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Headline News
Confusion Over Oxygen Cap Involves More than Just Typo
ATLANTA--Ivan Rodriguez, owner of IR Medical Equipment in Miami, is astounded at the hit he thinks the Deficit Reduction Act will have on his oxygen business.

"I think it will affect at least 50 percent of my business," he said, "and maybe more."

Like other oxygen providers across the country, Rodriguez expressed shock and concern over the controversial act, which includes a cap on Medicare rental of oxygen equipment at 36 months, then transfers title to the beneficiary (see HomeCare Monday, Jan. 9). And he has lots of questions.

"What does this mean if, after 36 months, a patient calls and I'm not being paid? What do I do?" he asked. "What happens for patients who have already been on oxygen for that long? And, God forbid, what happens if one of my patients dies [after the equipment title transfers]? How will this affect liability? Will I be responsible?"

Such questions and a myriad of others about how beneficiaries will receive ongoing care and services past the 36-month rental limit have mushroomed from stakeholders since President Bush signed the DRA Feb. 8. The American Association for Homecare pointed out the measure does contain broad language regarding "payments for oxygen" and "maintenance and service" after the title transfer, but said it includes "no specifics."

Compounding the confusion, while government officials say the DRA is a done deal, some on Capitol Hill have differing opinions as to whether the measure is even law. Because the Constitution dictates that each chamber pass bills in identical form, a legal debate emerged when the Senate and House of Representatives approved different versions of the bill due to a clerical typo.

In a press briefing earlier this month, Health and Human Services Secretary Mike Leavitt said he is presuming the DRA is law, "and we're moving forward on that basis." But a federal lawsuit challenging the legality of the act has been filed by an Alabama attorney, and legal experts say others could follow.

On the DRA's Heels
Adding another tangle, a separate proposal in the Bush administration's 2007 budget would shorten the oxygen rental period from 36 months to 13 months. Although Congress would have to approve such a measure, that proposal immediately drew its own fire from an industry already reeling at the DRA's new 36-month limit.

"President Bush's FY '07 budget proposal on oxygen is so over the top that I have had staff on Capitol Hill literally ask if the 13-month cap proposal was a typo," said Cara Bachenheimer, vice president of government relations for Elyria, Ohio-based Invacare.

The company blasted both the president's proposal and the DRA in a formal response Feb. 15 that raised additional questions--such as how beneficiaries would obtain back-up tanks to use in the event of a power outage--and pointed out that giving patients responsibility for their oxygen equipment and the services that go with it could saddle Medicare with additional costs. Without a relationship with a home oxygen provider to maintain equipment or monitor their therapy, the company said, "many beneficiaries will end up in hospital emergency rooms, or being admitted to a hospital where the daily cost exceeds $3,600. In contrast, an entire year of home oxygen therapy can be provided for about $2,784."

"We need to capitalize on the outrageous nature of this proposal and make sure every member of Congress can picture a frail, elderly home oxygen consumer when they address this issue this year," Bachenheimer said. "That must be our mission--to ensure that every member of Congress can visualize the consumer and have an understanding of the real impacts of a 13-month rental cap."

Last week, AAHomecare said it has commissioned a new study from Morrison Informatics to collect the exact costs associated with providing oxygen service.

More Questions than Answers
Meanwhile, Texas provider Dean Cheney, CEO of Dallas Oxygen, wondered if he would have to give new equipment to beneficiaries since they would own it in three years--and if he did, what would he do with the used equipment in cases where a beneficiary died before they assumed ownership?

"I can't plan because, based on the information that has been released, you don't know enough," Cheney said.

For example, 40 percent of Dallas Oxygen's patients use conserving devices, which Medicare doesn't pay providers for, he said. "So when you transfer title to the patient, who keeps the conserving device?" Cheney asked. "If I keep the conserving device, do I now get to charge for it? And who do I charge for it?

"Nobody has answers right now," Cheney said. "It's like I get to play the game but I don't know the rules."

Gary Marnhout, regional vice president of Lexington, Ky.-based Bluegrass Oxygen, said that after the 36-month cap, his company won't be able to provide many of the services it does now.

