WASHINGTON – The facts: CMS and HME providers agreed to certain payment rates for home medical equipment under Rounds 1 and 2 of competitive bidding. 

Up for debate, according to providers: Whether or not CMS had the right to apply an additional 2% cut in payments to those contracts. The cut is part of automatic, across-the-board spending cuts that went into effect April 1. 

“Doesn’t this set up an incredibly dangerous precedent?” wrote Alexander Hicks, senior general manager for Evercare Medical Solutions, to HME News. “If CMS can accept a binding contract, with set reimbursement amounts within that contract, and then simply change those amounts by 2%, what is to prevent any federal agency from doing the same thing?”

While providers may feel the cut isn’t right, it’s probably not illegal, industry attorneys say. For starters, any language about breach of contract in the competitive bidding regulations focuses on the provider—not CMS.

“The actual competitive bidding contracts state that ‘any violation of the terms of [the] contract by the contract supplier constitutes a breach of contract,’” said Jeff Baird, chairman of the Health Care Group at Brown & Fortunato in Amarillo, Texas. “Further, the competitive bidding regulations only list actions that CMS may take when a contract supplier breaches the contract. They do not contemplate actions a contract supplier might take if CMS breaches.”

Even if a provider wants to sue for breach of contract, it would likely be an expensive waste of time, says attorney Neil Caesar, since a lot could happen between now and when Round 2 starts in July. 

“They could always change their mind or the sequestration could go away before then,” said Caesar, president of the Health Law Center in Greenville, S.C. “Should we pay $100,000 to an attorney to do research and get briefs ready where the court’s not going to let us do anything until there’s actual harm? Or should we wait and see?”

When Walt Gorski cleaned out his office at AAHomecare in March, he found himself looking at several years’ worth of documents that proved some industry issues have been around a long time. Gorski plans to keep working on many of those issues through The Gorski Healthcare Group. He spoke with HME News recently about how far the industry has come—and where it needs to go next.

HME News: What legacy have you left through your six years at AAHomecare?

Walt Gorski: What I hope is to have changed the tone with policymakers and raised the credibility of AAHomecare with CMS, with Congress, and with the Government Accountability Office. When I started, we would have to call them. By the time I left, they were calling us. We were working cooperatively to try to solve various types of problems.

HME: How can the HME industry take its efforts to the next level?

Gorski: We have to move from the anecdotal stage to the evidence stage. We don’t really have specific studies showing the value of home care. It makes intuitive sense that if you keep patients out of the hospital, it’s more cost effective. But because of competing priorities and resources, we’ve just started to scratch the surface in that area.

HME: Do you feel that the industry needs to clarify its message on competitive bidding? Some days, it’s about jobs, other days it’s all about patient access.

Gorski: (AAHomecare Chairman) Joel Marx summarized it nicely: What we do is for the patient and everything after that sort of falls into place. The jobs argument is really a patient issue, as well. If you have fewer people to do the same level of work, you are going to negatively impact the patients. They are all part of the same string and they need to be woven together.

HME: How will your experience at AAHomecare lend itself to your work as a consultant?

Gorski: All the things I have learned, I can bring to individual companies and manufacturers. As technology advances, manufacturers are going to innovate new products and they are going to need someone that knows how to navigate the process. Suppliers are going to need people who have a strong understanding of HME and the process by which we are regulated by the government.

WASHINGTON – HME industry stakeholders expect to find out soon if the Congressional Budget Office (CBO) agrees that their bill to replace competitive bidding with a market-pricing program (MPP) is budget neutral.

“Now that the bill has dropped and now that the CBO has dealt with some of the other issues they’ve had to deal with, we expect a score to be coming,” said Cara Bachenheimer, senior vice president of government relations for Invacare.

Rep. Tom Price, R-Ga., introduced H.R. 1717 on April 24 with 25 co-sponsors.

Per the bill, in the time between competitive bidding ends and MPP starts, the industry would take a 25% cut in reimbursement, and Congress would cover the remaining 20% of the 45% cut planned for Round 2. The cuts, based on the fee schedule amounts not the bid rates, would be phased in over 18 months: 5% on July 1, 2013; 10% on Jan. 1, 2014; and 10% on July 1, 2014.

“With MPP, reimbursement starts fresh,” said Jay Witter, vice president of government affairs for AAHomecare.

For the national mail-order program for diabetes supplies, the industry would take a 10% cut on July 1, 15% on Jan. 1 and 15% on July 1, covering 45% of the 75% cut planned, and Congress would cover the remaining 30%.

Relying on Congress to pitch in on the “pay for” may seem like a big ask, but stakeholders say it’s not an uncommon legislative tactic.

“It’s only an issue when someone doesn’t support the idea, then they use it as an excuse,” Witter said.

If the industry and the CBO don’t see eye to eye on the “pay for” or the timeline for getting MPP up and running, stakeholders say they may have no choice but to negotiate.

“Can we offer something else?” said Wayne Stanfield, president and CEO of NAIMES, which will merge with AAHomecare on May 22. “Yes. We need to stop this.”

While the CBO score looms large, stakeholders are running with the bill.

“What we need to do as an industry is not wait for the CBO, but go back to legislators and get them to sign on to this bill,” said Seth Johnson, vice president of government affairs for Pride Mobility Products.

BALTIMORE – CMS plans to make changes to the recovery audit contractor (RAC) program that could intensify audit activity for DME providers, sources say.

CMS plans to create a fifth RAC specifically dedicated to identifying overpayments for home health, hospice and DME nationwide, according to a request for proposal and a statement of work issued by the agency.

“Obviously, we’re going to see another increase in the volume of audits being done,” said Wayne van Halem, president of The van Halem Group. “The current RACS are being criticized for a lack of work in home health and DME, and CMS sees a propensity for high error rates in these areas, so that’s why we’re seeing the expansion.”

