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Week of July 22, 2024

HEADLINE NEWS Senate Continues Medicare Debates as Study Predicts Competitive-Bidding Bureaucracy WASHINGTON and ALEXANDRIA, Va.--As home-care advocates waited to see whether U.S. Sen. Bob Graham, D-Fla., would attach a durable medical equipment competitive bidding amendment to S.812, a newly formed anti-competitive-bidding coalition released a study that predicted competitive bidding would be a bureaucratic nightmare for the federal government. Based on the competitive bidding mandates in the Medicare Modernization and Prescription Drug Act--which passed the U.S. House earlier this month--Medicare would have to add approximately 1,620 new staff members to implement DME competitive bidding nationwide, the study said. "The foregoing analysis demonstrates that adoption of a competitive bidding program, as set forth in MMPDA Section 511, would be unwise," the Coalition for Access to Medical Services, Equipment and Technology concluded. CAMSET, which includes 19 industry and consumer advocate organizations, commissioned the report from the Washington-based firm Multinational Business Services, whose staff includes former senior officials from the U.S. Congressional Budget Office, CAMSET said. After first identifying 50 separate congressional mandates contained in Section 511 of the House bill, MBS analyzed the "complex bureaucratic structure that would be required to accomplish all the individual mandates," CAMSET explained. According to MBS' analysis, the bill would require Medicare to set up approximately 260 "competitive acquisition areas" in metropolitan centers throughout the United States. Each area "would require its own bureaucracy in addition to increases in the bureaucracy in [the Centers for Medicare and Medicaid Services] regional offices and in CMS' headquarters." "Based on CMS' current size," CAMSET said, "CMS would need to expand by 35 percent to carry out Section 511 mandates," and inevitably would duplicate some of the agency's functions. These findings prompted CAMSET to urge Congress not to adopt nationwide competitive bidding until: -- CMS completes and analyzes its two ongoing demonstration projects; -- the government conducts additional demonstrations in more-diverse areas of the country, using a broader product sample; and -- CMS solicits and considers public comments on nationwide competitive bidding. Despite these suggestions, aides for Senate Majority Leader Tom Daschle, D-S.D., said Daschle would initiate a vote on competing Medicare prescription drug benefit amendments--attached to S.812--sometime tomorrow. However, even if the Senate approves S.812 and is able to reconcile the bill with the House's MMPDA, the fate of the combined bill is unclear, because the Bush administration does not support the generic drug bill in its current form. In a "statement of administration policy" issued July 18, the President's executive office said "the administration opposes S.812 in its current form because it will not provide lower drug prices." The Bush administration also said it supports features of the "tripartisan," Republican-backed drug benefit bill currently under debate in the Senate's Finance Committee. Conversely, the administration opposes the Democrat-backed bill also vying for favor among Finance Committee members. While AAHomecare is relatively certain that the tripartisan bill does not include competitive bidding language, the association admitted it still does not know what the Democrats' bill proposes. "The democrats right now are putting together a provider amendment," said Tom Connaughton, AAHomecare's president. "We hope it won't include competitive bidding. Our preliminary indications are that it won't be in there, but we have not seen it." Consequently, "it is critical that anyone who cares about home care get on the phone to their two senators--and they should feel absolutely free to use points from the CAMSET report," Connaughton continued, noting that additional information is available at CAMSET's Web site, http://www.protectaccess.org, and at AAHomecare's Web site, http://www.aahomecare.org. Last week, Longmont, Colo.-based Sunrise Medical added its voice--and committed its resources--to anti-competitive-bidding efforts underway nationwide. "We've been there with financial and with human resource support, but with an issue like competitive bidding, I feel we must make our position public," said Mike Hammes, chairman and chief executive officer of Sunrise. In addition to lobbying actively in Washington, Sunrise has provided competitive-bidding-related links on the company's Web site, http://www.sunrisemedical.com, and is planning to fax talking points and Senate contact information to its customers. Key Senate Committee Passes Medicaid Bill for Disabled Children WASHINGTON--A bill that seeks to extend Medicaid coverage to working parents with sick or disabled children passed the U.S. Senate's Finance Committee last week. Sen. Chuck Grassley, R-Iowa, introduced the bill, S.321, also known as the Family Opportunity Act, with the goal of encouraging low- to middle-income parents to stay in well-paying jobs without fear of losing Medicaid coverage, Grassley said. "The practical result under current law is that parents with disabled children are forced to drop out of the workforce or keep themselves in a low-paying job just to remain eligible for Medicaid," he said. "In effect, the government is forcing parents to choose between family income and their children's health care." Under the provisions of S.321, parents would pay for Medicaid services on a sliding scale. Seventy-four senators have co-sponsored the bill, which the full Senate now must consider. And, although the U.S. House of Representatives has not yet considered the bill, 235 House members already have indicated their support for the measure. The full text of S.321 is available at http://thomas.loc.gov.

