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Headline News
Opponents Say Clerical Error Gives Another Shot at Defeating DRA
WASHINGTON--Inconsistencies in the language of the House and Senate versions of the Deficit Reduction Act (S. 1932) that President Bush signed into law Wednesday could possibly give industry stakeholders a second chance at defeating the legislation.

The bill Bush signed varied slightly from the final version passed by the House, Reuters reported Thursday: Since December, as the bill was passed back and forth between the two chambers, a typo was written into it through a clerical error.

The House and Senate passed legislation as a fix to the error after the president had already signed the bill, but on Friday Democratic leaders in the House were reportedly still insisting on a re-vote for the original measure.

According to Reuters, the error was related to Medicare payments for medical equipment rentals. A spokesperson for the American Association for Homecare described the error as "a typo in [the] House version of S. 1932 that capped HME items at 36 months instead of 13."

As the drama of the error unfolded Thursday, industry stakeholders found themselves in a fog of hope and uncertainty, with erroneous and confusing press accounts circulating about the inconsistencies.

Ultimately, though, the spokesperson added, "It's possible that there could be one last-ditch effort to vote again on the capped rental provision, although it's a long shot."

Meanwhile, the industry is already feeling the effects of the DRA, the provisions of which are effective Jan. 1, 2006. Late Friday, CMS released a fact sheet outlining the changes the law brought about, including the following:

--The DRA makes some changes to Medicare payments for rental arrangements for durable medical equipment. Prior to the DRA, "capped rental" items are rented by Medicare for up to 15 months; after 15 months, the supplier continues to furnish the equipment to the beneficiary as long as the beneficiary needs it, but the supplier retains title to the equipment.

Beginning with items newly rented on or after Jan. 1, 2006, the DRA changes the rental period to 13 months. After the end of the rental period, title to the equipment transfers to the beneficiary. Medicare will continue to pay for reasonable and necessary service and maintenance after the end of the rental period. CMS will issue instructions to its contractors to implement these changes later this year.

--The DRA also makes some changes to Medicare payments for oxygen equipment. Prior to the DRA, oxygen equipment was rented indefinitely. The bill caps the rental period at 36 months, after which time the beneficiary will own the equipment. After the beneficiary owns the equipment, the DRA requires Medicare to pay for reasonable and necessary service and maintenance. The DRA also requires Medicare to continue to pay for gaseous and liquid oxygen contents for beneficiaries using stationary or portable oxygen tanks and cylinders after the beneficiary using that equipment owns it.

The DRA provides for a new 36-month rental cap period beginning Jan. 1, 2006, for all oxygen equipment. Thus, a new 36-month rental cap period would apply both for beneficiaries starting to use the equipment as well as for beneficiaries who have been using it for several years. CMS will issue instructions to its contractors to implement these changes later this year.

--The DRA changes from 27 to 29 the minimum number of days after the receipt of a non-electronic (paper) claim before Medicare will pay the claim. Medicare's carriers and intermediaries will implement this extended period as soon as possible.

--Caps on payments for outpatient therapy services went into effect Jan. 1. Two separate caps are in place: $1,740 per beneficiary per year for physical therapy and speech-language pathology, and the same amount for occupational therapy.

The new law also requires a one-time hold on Medicare payments for the period of Sept. 22 through Sept. 30, 2006. According to CMS, "payment on claims that would have otherwise been paid on one of these nine days will be made on the first business day of October 2006."

Technical Committee Begins Work on New PMD Codes
ROCKVILLE, Md.--An industry committee empaneled by CMS to provide input on new codes and testing requirements for power mobility devices began its work at a two-day meeting last week.

Following CMS' announcement in October that it would delay implementation of new Medicare power mobility codes--originally issued in February then revised in mid-September last year--Dr. Doran Edwards, SADMERC medical director, said he planned to devote his "full attention" to reworking the codes one final time with the committee's expertise as support.

Members of the Technical Expert Panel, which met in Rockville, Md., Feb. 8-9, include Gerald White, Pride Mobility Products; Mark Greig, Sunrise Medical; David Mahilo, Invacare Corp.; Anthony DiGiovanni, Hoveround; Tara Gentile, Permobil; Simon Margolis, National Seating and Mobility; Peter Axelson, Beneficial Designs (representing RESNA, the Rehabilitation Engineering and Assistive Technology Society of North America); Leonard Frier, MET Laboratories Inc.; Robbie Leonard, PT, Leonard Physical Therapy; Anita Pear, clinician consultant and New York University assistant professor; Greg McGrew, University of Virginia; Mark Schmeler, University of Pittsburgh; Larry Schneider, University of Michigan; and Bill Ammer, Ammer Consulting.