Four RACs will continue to identify overpayments in Regions A, B, C and D, but they will focus on hospitals and other healthcare providers. CMS plans to have the new structure in place in 2014.

Having one RAC dedicated to DME may also mean, instead of staggered audits, providers get hit all at once, sources say.

“There may be an increase in administrative costs to respond to all of the requests in a timely manner, especially for providers that supply items nationally,” said Sylvia Toscano, owner of Professional Medical Administrators.

A possible benefit of having one RAC dedicated to DME, sources say: a staff that develops an expertise in this area and, therefore, interprets guidelines more consistently.

“The only bright spot I see is that, maybe, if this is all they have to focus on, they may make better decisions,” van Halem said.

CMS also plans to require that the RACs play a larger role in the appeals process, a move that sources fear will reduce the number of denials that are overturned.

“I believe more decisions are going to stand in the appeals process,” said Kelly Wolfe, CEO of Regency Billing and Consulting. “The RACs are making money to deny claims and they’re going to fight to keep that money.”

ELYRIA, Ohio – Following Invacare’s earnings release April 25, a slew of board members and execs have bought shares of the company’s stock. Chairman Mal Mixon bought 45,700 shares at a cost of $12.53, and CEO Gerry Blouch bought 1,000 shares at a cost of $13.59. The following board members also bought shares: Ellen Tauscher and Dale LaPorte each bought 1,000 shares at a cost of $12.30 and $12.24, respectively; William Weber bought 5,000 shares at a cost of $12.15; and Baiju Shah bought 1,000 shares at varying costs. Additionally, Senior Vice President Lou Slangen bought 1,000 shares at a cost of $13.05. Invacare reported net sales for the first quarter of 2013 decreased 4.9% to $337.6 million compared to the same period last year. In the North America/HME segment, where the company has been hardest hit by a consent decree that limits manufacturing at its Taylor Street manufacturing facility, Invacare reported net sales decreased 13.6% to $152.2 million.

Coming soon: HME store in retirement community

NAPLES, Fla. – Max-Wellness, a Cleveland-based health and wellness company, will open a Mini-Max store in an upscale retirement community that is home to 700 residents on May 7, according to a press release. Located within a 37,000-square-foot facility on the campus of Moorings Park, product offerings will include mobility devices, braces, supports and other HME, the release noted. Max-Wellness CEO Michael Feuer characterized the store as a “prototype operation” to be used as a “springboard for future expansion in other markets throughout the country.” In 2011, Max-Wellness opened a Mini-Max store in the lobby of a local acute care hospital, Lake Health’s West Medical Center in Willoughby, Ohio.

Report: M&A down in Q1 2013

DUBLIN, Ireland – Mergers and acquisitions in the medical equipment industry, along with asset transactions, were down 14% in the first quarter of 2013, according to a report from Research and Markets, a global market research firm. There were 139 deals in the first quarter of 2013, compared to 162 deals in the same quarter of 2012, the report noted. The fourth quarter of 2012 saw 164 deals close. “Deal activity slowed as companies have been apprehensive about their investments owing to macroeconomic and geopolitical concerns,” authors of the report stated. Healthcare IT and in-vitro diagnostic markets recorded the highest number of deals in the first quarter, according to the report. One high-profile deal in the first quarter: Cardinal Health’s acquisition of AssuraMed for $2.07 billion.

CareFusion pays $41M to resolve allegations

SAN DIEGO – CareFusion, a manufacturer of home infusion pumps and respiratory products, has reached an agreement in principle to pay $41 million to the government to resolve an investigation related to prior sales and marketing practices and its relationships with healthcare professionals, according to a press release. The company will record the charge in the third quarter of fiscal year 2013 to establish a reserve for this amount. In connection with these matters, CareFusion has entered into a non-prosecution agreement, the release noted. “Since our spinoff (from Cardinal Health), we have made significant investments to improve our quality systems, including our sales and marketing practices, and we remain committed to adhering to the highest standards,” stated Kieran Gallahue, chairman and CEO. The agreement remains subject to several conditions, including the completion and execution of a formal settlement agreement and other required documentation, according to the release.

MedBridge acquires pair of providers

GREENVILLE, S.C. – MedBridge Healthcare has completed the acquisitions of two Fargo, N.D.-based sleep care providers: Precision Diagnostic Systems, a provider of sleep diagnostic and testing services; and SleepEasy Therapeutics, a provider of CPAP and respiratory services. The acquisitions expand MedBridge’s geographic footprint to service patients in Minnesota, North Dakota, South Dakota, Illinois, Iowa, Michigan and Wisconsin, according to a press release. “The combined businesses complement each other very well and the acquisition solidifies MedBridge’s position as one of the largest healthcare platforms in the sleep disorder and CPAP therapy market,” stated Klaus Koch, chairman of the board and managing partner at Vicente Capital Partners, the investment firm that owns MedBridge.

Provider news

JustHomeMedical.comhas established a $1,000 scholarship for students studying to be in the healthcare industry. The scholarship is open to those studying to be a doctor, nurse, pharmacist, physical therapist, dentist, medical technician or other healthcare-related professional…If all goes as planned, All-States Medical will more than double the size of its staff in the next two months, adding 50 new employees. The growth is a result of the company providing HME to an expanded territory as part of Round 2 of competitive bidding, the release noted…Numotion, the company formed from the merger of ATG Rehab and United Seating and Mobility, now offers a midline mounting system for power wheelchair drive controls from Active Controls, according to a press release. The ReJoy joystick platform allows users to re-position armrest-mounted hand controls in up to three locations on any power wheelchair.