PROVIDER NEWS Apria Reports Q2 Earnings LAKE FOREST, Calif.--For the second quarter ended June 30, 2002, Apria Healthcare Group reported a net income of $26.2 million, or 47 cents per share, an increase of 38 percent compared to a net income of $18.8 million, or 34 cents per share, for the same quarter in 2001. Sales for the quarter totaled $310.4 million, a 9.5 percent increase compared to sales of $283.5 million during the same quarter in 2001. VITAS Healthcare Opens HME Company MIAMI--VITAS Healthcare, one of the nation's largest hospice care providers, has opened a home medical equipment company to serve its Chicago-area patients, VITAS announced. By handling patients' home medical equipment needs in-house, "we are able to reduce our costs by half," said Mark Bowers, VITAS' general manager of HME. Because the hospice and the HME dealer are one company, "we can really focus on the hospice industry . . . which requires a very heavy turnover of equipment." VITAS also operates HME companies in Florida and Texas. MANUFACTURER NEWS Johnson & Johnson Announces Second Quarter Results, Confirms FDA Probe NEW BRUNSWICK, N.J.--For the second quarter of 2002, Johnson and Johnson reported net earnings of $1.7 billion, or 54 center per diluted share, an increase of 11.6 percent compared to net earnings of $1.5 billion, or 48 cents per diluted share, for the same quarter in 2001. Sales for the quarter rose 10.9 percent, to $9.1 billion, compared to sales during the same period in 2001. Only three days after reporting these positive results, Johnson & Johnson on July 19 confirmed that the U.S. Food and Drug Administration is investigating allegations by a former Johnson & Johnson employee that the employee was directed to falsify records at the company's Ortho Biologics facility in Puerto Rico. That same day, The New York Times reported that the FDA and the U.S. Justice Department are investigating the Puerto Rico facility--which manufactures an anemia drug called Eprex--in connection with a series of red blood cell illnesses in Europe and Canada. Denying the possibility that the former employee's lawsuit and the red blood cell conditions could be linked, Johnson & Johnson said, "we are unaware of the precise nature of the FDA's interest, but we are taking the matter with the utmost seriousness. We remain confident that the allegations in the lawsuit would not have affected product integrity at the manufacturing plant. "The employee, a utilities worker with no responsibility for manufacturing, was terminated in 1999 from the Ortho Biologics manufacturing facility in Manati, Puerto Rico, for failing to properly complete equipment records," the company explained. Invacare Reports Q2 Earnings ELYRIA, Ohio--For the second quarter ended June 30, 2002, Invacare reported flat net earnings of $16.1 million, or 51 cents per share, compared to net earnings of $16.1 million, or 51 cents per share, during the same period in 2001. Sales for the quarter rose 2 percent to $271.8 million, compared to sales of $265.7 million during the second quarter of 2001. Drive Medical Acquires Winmed FARMINGDALE, N.Y.--Drive Medical Design & Manufacturing, a division of Medical Depot, has acquired Winmed Products, a Fort Myers, Fla.-based mobility manufacturer. "The acquisition will further expand our line of Rollators," the company said. "The additional manufacturing will provide critical mass in our factory and add a significant number of new customers who have not been exposed to the Drive brand." The companies did not disclose the terms of the acquisition.

