GLENVIEW, Ill. – Medical costs related to COPD will rise from $32.1 billion in 2010 to $49 billion in 2020, the American College of Chest Physicians estimates in a new report.
The group, which presented its findings to the Centers for Disease Control and Prevention (CDC) on July 24, also estimate absenteeism costs were $3.9 billion in 2010, for a total of $36 billion in costs attributable to COPD.
Private insurance picked up the tab for 18% of the medial costs associated with COPD, while Medicare paid 51% and Medicaid paid 25%, according to the report.
"Evidence-based interventions that prevent and reduce tobacco use and reduce clinical complications of COPD may result in potential decreased COPD-attributable costs," said Earl Ford, MD, Division of Population Health, CDC, in a statement.
In 2011, 12.7 million adults in the U.S. were believed to have COPD. However, nearly 24 million have evidence of impaired lung function, indicating an under-diagnosis of the disease, according to the report.
ELYRIA, Ohio – Invacare has reported a loss in net earnings of $13.6 million for the second quarter compared to a loss of $12.5 million for the same period last year.
It reported net sales of $331.3 million vs. $344.8 million.
“We are not pleased with the second quarter’s consolidated financial results,” said Gerald Blouch, president and CEO, who will retire July 31. “We are determined to turn around the business by focusing on improving free cash flow and restoring profitability in the North America/HME and Asia/Pacific businesses.”
Invacare reported a loss in net earnings of $31.6 million for the first half of the year compared to net earnings of $22.7 million for the same period last year. It reported net sales of $640.4 million vs. $676.2 million.
For North America/HME, Invacare reported a loss in net earnings of $12.4 million, excluding restructuring charges, for the second quarter compared to a loss of $10.3 million for the same period last year. It reported net sales of $138.7 million, a 13% decrease. The company reported a loss in net revenues of $28.4 million, excluding restricting charges, for the first six months of the year compared to $19.8 million for the same period last year. It reported net sales of $267.8 million vs. $311.2 million.
Invacare says sales in lifestyle products were affected by Medicare’s audits of HME providers and by a focus on lower-cost products driven by the competitive bidding program.
Sales of power wheelchairs from the Taylor Street facility, still under a consent decree with the Food and Drug Administration, in the second quarters of 2014 and 2013 represented only 8.8% and 14.5%, respectively, of the pre-consent decree units shipped during the same period in 2012.
“We are continuing through the final certification audit process,” Blouch said. “In order to address these needs, we have engaged additional consultants to help us improve the functionality and capabilities of certain of our quality subsystems.”
WASHINGTON – CMS lacks complete average sales price (ASP) data for certain drugs, hindering its ability to ensure that payment amounts are accurate and reflective of manufacturer sales prices, according to a new report from the Office of Inspector General (OIG).
At least one-third of the more than 200 manufacturers of Part B drugs did not submit ASPs for some of their products in the third quarter of 2012, despite being required to do so, according to the report. Another 45 manufacturers were not required to report ASPs during the same quarter.
The OIG also found a small number of inaccuracies in CMS’s ASP files, which may have affected Medicare payments.
The OIG recommends that CMS:
1. Continue to work with the OIG to identify and penalize manufacturers that do not meet ASP reporting requirements;
2. Seek a legislative change to require all manufacturers of Part B drugs to submit ASPs;
3. Ensure the accuracy of product information for the national drug codes (NDCs) listed in the background and crosswalk files; and
4. Finalize the implementation of automated ASP-related procedures by using processes related to average manufacturer price as a model, and subsequently require all manufacturers to submit ASPs through the automated system.
CMS concurred with the first, third, and fourth recommendations, but it did not concur with the second.
The report is a follow up to a previous report that recommended CMS seek a legislative change to require all manufacturers of Part B drugs to report ASPs.
SAN DIEGO and BREA, Calif. – An International Trade Commission (ITC) ruled July 18 that the humidifier in Apex Medical’s iCH CPAP device infringes on ResMed patents, according to a press release from ResMed.
Apex Medical had argued that it had redesigned the humidifier so that it no longer infringed on ResMed patents, the release states.
“As a result, Apex should continue to be banned from selling the iCH humidifier in the United States,” ResMed states in the release.
In its own press release, Apex Medical states it plans to introduce an upgraded iCH water tank in October.
Apex Medical notes that the ITC found its newly designed XT series CPAP water tank free from patient claims asserted by ResMed.
“Significantly, the ITC overruled the ALJ's negative finding regarding the newly designed XT series water tank,” Apex Medical stated in the release.
The ITC also upheld a previous decision that Apex Medical’s Wizard 220 masks are free from patent claims.
Apex Medical chose to withdraw its redesigned Wizard 210 nasal mask from the proceedings, according to the release from ResMed.
The U.S. Patent and Trademark Office is also reviewing the validity of five patents from ResMed, including a claim related to the iCH water tank, through a procedure called inter partes review. The USPTO is expected to make a decision in early 2015.
BALTIMORE – Keeping everyone on their toes, CMS has a few surprises up its sleeve for the Round 2 recompete of competitive bidding, say industry stakeholders.
For starters, competitive bidding areas (CBAs) in the Round 2 recompete won’t cross state lines. That means, although the recompete encompasses the same geographic areas as the previous Round 2, there are now 117 CBAs.