In the first round of new codes issued last year, the number ballooned to 49 from the current K codes (K0010 through K0014). But in September, those codes were revised and bumped to 63, and new product testing requirements were put in place though manufacturers had already tested products based on the 49 codes.

In October, the codes were retracted entirely, and Edwards said his goal in reworking them would be to "settle this once and for all so that the codes can remain in effect for a number of years without having to be tweaked." Edwards said that determining the performance categories for power wheelchairs would be the initial matter at hand for the panel, and that testing requirements should be consistent to ensure product quality, safety and the best clinical outcomes for users.

According to Seth Johnson, chair of AAHomecare's Rehab and Assistive Technology Council and director of government affairs for Pride Mobility, CMS contractor ECRI, brought in as facilitator, will put together a report of the meeting including the panel's recommendations. The report is expected to be issued by the end of March, when CMS would then determine how to proceed with code development.

Based on that timeline, said Johnson, "New codes could potentially go into effect as early as July 2006, but the timing will largely be dependent upon the makeup of the new codes and any additional testing that is required."

"This is the third formal attempt to come to a consensus that you agree with, CMS agrees with and the DMERCs agree with," Edwards told an audience at Medtrade last fall. "This will impact the future of power mobility. We must get this right."

Industry Unhappy with HME Targets in Bush '07 Budget
WASHINGTON--In his $2.77 trillion FY 2007 budget proposal, released last week, President Bush calls for a major bump in spending to develop a nationwide, interoperable health information network, including personal electronic health records for most Americans by 2014. He proposes $169 million in health information technology spending for the Department of Health and Human Services, up from $111 million in the current year.

The president's budget request from Congress also asks for $6 million for a Food and Drug Administration initiative called "Critical Path to Personalized Medicine," which would focus on cutting-edge research methods and better designed clinical trials.

But the budget also calls for some $36 billion in reductions to Medicare and more than $1.5 billion to Medicaid over five years. Additional proposed regulatory changes would reduce federal funding for Medicaid by another $12.3 billion over the same timeframe.

A response from AAHomecare said the association is opposed to several provisions in the budget specifically targeting home health care, including a proposal to transfer ownership of medical oxygen equipment to Medicare beneficiaries after 13 months, a freeze on home health reimbursement and elimination of the ability to purchase power wheelchairs in the first month.

"Continuing cuts to home care erode the cost-effective infrastructure of home care that will be essential to the nation's health care needs, especially as baby boomers near Medicare eligibility," said Tom Ryan, AAHomecare chairman and CEO of Homecare Concepts in Farmingdale, N.Y., in a statement issued Wednesday.

"The expected growth in number of Medicare beneficiaries and increasing length of time they will need health care services should encourage policymakers to keep cost-effective care methods such as home care in mind as they create budget policy," he continued.

According to the association, the proposed budget's limit of 13 months on the oxygen rental period would exacerbate the recent 36-month cap on medical oxygen that was included in the Deficit Reduction Act (S. 1932), which Bush signed into law on Wednesday. (See story in this issue.)

The forced transfer of ownership of oxygen equipment places unfair burdens and uncertainty on beneficiaries, AAHomecare said, and the freeze on home health reimbursement is "unwarranted and unwise, given rising costs for home health agencies and the widely recognized value that home health care delivers to the Medicare and Medicaid programs."

Seth Johnson, chair of AAHomecare's Rehab and Assistive Technology Council and director of government affairs for Pride Mobility, said the proposal to eliminate first-month purchase of power wheelchairs is worrisome because they are provided to beneficiaries with disabilities that are long-term conditions, and more than 95 percent of power wheelchairs are purchased in the first month.

"The RATC will work closely with Congress as they begin to develop Medicare legislation this year," Johnson said. "The council is very concerned about the impact an elimination of the first-month purchase option would have on beneficiaries and suppliers and will work to educate Congress on the many reasons why this is bad policy."

Because it is up to Congress to decide whether to pass legislation containing any provisions from the president's budget proposal, AAHomecare said, "it will be important for the home care community to be vocal about its opposition to these proposed changes."

