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Headline News
AAHomecare Asks CMS for Clarification on DRA
ALEXANDRIA, Va.--In an April 20 letter addressed to Herb Kuhn, director of CMS' Center for Medicare Management, the American Association for Homecare has asked for clarification on the oxygen and DME rental cap provisions in the Deficit Reduction Act.

The association is concerned about a number of issues involving implementation of the DRA--signed into law on Feb. 8--which will cap Medicare rental of home oxygen equipment at 36 months and transfer the title to the beneficiary, as well as eliminate the cap rental option for DME (see HomeCare Monday, Jan. 9).

"AAHomecare understands that these new payment methodologies do not take effect immediately. However, their impact on our members' operations is immediate because they must begin to structure their operations to respond to the changes," the letter said. "Moreover, providers must plan now for their implementation in order to ensure a smooth transition for Medicare beneficiaries."

The letter included the following 33 questions addressing medical necessity and documentation, reimbursement, service and maintenance and other issues:

1. Will current regulations defining "continuous use" for capped rental DME remain unchanged?
2. How will CMS define "continuous use" for oxygen equipment? What will constitute a break in service so that a new period of continuous use commences for beneficiaries on oxygen?
3. When a beneficiary owns his or her oxygen equipment, will Medicare pay for new equipment on the basis of a change in condition? Does the change in equipment begin a new period of continuous use?
4. Will CMS issue regulations to address the issues raised in questions 1 and 2 above? If so, what is the projected timeline for a proposed rule?
5. If new technology becomes available that is medically appropriate and has the potential to improve health outcomes, will the beneficiary be responsible for paying for the new equipment (assuming there has been no change in condition)?
6. How will CMS define "oxygen" after the 36-month period of continuous use ends? How will the medical necessity documentation for oxygen change? Will lifetime CMNs be valid for beneficiaries who own their own equipment?
7. Will beneficiaries who have both a concentrator and stationary liquid or a concentrator and a portable concentrator be responsible for purchasing one of the two systems after 36 months?
8. How will CMS pay for refills on an oxygen cylinder? Will the payment amount differ between patients who require more refills because they have a greater need for mobility or a higher prescribed liter flow?
9. How will CMS take into consideration those patients who have a concentrator and a liquid system, where the liquid system is being primarily used for ambulatory/portable requirements? Will the Medicare program pay for additional portable cylinders after the 36-month rental period, or will it be the beneficiary's responsibility to purchase these items?
10. Will the beneficiary be responsible for purchasing supplies such as cannulas and tubing for their oxygen equipment or other items such as humidifiers?
11. May providers charge beneficiaries a rental or purchase for a back-up emergency cylinder that is not used to meet the patient's portable oxygen needs? These units would be used solely in the event of an emergency such as a power outage, a natural disaster, or a malfunction of the beneficiary's primary equipment. Will Medicare pay for the contents once these cylinders are used?
12. Will the payment amount differ based on different oxygen technologies that may be more or less costly for the provider to furnish?
13. Providers may be unable to service a patient-owned portable oxygen cylinder that they did not furnish. Will the beneficiary be responsible for purchasing a new oxygen cylinder under these circumstances?
14. Will rental months at a beneficiary's second residence apply towards the 36 months of continuous use? If so, which provider is responsible for transferring title to the beneficiary (i.e., the primary provider, or the provider at the second residence)? Similarly, if a beneficiary moves during the period of continuous use, which provider is responsible for transferring title (the new provider or the original provider)?
15. For short-term travel, the beneficiary pays for the oxygen out-of-pocket and the primary provider may reimburse all or a part of those costs. AAHomecare anticipates that this rule will not change for beneficiaries who own their oxygen equipment. That is, the beneficiary will continue to be responsible for arranging and paying for travel oxygen. With respect to the period of continuous use, please confirm that our understanding is correct. After title to the equipment transfers, will Medicare pay the beneficiary directly for short-term travel oxygen?
16. Will the beneficiary be responsible to pay charges for pick up and delivery of oxygen refills after title to oxygen equipment transfers to the beneficiary? If not, what data does CMS propose to use to arrive at an appropriate payment amount for pick up and delivery charges?
17. For beneficiary-owned equipment that requires servicing, will Medicare pay pick up and delivery charges? If so, what data will CMS use to arrive at an appropriate payment amount for pick up and delivery charges?
18. Does CMS intend to apply any of the billing rules that applied to capped rental equipment to rent-to-purchase DME? A purchase option letter is unnecessary inasmuch as the beneficiary no longer has the "option" to purchase the equipment. Consequently, we see no need to use the BP, BR, or BU modifiers in the 11th, 12th and 13th rental months.
19. How will CMS define the useful of life of oxygen equipment?
20. If oxygen equipment is "irreparably damaged" after title has transferred to the beneficiary, but before the end of the equipment's "useful life," will Medicare pay for new equipment? If so, will this commence a new period of "continuous use," or will CMS pay a lump sum amount for the new equipment?
21. Does CMS have a timeline for issuing regulations that address questions 17 and 18 above?
22. Oxygen cylinders must undergo hydrostatic testing and other checks periodically. Though technically these tests are not "repairs," will they be reimbursed as repairs to account for the more extensive service they involve?
23. Will the Medicare program pay for emergency service calls for beneficiary-owned equipment that is still under warranty? If not, can providers contract with beneficiaries to provide on-call services for patient owned equipment?
24. If the manufacturer of equipment that is under warranty is no longer in business, will the beneficiary be responsible for paying for replacement parts? If the provider who furnished the equipment to the beneficiary is no longer in business, who is responsible for the repairs?
25. How will providers document that the maintenance and service they performed on oxygen equipment were reasonable and necessary? Will CMS require different documentation depending on whether the provider repairs the equipment it furnished or equipment furnished by another provider?
26. Will CMS issue temporary HCPCS codes to identify the service, maintenance and repairs for oxygen equipment, or will providers have to apply for the codes?
27. How will providers be reimbursed for service or maintenance to non-covered oxygen equipment such as conserving devices or oxygen titrating devices? Will providers bill the beneficiary for these services?
28. Will CMS issue temporary HCPCS codes to identify service and maintenance repairs and parts for equipment in the capped rental category, such as motor and hand controls for a bed, or will providers have to apply for the codes?
29. Will the requirements of the DRA apply retroactively to January 1, 2006, regardless of whether the need for systems changes result in administrative delays in implementation?
30. Will CMS require providers to transfer title to beneficiaries who have unpaid deductible and coinsurance balances?
31. After title to the oxygen equipment transfers to the beneficiary, will beneficiaries be responsible for paying for clinical assessments required under state law? Will the beneficiary be responsible for paying for respiratory assessment ordered by the physician?
32. Please confirm that parenteral and enteral pumps are not subject to the rent-to-purchase methodology established under the DRA.
33. How will providers be reimbursed if beneficiaries begin to use oxygen or capped rental equipment under a Medicare Advantage plan? Will CMS begin a new period of continuous use each time the beneficiary has a payer change in or out of traditional Medicare?