“CMS said it’s because of the licensure issues (we saw last time),” said Kim Brummett, senior director of regulatory affairs for AAHomecare. “I think this will save a lot of heartache. What’s challenging, though, is that now there are many more bids for some providers.”
CMS announced plans for the Round 2 recompete of competitive bidding and the national mail-order program July 15. The bidding schedule and education program begin this fall, with the bidding window expected to open in the winter of 2015.
CMS has also shuffled product categories. Providers will be submitting bids in eight product categories, compared to six in the Round 1 recompete. That’s because CMS split nebulizers and supplies (previously part of the respiratory category), and TENS devices and supplies (previously part of general DME) into their own separate categories.
Additionally, walkers have been shifted from general DME into the standard mobility category—a bad move, say stakeholders.
“We really believe walkers should be in the DME category,” said Brummett. “If you do power mobility, you don’t do walkers. If you do walkers, you don’t do power mobility.”
Completely missing from the product list: external infusion pumps and supplies, which were added in the Round 1 recompete. While there haven’t been any reports of widespread access issues, the complex nature of the therapy likely made CMS realize it was a poor candidate for bidding, say stakeholders.
Another surprise: CMS plans to start Round 2 recompete contracts July 1, 2016, and end them Dec. 31, 2018—shorter than the current three-year contracts.
Stakeholders aren’t sure why CMS plans to shorten the contract duration but surmise it may have to do with the agency’s proposal to bundle payments for certain HME starting in 12 metropolitan statistical areas on Jan. 1, 2015.
“It sounds like they may want to accelerate that process of applying bundled pay rates more globally,” said Cara Bachenheimer, senior vice president of government relations for Invacare.
With CMS going full speed ahead on competitive bidding, the industry can’t let up in its efforts to improve the program, say stakeholders. A recently introduced bill that would require bidders to obtain bid bonds currently has 21 co-sponsors; and the U.S. Small Business Administration (SBA) continues to look into the program following a June hearing.
“We’ve already seen Round 2 businesses going out of business,” said John Gallagher, vice president of government relations for The VGM Group. “The SBA is looking at it pretty solidly. They want some numbers from CMS and CMS has yet to respond.”
WASHINGTON – The devil’s in the details, and the lack of details in CMS’s proposal to implement bundled monthly payments for standard manual and power wheelchairs has stakeholders on edge.
“There are so many more questions that this proposal raises than it answers, and that should probably be more troubling than anything else,” said Cara Bachenheimer, senior vice president of government relations for Invacare.
CMS states in a proposed rule published in the Federal Register on July 11: “We propose that the suppliers would submit a single bid for each HCPCS code describing the wheelchair for each CBA for furnishing the wheelchair and all accessories (including batteries) and services needed on a monthly basis.”
One big hole in CMS’s proposal: Stakeholders don’t know what kind of data providers will have at their disposal to develop these bids.
“I don’t see how you can put together an intelligent bid because patient needs will vary so significantly,” Bachenheimer said.
CMS is also soliciting comments on whether standard manual and standard power wheelchairs should each be described under one HCPCS code.Bundling is not a new idea. But grouping everything under one code?
“That’s just insane,” Bachenheimer said.
CMS claims using bundled monthly payments in lieu of capped rental payments would help to fix repair issues, but stakeholders beg to differ.
“Most of the items that will require repair in the short- to mid-terms are already beneficiary owned and the proposal would only apply to newly-provided products and services, so it still does not sufficiently address the lion’s share of the problem,” said Seth Johnson, vice president of government affairs at Pride Mobility Products.
CMS’s proposal—the bundled payments, the single codes—speaks to the agency’s ongoing lack of understanding about how wheelchairs are provided, stakeholders say.
“It just is really incredible how they’re portraying the simplicity of this when in reality it’s going to be tremendously complicated,” said Don Clayback, executive director of NCART.
WASHINGTON – CMS’s proposal to allow contract suppliers to sell specific lines of business could jolt M&A activity in the HME industry, but not necessarily in a good way, industry watchers say.
As part of a proposed rule published in the Federal Register on July 11, CMS proposes “establishing an exception to the prohibition against subdividing a contract that would allow a contract supplier to sell a distinct company that furnishes a specific product category or (serves) a specific competitive bidding area.”
Industry watchers like Don Davis worry the plan would reward contract suppliers that submitted low-ball bids by increasing the value of their contracts.
“It’s like ticket scalping,” said Davis, president of Duckridge Advisors. “It gives providers a ticket for bidding artificially low rates, even though they never intended to play the game, and makes it easier for them to sell it for a profit, because there are fewer legal restrictions. It’s crazy.”
As part of the plan, CMS would: sever the product categories and bid areas that the company serves, along with the company’s location, from the original contract; incorporate those product categories, bid areas and location into a new contract; and transfer the contract to a new owner under specific circumstances.
The plan would apply to all current and future rounds of competitive bidding.
It’s true that where you stand on competitive bidding has a lot to do with whether or not you view the plan positively or negatively, but industry watchers say the plan makes sense for several reasons.
“I’ve had situations, for example, where a company has purchased a company whose contracts included beds and oxygen, but all they wanted was mobility,” said Denise Leard, a healthcare attorney with Brown & Fortunato. “They don’t end up doing a lot with beds and oxygen, but they’re still responsible for them. If they could sever them, that would be wonderful.”