Vendor news

Quantum Rehab, a division of Pride Mobility Products, is boosting the production capacity, delivery capabilities, parts inventory and staff support for Quantum Western America. Based in Las Vegas, Quantum Western America expects the moves to increase business efficiency and help patients receive mobility products faster…Inogen, a manufacturer and provider of respiratory products, has received a 2013 World Trade Week Export Achievement Award. The award recognizes companies that have demonstrated sustained success in exporting their products globally…Convaid is teaming up with Nehemiah Vision Ministries (NVM), a nonprofit charitable organization, to help provide special needs children in Haiti with custom wheelchairs, according to a press release. The company has donated two Tilt-in-Space Rodeo wheelchairs to the cause…Managed Health Care Associates (MHA), a group purchasing organization (GPO) that acquired The MED Group in 2010, has been acquired by Roper Industries, a diversified growth company based in Sarasota, Fla.

People news

The van Halem Group has hired Jane Naig to serve as a senior clinical consultant. Naig, a registered nurse, has 30 years of experience in medical investigations, quality assurance and clinical data analysis from her time spent working for Medicare, where she focused on the areas of medical review and program integrity…Brightree has named Rob Boeye as its chief revenue officer. Prior to joining Brightree, Boeye served as vice president for Invacare Corporation.

WASHINGTON – AAHomecare hopes a strong turnout for its Washington Legislative Conference May 22-23 will help drum up congressional support for H.R. 1717, a bill to replace competitive bidding with a market pricing program (MPP). In preparation for the event, the association is hosting a webinar May 7 designed as a refresher on how to conduct visits with lawmakers. Here’s what Jay Witter, vice president of government affairs, had to say about the conference.

HME News: What’s the goal this year as far as attendance?

Jay Witter: Even if we match last year’s attendance, that’s not good enough. We want to exceed last year’s numbers. Now that Reps. Tom Price and John Larson have introduced legislation, the goal is to have all of our members come into D.C. and talk about Round 2 problems and get congressional support for H.R. 1717.

HME: The timing of the conference seems perfect.

Witter: We’re at a critical time right now. Round 2 contracts go into effect July 1, so we’re trying to build as much pressure on Congress to move as quickly as possible.

HME: What will be different about this year’s conference?

Witter: I think the level of energy will be greater, because there’s such a need to rally the troops. We have true industry champions on our side, and we’ve confirmed that Reps. Price, Glenn Thompson and Marsha Blackburn will be speaking at the conference.

HME: What are some keys to good visits with lawmakers?

Witter: Explaining what HME providers do, what they have to go through to provide equipment to Medicare patients, and the effects of Round 2 on their businesses. Providers need to explain that Congress needs to pass something better than a bid system. Ultimately, we need to remind Congress that home care saves Medicare money.

HME: How will AAHomecare keep up the momentum after the visits?

Witter: We have feedback forms from participants, and we use that information to follow up on meetings. We work with those who come into D.C. long after the May event. We build off those events and continue to use that information for the rest of the year.

FRANKFURT, Germany – Boosted in part by its 2012 acquisition of Lincare, Linde AG has reported a better-than-expected 12.6% increase in operating profit for the first quarter, according to multiple reports.

Clearwater-Fla.-based Lincare contributed 397 million euros of Linde’s 3.99 billion euros in sales for the first quarter, helping to increase revenues in the gases division by 15%.

“Despite less than favorable conditions, especially in the mature markets, we have continued to achieve profitable growth,” stated CEO Wolfgang Reitzle. “Our newly acquired operations in the health-care product area made the most significant contribution here.”

For all of 2013, Linde is targeting at least 4 billion euros in operating profit, thanks to expected earnings contributions from Lincare, according to reports.

Linde bought Lincare for $3.8 billion in August. It also bought the former homecare business of Air Products in January of 2012.

WASHINGTON – Both the HME industry and CMS came under fire April 24 during a congressional hearing to review provider business practices and Medicare audits.

The hearing was the first for the Subcommittee on Financial & Contracting Oversight, which is led by Sen. Claire McCaskill, D-Mo.

“One significant concern is the prevalent practice among some medical equipment companies to aggressively call, email and write Medicare beneficiaries to directly market their products,” McCaskill said, citing a doctor from Chesterfield, Mo., who was recently “besieged by faxes from companies asking her to sign prescriptions from these patients so that the companies can bill Medicare.”

Two HME providers—Jon Letko, president of Milford, N.J.-based U.S. Healthcare Supply; and Dr. Steve Silverman, president of Boca Raton, Fla.-based Med-Care Diabetic and Medical Supplies—were invited to testify but declined. AAHomecare submitted a statement for the record.

“I continue to believe that these companies can provide us useful information that would assist the subcommittee in its oversight,” McCaskill said. “We will continue to discuss the possibility of these witnesses appearing in front of us at a future date.”

In the latter half of the hearing, McCaskill, a former auditor herself, took CMS’s auditors to task for recovering only $34 million of roughly $10 billion in improper payments identified in 2011.

“How much of their contract is based on how well they do and how much of it do they get regardless of whether or not they’re complete failures at it?” she asked.

Testifying at the hearing were two representatives from CMS: Peter Budetti, deputy administrator and director of the Center for Program Integrity; and Laurence Wilson, director of the Chronic Care Policy Group. When McCaskill asked for data separating improper payments due to fraud versus those due to technical errors, Budetti could not supply the information.

“The way that the statistical sample is structured and the way that it measures improper payments is not a very sensitive tool in terms of actually looking at fraud,” he said.

McCaskill was not satisfied with Budetti’s response.

“Well then why do we have it?” she asked. “Why are we auditing anything?”

WASHINGTON – The facts: CMS and HME providers agreed to certain payment rates for home medical equipment under Rounds 1 and 2 of competitive bidding. 

Up for debate, according to providers: Whether or not CMS had the right to apply an additional 2% cut in payments to those contracts. The cut is part of automatic, across-the-board spending cuts that went into effect April 1. 

“Doesn’t this set up an incredibly dangerous precedent?” wrote Alexander Hicks, senior general manager for Evercare Medical Solutions, to HME News. “If CMS can accept a binding contract, with set reimbursement amounts within that contract, and then simply change those amounts by 2%, what is to prevent any federal agency from doing the same thing?”