AAHomeCare, Cox Part Ways
ALEXANDRIA, Va.--AAHomecare announced last week that Kay Cox has stepped down as president and CEO effective Feb 6. According to a statement issued by the association, the decision was mutual between Cox and its board of directors.

In June 2003, Cox was hired from a field of 26 candidates to replace Tom Connaughton, who resigned after the expiration of a three-year contract. With more than 20 years of health care experience, Cox had previously served as vice president of the Washington office and political action committee of skilled nursing facility operator Beverly Enterprises. Immediately after accepting the job, Cox noted the association had its work cut out with the then-pending items of competitive bidding and Medicare copays "at the top of the national Medicare-reform agenda."

According to AAHomecare Chairman Tom Ryan, a search committee has been formed "and will move diligently to fill this position." In the interim, COO Sue Mairena will continue to be responsible for the association's day-to-day activities, working closely with the executive committee of the board.

The timing of the change will allow the board "to evaluate the operational model of the association to ensure that it furthers the legislative and regulatory needs of our diverse membership," said Todd Brason, AAHomecare vice chair. "We remain committed to the fact that the industry needs to be represented by one face and one voice."

Provider News
2005 Reimbursement Cuts Hit Apria Hard
LAKE FOREST, Calif.--On Wednesday, Apria Healthcare Group announced financial results for the quarter and year ended Dec. 31, 2005.

Revenues were $359.7 million for the quarter, a 4.4 percent decrease compared to revenues of $376.4 million for the fourth quarter in 2004. Net income for the quarter was $19.5 million, compared to $27.3 million for the same period last year. Full year revenues were $1.474 billion in 2005, compared to $1.451 billion in 2004. Net income for 2005 was $66.9 million versus $114 million in 2004.

According to the giant provider, which has approximately 500 branches in 50 states, 2005 revenues and net income were negatively impacted by Medicare reimbursement cuts that took effect for respiratory medications and other HME in January last year and for oxygen and oxygen equipment in April.

Without the pricing reductions, a company statement said, revenue growth would have been 3.5 percent for the year, while revenue for the fourth quarter would have declined by 3 percent. The revenue shortfall in the fourth quarter was primarily in the company's HME, infusion therapy and respiratory drug product lines, while Apria said enteral nutrition revenue growth was strong.

"Our revenue was disappointing during the second half of 2005," said Lawrence M. Higby, CEO. "As a result of our performance, no executive officer will receive a salary increase or bonus for 2005. Looking forward, however, the previously announced changes we made in the fourth quarter in sales management, sales force structure and sales incentives should make 2006 a stronger year.

"In addition," Higby continued, "the rollout of our electronic Sales Management System (SMS) should provide improved territory-level account targeting and accountability as we move through 2006. Finally, we will also benefit from the new CIGNA contract, which was effective Feb. 1, 2006, as well as the expected expansion of Medicare Advantage program enrollment."

For 2006, management of the $1.5-billion company estimates that revenue growth will be in the 4 to 5 percent range.

"In 2006, we have two basic objectives: restoring strong organic revenue growth and leveraging our cost structure," Higby commented.

Arcadia Acquires Remedy Therapeutics
SOUTHFIELD, Mich.--DME and home care staffing provider Arcadia Resources has acquired Crystal Lake, Ill.-based Remedy Therapeutics, the company's 19th acquisition in almost two years.

Remedy has annual sales of $2.7 million, according to Arcadia. Remedy founder Michael Burke has been retained as Arcadia's regional manager for the Chicago area. Prior to founding Remedy, Burke was a regional manager for Rotech Healthcare.

"We are very excited to integrate Remedy Therapeutics into Arcadia's home respiratory care and durable medical equipment division," said Larry Kuhnert, president of Arcadia Resources. "We are equally pleased to welcome Mr. Burke to our executive management team. His background of success in the direct-to-patient DME business is an asset to our organization, and supports our initiative to acquire accretive acquisitions."

State News
Big Apple's Bloomberg Calls for EHRs in NYC
NEW YORK--In his State of the City address Jan. 26, New York City Mayor Michael Bloomberg called for $100 million to create electronic health records in community clinics and the offices of doctors who practice in the city's poorest neighborhoods.

The goal, according to the mayor, is to "reduce preventable illnesses. It will save millions of dollars a year now wasted on needless procedures."