As for CMS’s motive for such a proposal? Leard says the agency may have realized the cumbersomeness of having “one big contract.”
“In Tennessee, where there were instances of providers with contracts that didn’t have licensure or a location, there was some concern they could have their whole contract taken away,” she said. “What they ended up doing is taking away just that part. In a real-world situation, you need more flexibility.”
That flexibility may come in handy especially for providers with multiple locations across the country but one tax ID, and providers with 5% or more common ownership, industry watchers say.
“CMS is not throwing in the towel and saying anything goes, but attorneys like me can work with this kind of expansion to be able to do a lot,” said Neil Caesar, president of the Health Law Center.
NASHVILLE, Tenn. – Verus Healthcare has acquired its 85th CPAP business, it announced last week. The provider, which holds competitive bidding contracts nationwide, now serves more than 40,000 patients and processes 10,000 new orders per month, according to a press release. Verus, formerly Sleep Nation, got its start in sleep when it acquired CPAP Care Club in 2012 and used it as a platform to roll up other businesses. "When we bought this platform two years ago, attrition among the patient base was very high," said Richardson Roberts, CEO of Verus. "We've grown the patient base seven-fold, while decreasing our monthly attrition to approximately 1% per month.” The company changed its name earlier this year.
Hoveround ups certification
SARASOTA, Fla. – Hoveround has been certified in ISO9001 and, for the first time, ISO13485, the company announced this month. A team of ISO experts surveyed the company at its manufacturing, distribution and administrative facilities in April 2014 to determine its compliance with industry standards. The team found Hoveround met the “highest level of excellence in the design, manufacture, delivery, distribution and service of motorized wheelchairs, scooters and mobility related products and accessories,” according to a press release. Hoveround has been ISO9001 certified since 1997. New with the ISO13485 certification: the inclusion of rehab technology specialists in the field. Third-party certifiers will audit these specialists to ensure they meet standards, according to the release. “We have no doubt that adding ISO13485 will only help us enhance our quality of service,” stated President and Founder Tom Kruse.
Bill watch: competitive bidding, audits
WASHINGTON – A bill that would require providers to obtain bid bonds as part of future rounds of competitive bidding had 21 co-sponsors at press time on Friday. H.R. 4920, introduced in June, would also require providers to prove they meet licensure requirements before they submit bids…A bill that would require CMS contractors that perform audits to reinstate clinical inference and judgment to reduce error rates has six co-sponsors at press time on Friday. Other components of H.R. 5083, introduced last week, include reducing the document review period for all audits from five years to three years and excluding providers with low error rates from some or all audits during a two-year period.
New audit website serves as ‘rallying point’
WASHINGTON – AAHomecare has launched FixMedicareAudits.org to serve as one-stop shop for audit reform, the association announced this week. The cornerstone of the new site: H.R. 5083, The Audit Improvement and Reform Act (AIR Act), which was introduced by Rep. Renee Ellmers, R-N.C., on July 11. “The new site will serve as a rallying point for the HME community to come together in support of the AIR Act, which will apply common sense fixes to one of the most pressing challenges facing our industry today,” said AAHomecare President/CEO Tom Ryan. The site brings together AAHomecare’s multi-platform fight against audits, including its new HME Audit Key, educational resources and Share Your Audit Story.
Home Care Medical lands insurance contract
NEW BERLIN, Wis. – Home Care Medical has reached an agreement with Dean Health Plan to be an in-network provider for members in Milwaukee and Waukesha counties. Home Care Medical will offer infusion and enteral therapy, high-tech rehab equipment, respiratory care, HME and supplies, and bracing and compression garments to the plan’s 250,000 members. The provider has been actively seeking private pay contracts, including Network Health in October.
DME MACs issue policy reminder for CPAP
WASHINGTON – The DME MACs issued a policy reminder about CPAP therapy last week after a review of recent appeals identified denials associated with lack of compliance with requirements for continued coverage after the first three months of rental. At the end of the initial rental period, additional requirements must be met for rental and payments to continue: the treating physician must meet the beneficiary in person between the 31st and 91st days after initiating therapy for a re-evaluation documenting the benefits from PAP therapy and the physician must include objective evidence of the beneficiary’s adherence to the therapy in the medical record. Beneficiaries who fail the 12-week trial may re-qualify if they have a face-to-face re-evaluation to determine why they didn’t respond to therapy and if they repeat a sleep study. Also in the reminder: If an E0601 device is ineffective, substitution with an E0470 does not change the length of the trial if there are fewer than 30 days remaining; if there are more than 30 days remaining, the re-evaluation must be done between the 31st and 91st days and documentation of adherence to the E0470 device must be completed before the 91st day.
MIT completes re-org
FREDERICKSBURG, Va. – MIT Holding, a holding company with subsidiaries in infusion and DME services, has completed a turn-around, according to a release. The company, which eliminated millions in non-profitable revenues, says its subsidiaries are now operating with objectives of a 32% net profit. MIT now turns its attention to expansion and growth. “We have come through the re-organization with a company that now has strong, industry-respected management, and is lean and nimble enough to pivot and evolve to meet the demands of the daily changes in the healthcare industry,” stated CEO Walter Drakeford.