"When that cap hits and somebody's 40 miles away from you, in a rural area--and we have a lot of people in rural areas here--you can't be expected to drive 40 miles to take four oxygen tanks," he said. "It's not going to work."

The DRA is going to hurt a lot of people, Marnhout continued, as well as confuse referral sources and probably force very small companies out of business.

"It's an irresponsible legislature that does this to the American people," Marnhout said.

Health Care Spending to Double by 2015
WASHINGTON--Spending on national health care will double by 2015, reaching some $4 trillion yearly, according to a CMS study released last week and published in the online journal Health Affairs.

Main factors contributing to the increase are the aging of the population and changes in medical technology and utilization, the agency said.

The study, based on data from 2004, anticipates the nation's health expenditures will reach more than $2 trillion this year, with expenditures increasing at an average rate of 7.2 percent each year over the next decade--a rate 2.1 percentage points faster than the projected annual growth rate for the Gross Domestic Product.

By 2015, the health share of the GDP is projected to reach 20 percent, compared to 16 percent in 2004.

Overall, the nation's health care spending has slowed, the study found, decreasing from 7.9 percent in 2004 to an anticipated 7.4 percent for 2005, with a growth rate of 7.3 percent projected for 2006. The growth rate reached a high of 9.1 percent in 2002. CMS said an expected drop in personal health care spending underlies the slowdown.

Other findings in the study include the following:

-- Home health spending growth is expected to remain strong in 2005 at 13.2 percent, following 13.3 percent growth in 2004, with public payers--particularly Medicare--driving this trend. While growth of 15.3 percent for Medicare home health services in 2005 would mark the fifth consecutive year of double digit growth, CMS said, the agency expects that trend to moderate and average 6.9 percent from 2007-2015. Growth in home health services provided by Medicaid is expected to grow to 18.6 percent in 2005, and grow at an average rate of 10.9 percent between 2007 and 2015.

--Combined federal and state Medicaid spending growth is expected to slow, for the fourth consecutive year, to 7.7 percent. Medicaid enrollment growth is expected to decelerate in 2005 to 2.1 percent from 4.2 percent in 2004, but per enrollee spending is expected to increase 2.8 percent in 2005.

--After slowing slightly from 8.9 percent in 2004 to 8.6 percent in 2005, Medicare growth is expected to have a one-time increase of 25.2 percent as a result of the new Medicare prescription drug coverage. This is significantly less growth than had been forecast previously, as a result of new projections of the Medicare drug benefit budget cost declining by 20 percent for 2006. Thereafter, Medicare growth is expected to slow to 5.4 percent in 2007 and then accelerate to 8.8 percent by the end of the projection period.

To access the health care spending projection data, click here.

Provider News
Respiratory Giants Feel the Pain
CLEARWATER and ORLANDO, Fla.--Following Apria Healthcare's recent announcement of decreased revenues for 2005--with net income for the year at $66.9 million compared to $114 million in 2004--respiratory providers Lincare Holdings and Rotech Healthcare also have reported year-end results they said were negatively affected by reimbursement cuts to respiratory meds, DME and home oxygen.

Clearwater, Fla.-based Lincare, which has 625,000 customers in 47 states, said revenues for the year ended Dec. 31 were $1.267 billion compared to $1.269 billion in 2004. Net income for the year was $213.7 million, down 22 percent from $273.4 million the prior year. According to a statement, the company estimates that annual revenues were reduced by $188.2 million as a result of Medicare price changes for respiratory medications and some DME that took effect on Jan. 1, 2005, and for oxygen equipment that took effect April 1.

Lincare CEO John Byrnes said the company continues to gain market share in its core respiratory business and is controlling costs and reinvesting capital to sustain growth. During the year, Lincare acquired 15 companies with annual revenues of approximately $68 million. The company also added 79 operating centers, with 45 derived from internal expansion and 34 from acquisitions, bringing the total number of locations to 883 at the end of 2005.

And last week, Rotech, headquartered in Orlando, reported net revenues of $533.2 million for 2005 versus $535.3 million for 2004. The company said net earnings were $5.5 million for the year compared to $36 million for 2004. Respiratory therapy equipment and services represented 87.8 percent and DME 11.2 percent of its total revenues for the year, according to a company statement.

