To view the interim final rule, click here.

Industry Hustles to Fight Capped Rental Provision in Senate Plan
WASHINGTON--While most savings outlined in the Senate Finance Committee's colossal Medicare/Medicaid spending package for 2006 are aimed at reducing subsidies for the pharmaceutical industry, one section would hit the HME industry where it hurts, discontinuing the capped rental option for equipment.

According to AAHomecare, the provision would eliminate Medicare beneficiaries' choice to continue renting medical equipment in the capped rental category and would require transfer of title to patients for certain DME items after a 13-month rental.

On Monday, the association sent a letter opposing the change to Finance Committee Chairman Charles Grassley (R-Iowa) and Ranking Member Max Baucus (D-Mont.) making the following points:

--DME providers are currently required to notify patients about the option to rent or purchase durable medical equipment in the capped rental category, but the vast majority of Medicare beneficiaries prefer the rental option.
--It is neither safe nor fair to shift the burden of maintenance and repair for medical equipment to the disabled or elderly Medicare beneficiary.
--If the medical equipment is purchased, the patient incurs additional fees for clinical or emergency support or for exchange of malfunctioning equipment.
--There may be medical equipment items that should not be categorized as capped rental, but selecting those items should be carefully deliberated.
--Beneficiary access to power wheelchairs will be jeopardized by the provision.

An Oct. 21 letter to delivered to Grassley from VGM Management President Jim Walsh pointed out that "any elimination of 'maintenance fees' (after the capped rental period ends) will likely result in seniors having difficulty with the equipment or having to pay for repairs and maintenance themselves ... Half of the compromise that created the 'capped rental' concept was that the maintenance fee replaced continued rental payments. Maintenance doesn't go away with the wave of the legislative wand ... it just means people who already have serious health problems have to pay for things themselves or live with poorly or non-functioning equipment."

The full Senate is expected to vote on its plan, including the capped rental measure, this week.

Apria Decides Not to Sell
LAKE FOREST, Calif.-- Apria Healthcare Group is no longer for sale.

Instead of looking for a buyer, the giant provider--which has 500 branches in 50 states--will "focus 100 percent on revenue growth and operating improvements," company officials announced Tuesday. The company also said it will repurchase up to $250 million of its outstanding common stock.

While there were extensive discussions with possible investors after its June decision to sell, according to the announcement, the company's board of directors ultimately decided none of the proposals represented Apria's "intrinsic value and prospects for future appreciation."

Apria's third-quarter revenues increased just 1 percent over revenues for the third quarter of 2004, according to quarterly financial results released with the announcement. Revenues were $367.6 million for the quarter ended Sept. 30 versus $364.6 million for the same period last year. Net income of $19.3 million for the quarter compared to $29.8 million for the same period in 2004.

Reimbursement cuts that went into effect this year for HME, oxygen and respiratory medications negatively affected the 2005 figures, Apria said. Earlier this month, the company dropped its revenue expectations estimate for 2005 to 2 to 3 percent, but currently estimates revenue growth for 2006 at 5 percent.

Apria said several contract wins and expansions will help accelerate its organic growth. The company recently signed a new three-year contract with Cigna HealthCare, effective February 2006, and renewed an existing five-year contract with Kaiser Permanente. In addition, a national contract with Aetna has been expanded.

"With these new contracts in hand and our recent success in gaining Medicare oxygen business, we believe we have the basis for solid organic growth in 2006," company CEO Lawrence Higby said in a statement. "We also expect to benefit from expanded Medicare Advantage business as new beneficiaries become eligible for Medicare."

During the third quarter, Apria acquired five small businesses totaling $4.1 million. For the year, the company completed 19 acquisitions for $99.5 million.

"The company has a strong future ahead of it," Higby said. "Throughout the summer, we have remained focused on implementing various initiatives related to logistics, revenue management, centralized Medicare billing and centralized pharmacy management--all of which have made good progress. Given our third quarter revenues, we will redouble our focus on revenue growth while continuing to pursue the operating initiatives which should further enhance long-term shareholder value."

VGM Steps Up Efforts to Fight Competitive Bidding
WATERLOO, Iowa--The VGM Group has announced that it is renewing efforts to stop DME competitive bidding.

The effort follows "an extended and apparently unsuccessful attempt by many in the industry to persuade legislators that the plan is flawed and unnecessary," according to a statement from the buying group. While the Hobson-Tanner bill now pending in the House of Representatives (H.R. 3359) would offer the industry some relief from the bidding program--mandated under the Medicare Modernization Act--"it has been slow to gather support," the statement said.

"VGM believes that much more is needed soon, therefore we are preparing a federal lawsuit seeking to strike sections of MMA on constitutional and other grounds. This litigation is being supported by VGM and will be brought in the names of patients of VGM Group members as soon as CMS designates what the first 10 [metropolitan statistical areas] are. A number of patients have already identified themselves as eager to be named parties," said Jim Walsh, president of VGM Management.

A public information campaign will be undertaken in some congressional districts, he continued. "This multi-media effort will educate the electorate in the home districts of the prime supporters of selective contracting for HME. We want them to know what their congressmen are up to and how their freedoms under Medicare will be affected by those actions."

VGM also will partner with other organizations that are likely targets of selective contracting, as well as beneficiary groups that could be adversely affected if the scheme is implemented. "A two-tier medical system is bad for all patients and all providers," Walsh noted.

"A stepped-up informational campaign to all members of Congress regarding our reasons for and efforts to stop selective contracting, our affiliations in that effort and the basis of the suit" will also take place.

To support the effort, VGM will contribute $50,000 to Last Chance for Patients' Choice, a not-for-profit organization it formed to coordinate with other groups and help with costs of the informational campaigns and the litigation.

