DMERCs Scour Diabetic Supply Claims
WASHINGTON--CMS' durable medical equipment regional carriers are beginning to examine diabetic supply claims more carefully, so providers must take steps to make sure those claims are reimbursed, a CMS official announced during the agency's Open Door Forum June 23. Recently, a number of providers, particularly in DMERC Region A, have expressed concern about these reimbursements, he said.

"Diabetic supplies are a significant area of concern for our [comprehensive error rate testing] program," the representative continued. The CERT program measures how well providers prepare claims for submission and whether the DMERC made appropriate payment decisions. "I expect [the DMERCs] are going to take a closer look at those claims," he said.

With diabetes, the beneficiary's condition may worsen, and providers may have to order additional supplies if, for example, the patient needs to check glucose levels an increased number of times a day. If supplies have been ordered within the last 90 days, "the DMERC is going to look at [the new claim] and think it's a duplicate claim," the CMS spokesperson explained.

To avoid claim hassles for diabetic supplies, the official told providers to make sure the claim's text field notes that the patient's condition has changed. "That is normally sufficient," he said, though he cautioned that the DMERC may still send a request for additional documentation. If these requests are followed, he said, "I don't expect any properly justified claims will be denied."

ALJs to Transfer to HHS July 1
WASHINGTON--Home care providers will soon need to send appeals of carrier fair hearing decisions to the Department of Health and Human Services.

As mandated by the MMA and the Benefits Improvement and Protection Act (BIPA) of 2000, the Administrative Law Judge function, which covers appeals on carrier fair hearing decisions, will move from Social Security jurisdiction to HHS' Office of Medicare Hearing and Appeals July 1. The new HHS ALJs will handle carrier fair hearing decisions dated on or after June 30.

The change has caused some concern among providers. According to some observers, ALJs, who handle second-level appeals, have maintained impartiality because they work for the SSA, and moving them to HHS control could create a conflict of interest.

"ALJs have been in many ways the saving grace for providers," according to Ann Howard, director of federal policy for the American Association for Homecare. "Home care providers have a remarkable rate of success before ALJs."

She added that the association will monitor how HHS evaluates the ALJs--and whether the appeal judges remain truly independent. "Who's going to evaluate them? How are they going to be evaluated, and what are they going to evaluate them on?" she asked. "If they don't give proper deference to CMS policy, will they be sent to the ALJ doghouse?"

The transfer is among the first steps in the government's plan to reform the Medicare claims appeals process. By the start of next year, a new entity called Qualified Independent Contractors will hear first-level appeals, replacing the current "fair hearing" process now handled by the Medicare carriers. The QICs will include review panels of medical professionals who will reconsider all cases involving medical necessity issues. According to CMS, this change should reduce the average time frames for fee-for-service Medicare claims appeals from 1,000 to 300 days.

Those QICs, CMS said, should also alleviate concerns over fairness during claims appeals. The QICs will offer "routine considerations ... of all medical necessity issues," the agency said in a rule proposed earlier this year. "As a result, we believe these new procedures will lead, over time, to significant reductions in the need to pursue appeals at the later stages of the appeals system, such as ALJs and [Medicare Appeals Council] reviews."

Providers should visit their DMERC Web site to find where to send requests for ALJ hearings based on fair hearing decisions dated June 30 or later.

For more on Medicare appeals process reform, visit the HHS Office of Medicare Hearings and Appeals Transition Web site, available by clicking here.

High Profits 'Relevant' to Motive in Power Chair Fraud Case
CINNCINATI--High profit margins were properly allowed as "relevant evidence" in a case that charged a power wheelchair provider with Medicare fraud, the Sixth Circuit Court of Appeals has ruled.

In an appeal of his 2003 conviction on 22 felony counts--including health care fraud, mail fraud, illegal kickbacks and money laundering charges--Hussein Amr, owner of United States Medical Supply in Livonia, Mich., argued the government's use of his high profit margins on power chair sales was either not relevant to the case or produced "unfair prejudice." But the court disagreed, saying that the evidence showed Amr steered patients who wanted or needed less expensive chairs to the power wheelchairs. In addition, he did not inform patients that they had a right to lease the power equipment.

"[Amr] did so because otherwise he would not have obtained the over $4,000 profit per power wheelchair sold," wrote Senior Judge Cornelia G. Kennedy in a May 25 ruling. "Thus, since the evidence was relevant to establishing [Amr's] motive, the district court properly admitted the evidence ...."

Amr was originally indicted in 2000 for "inducing patients to purchase power chairs they did not want or need, offering free lift chairs to induce patients to purchase power wheelchairs, failing to offer patients the option of renting rather than purchasing the wheelchairs, charging for standard accessories which were already included in the wheelchairs and inflating repair charges."