A “Dear Colleague” letter that calls on the Office of Inspector General (OIG) to review the competitive bidding program before it is expanded in 2016 had been signed by 117 lawmakers by press time. The deadline for signing the letter was Friday…ResMed CEO Michael Farrell sold 3,200 shares of company stock on the open market July 15. The stock was sold at an average $49.22 for a total transaction of $157,504, according to news reports. Farrell now owns 106,655 shares of ResMed stock, worth about $5.2 million…AmeriCare Medical has been accredited by the Community Health Accreditation Program (CHAP) for nursing and staffing, specialty pharmacy, and medical equipment and supply. AmeriCare has three subsidiaries: AmeriStaff Nursing Services, Sun Medical Equipment and Rx IV Infusion Pharmacy.
Shawn Stacyhas been promoted to CEO of Hometown Oxygen in Charlotte, N.C. Stacy has more than 10 years of experience in marketing and management in the HME industry. Previously, he led the sales and customer service operations at Hometown Oxygen. He has also worked at ResMed, Fisher & Paykel and American HomePatient…Chris Wilson is now chief marketing officer at Finnegan Health Services in Little Rock, Ark. Wilson will help the company promote itself to customers and healthcare professionals statewide, and assist its affiliated company, Finnegan Medical Supply, with a startup e-commerce venture. He was most recently director of public relations for the Arkansas Farm Bureau…Nonin Medical has named Ash Keswani vice president of marketing. Keswani has more than 20 years of experience marketing disposable medical devices, implantable devices and pharmaceuticals…BioScrip has appointed Thomas Pettit senior vice president and COO. Pettit succeeds Richard Jenkins, a managing director at Alvarez & Marsal, who has served as interim COO since November 2013. Jenkins will continue as a consultant to the company to ensure a smooth transition. Pettit has nearly 20 years of experience in operational management in several industries, with expertise in supply chain logistics and lean initiatives.
BALTIMORE – CMS late yesterday announced plans to recompete contracts for Round 2 of competitive bidding and the national mail-order program for diabetes supplies.
The agency says it has begun its pre-bidding supplier awareness program, and will announce the bidding schedule and education program this fall. Bidding is set to begin some time in the winter of 2015.
The original contracts for Round 2 are set to expire June 30, 2016.
CMS plans to include the following product categories in the recompete:
• Enteral nutrients, equipment and supplies
• General home equipment and related supplies and accessories (includes hospital beds and related accessories, Group 1 and 2 support surfaces, commode chairs, patient lifts and seat lifts)
• Nebulizers and related supplies
• Negative pressure wound therapy (NPWT) pumps and related supplies and accessories
• Respiratory equipment and related supplies and accessories (includes oxygen, oxygen equipment, and supplies; continuous positive airway pressure (CPAP) devices and respiratory assist devices (RADs) and related supplies and accessories)
• Standard mobility equipment and related accessories (includes walkers, standard power and manual wheelchairs, and scooters)
• Transcutaneous electrical nerve stimulation (TENS) devices and supplies
CMS has shuffled around some products in the recompete, including walkers, now in the standard mobility category, and has added TENS devices, which was included in the Round 1 recompete but not the original Round 2. Not included: infusion pumps and supplies, which were part of the Round 1 recompete.
The agency plans to run the recompete in the same geographic areas, but due to Office of Management and Budget updates there will be 90 metropolitan statistiscal areas (MSAs) instead of 91. Another change: It has redefined the CBAs so that no CBA includes more than one state.
CMS will also recompete the contracts for the national mail-order program for diabetes testing supplies for all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam and American Samoa.
For more info on the recompete: http://www.dmecompetitivebid.com/palmetto/cbic.nsf/DocsCat/CBIC%20-%20Main~DMEPOS%20Competitive%20Bidding%20Round%202%20Recompete%20and%20National%20Mail-Order%20Recompete%20Announced?opendocument
To see a list of specific items in each category:
PORT WASHINGTON, N.Y. – Drive Medical’s acquisition of Medquip in July is another notch in the company’s belt in the respiratory product category.
When Drive Medical acquired Inovo/Chad Therapeutics in 2011, company officials said they were looking to make more acquisitions in the category. Where Inovo brought to the table oxygen conservers and regulators, Medquip brings nebulizers and disposable respiratory products.
“You have the asthma population that needs nebulizers, but also the COPD population, and as their disease progresses, they may need oxygen,” said Mitch Yoel, executive vice president of Drive Medical. “We have the ability to match products to patients based on their changing needs.”
Drive Medical’s next move in the respiratory product category: to introduce a 5-liter stationary concentrator, called the Pure Concentrator, and a transfilling device, called the Pure Fill. The products, which are currently being beta tested, will be on display at Medtrade in October.
Drive Medical was already a player in the nebulizer market, but Medquip, best know for its Airial line of pediatric nebulizers, “solidifies” the company’s position, Yoel says.
Medquip also brings new products with retail opportunities, such as digital blood pressure monitors, to Drive Medical’s line-up, he says.
Drive Medical has already moved Medquip’s inventory to its Atlanta distribution center, Yoel says.
For Bluffton, S.C.-based Medquip, being part of Drive Medical means having more to offer its customers, says Craig Bright, who owns Medquip and will become senior vice president of business development, respiratory products, for Drive Medical.