While providers may feel the cut isn’t right, it’s probably not illegal, industry attorneys say. For starters, any language about breach of contract in the competitive bidding regulations focuses on the provider—not CMS.

“The actual competitive bidding contracts state that ‘any violation of the terms of [the] contract by the contract supplier constitutes a breach of contract,’” said Jeff Baird, chairman of the Health Care Group at Brown & Fortunato in Amarillo, Texas. “Further, the competitive bidding regulations only list actions that CMS may take when a contract supplier breaches the contract. They do not contemplate actions a contract supplier might take if CMS breaches.”

Even if a provider wants to sue for breach of contract, it would likely be an expensive waste of time, says attorney Neil Caesar, since a lot could happen between now and when Round 2 starts in July. 

“They could always change their mind or the sequestration could go away before then,” said Caesar, president of the Health Law Center in Greenville, S.C. “Should we pay $100,000 to an attorney to do research and get briefs ready where the court’s not going to let us do anything until there’s actual harm? Or should we wait and see?”

WASHINGTON – Both the HME industry and CMS came under fire April 24 during a congressional hearing to review provider business practices and Medicare audits.

The hearing was the first for the Subcommittee on Financial & Contracting Oversight, which is led by Sen. Claire McCaskill, D-Mo.

“One significant concern is the prevalent practice among some medical equipment companies to aggressively call, email and write Medicare beneficiaries to directly market their products,” McCaskill said, citing a doctor from Chesterfield, Mo., who was recently “besieged by faxes from companies asking her to sign prescriptions from these patients so that the companies can bill Medicare.”

Two HME providers—Jon Letko, president of Milford, N.J.-based U.S. Healthcare Supply; and Dr. Steve Silverman, president of Boca Raton, Fla.-based Med-Care Diabetic and Medical Supplies—were invited to testify but declined. AAHomecare submitted a statement for the record.

“I continue to believe that these companies can provide us useful information that would assist the subcommittee in its oversight,” McCaskill said. “We will continue to discuss the possibility of these witnesses appearing in front of us at a future date.”

In the latter half of the hearing, McCaskill, a former auditor herself, took CMS’s auditors to task for recovering only $34 million of roughly $10 billion in improper payments identified in 2011.

“How much of their contract is based on how well they do and how much of it do they get regardless of whether or not they’re complete failures at it?” she asked.

Testifying at the hearing were two representatives from CMS: Peter Budetti, deputy administrator and director of the Center for Program Integrity; and Laurence Wilson, director of the Chronic Care Policy Group. When McCaskill asked for data separating improper payments due to fraud versus those due to technical errors, Budetti could not supply the information.

“The way that the statistical sample is structured and the way that it measures improper payments is not a very sensitive tool in terms of actually looking at fraud,” he said.

McCaskill was not satisfied with Budetti’s response.

“Well then why do we have it?” she asked. “Why are we auditing anything?”

YARMOUTH, Maine – As HME stakeholders continue to pore over the list of Round 2 contract suppliers, it’s become more and more clear that some may not meet various licensing requirements—a condition of winning a contract.

“How are they granted awards if they didn’t meet state qualifications for licensure?” asked Jeff Mastei, director of compliance and audits for Dearborn, Mich.-based Wright & Filippis.

In Tennessee, for example, out-of-state contract suppliers received a letter from the competitive bidding implementation contractor (CBIC) on April 16 reminding them that they must “comply with all state and local laws, including applicable licensure requirements.” For Tennessee, that means providers must have a physical location within the state. The letter states that contract suppliers have until July 1 to meet the licensure requirements.

“That’s just not going to happen,” said James Herren, executive director of the Association for Tennessee Home Oxygen & Medical Equipment Services. “The state licensure department is overwhelmed with phone calls from people saying, ‘I didn’t know.’”

Herren said the state has told him it is investigating as many as 50 companies.

Even the July 1 deadline cited in the letter appears to be in conflict with CMS’s own bidding rules, which state that providers must have met licensure requirements by May 1, 2012, with a copy on file with the National Supplier Clearinghouse, stakeholders say.

“Our licensure law has been in effect for about 13 years,” said Herren. “For either CMS or bidders to say they didn’t know you had to have a license is laughable. Those bids should be invalid.”

Another example: In the Detroit CBA, providers of hospital beds must have a “bedding and furniture permit,” according to stakeholders.

“There is an issue of whether or not CMS actually checked state and local licenses for various bidders,” said Barry Cargill, executive director of the Michigan Association for Home Care. “I think many people involved in the bidding process were not even aware that this was there.”

The big question now: What happens if contract suppliers were awarded contracts when, technically, they should not have been? The letter to suppliers in Tennessee states that failure to comply with licensure requirements or any other requirement outlined in the contract will result in a breach of all of a supplier’s contracts.

WASHINGTON – StrategicHealthSolutions, a new audit contractor, has begun targeting claims for post-pay review. The problem, say stakeholders: Many have already been audited.

“There’s only a select pool of providers, and a select pool of claims to pull from,” said Andrea Stark, a reimbursement consultant with MiraVista.

Medicare contracted with the Omaha, Neb.-based StrategicHealthSolutions to serve as a Medicare supplemental medical review contractor (SMRC) in 2012 to “identify and employ more efficient methods of medical review, such as data extrapolation” and lower improper payments for fee-for-service claims, according to its website.

So far, it looks like the contractor is going after sure bets, say stakeholders, like power mobility claims, which typically have high error rates.

“They’re looking for situations where there’s a high likelihood there’s going to be an issue,” said Stephanie Morgan Greene, general counsel for Harrington Management Group, also known as The Audit Team.

Provider Dave Hosemann had just provided requested information on a claim to another auditor when StrategicHealthSolutions requested the same information on the same patient. StrategicHealthSolutions told Hosemann it hadn’t meant to duplicate another auditor’s efforts, but asked him to provide the information, anyway.