Walsh said VGM will continue to support AAHomecare and others "to urge passage of the Hobson bill."

For more on the Hobson-Tanner bill, see HomeCareMonday, Aug. 1.

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

State News
California DME Providers Must Staff Rehab Professionals
SACRAMENTO, Calif.--DME providers in California who do business with Medi-Cal, the state's Medicaid program, will soon have to employ or contract with qualified rehabilitation professionals to provide custom rehab equipment.

Beginning July 1, 2006, providers must use a physical therapist, occupational therapist, National Registry of Rehab Technology Suppliers (NRRTS) registrant or an individual credentialed by the Rehabilitation Engineering & Assistive Technology Society of North America (RESNA) to evaluate beneficiaries and deliver custom rehab equipment, under legislation signed by Gov. Arnold Schwarzenegger this month. The bill was sponsored by the California Association of Medical Product Suppliers (CAMPS).

According to CAMPS, current Medi-Cal policy reduces the reimbursement on unlisted custom rehab equipment to 80 percent of the manufacturer's suggested retail price if the provider does not have a qualified professional on staff. The new law makes it a provider requirement.

Kentucky to Limit Medicaid Prescriptions
FRANKFORT, Ky.--On Wednesday, Kentucky Medicaid officials said they will limit beneficiaries' emergency room visits and monthly prescriptions in an effort to avert a $425 million budget shortfall for the program.

To take effect as early as January, the changes--which would limit Medicaid patients to four prescriptions a month and end payment for emergency room visits for nonemergency services--should generate as much as $136 million in savings, Mark Birdwhistell, undersecretary for health, told the Associated Press.

Without such changes, Birdwhistell said, Kentucky's Medicaid expenses could go up about $300 million for 2007-2008.

Auditor Suggests Competitive Bidding for Missouri Medicaid
JEFFERSON CITY, Mo.--DME competitive bidding could save Missouri more than $5 million in Medicaid costs, a state audit has suggested.

The audit, which focused on $100 million in DME and other programs from January 2003 through March 2004, showed that Missouri Medicaid paid more than surrounding states on 41 percent of the 1,139 medical equipment devices reviewed.

"Competitive bidding is the best friend of the taxpayer in government services. It is a process by which you are sure you are getting the best value out of taxpayers' dollars," State Auditor Claire McCaskill told the Columbia Missourian.

However, Michael Ditmore, director of medical services for the state, said in an Oct. 9 editorial in the Springfield News-Leader that calling competitive bidding a solution is "misleading."

Citing the audit's reliance on examples of Medicare competitive bidding demonstration projects in Texas and Florida, Ditmore pointed out they were not Medicaid projects and only bid on a limited number of items. He also said there would be a substantial cost for bidding on a wide range of equipment and that purchasing equipment from one vendor would close small businesses across the state.

"Creating a monopoly for durable medical equipment also leaves the state open to liability issues," he wrote.

In a money-saving move, Missouri Medicaid stopped coverage of a number of DME items, such as hospital beds, wheelchair batteries, breathing aids and cushions in September. (See HomeCare Monday, Sept. 26.) And last Wednesday, a commission looking at ways to overhaul the state's Medicaid system spent the day looking at options for additional ways to save, including a discussion of whether smoking and bad eating habits should be penalized, according to The Kansas City Star.

CMS To Review New York Medicaid Fraud
ALBANY, N.Y.--CMS has bumped up a regularly scheduled program review of the New York Department of Health's fraud prevention work in response to legislators' concerns about Medicaid fraud.

The review had been scheduled for the spring, but will be conducted in November instead, CMS said.

In July, U.S. Rep. John Sweeney (R-N.Y.) and New York State Sen. Dean Skelos said they had formally requested that HHS audit the state's use of more than $93 million in Medicaid fraud prevention funds received from the federal government. Citing numerous instances of Medicaid fraud uncovered in a New York Times series, the lawmakers said they asked for the audit to find out why such cases were not detected by New York prosecutors and investigators.

Last month, HHS Inspector General Daniel R. Levinson reported that New York's Medicaid Fraud Control Unit would be the subject of a similar review by his office.

A final report from CMS is expected by year's end, with the OIG report to be issued at the beginning of 2006.

In Brief
The First Annual AAHomecare Humanitarian Dinner, held at Medtrade in Atlanta Oct. 18, netted more than $65,000. The funds raised will be targeted to relief efforts for the home care community in areas hard hit by Hurricane Katrina, according to the association. Special recognition at the dinner went to Harvey Diamond, president of Drive Medical Design and Manufacturing, who was a key driver behind the benefits dinner and relief effort.

Medtrade has announced the winners of its New Product Pavilion awards for 2005, based on attendee votes. The Merit Award, presented for the product that most improves quality of life, went to Millennial Medical of Logan, Utah, for its foldable, ergonomic Millennial Crutch. For the Providers Choice award, attendees picked the Camel, a portable, inflatable lifting device from Wales, U.K.-based Mangar International. And the Innovation Award was given to Care Giver Supports Products, Las Vegas, for its FAWSits Fold Away Wheelchair Shower, a roll-in, self-contained portable shower stall.

The Health Care Fraud and Abuse Control Program, in its eighth year of operation, continues success in prosecuting health care fraud including DME cases, according to a report released last week by the HHS Office of Inspector General. During 2004, the federal government won or negotiated $605 million in judgments and settlements, and returned $1.5 billion to the Medicare Trust Fund as a result of enforcement actions by HHS and the Department of Justice. More than $7.3 billion has been returned to the Medicare Trust Fund since the inception of the program in 1997.

Coming Up
The Ohio Association of Medical Equipment Services (OAMES) will hold its 25th Annual Meeting in Columbus Nov. 9-10. For more information, call (614) 876-2424 or visit www.oames.org.