Rotech provides equipment and services in 48 states with approximately 485 branches, located principally in non-urban markets.

Walgreens Home Care Adds CV Medical Solutions
DEERFIELD, Ill.--Walgreens Home Care has expanded its presence in Oklahoma with the addition of Oklahoma City-based Canadian Valley Medical Solutions. Walgreens entered the market last year with the addition of D&T Medical in Tulsa.

Co-owned by Tracey Wills and Jeff Wills, who serves as chair for AAHomecare's HME/RT council, the 13-year-old CV Medical Solutions provides HME, home infusion therapy, respiratory services including oxygen and custom mobility and seating in the state's central and western regions. The company also offers a program called CV Kids, which focuses on pediatric patient needs, such as specialized respiratory (ventilator and airway management), infusion, skilled nursing and customized rehab. (See "Life Savers," HomeCareXtra, Summer 2003.)

Jeff Wills said he and wife Tracey will continue to run day-to-day operations with their staff at the Oklahoma City location.

Walgreens Home Care, a division of Walgreens Health Initiatives, operates more than 40 branches in Arizona, Florida, Illinois, Indiana, New Mexico, Oklahoma, Texas and Wisconsin. WHI is a subsidiary of Walgreen Co., with 2005 sales of $42.2 billion and more than 5,100 stores in 45 states and Puerto Rico.

Terms of the deal were not disclosed.

In Brief
CMS sponsored a Wednesday meeting on the transition from the DMERCS to the new DME Medicare Administrative Contractors, AAHomecare has reported. Currently, the agency expects July 1, 2006, to be the "cut-over" date in the four DME MAC regions. Prior to that date, there will be opportunities for testing claim submissions to the new MACs. CMS also plans to hold stakeholder meetings monthly, at least through July 1, and will provide a Q&A forum addressing issues raised during the meetings on the CMS contractor reform Web site.

In a final decision memorandum issued Tuesday, CMS said that Medicare will pay for some obesity surgeries for beneficiaries 65 and over under certain conditions. The decision expands a proposal published in November that would have excluded coverage for seniors. Under the decision, coverage will be restricted to three of the most common procedures: gastric bypass, gastric banding and biliopancreatic diversion with a duodenal switch. It also will be limited to patients with another medical problem--such as hypertension, type 2 diabetes, heart disease, sleep apnea or respiratory problems--related to their weight. And CMS will cover the procedures only at centers certified by the American College of Surgeons and the American Society for Bariatric Surgery. According to the National Institutes of Health, approximately 34 percent of Americans are overweight and 27 percent are obese. To view the CMS decision memorandum, click here.

Coming Up
CMS will conduct a Home Health, Hospice and DME Open Door Forum tomorrow at 2:00 p.m. EST. To participate by phone, call (800) 642-1687 and reference conference ID number 3102606.

Women Business Leaders of the U.S. Health Care Industry Foundation will hold its 2006 summit March 1-3 in Berkeley, Calif. For more information, call (202) 955-7181 or visit www.womenleadinghealthcare.org.

The Colorado Association of Medical Equipment Services (CAMES) will hold its legislative conference March 14 in Denver. For more information, call (303) 755-1294 or visit www.cames.org.

Dynamic Seminars & Consulting will hold the "Staying Legal in the Employee Management Arena" teleconference March 14. For more information, call (954) 435-8182 or visit www.dynamicseminars.com.

The New England Medical Equipment Dealers Association (NEMED) will hold its spring membership meeting March 16 in Nashua, N.H. For more information, call (508) 993-0700 or visit www.nemed.org.

VGM will hold its Sales Training University March 17-18 in Houston. For more information, call (866) 227-8171 or visit www.vgmeducation.com.

Dynamic Seminars & Consulting will hold "Sales Training: Quick & Easy" March 20 in Las Vegas. For more information, call (954) 435-8182 or visit www.dynamicseminars.com.

The American Association for Homecare Continuum of Care conference will be held March 21 in Las Vegas. For more information, call (703) 836-6263 or visit www.aahomecare.org.

Medtrade Spring will open its doors March 21-23 in Las Vegas. For more information, call (800) 933-8735 or visit www.medtradespring.com.

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

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