“Does the left hand know what the right hand is doing here?” said Hosemann, owner of Vicksburg, Miss.-based Hometown Medical. “I think someone has to make a decision on whether these entities want beneficiaries taken care of or whether they don’t.”

Provider Mark Farmer has also experienced double dipping: Three of the four claims StrategicHealthSolution is currently reviewing have already been audited. That puts even more stress on his staff.

“It’s so labor-intensive to respond to these audits,” said Farmer, president of Mesa, Ariz.-based Southwest Mobility. “They’re relentless.”

The only hope for reducing audit scrutiny is to ensure you have a high approval rate, says Greene.

“Take every audit extremely seriously,” said Greene. “If you pass a random DME MAC audit, the likelihood of another audit is significantly lowered.” HME

WASHINGTON – A bill in the House of Representatives to replace competitive bidding with a market-pricing program (MPP) picked up 19 co-sponsors last week. There are now 44 co-sponsors for H.R. 1717 and industry stakeholders urge providers to keep talking it up. “We need everybody and their cousins to hear about it,” said Cara Bachenheimer, senior vice president of government relations for Invacare. Reps. Tom Price, R-Ga., and John Larson, D-Conn., introduced the bill April 24. Also last week, on May 9, CMS in a bulletin urged providers to make Medicare beneficiaries in Round 2 areas aware of competitive bidding and the national mail-order program, which are both scheduled to kick off July 1. CMS will start mailing information to approximately 5.7 million beneficiaries on May 13, according to the bulletin.

Aeroflow lands hundreds of contracts, seeks subcontractors

ASHEVILLE, N.C. – Aeroflow Healthcare, which won 456 contracts as part of Round 2 of competitive bidding, seeks to subcontract with providers that did not win bids to help it serve customers, according to a press release. Aeroflow, a provider of sleep testing and treatment services, says the subcontracting agreements will allow providers who did not win bids to maintain their relationships with their referral sources and patient base. The company is also encouraging family members in areas where the local provider did not win bids to contact Aeroflow Healthcare “to ensure that these patients continue to have access to all of their necessary health care equipment,” according to the release.

Lincare headlines Linde’s strong growth

FRANKFURT, Germany – Boosted in part by its 2012 acquisition of Lincare, Linde AG has reported a better-than-expected 12.6% increase in operating profit for the first quarter, according to multiple reports. Clearwater-Fla.-based Lincare contributed 397 million euros of Linde’s 3.99 billion euros in sales for the first quarter, helping to increase revenues in the gases division by 15%. “Despite less than favorable conditions, especially in the mature markets, we have continued to achieve profitable growth,” stated CEO Wolfgang Reitzle. “Our newly acquired operations in the health-care product area made the most significant contribution here.” For all of 2013, Linde is targeting at least 4 billion euros in operating profit, thanks to expected earnings contributions from Lincare, according to reports. Linde bought Lincare for $3.8 billion in August. It also bought the former homecare business of Air Products in January of 2012.

Study: Bedtime regularity predicts CPAP compliance

DARIEN, Ill. – Having a routine bedtime prior to CPAP therapy plays an important role in compliance, suggests a new study published in the journal SLEEP. Conducted by researchers at Penn State University, the study found that bedtime variability was a significant predictor in CPAP adherence, which researchers defined as four or more hours of treatment per night. The odds of not being adherent to CPAP therapy after one month were 3.7 times greater for every one unit increase in pre-treatment bedtime variability, the study found. “Long-term use of CPAP, such as after the first month or longer, requires regular routines that are conducive to establishing a new health behavior,” stated principal investigator Amy Sawyer, PhD, RN, assistant professor at the Penn State School of Nursing. Researchers will present the findings of the study, which comprised 97 adults with newly diagnosed obstructive sleep apnea (OSA), at the SLEEP 2013 professional conference June 5 in Baltimore.

NEMED members ‘right there to help’ bombing victims

NEW BEDFORD, Mass. – In the wake of the bombings in Boston, the New England Medical Equipment Dealers Association (NEMED) called on its members to provide assistance to victims injured in the attacks. Its members answered that call. “By the second day, BMC (Boston Medical Center) was calling NEMED to ask us to help coordinate because they had received so many offers of help from our members,” said Karyn Estrella, NEMED executive director, in a bulletin from The VGM Group. Invacare Corporation and Baystate Home Infusion & Respiratory Services were instrumental in getting equipment delivered quickly to BMC, according to the bulletin. National Seating & Mobility, along with Invacare, delivered several wheelchairs to the hospital within 48 hours. “As with other tragedies, NEMED members are always right there to help,” Estrella added. “It is an honor to work with these amazing people.”

New season of HME Voice set to kick off

ATLANTA – The second season of HME Voice is slated to begin May 16, according to a Medtrade press release. Hosted by Kevin Gaffney, group show director of Medtrade, and Mike Sperduti, founder of Emerge Sales, the show is a forum for experts to discuss innovation in the industry. Topics of discussion will include the latest legislative updates from Washington, new technologies in the industry and stories from providers. The first show on May 16 features Ron Bendell, president of VGM & Associates. Shows on June 20 and July 16 feature Jeff Baird of Brown & Fortunato and Bryan Anderson of Pride Mobility products, respectively.