SOURCES SAY ROCKVILLE, Md.--Medical devices such as intravenous bags and tubing, which contain a plastic-softening chemical called DEHP, may be unsafe for patients--especially for young boys, according to a report that the U.S. Food and Drug Administration released last week. Procedures that pose the highest risk of DEHP exposure include the exchange of transfusion in neonates, total parenteral nutrition in neonates, hemodialysis in peripubertal males, hemodialysis in pregnant or lactating women, and enteral nutrition in neonates or adults, the FDA said. "Everyone is exposed to small levels of DEHP in everyday life," the report continued. "However, some individuals can be exposed to high levels of DEHP through certain medical procedures . . . Exposure to DEHP has produced a range of adverse effects in laboratory animals, but of greatest concern are effects on the development of the male reproductive system and production of normal sperm in young animals." WASHINGTON--The Disability Insurance and Supplemental Security Income programs have not kept pace with the medical advances and social changes that enhance disabled people's ability to work, the U.S. General Accounting Office told the House Subcommittee on Social Security this month. While changes are possible within the current structure, the GAO urged Congress to look at revamping the system entirely. "Policymakers and agency officials could look beyond the traditional concepts that underlie the DI and SSI programs to re-examine the core of federal disability programs--including eligibility standards, the benefits structure and return-to-work assistance--with a focus on taking advantage of the medical, economic and social changes," the GAO said. To help lawmakers conceptualize such changes, the GAO then outlined ways that private disability insurers and other countries have addressed social and medical advances. WASHINGTON--Government support for the care of Alzheimer's patients may not always be a distant dream. The U.S. Health and Human Services Department on July 15 announced it had awarded grants totaling more than $10 million to create new Alzheimer's care demonstrations in eight states--Colorado, Kansas, Michigan, Mississippi, New York, Oklahoma, Pennsylvania and West Virginia--and to support ongoing demonstrations in an additional 25 states. "Alzheimer's disease affects about 4 million Americans and often devastates families who struggle to provide the best possible care to their loved ones," HHS Secretary Tommy Thompson said. "These new grants will expand the community services available to those families and help them to overcome the special challenges they face in living with this tragic illness." The grants will focus on expanding the availability of diagnostic and support services for Alzheimer's patients, and on improving outreach and service delivery to low-income, cultural minority and rural families, the agency explained. WEST PALM BEACH, Fla.--A quadriplegic man from Orlando is suing a West Palm Beach strip club for allegedly violating the Americans with Disabilities Act, the man's attorney, Anthony Brady, told the South Florida Sun-Sentinel. Edward Law filed a lawsuit in federal court last month against Wildside Adult Sports Cabaret, alleging the club did not provide handicap access to its lap-dancing room or its bathroom. "This is an industry that is high-profit and knows about ADA and is ignoring it," Brady told the Sentinel.