“It was going to be challenging in the future to be a niche player,” he said. “We’ve been lucky to have great success, but with the changes in the market, we were concerned we didn’t have the breadth of products. In a market going through a lot of changes, there are always winners and losers, and we feel that Drive is a winner.”
Those changes in the market, namely competitive bidding and audits, will drive continued consolidation among HME manufacturers, Yoel says. Just days after announcing the Medquip acquisition, Drive Medical announced that it acquired Dupont Medical, a manufacturer and distributor of a range of healthcare products in France.
“We’ve had quite a few acquisitions and you’re going to see quite a bit more,” he said.
WASHINGTON – Reps. Renee Ellmers, R-N.C., and John Barrow, D-Ga., introduced a bill on Friday afternoon to reform Medicare’s audit program for HME.
H.R. 5083, the Audit Improvement and Reform Act (AIR Act), would require the MACs, RACs and other contractors performing audits to, among other things, reinstate clinical inference and judgment to reduce error rates. In 2009, when this practice was dropped, the error rate for HME skyrocketed from less than 10% of claims to more than 60% of claims, says Tom Ryan, president and CEO of AAHomecare.
“Common sense has been thrown out the window,” he said. “It has just become a matter of the technical components of the billing process.”
Earlier in the week, Sen. Bill Nelson, D-Fla., chairman of the Senate Special Committee on Aging, hosted a roundtable discussion on audits, and the House Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements held a hearing to discuss the appeal process and potential reform.
Other components of the bill include reducing the document review period for all audits from five years to three years, excluding providers with low error rates from some or all audits during a two-year period, and establishing education and outreach programs for providers.
“A lot of providers have issues because they don’t know what the rules are—CMS is not clear,” said Jay Witter, senior vice president of public policy for AAHomecare. “This would set in stone what they need to do to follow the rules.”
The industry’s next moves include drumming up co-sponsors for the House bill, introducing a companion bill in the Senate and being at the ready when Congress takes up comprehensive reform on audits.
“There has been a lot of political pressure to take action, and this bill gives us the political power to be at the table,” Witter said.
The bill already has strong bi-partisan support from Reps. Bruce Braley, D-Iowa, John Barrow, D-Ga., John Duncan, R-Tenn., and Mike Thompson, R-Pa., according to the North Carolina Association for Medical Equipment Services (NCAMES). The association’s executive director Beth Bowen and members Joey and Billy Tart of Family Medical worked closely with Ellmers to craft and introduce the bill.
In conjunction with the bill dropping, AAHomecare has launched a website, www.fixmedicareaudits.org, where visitors can download a copy of the bill and issue briefs, and learn how they can support the industry’s efforts.
“We believe this is doable,” Ryan said.
ROCHESTER HILLS, Mich. – Wright & Filippis said goodbye to 35 years of providing home medical equipment and respiratory services on June 30, when it sold that part of its business to Lincare.
“In Medicare’s eyes and the payers’ eyes, those businesses have moved to a commodity business,” said A.J. Filippis, CEO. “We decided we wanted to get back to our roots and focus on prosthetics and orthotics, complex rehab and our accessibility business.”
The family-owned Wright & Filippis, which celebrated 70 years in business in April, has a sizable presence in Michigan, with 32 locations. In 2012, for example, the provider received about $1.4 million from Medicare for oxygen concentrators and $496,234 for CPAP devices, according to the HME Databank.
The terms of the deal were not disclosed, but Filippis confirmed that Wright & Filippis had closed a few locations and laid off employees, although many of them were rehired by Lincare. Lincare will operate out of many of Wright & Filippis’s existing locations, he said.
“For the patients, it’s not going to look much different,” said Filippis. “A lot of these patients we’ve serviced for 15 or 20 years and we wanted to make sure the service levels were going to be consistent.”
Also driving the sale: competitive bidding. In Round 2, Wright & Filippis won only a few contracts, for oxygen, CPAP and negative pressure wound therapy.
The deal didn’t surprise industry analysts.
“Wright & Filippis has been struggling with the DME business since they didn’t win the awards they wanted,” said Don Davis, president of Duckridge Advisors. “And at the end of the day, at least in that part of the world, there’s nobody else to buy them. Lincare has the capital and they are taking advantage of the very low multiples in our industry.”
Although Lincare is gaining a big slice of market share in Michigan, local providers say they are not ready to throw in the towel.
“You are always concerned when competing with somebody that big,” said Kevin Druzinski, president of Motor City Medical in Madison Heights.“They bought the largest independent in Michigan and Wright & Filippis was very strong. Everybody just keeps rolling along and there’s opportunity every time there’s a misfortune like that.”
Wright & Filippis, meanwhile, plans to grow its remaining business, with plans to close on a couple of acquisitions this summer, said Filippis.
BALTIMORE – A new pilot program seeks to settle appeals that are stuck at the administrative law judge (ALJ) level, but is CMS ready to negotiate?
“I have clients consistently ask me if they can get into a settlement discussion at the very beginning,” said Stephanie Green, chief consulting officer & general counsel for Acu-Serve. “This is our first opportunity to make CMS come to the table.”