Vendor short takes

Members of The MED Group will soon have access to CareCentrix managed care patients. A new partnership allows MED members to provide home medical equipment and services to CareCentrix’s patients at pre-negotiated rates for the next three years, effective May 1…Maddak, Inc., can now add another award to its trophy case to go along with the Medtrade Spring Innovation Award it won in March. In recognition of Morph Wheels, the company’s foldable wheelchair wheel, Maddak received the 2013 Design of the Year Award in the transportation category from London’s Design Museum…For the fifth straight year, Invacare will be honored for its customer service by Smart Business, a regional business management journal. Through case studies and customer testimonials, the lengthy application process sought to gain an in-depth understanding of the company’s customer service philosophy, service systems and training methods…This year marks the 125th anniversary of DeVilbiss Healthcare, which was founded in 1888 by Dr. Allen DeVilbiss, who invented the first atomizer. Originally founded in Toledo, Ohio, the company’s atomizer came to replace the use of cotton swabs to apply medication to the throats of patients…The Board of Certification/Accreditation (BOC) has announced an agreement with Essentially Women (EW), a group purchasing organization for providers of women’s healthcare products and services, whereby EW members receive discounts on BOC products and services. EW members will get a 50% discount off of BOC’s three-year facility accreditation fee, which helps providers manage finances, business processes, and human resources, the release noted…Sunrise Medical has announced the first recipients of its Propel Donation Program: Suheil Aghabi has received a power wheelchair from Numotion; and Wallace Choy has received a folding manual wheelchair from National Seating & Mobility.

Provider short takes

Numotion, formerly ATG Rehab and United Seating & Mobility, has acquired Mobility Designs, an Atlanta-based complex rehab provider. This is the second acquisition for Numotion since the merger. The company announced in April that it acquired Ultimate Mobility in Worcester, Mass…The owners of Broadway Home Medical in Wichita, Kan., plan to open a cash-only store on the other side of town, according to the Wichita Eagle. The new 4,000-square-foot store, Lindsey Medical Supply, will carry similar supplies to Broadway Medical—walkers, wheelchairs, hospital beds and respiratory supplies, among other items—but won’t bill Medicare and other payers…Pinnacle Medical Solutions has unveiled a new website featuring a new range of services, including “ask a diabetes educator” and “ask an insurance specialist” functions. Pinnacle home delivers medical supplies to people in Alabama, Arkansas, Louisiana, Mississippi and Tennessee.

People news

AAHomecare has hired Heather Boyd to be its new manager of regulatory affairs. Boyd has six years of experience with healthcare policy, focusing specifically on Medicare regulations. She will officially join AAHomecare on May 20, working closely with Kim Brummett, senior director of regulatory affairs, on the association’s policy initiatives. 

WASHINGTON – H.R. 1717 remains the HME industry’s No. 1 priority, but with time running out, stakeholders are again pressing for a delay in the July 1 start date of Round 2 of competitive bidding.

The basis for that delay: a growing list of contract suppliers that appear to fail to meet various licensure or accreditation requirements in accordance with CMS’s own bidding rules, they say.

“This is raising significant issues about the process that CMS used to apply due diligence to complete the contracting process and raises concerns about how the contracts were determined,” said Wayne Stanfield, president and CEO of NAIMES.

In the latest wrinkle, The VGM Group has identified about 300 contract suppliers that, as of May 10, do not appear to meet accreditation requirements for the products they accepted contracts for. They had to meet that and other requirements by May 1.

VGM has put together a one-page handout that outlines those findings and is passing it along to lawmakers. The handout asks for a delay in the program, through legislation or an administrative request from the Department of Health and Human Services, says Ryan Ball.

“The handout seems to get their attention,” said Ball, director of state policy for VGM & Associates.

The bigger issue is whether those unqualified suppliers “polluted” the bidding process, says Cara Bachenheimer.

“When you look at the volume of firms that did not meet licensure requirements, it completely pollutes the calculations of the single payment amounts,” said Bachenheimer, senior vice president of government relations for Invacare. “Other providers should have been in the mix with different payment amounts.”

With about 150 expected to converge on Capitol Hill May 22-23 as part of AAHomecare’s Washington Legislative Conference, providers should pull out the stops to press lawmakers to delay Round 2 and implement H.R. 1717, which would replace competitive bidding with a market-pricing program or MPP. Introduced April 24 by Rep. Tom Price, R-Ga., the bill currently has 65 co-sponsors.

“We’ve got a showcase for members that this was dubious and needs to be delayed and changed,” said John Gallagher, vice president of government relations for The VGM Group.

YARMOUTH, Maine – Some Medicare Advantage (MA) plans are starting to look more and more like traditional Medicare, industry sources say.

In the wake of CMS’s announcement of the Round 2 payment amounts, a Blue Cross Blue Shield MA plan in one state, for example, has shaved 10% off its reimbursement for HME. Another plan going in that direction: Windsor, says Tyler Poole.

“We anticipated this,” said Poole, vice president of operations for Benefits365, a company that helps providers shift beneficiaries from traditional Medicare to MA plans. “We thought they would make a move—we hoped they wouldn’t, but we thought they probably would—but we don’t think there’s any chance they’ll make a 45% cut.”

As part of Round 2, that’s the cut that will be in place for providers serving traditional Medicare beneficiaries in 91 cities starting July 1.

There are also reports of increased audit activity for providers that service MA plans. Peggy Walker has received five of these audits from providers in recent weeks.

“It’s just a few, but providers need to know these audits are coming and they need to be prepared,” said Walker, a billing and reimbursement advisor for U.S. Rehab, a division of The VGM Group.

Because MA plans follow the guidelines for traditional Medicare, the audits should be mostly familiar territory. Where some providers are getting tied up: Their contract says one thing, and they’re being told another thing.

“Just because you call and speak with a representative and you hear what you want to hear, it doesn’t necessarily equate to a commitment from a policy perspective,” said Andrea Stark, a reimbursement consultant with MiraVista. “Everything has to be in writing or from an official directive.”

Even though MA plans aren’t totally free from reimbursement cuts and audits, for providers like Banner Home Care, which is not a contract supplier under competitive bidding, this business has become a priority.

“It’s at least 50% of our business and growing,” said Susan Kirchhof, director of HME for the Gilbert, Ariz.-based provider, which is an affiliate of Banner Health. “We’re going after as many contracts as we can.”

And there may be more of them to get. In its annual review of the federal budget in May, the Congressional Budget Office stated it believes MA plans will swell to 21 million participants by fiscal year 2023, from 14 million this year.