The government said that the DME provider purchased power chairs for $2,250, then billed Medicare $4,300 and an additional $800 for accessories, resulting in a total reimbursement request of $5,100. USMS would then receive a co-pay of $1,200, usually from Medicaid or Blue Cross, resulting in a total of $6,300--and a profit of more than $4,000--from the sale of one power chair.

Upon his conviction, the jury ordered Amr to forfeit more than $1 million.

Provider News
Arcadia Resources Expands Direct-to-Consumer Marketing
SOUTHFIELD, Mich.--Home care mail-order pharmacy, DME supplier and staffing service provider Arcadia Resources has acquired Rite at Home Healthcare Products, LLC, of Burr Ridge, Ill., a catalog outsourcing and product fulfillment company.

Rite at Home distributes the business-to-consumer marketing efforts of one of the nation's largest retailers, Sears Shop at Home Services, a Sears specialty catalog. With the acquisition, Arcadia gains Rite at Home's licensing rights to distribute Sears' Shop at Home catalog of home health and wellness products via direct mail and the Internet. Products offered include mobility, ADLs, adjustable beds and stairway lifts.

"Sears and the Sears Catalog are arguably the most recognizable and trusted brands among our target demographic audience," said John Elliott, chairman and CEO of Arcadia Resources. "Rite at Home retains a long-standing marketing relationship with Sears, bringing Arcadia an exciting new sales channel."

Since mid-2004, Arcadia has successfully acquired staffing and home care businesses in Alabama, Colorado, Florida, Georgia, Indiana, Illinois, Massachusetts and North Carolina. The company said it plans to continue to acquire synergistic companies throughout the rest of the year.

Indiana HME Moves Into Wal-Mart
MISHAWAKA, Ind.--Opening HMEs in Wal-Mart continues as providers hope to boost their profiles and increase cash sales. In the latest move-in, American Medical Oxygen Sales opened its first Wal-Mart branch last week.

The 760-square-foot store will provide a variety of DME, mainly mobility items, power wheelchairs, scooters, stair lifts, bath safety, ADLs and lift chairs, according to company Vice President Rob Newell.

"We felt it was a good way to get our name out there and do some advertising. There's a lot of traffic flow going through Wal-Mart," he said. "We're also interested in increasing our retail sales and cash items."

The Hammond, Ind.-based provider, founded in 1953, operates three locations in northern Indiana and has annual revenues of $4.2 million. According to Newell, the company is in talks with Wal-Mart about opening possible stores in other locations.

In recent years providers, including major players like Apria, The Scooter Store and Hoveround, have opened locations in the world's largest retailer.

In Brief
A Friday afternoon explosion of a Praxair gas plant in St. Louis will not affect the company's home health care operations, according to Dana Donohue, spokesperson for Praxair Healthcare Services. Parent company Praxair, based in Danbury, Conn., operates plants nationwide. The St. Louis plant packages gases, including acetylene, primarily for welding and other businesses.

A federal judge has ruled that Amtrak can legally charge wheelchair users more if they ride in groups together, the Associated Press reported. Disabled in Action of Pennsylvania--a group that regularly travels from Philadelphia to Washington to lobby--sued Amtrak when the company said it would charge an additional $200 to remove seats. The organization said the policy violated the federal Americans With Disabilities Act. But U.S. District Judge Harvey Bartle III said Amtrak is only required to have one space to park and secure a wheelchair and one space to fold and store a wheelchair for each passenger, and can charge more for anything extra.

CMS will create a new "Office of Policy" within the office of Administrator Mark B. McClellan to help with coordination and implementation of the agency's policy activities related to Medicare, Medicaid and the State Children's Health Insurance Program, among others, the Kaiser Network reported. The new office will be headed by Carol Kelly, former director of the Office of Legislation and Policy for the Health Care Financing Administration (now known as CMS).

Coming Up
The American Association for Respiratory Care (AARC) will hold its Summer Forum July 8-10 in Orlando, Fla. For more information call (972) 243-2272 or visit www.aarc.org.

The North Carolina Association for Medical Equipment Services (NCAMES) will host its Summer Meeting & Show July 13-15 in Wrightsville Beach, N.C. For more information, call (919) 387-1221 or visit www.ncames.org.

The Virginia Association of Durable Medical Equipment Companies (VADMEC) will hold its Summer Meeting & Trade Show July 13-15 in Virginia Beach, Va. For more information call (804) 285-4431 or visit www.vadmec.org.

The National Association for Home Care & Hospice (NAHC) will hold its Financial Management Conference July 20-22 in San Diego. For more information, call (202) 547-7424 or visit www.nahc.org.

Dynamic Seminars & Consulting will hold a teleconference on Understanding the Case Manager July 28. For more information, call (954) 435-8182 or visit www.dynamicseminars.com.

In observance of Independence Day, HomeCare Monday will resume publication July 11. HomeCare's staff wishes you a safe and happy Fourth of July.

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