The Office of Medicare Hearings and Appeals (OMHA) launched the pilot to alleviate a massive backlog at the ALJ level. The pilot brings the provider and CMS together with an OMHA employee acting as a facilitator to try and work out a settlement.
The path to settlement won’t be easy, stakeholders say. First of all, the criteria for qualifying for the pilot are strict. Providers must have a minimum of 20 claims or $10,000 stuck at the ALJ level; they must appeal all claims for the same service; and they must have filed the claims, which can’t be already assigned to a judge, in 2013.
“I think from a DME perspective, that’s going to be a challenge,” said Kim Brummett, senior director of regulatory affairs for AAHomecare.
Secondly, the process will likely put the burden of proof on providers, stakeholders say. The OMHA facilitator won’t make official determinations on the merits of the claims, but “may help the appellant and CMS see the relative strengths and weaknesses of their positions,” according to a fact sheet on the program.
“The government has policies that must be followed,” said Wayne van Halem, president of The van Halem Group. “The ALJ, on the other hand, isn’t particularly bound by the policy, so there’s reason in the equation.”
CMS is not required to settle claims and both sides have the discretion to reject offers. If no settlement is reached, the appealed claims will return to the ALJ to await a hearing—which could take years.
“The clients I’ve had who are interested in this don’t want to wait three years,” said Greene.
ELYRIA, Ohio – Invacare has come back with what it believes is a more effective pricing policy for products marketed and sold over the Internet.
The biggest difference between the old policy, terminated May 22, and the new Minimum Advertised Price (MAP) Policy, introduced July 7: increased accountability, says Judy Kovacs, vice president of customer service and sales operations.
“The new policy has specific actions that we will take if an e-commerce provider doesn’t comply,” she said. “The old policy didn’t have specifics.”
Per the new policy, Invacare has specified minimum advertised prices for products that it has designated “MAP Products.” It’s a violation of the policy for an e-commerce provider to list advertised prices for such products that are lower than the prices specified by the company.
Upon first violation, Invacare reserves the right to place a shipment on hold for two business days and, upon second violation, to place a shipment on hold for 30 business days. Subsequent violations may result in sanctions for longer periods of time, or suspension or termination of accounts.
The policy allows Invacare to strike a balance between protecting its brick-and-mortar providers and encouraging e-commerce providers to market and sell its products, Kovacs says.
“Brick-and-mortar companies are out there doing a great service, but we realize other channels exist,” she said. “E-commerce is a strong purchasing solution for people in this country.”
Kovacs added: “E-commerce providers also want a fair playing field.”
The policy also allows Invacare to “maintain the integrity of our products,” Kovacs says.
“We're not in the game of selling on price," she said. "We have value-add, quality products.”
Invacare will use a service to monitor compliance with its MAP Policy. The company also has staff, internally, that is responsible for managing the policy, Kovacs says.
Ultimately, however, it’s at the discretion of the e-commerce provider to adhere to the policy, she acknowledges.
PORT WASHINGTON, N.Y. – Drive Medical has acquired Dupont Medical, a manufacturer and distributor of healthcare products in France. Based in Frouard, Dupont manufactures and distributes everything from wheelchairs to homecare beds to patient lifts. The company also manufactures diagnostic devices, emergency equipment and medical instruments for doctors and other healthcare professionals. The deal will further expand Drive’s presence in Europe. In May, the company acquired several product lines from U.K.-based Days Healthcare.
The Compliance Team expands patient satisfaction service
SPRING HOUSE, Pa. – The Compliance Team has expanded enrollment in its web-based patient satisfaction reporting and benchmarking service to all DMEPOS providers, whether they’re accredited by The Compliance Team or another Medicare-approved organization. “Given Medicare’s and managed care’s emphasis on pay-for-performance and mandates for providers to prove their quality claims, we believe the time is right to expand our service,” stated Sandra Canally, founder and president, in a press release. The Compliance Team has been requiring the submission of patient satisfaction surveys on a quarterly basis since 1998, making its database the oldest and largest of its kind, the company stated in the release. To date, The Compliance Team has aggregated and benchmarked more than 1.3 million patient satisfaction surveys, garnering 10 million standardized data points from providers in all 50 states, Puerto Rico and the U.S. Virgin Islands. The Compliance Team is charging an introductory fee of $249 per year for the first location for providers that are not accredited by the company.
NovaSom obtains financing
DURAM, N.C. – NovaSom has secured a $7.5 million line of credit from Square 1 Bank to further its foothold in the sleep market. “After being vetted and approved through Square 1's diligence process, management's vision and plans to move into its next phase of development are validated,” said CEO John Spitznagel in a press release. NovaSom manufactures AccuSom, a home sleep test.
FDA warns Philips Respironics over Smart Monitor 2
MURRYSVILLE, Pa. – The U.S. Food and Drug Administration (FDA) has sent a warning letter to Philips Respironics about the batteries used in its Smart Monitor 2. The June 30 letter said batteries in the apnea monitor were not properly examined or tested “causing the units to constantly alarm, not allowing continuous monitoring of respiration, heart rate and oxygen saturation of infant and pediatric patients.” Philips says inspectors found “a limited number” of incorrectly wired battery packs and that the issue was addressed through a device recall, according to the Pittsburgh Post-Gazette. Philips says it has verified its supplier has changed its processes and is doing more inspection, according to the newspaper.