YARMOUTH, Maine – In a nod to the complexity of subcontracting under competitive bidding, the number of non-contract suppliers that are seeking out agreements and those that aren’t is split down the middle, according to a recent HME Newspoll.

Fifty-four percent of non-contract suppliers in Round 2 who responded to the poll say they aren’t seeking out subcontracting agreements with contract suppliers, while 46% say they are.

“It’s a way to keep our workers employed and in front of our referrals until all the dust settles,” one respondent said.

Another remarked, “We have contacted suppliers and they have contacted us regarding these arrangements. Anything to maintain our revenue stream.”

The good news for non-contract suppliers seeking a subcontracting agreement? They say 73% percent of the time contract suppliers are receptive to the idea, according to the NewsPoll.

While some non-contract suppliers characterized subcontracting as a necessary evil—a way of staying in the Medicare game for the time being—others were opposed to the idea altogether. One respondent asked how, with reimbursement for Round 2 set at, on average, 45% below the current fee schedule, there would be enough to go around.

“Simple math will tell you that a contract winner whose reimbursement is in any of the bid categories is financially unsustainable,” said Fred Ivey, owner of Arden, N.C.-based CareMedical. “How in the world are these folks going to be able to hire a subcontractor if their margins will not sustain the contractor’s business?”

Provider Ed Huyke says he’s not seeking out subcontracting agreements because he would have to cut too many corners to make it work under the new reimbursement.

“It would hurt our reputation, but that’s just our opinion, and time will tell who’s right,” said Huyke, manager of Anything Medical in Bullhead City, Ariz.

The last straw for non-contract suppliers that aren’t seeking subcontracting agreements: the potential legal ramifications and audit burden of, among other things, having one provider rely on another provider to get the billing right.

There were also non-contract suppliers who object to subcontracting on principle.

“Why should I help a company that low-balled the bid?” one respondent said. “Then they want me to not only store their equipment in my warehouse, but do the delivery, set-up and explanation?”

PLAINVIEW and MT. VERNON, N.Y. – Two New York-based DME providers, Landauer Metropolitan and Allcare Medical, have agreed to merge operations. The merger brings together two of the largest HME providers in the Northeast at a time when the industry is seeing significant consolidation due to competitive bidding, according to a press release. The newly merged company will be better equipped to handle the increased volume that will likely result from the program, the release notes. It will operate under the Landauer Metropolitan name. Lou Rocco, CEO of Landauer, will remain in that position, while Win Hayes, CEO of Allcare Medical, will become president of the company. Landauer serves patients in nine Northeastern and Mid-Atlantic states and the District of Columbia, while Allcare serves patients in New Jersey, New York and Pennsylvania.

Audits: AOPA vs. CMS

ALEXANDRIA, Va. ­– The American Orthotic and Prosthetic Association (AOPA) has sued CMS over what it calls “unfair and unauthorized” auditing activities, according to a press release. “Today, AOPA has stated emphatically that we will not stand by when government acts inappropriately to threaten either the quality of care we provide to our patients or the economic viability of the small businesses and providers that comprise the orthotics and prosthetics profession,” stated Thomas Kirk, president of AOPA, in the release. The impetus for the lawsuit: a “flawed, and in some respects amateurish, report (by the Office of Inspector General in August 2011) alleging fraud in the O&P field where there essentially was none.” The suit claims, among other things, that the report misunderstood important nuances of the patient-physician relationship with respect to prosthetics; created confusion about whether bi-lateral amputees should have both prostheses on a single claim; and jumped to conclusions about fraud while disregarding technological advances necessitated by injuries sustained by veterans of wars in Iraq and Afghanistan.

Pride/Quantum partner with Comfort Company

EXETER, Pa. – A new partnership allows the Comfort Company, a manufacturer of wheelchair seating and positioning products, to sell manual wheelchairs from Pride Mobility and Quantum Rehab, according to a press release. Working as a team, representatives from all three companies will be able to deliver onsite support and additional resources to providers to meet patient needs. The inside sales force at Pride and Quantum will continue to process and facilitate orders to provide an uninterrupted transition for providers. “This partnership will allow Quantum/Pride and Comfort Company to capitalize on additional opportunities and improve relationships with therapists and ATPs across the country,” stated Jay Brislin, vice president of Quantum Rehab, in the release.

ResMed settles with university

SAN DIEGO – ResMed agreed to pay the University of Sydney $AU25 million to settle a lengthy legal dispute regarding patent infringement, according to news reports. The university, where researcher Colin Sullivan invented a nasal mask to treat sleep apnea, had accused ResMed, its former commercial partner, of infringing its patent and failing to pay royalties. As part of the settlement, ResMed will fund two perpetual academic chairs: the ResMed Chair of Sleep Medicine; and the ResMed Chair of Biomedical Engineering. The company will also provide research funding in related areas, the release noted.

Strike Force takedown nets 89 medical professionals

WASHINGTON – The Medicare Fraud Strike Force has charged 89 individuals with about $223 million in false billings, according to a press release from the Department of Justice (DOJ) on May 14. Strike Force operations in eight cities resulted in charges against doctors, nurses and other licensed medical professionals for alleged fraud schemes involving, primarily, home health care, but also mental health services, psychotherapy, physical and occupational therapy, DME and ambulance services, the release noted. The coordinated takedown was the sixth of its kind nationally since the strike force was initiated. Operated jointly by the Department of Health and Human Services (HHS) and the DOJ, the strike force has charged nearly 600 individuals with about $2 billion in false billings. 

Sleep Nation launches live call service

NASHVILLE, Tenn. – Sleep Nation, a provider of CPAP supplies, has bundled its call center, insurance eligibility and fulfillment teams into a live call service for providers, according to a press release. The provider is pitching the services to other providers looking to increase their re-supply businesses. “Live callers perform better than automated options and provide for better patient communication and care,” stated Richardson Roberts, CEO of Sleep Nation, in the release.