INDUSTRY BRIEFS John Gallagher has joined The VGM Group, Waterloo, Iowa, as vice president of government relations. Gail McGrath has been appointed director of the Center for Beneficiary Choices in the Washington-based Centers for Medicare and Medicaid Services. McGrath has 25 years of experience with health care business issues, and was the founder and executive director of the Home Health Services and Staffing Association. Stuart Guterman has been appointed director of research for CMS. Guterman will oversee CMS' Office of Research, Development and Information. Previously, he was a senior analyst with the Congressional Budget Office's Health and Human Resources Division, as well as deputy director of the Medicare Payment Advisory Commission. IN OTHER NEWS San Diego-based ResMed has received 510(k) clearance from the U.S. Food and Drug Administration for the S7 Elite continuous positive airway pressure device and the AutoSet Spirit autotitrating device. Both devices treat obstructive sleep apnea and offer heated humidification options, the company said. The Alexandria, Va.-based National Home Infusion Association has formed a partnership with the Washington-based National Alliance for Infusion Therapy in order to strengthen NHIA's ability to provide legislative advocacy for its members. NAIT is a lobbying organization that represents infusion-therapy manufacturers and providers. NHIA also has created a legislative information center on its Web site, http://www.nhianet.org, which provides legislative updates and position papers to NHIA members. The Medco Group, a division of The Zandee Group in Sarasota, Fla., has added new members: Homecare Products of Kent, Wash.; Scooter-Lift Manufacturing of Medford, Ore.; and Unicare Medical of Toronto. Southeast DME, based in Sonora, Ky., has become the first home medical equipment repair center in the United States to receive ISO 9000 certification. The company provides HME repair services, including sieve bed repours, compressor rebuilds, concentrator repair and hydrostatic cylinder retesting, to HME providers worldwide. The Managed Care Information Center, Manasquan, N.J., has published the 5th edition of The Managed Care Yearbook, which includes information about enrollment and premium trends, member strategies, technology trends, case studies, provider relations, and Medicare and Medicaid managed care. For more information, call MCIC at (888) 843-6242 or go to http://www.themcic.com. Ed Collier, a registered respiratory therapist with Children's Hospital of San Diego, received a trip to New York City as the winner of Pittsburgh-based Respironics' OptiChamber Advantage "Win a Trip for Two to New York City" contest.

STOCKS Merrill Lynch has downgraded New Brunswick, N.J.-based Johnson& Johnson from "strong buy" to "buy." Company High Low PE Ratio 7/12/02 7/19/02 Change Abbott Laboratories 58.00 30.97 19.34 33.15 32.14 (1.01) Allied Healthcare International (TWH) 6.80 2.40 N/A 4.65 4.55 (0.10) Allied Healthcare Products (AHPI) 5.30 3.10 150.00 4.50 4.75 0.25 American HomePatient (AHOM.OB) 1.70 0.21 N/A 0.23 0.23 0.00 AmerisourceBergen (ABC) 82.85 52.12 25.22 61.00 61.35 0.35 Apria Healthcare (AHG) 28.52 18.90 13.82 19.95 19.00 (0.95) Cardinal Health (CAH) 76.65 46.80 22.47 52.30 52.75 0.45 CareCentric (CURA) 2.65 0.40 N/A 0.53 0.54 0.01 Chad Therapeutics (CTU) 4.35 2.02 27.27 2.95 2.75 (0.20) Coram Healthcare (CRHEQ.OB) 0.79 0.13 N/A 0.53 0.47 (0.06) Gentiva Health Services (GTIV) 27.55 7.90 9.90 8.95 8.54 (0.41) Invacare (IVC) 41.25 28.50 27.62 31.89 31.00 (0.89) Johnson and Johnson (JNJ) 65.89 45.56 24.99 50.50 41.85 (8.65) Lincare Holdings (LNCR) 34.39 22.25 22.09 31.38 29.87 (1.51) Matria Healthcare (MATR) 40.00 6.65 8.84 6.80 7.23 0.43 McKesson (MCK) 42.09 27.80 20.99 30.07 28.75 (1.32) National Home Healthcare (NHHC) 18.90 7.99 13.84 11.98 11.18 (0.80) Option Care (OPTN) 17.72 8.76 19.46 12.46 11.29 (1.17) Pediatric Services of America (PSAI) 14.10 4.95 8.36 6.25 6.40 0.15 Praxair (PX) 61.11 36.50 18.77 52.05 48.07 (3.98) ResMed (RMD) 62.20 24.30 23.83 26.20 25.00 (1.20) Respironics (RESP) 37.88 23.79 23.19 30.15 29.23 (0.92) Tyco (TYC) 60.09 8.25 4.40 13.73 12.49 (1.24) Walgreen (WAG) 40.70 28.70 34.69 34.88 32.00 (2.88)

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