Rule Sets New Enrollment Requirements for Medicare Suppliers
BALTIMORE--In an effort to curb fraud and abuse, CMS has issued new enrollment requirements for Medicare providers and suppliers.

A final rule issued last week requires that all health care providers and suppliers fill out an enrollment form and periodically update and certify the accuracy of their enrollment information to receive and maintain billing privileges in the Medicare program.

"Basically, this final rule consolidates current regulations found throughout the Code of Federal Regulations and more clearly defines what Medicare expects from providers and suppliers furnishing items or rendering services to the Medicare beneficiaries," the agency said in the rule, which takes effect June 20.

In one change from the proposed rule, which was published in April 2003, the three-year cycle for revalidation was upped to five years. The agency said it agreed with comments that a longer cycle would reduce the burden on providers.

Some commenters recommended that the agency not perform unannounced site visits to verify enrollment information, but CMS kept this requirement, explaining that they are a "useful tool." The agency also rejected a request to implement a grandfather process for providers who already have billing numbers.

To view the rule, published in Friday's Federal Register, click here.

Report Finds Life Expectancy Up, Death Rate Down
ATLANTA--Americans are living longer and the annual death rate is declining, a recent report indicates.

Preliminary data for 2004 from the National Center for Health Statistics shows that the death rate in the U.S. dropped by nearly 50,000 to 2,398,343, or 2 percent from 2003. Average life expectancy, meanwhile, has reached 77.9 years, a record high.