The call for EHRs, which officials believe can cut costs and improve care, follows the city's announcement of an aggressive campaign to control diabetes. In December, the city said it would begin gathering personal medical data in an effort to curb dramatic increases in diabetes cases, which doubled in the city between 1992 and 2004 and now cost $5 billion a year to treat. (See HomeCare Monday, Dec. 19, 2005.)

Under a ruling from the New York Board of Health, clinical laboratories must report comprehensive information about diabetic patients' blood sugar tests to the city health department to "improve surveillance and target interventions to improve outcomes," according to department documents.

Bloomberg's EHR system could reportedly automate collection of that information and identify patients who need help in better controlling their disease. Such patients could get letters or calls reminding them to select healthy diets, get frequent check-ups and stick with their medications.

Pointing to diabetes as "the only major health problem in our city that is getting worse," Bloomberg said, "it's a vicious silent killer, and we're going to start tracking it down and doing everything we can to control it. This year, when people take blood sugar tests, that information will go to the Health Department. And starting in the South Bronx, we'll work with patients at high-risk and their doctors to improve the care they receive."

In his speech, Bloomberg said he wants to cut the number of patients "at the highest risk for diabetes complications by 20 percent by the end of 2008," and also proposed cutting the number of HIV-related deaths by 40 percent over the next three years.

The mayor said he will ask Washington, state government and the private sector to help with funding the "revolution" in the city's clinics, and said the EHR initiative would make New York the national leader in providing high-quality health care to those most in need.

"Public health is a fundamental responsibility of government," Bloomberg said, "and we are going to do everything we can to help New Yorkers continue living longer lives."

Two Sentenced Following Texas PWC Investigation
HOUSTON--A one-year federal prison sentence and a $300,000 fine were handed down last month against Lorine Hawthorne, 34, of Houston, for her role in a Medicaid power wheelchair scheme. In addition, an accomplice, Pamela R. Rossell, 37, of Galena Park was sentenced to five years probation and $108,000 in restitution. Hawthorne will also serve three years supervised release upon completing her sentence, and Russell will spend six months in home confinement.

According to a statement from Texas Attorney General Greg Abbott's Medicaid Fraud Control Unit, the two were charged with receiving kickbacks between $200 and $800 on each referral from Anefiok Jimmy Eking, owner of DME companies Medical Equipment and Supplies and Mescorp.

Eking, now a fugitive, and his companies have been charged with illegally billing Medicaid almost $10 million over four years for power wheelchairs and related equipment that were either unnecessary or could have been made available at much lower cost to those in need.

A physician, Dr. Anant Mauskar, was charged with falsely certifying the transactions as medically necessary, and also profited illegally from kickbacks. Mauskar was convicted following a federal jury trial in November and faces sentencing on Feb. 24. (See HomeCare Monday, Nov. 21, 2005.)

In Brief
In the most recent of a series of congressional hearings on Medicare's Part D, CMS Administrator Mark McClellan told the Senate Finance Committee Wednesday that he expects most problems experienced by beneficiaries, pharmacists and states in implementation of the drug benefit to be resolved by March or April. McClellan said CMS' education campaign to curb late-in-the-month plan enrollment and plan-switching by beneficiaries would be accomplished this month; that problems among computer systems operated by Medicare, the states and various drug plans would be addressed by mid-April; that customer service delays would be solved by April; and that outreach to pharmacists would be completed by March, but would be "ongoing." On Feb. 2, the Senate Special Committee on Aging held hearings on Part D problems, and a hearing by the House Energy and Commerce Committee is scheduled for Feb. 16.

With skyrocketing incidences of needlestick injuries in the worldwide health care environment and high consumer demand for syringe alternatives, the market for needle-free injection systems and safety syringes is growing--some sectors in excess of 20 percent annually--and should reach $2.49 billion by 2009. That's according to a new study from market research firm Kalorama Information, a division of MarketResearch.com. The report reveals that annual needlestick injuries in the U.S. alone average 600,000 to 1 million, and estimates indicate that as many as 80 percent of the incidents could be prevented with the use of needle-free devices and safety syringes.

Coming Up
CMS has rescheduled its next Home Health, Hospice and DME Open Door Forum for Feb. 28 at 2:00 p.m. EST. To join in by phone, call (800) 642-1687 and use conference ID number 3102606. To subscribe to the Open Door Forum listserv, click here.

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