CMS adds three new DME codes

WASHINGTON – CMS has added three new codes for custom DME, according to an announcement. The additions, which are only to be used for items that meet the definition of “customized items,” are: K0008 (custom manual wheelchair/base); K0013 (custom motorized/power wheelchair base); and K0900 (custom durable medical equipment, other than wheelchairs). Effective July 1, claims for items billed using these codes will be manually processed and evaluated to ensure the items furnished meet Medicare’s definition of customized items.

Study links sleep apnea, obesity

MADISON, Wis. – A new study suggests that the near 55% increase in sleep apnea cases over the past two decades may be linked to a higher incidence of obesity. The study, published by researchers at the University of Wisconsin-Madison, examined more than 600 adults between the ages of 30 and 70 who were tested for sleep apnea between 1988 and 1994, with some continuing to take part, along with hundreds of new participants, from 2007 and 2010. Researchers estimate that the number of cases of sleep apnea rose from 14% from 1994-1999, to 55% from 2007-2010. Study author Paul Peppard believes that between 80% to 90% of the increase is attributable to the obesity epidemic.

Vendor short takes

The Board of Certification/Accreditation (BOC) recently changed its prerequisites for becoming a certified orthotist or prosthetist by adding both a graduation and residency requirement…Invacare sponsored the Buckeye Wheelchair Games May 16-18 at the Spire Institute in Geneva.

People news

In a rare display of bipartisanship, the U.S. Senate confirmed Marilyn Tavenner as the first full-fledged administrator for CMS since 2006, according to multiple reports. Senators voted 91-7 to back President Barack Obama’s nominee…AAHomecare has recognized two HME providers for their contributions to government affairs on behalf of the industry. Georgie Blackburn of Tarentum, Pa.-based Blackburn’s, and Jackie Bolt of Greenville, S.C.-based Carolina Homecare Medical Equipment Center, have received this year’s Legislative Advocate Award…InnoMed Technologies has named Ron Richard its new CEO…CCS Medical has appointed Michael Sicuro to be its interim CEO. 

WASHINGTON – More than a dozen consumer groups are throwing their support behind H.R. 1717, a bill to replace competitive bidding with a market-pricing program (MPP), according to AAHomecare. 

The groups are lining up to sign a letter from United Spinal Association endorsing the bill. The letter began circulating on Monday, just as stakeholders hit the Hill as part of the AAHomecare Washington Legislative Conference.  

“When you call or email your members of Congress, make sure they know that the bill has strong support from patient and consumer groups,” AAHomecare told members in its weekly Wednesday in Washington report.

Introduced April 24 by Reps. Tom Price, R-Ga., and John Larson, D-Conn., H.R. 1717 currently has 90 co-sponsors.

Consumer organizations backing the bill include:

1. Disability Rights Education & Defense Fund

2. Long Island Center for Independent Living, Inc.

3. Association of Programs for Rural independent Living

4. Shepherd Center

5. United Spinal Association

6. Disability Rights Center

7. National Organization of Nurses with Disabilities

8. Ability Center

9. Association of Assistive Technology Act Programs

10. Three Rivers Council on Independent Living

11. National Council on Independent Living

12. American Academy of Physical Medicine and Rehabilitation

13. Touch the Future

14. Statewide Independent Living Council of Georgia

15. Christopher and Dana Reeves Foundation

16. Association of Programs for Rural Independent Living

17. Brain Injury Association of America

18. Post-Polio Health International

19. International Ventilator Users Network

20. Association of University Centers of Disabilities

21. Friends of Disabled Adults and Children

RALEIGH, N. C. – When it comes to audits, Kim Brummett says it’s time for providers to go from defense to offense. 

“We talk about audits all the time,” said Brummett, immediate past president of the North Carolina Association for Medical Equipment Services, and senior director of regulatory affairs for AAHomecare. “We need to quantify it. Providers need to say, ‘It feels like we get tons—is that really the case?’”

Brummett created an Excel spreadsheet for providers to use to keep track of audits by type and code, as well as a provider’s success at appeals. NCAMES sent the spreadsheet to members after the association’s annual meeting in February.

Brummett says she’s not against audits, but that their goal should be to seek out fraud, not burden trustworthy providers.

“All of us want the fraudsters to go away,” said Brummett. “That’s better for everybody.”

Provider Frank Trammell says audits are out of control, and he expects that the data, once compiled, will prove that. 

“The numbers are going to be pretty clear,” said Trammell, president of Carolinas Home Medical Equipment in Matthews, N.C. “We eventually get paid and the documentation hasn’t really changed. This will give us something to show Medicare and the Senate Finance Committee, and demand some answers.” 

Brummett hopes North Carolina’s efforts will feed into the AAHomecare Regulatory Council’s work to compile data on audits on a national level, an effort that started in March. Rachel Prager, manager of regulatory affairs, says it’s important to make sure audits are fair and accurate.

“When you have providers who are responding and doing everything they can, and the error rates aren’t going down, there’s something wrong with the system,” said Prager.

ANNAPOLIS, Md. – The state legislature in April passed an emergency bill exempting HME providers from a rule requiring they have a full-time pharmacist on staff. 

With Round 2 of competitive bidding set to start July 1, however, the Maryland National Capital Homecare Association (MNCHA) and the Maryland Board of Pharmacy are now in a full-on race to write new regulations.

“Because this is intersecting with Round 2, we’re trying to expedite the process of creating regulations that are manageable and reasonable for providers,” said Ann Horton, executive director of MNCHA.

Gov. Martin O’Malley signed the bill into law on May 2.

Stakeholders expected a new application for a waiver permit for HME providers to be available May 15. Horton advises providers to fill out and submit the application and have proof on hand that they’ve done so. 

“If Medicare shows up at their door, at least they have documentation that they’re trying to obtain the waiver permit,” she said.

Providers must still pay new pharmacy licensing fees of $700 for the first year and $600 every year thereafter.