In 2004, heart disease continued to be the leading cause of death. But the report said long-term decreasing trends for the three leading causes of death--heart disease, cancer and stroke--are continuing. There were increases for hypertension and Alzheimer's disease.

For 10 of the 15 leading causes of death, the age-adjusted death rate declined considerably. Overall, it fell to a record low of 801 deaths per 100,000 population in 2004.

To view the report, click here.

Provider News
Rotech: New Budesonide Reimbursement Rate Will Hurt
ORLANDO, Fla.--Rotech Healthcare said CMS' new reimbursement rate for budesonide will reduce the company's annual revenues by approximately $30 million.

"The company believes that this new reimbursement rate is not merited and is working with regulatory authorities to reverse this change, although the final regulatory outcome of this matter cannot be predicted," the provider said in a press release Thursday.

At the beginning of the year, a new Medicare billing code and payment methodology for compounded budesonide took effect. Under the new regulation, payments are based on pharmacy invoices submitted for individual claims.

Last week, Rotech received its first 2006 payment for compounded budesonide from a single Medicare contractor for approximately 10 claims at the reimbursement rate of $0.29 per 0.5 milligrams. "The company believes this payment reflects a Medicare contractor's determination to reimburse compounded formulations of budesonide on a different basis than non-compounded formulations of the drug," Rotech said.

The reimbursement rate for non-compounded budesonide is $4.408 per 0.5mg and $4.374 per 0.5mg, respectively, for the first and second quarters of 2006.

In response to the Rotech statement, Lake Forest, Calif.-based Apria Healthcare stated that it is not "materially impacted by this development" and expects a reduction of $3 million in revenue due to the new reimbursement rate.

Four Convicted in $24 Million Medicare Scheme
LOS ANGELES--A provider who used money from a Medicare scheme to purchase a yacht, mansion and luxury cars, and who spent more than $100,000 gambling, was convicted this month of health care fraud and money laundering, federal officials said.

Phu Luong, 51, of Huntington Beach, and three others were convicted on federal charges for billing Medicare more than $24 million for nutrition products and power wheelchairs that were not medically necessary and, in many cases, were never provided, according to the United States Attorney, Central District of California.

After a three-week trial in U.S. District Court in Santa Ana, a federal jury found each defendant guilty of 35 counts of health care fraud. According to a statement from the attorney's office, those convicted include:

• Luong, who operated United Medical Supply, and also was convicted of five counts of money laundering;
• Sareth Tath, 56, of Long Beach, Luong's partner, who recruited physicians to provide fraudulent prescriptions to United;
• Mo Thi Pham, 50, of Westminster, a Tath employee who recruited Medicare beneficiaries to receive DME that was not medically necessary; and
• Peter Kim, 82, of Los Angeles, another Tath employee who recruited and drove Medicare beneficiaries to the doctors.

In Brief
David Brailer, national coordinator for health information technology, announced his resignation last week, citing family reasons. Brailer, the first person to hold the position since its creation in 2004, will continue work until May 19. He will also serve as vice chair of the American Health Information Community, a panel that advises HHS on health IT standards, and will continue to serve as a consultant to HHS to help lead the president's health care transparency initiative. Until a replacement is found, the Office of the National Coordinator will be led by its four permanent directors. The office is charged with advancing the nation's health care IT, including laying the foundation for a system of electronic health records, which President Bush has called for within the decade.

The Joint Commission on Accreditation of Healthcare Organizations announced last week that it will begin conducting unannounced on-site accreditation surveys. "The Joint Commission's accreditation process should create an impetus for each organization to be in compliance with 100 percent of the standards 100 percent of the time," said JCAHO President Dennis S. O'Leary. "Making on-site evaluations less predictable and more focused on potential performance issues is intended to satisfy both public demand for greater organization accountability and organization demand for greater value in undergoing these outside evaluations." The transition from announced to unannounced surveys is the latest component of the organization's new accreditation process, which was launched in January 2004. JCAHO accredits or certifies more than 15,000 health care organizations.

AdminaStar Federal has added information about the upcoming DME Medicare Administrative Contractor transition to its DMERC Region B interactive voice response unit. A new menu option will provide general transition information for suppliers who serve beneficiaries living in Kentucky, Maryland, Washington, D.C., Virginia and West Virginia. To hear this information, call (877) 299-7900 and press 5 from the main menu. Administar's new Web page on the transition can be viewed by clicking here.

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