California man gets 121 months in jail for fraud
LOS ANGELES – Vahe Tahmasian has been sentenced to 121 months in prison after being convicted of conspiracy to commit health care fraud, six counts of health care fraud and six counts of aggravated identity theft, according to a press release from the U.S. Department of Justice. Between April 2009 and February 2011, Tahmasian and co-conspirator Erik Mkhitarian, owners of Orthomed Appliance, a DME supply company in West Hollywood, allegedly stole the identity of beneficiaries and doctors from patient files to submit fraudulent claims. Tahmasian, who was found guilty in March, submitted more than $1.5 million in claims to Medicare and received $994,036. He has been ordered to pay restitution, according to the release.
Pain device gets OK in Canada, eh
BILLINGS, Mont. – ExcelHealth has received approval to sell its TENS device, the iRelieve Pain Management System, in Canada. The device offers safe, drug-free pain management, according to a release. “People suffering from physical pain is truly an epidemic,” said CEO and iRelieve developer Mike Williams. “I am passionate about bringing to the marketplace access to OTC pain management products that truly help people.” ExcelHeath received U.S. Food and Drug Administration clearance earlier this year.
Big belly? You’re at increased risk of developing COPD
YARMOUTH, Maine – Obesity, especially excessive belly fat, is a risk factor for chronic obstructive pulmonary diseases (COPD), according to an article in the Canadian Medical Association Journal. A team of researchers in Germany and the United States looked at the relationship of waist and hip circumference, body mass index (BMI) and physical activity levels to new cases of COPD in a large group of men and women in the U.S. They looked at data on 113,279 people between the ages of 50 and 70 who did not have COPD, cancer or heart disease at the beginning of the study. During the 10-year follow-up period, 3,648 people developed COPD. People with large waist circumferences (110 cm or more in women and 118 cm or more in men) had a 72% increased risk of COPD. "Our findings suggest that next to smoking cessation and the prevention of smoking initiation, meeting guidelines for body weight, body shape and physical activity level may represent important individual and public health opportunities to decrease the risk of COPD,” researchers say.
HME revenues, profits to decline, report says
NEW YORK – The HME industry has a lot going for it, including a rapidly aging population, but that may not be enough to offset increased Medicare and Medicaid regulations, according to a new report from IBISWorld. Industry revenue is expected to decline at an annualized rate of 2.5% from 2009 to 2014, bringing down total revenue to $5.6 billion, the research firm says. Profit is expected to fall to 4.2% of revenue in 2014, down from 11.6% of revenue in 2009, it says. The biggest regulation that the HME industry has to contend with: competitive bidding, according to the report. “Moving forward, industry revenue is expected to continue declining due to federally mandated low rental prices, although the industry itself remains mature,” stated analyst Amal Ahmad in a press release.
Moneyline: ResMed, Altius
Altius Healthcare, a provider of home infusion and specialty infusion services, has been acquired by Amerita, a wholly owned subsidiary of PharMerica Corp. “The sale of Altius Healthcare to Amerita is a great opportunity for the company as it will allow us to better compete in the healthcare marketplace,” stated Kevin Nestrick, the founder and CEO of Altius, in a press release. “Amerita has the size and scale needed to win on a national level with a local network that our patients can count on.” Altius has two locations in Prescott and Tucson, Ariz…David Pendarvis, chief administrative officer and global general counsel for San Diego-based ResMed sold 5,000 shares of the company’s stock in a July 3 transaction. The stock was sold at an average price of $50.04 for a total transaction of $250,200. Pendarvis now owns about 69,207 shares of the company’s stock valued at about $3.5 million.
Therapy Support has appointed Cliff Stepp as CEO. Stepp previously served as the company’s executive vice president. His goal as CEO: “lead Therapy Support on a path of brand expansion, growth and employee empowerment,” according to a press release.
WASHINGTON – The Office of Medicare Hearings and Appeals (OMHA) has announced a pilot program aimed at helping providers resolve claims appealed to the administrative law judge (ALJ) level.
To qualify for the program, a provider must have a minimum of 20 claims or $10,000 tied up in appeals. The amount of each claim must be less than $100,000.
Other requirements of eligibility: Claims must have been filed in 2013 and can’t be currently assigned to an ALJ, and providers must appeal all claims for the same service, according to an AAHomecare bulletin.
The program will rely on a settlement conference facilitator to mediate between providers and CMS. The facilitator does not make official determinations, but may help the appellant and CMS see the relative strengths and weaknesses of their positions, according to the U.S. Department of Health and Human Services website.
WASHINGTON – Audits take the spotlight in Washington, D.C., this week as lawmakers seek to address ongoing concerns with Medicare’s audit system.
At a roundtable held today, July 9, by Sen. Bill Nelson, D-Fla., consultant and former AAHomecare exec Walt Gorski will testify on behalf of the Medical Equipment Suppliers Association (MESA) about the audit process and its impact on HME providers. Sen. Nelson is the chairman of the Senate Special Committee on Aging, which, among other tasks, reviews Medicare’s performance on an annual basis.
Then on July 10, the House Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements, will hold a hearing to discuss concerns with the appeal process and evaluate potential reforms. Chief Administrative Law (ALJ) Judge Nancy Griswold will testify at the hearing, titled “Medicare Mismanagement Part II: Exploring Medicare Appeals Reform.” Griswold first raised the alarm over a massive backlog at the ALJ in December.
