-States Medical Supply has laid off eight employees due to soaring audit rates and recent cuts in Medicare reimbursement, according to a release. When All-States won a contract as part of the national mail-order program for diabetic supplies in 2013, it planned to hire 50 employees to meet an increase in demand. But now, along with the steep cuts associated with the program, the company is also dealing with audits tying up hundreds of thousands of dollars in limbo, said President Jason de Los Santos in the release. “The layoffs were a devastating decision for us, but one we had to make to keep our head above water,” he said. All-States is diversifying into retail stores and therapeutic shoe fittings, as well as adding an on-site pharmacy to take private insurance for diabetic supplies, according to the release.

Fraud program posts record-breaking year

WASHINGTON – The Health Care Fraud and Abuse Control Program recovered $4.3 billion in fiscal year 2013 and $19.2 billion in the last five years. That’s up from $4.2 billion in fiscal year 2012 and $9.4 billion in the previous five years, according to an annual report released Feb. 26. “These impressive recoveries for the American taxpayer are just one aspect of the comprehensive anti-fraud strategy we have implemented since the passage of the Affordable Care Act,” said Department of Health and Human Services (HHS) Secretary Kathleen Sebelius in a release. A highlight from 2013: Strike Force teams coordinated a takedown in eight cities against 89 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $223 million in false billings.In 2013, the Department of Justice (DOJ) also opened 1,013 new criminal and 1,083 new civil healthcare fraud investigations, and helped to convict 718 defendants of healthcare fraud-related crimes.Also as part of fraud prevention efforts, CMS has been revalidating 1.5 million enrolled providers and suppliers under Affordable Care Act screening requirements. As of September 2013, CMS has revoked the ability of 14,663 providers and suppliers to bill Medicare.

Aeroflow signs four new insurance contracts

ASHEVILLE, N.C. – Aeroflow Healthcare has signed new insurance contracts with Cypress Care, Arbor Health, Indiana University and NJ Medicaid, according to a Feb. 28 release. The DME provider is now in-network with 24 state Medicaid plans and hundreds of other insurance providers. As reimbursement cuts, bidding and audits drive providers to close their doors, the contracts allow Aeroflow to step in, said Ryan Bullock, director of sales and marketing. “The additional contracts will position Aeroflow to ensure these patients are still serviced,” he said. The company’s goal is to continue growth nationwide, according to the release.

Insulet grows revenues in Q4

BEDFORD, Mass. – Insulet’s revenues in the fourth quarter of 2013 were $68.5 million, an increase of 19% over the same period in 2012, the company announced Feb. 17. Revenues grew on patient adoption of the OmniPod insulin pump, and despite a reduction in revenues from subsidiary Neighborhood Diabetes, due to competitive bidding. Gross profits for the quarter were $33 million, compared to $25.3 million over the same period in 2012. For the year ended Dec. 31, Insulet’s revenues were $247.1 million, a 17% increase over 2012. Gross profit for the year was $112.4 vs. $92.3 million.

The Compliance Team celebrates 20 years

SPRING HOUSE, Pa. – This year marks the 20th anniversary of The Compliance Team, the only woman-owned Medicare-deeming authority to accredit DMEPOS providers, according to a release. Founder and President Sandy Canally helped to drive a number of improvements to the accreditation process, including the industry’s first plain-language service and product-line specific quality standards, according to the release. “My intent was to make it easier for everyone within an organization to buy into the process by combining a readily-recognizable quality branding message with a third-party validated accreditation tool,” she said. The Compliance Team has accredited thousands of healthcare organization in the U.S., Puerto Rico and the U.S. Virgin Islands.

CMS issues face-to-face reminder

BALTIMORE – CMS has released a “Dear Physician” letter that providers can use to remind doctors they must conduct face-to-face examinations within six months of ordering certain DME items prescribed on or after July 1, 2013. CMS has repeatedly delayed enforcement of the face-to-face rule, but not the written order prior to delivery requirement. In the Feb. 21 letter, CMS said face-to-face examinations are necessary in the following cases: for purchases and initial rentals; when there is a change in the order; when an item is replaced; when the supplier changes; when state law requires it; and on a regular basis only when specified in documentation. It also outlined prescription, and date and timing requirements

Gov’t agrees to re-examine ResMed patents

SAN DIEGO – The U.S. Patent and Trademark Office has agreed to re-examine five ResMed patents in response to challenges filed by Apex Medical, the manufacturer has announced. Apex had filed challenges against ResMed in August 2013 for six patents related to CPAP machines and masks. It’s the latest move in an ongoing patent battle between ResMed and Apex. On Feb. 19, Apex filed challenges to four patents in European and German patent offices. In November, ResMed won preliminary injunctions in Germany against both Apex and BMC Medical, prohibiting them from selling or making certain products without a court order.

Aeroflow expands into South Carolina

ASHEVILLE, N.C. – Aeroflow Healthcare has acquired Easley, S.C.-based Air-Care Home Health, extending its footprint into Greenville, Spartanburg and surrounding areas. As a result of the acquisition, Aeroflow will be the primary provider of oxygen supplies and services to Air-Care patients. Aeroflow will also offer the company’s patients other DME, including vents and negative pressure wound therapy. Aeroflow cites competitive bidding as the driver behind its growth. “This program has presented us with new opportunities,” stated Josh Hill, director of business development, in a press release. “We are actively looking for more strategic locations, acquisitions and expansion opportunities.”

Obama proposes cut to Medicare Advantage

WASHINGTON – The Obama administration has proposed cutting reimbursements rates for Medicare Advantage (MA) plans by 1.9% in 2015, Kaiser Health News reports. Insurers argue, however, that the cut is much bigger when you combine it with new fees on health plans related to healthcare reform, a phase-out of the “star rating” system that helped buffer cuts from previous years and additional cuts due to sequestration, according to the news organization. Last year, CMS proposed a 2.3% rate cut for 2014, but after heavy lobbying, the agency ended up increasing rates by 3.3%. Enrollment in Medicare Advantage plans rose in 2014 by 8.9% to 15.9 million enrollees, according to consulting firm Avalere Health.

CMS to test ICD-10 claims

WASHINGTON – CMS plans to conduct testing of ICD-10 billing submissions across a wide range of fee-for-service providers. In a recent MLN Matters article, the agency said it will offer acknowledgment testing from March 7-10 to allow providers, billers and clearinghouse to determine whether CMS will be able to accept their claims with ICD-10 codes. After analyzing the results, CMS may offer additional weeks of acknowledgement testing. This summer, CMS will offer end-to-end testing to a small sample group of providers. As of Oct. 1, 2014, healthcare claims must contain ICD-10 codes.

Short takes: RESNA, NovaSom

Former Indy 500 driver Sam Schmidt, founder of the Sam Schmidt Paralysis Foundation, will open RESNA’s “Racing Towards Excellence in AT” conference. Held June 13-15 in Indianapolis, the conference will also feature Gregor Wolbring, a University of Calgary scholar of ableism ethics and governance, and Cole Galloway, a University of Delaware pediatric mobility researcher…NovaSom, provider of the AccuSom home sleep test, has joined the American Sleep Apnea Association (ASAA) industry roundtable, according to a release. Corporations on the roundtable support the ASAA mission, activities and programs.

People news: Changing of the guards at ACU-Serve, Jaysec

ACU-Serve Co-founder Jim Knight is now CEO. Co-founders Angie Barone and Tim Barone have left the company to pursue other opportunities. Other changes include Tom Meadows as business partner, Cindy Hoyt as COO, and Samantha Haynam and Yvette Nugent as account managers. Additionally, Stephanie Greene will head up an auditing and consulting division…Gibran Ameer is the new chief operating officer of Jaysec Technologies. He will oversee operations for value and efficiency. Ameer most recently worked with Medical Services of America. “He brings vast knowledge and experience within the home care industry along with a commitment to innovation and client services critical to the success of Jaysec,” said Dan Dillon, CEO.

WATERLOO, Iowa – The VGM Group has received 280 replies so far for its online competitive bidding survey, and it doesn’t want to stop there. 

The group created the survey to make it easier for providers to respond to CMS’s recent request for public comment on a proposal to expand the competitive bidding program nationwide in 2016. CMS on Feb. 24 published an advanced notice of proposed rulemaking seeking input on developing a methodology to adjust rates in non-bid areas based on bid rates; and on bundling payments for certain DME, including complex rehab and enteral nutrition.

VGM says its survey clarifies the six questions asked by CMS. It will forward the results to the agency by the March 28 deadline.

Take the survey here.

NEW YORK – The United Spinal Association and a group of manufacturers have banded together to ensure people with disabilities have access to needed supplies.

The newly formed Urology Coalition is particularly concerned about the impact of competitive bidding, which it says limits patient access, and the future expansion of the program to include urologicals. 

The coalition will also work to ensure access under Medicaid and private insurances.

In general, the Urology Coalition’s mission is to act on health policy matters that:

• Maximize function and independent living for people with disabilities;

• Provide people with disabilities with their choice of, and access to, prescribed and medically appropriate urological medical technology and supplies; and

• Ensure appropriate coding, coverage and payment.

In addition to manufacturers, the coalition will include consumers, disability advocates, clinicians and physician groups.

Members of the Urology Coalition are: ABC Home Medical, Adapta Medical, CR Bard, Coloplast, Convatec, Cure Medical, Hollister, McKesson, Teleflex Medical, UroMed, Wellspect Healthcare, Simon Foundation for Continence and the United Spinal Association.