Back in February, the Office of Medicare Hearings and Appeals hosted a forum to discuss the backlog at the ALJ.
ELYRIA, Ohio – Invacare has introduced a new pricing policy for providers that sell and market its products over the Internet in the United States.
About one month after terminating its existing Lowest Advertising and Marketing Prices (LAMP) Guidelines, the company on July 7 introduced a new Minimum Advertised Price (MAP) Policy.
Per the policy, Invacare will specify a minimum advertised price for certain products that it designates, from time to time, as “MAP Products.” It will be a violation of the policy for an e-commerce provider to list advertised prices for such products that are lower than the prices specified by the company.
(For the current list of MAP products and pricing, go here.)
Invacare says it is within the discretion of the e-commerce provider to adhere to the policy. However, if a provider violates the policy, the company reserves the right to, upon first violation, place a shipment on hold for two business days and, upon second violation, place a shipment on hold for 30 business days. Subsequent violations may result in sanctions for longer periods of time, or suspension or termination of accounts.
Invacare says the new policy encourages e-commerce providers to invest in marketing, pre-sales and post-sales services, and support for the products, and promotes the “premium status” of the company’s products.
“We must continue to recognize those providers who offer superior customer service and product selection of a broad level, and that is the overriding purposed of this policy,” stated Judy Kovacs, vice president of customer service and sales operations, in a press release.
WASHINGTON – CMS’s plan to expand competitive bidding pricing and implement bundled monthly payments for certain HME is a mixed bag of positives and negatives, industry stakeholders say.
Biggest loser: rural areas
In a July 2 proposed rule, the agency outlines plans to apply competitive bidding prices in non-bid areas by using regional prices limited by a national ceiling (110% of the average of regional prices) and the floor (90% of the average of regional prices).
“Until they calculate the ceiling and the floor, it’s tough to say much about this,” said Kim Brummett, senior director of government affairs for AAHomecare. “But it will be a huge hit in rural areas.”
With 45% cuts, on average, as part of Round 2, the regional prices will likely mean big cuts for providers in rural areas even at 110% of the average of regional prices, stakeholders say. To boot: Providers in rural areas are less likely to see volume increases from the program, due to the demographics of the areas they do business in.
In its comments to an advance notice of proposed rulemaking published in February, AAHomecare argued that pricing for HME in rural areas should receive an add-on, much as it does for home health.
“No rural add-on and average bid rates that were wrong—it just doesn’t add up,” Brummett said.
Stakeholders bristle at the idea of using competitive bidding pricing, in general, for anything going forward.
“We believe the methodology is flawed to begin with and the rates are unsustainable,” said Tom Ryan, president and CEO of AAHomecare.
The agency plans to apply expanded competitive bidding pricing Jan. 1, 2016.
Testing the waters with bundling
CMS also outlines plans to phase in bundled monthly payments for enteral nutrition, oxygen, standard manual and power wheelchairs, hospital beds, CPAP devices and respiratory assist devices furnished in no more than 12 metropolitan statistical areas (MSAs).
“At least it’s a demo,” Brummett said. “The big question: What is the rate going to be?”
The MSAs chosen for the demo would have a general population of at least 250,000 and a Medicare Part B enrollment population of at least 20,000 not already included in Round 1 or 2.
Stakeholders worry what bundled payments will do to patient and quality outcomes, for some products more than others.
“When you’re talking about CPAP, compliance is important, and at the end of the day, you have to make sure you have outcomes,” Ryan said.
The agency plans to implement bundled monthly payments, which would cover equipment, supplies, accessories and any necessary maintenance and repairs, Jan. 1, 2015.
CMS will accept comments on the proposed rule until Sept. 2. It expects the rule to appear in the July 11 Federal Register.
WASHINGTON – It took nearly six years, but CardioSom has prevailed in its lawsuit against the government.
A U.S. Court of Federal Claims judge ruled June 30 that the government was in breach of contract when it rescinded contracts in the original Round 1 of competitive bidding.
“It’s been a long time coming,” said attorney Jerry Stouck, a shareholder with Greenberg Traurig, the law firm representing CardioSom. “The (court says) that CardioSom is entitled to damages.”
CardioSom filed its lawsuit in 2008 after Congress delayed the bidding program for 18 months, rescinding its contracts and those of approximately 300 other providers.
Chief Judge Patricia Campbell-Smith’s ruling came just days before the six-year statute of limitations for the lawsuit expired on July 14. Although the ruling could apply to other providers that had their contracts rescinded, they would have to act fast, says Stouck.
“Any other company that wants to take advantage of this has to file a lawsuit prior to the expiration of the statue of limitations,” he said. “I would suspect that there are companies out there that don’t know they have the right to legal recourse. On the other hand, they might be perfectly content and have moved on to other things. Six years is a long time.”
Stouck says the next step is for CardioSom to seek damages. Damages could include expenses like rent and utility costs that CardioSom incurred as a result of ramping up its business to fulfill its contracts, and any profits it would have earned from the three-year contracts.
“The numbers I’ve seen are big numbers,” he said.
In April, Campbell-Smith ruled that the court did indeed have jurisdiction to review the lawsuit.