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Week of June 24, 2024

HEADLINE NEWS Competitive Bidding Moves Forward in House, CBO Predicts Big Savings WASHINGTON--Early Friday morning, the U.S. House Energy and Commerce Committee became the second House committee in a week to approve a plan for nationwide competitive bidding for durable medical equipment. As home care industry advocates predicted, the Energy and Commerce bill closely resembles a bill that the House Ways and Means Committee passed two days earlier--with one significant exception: The Energy and Commerce bill does not include a provision to charge Medicare beneficiaries $40 for each home health service episode. In support of the Ways and Means bill, the Congressional Budget Office last week released a report predicting that DME competitive bidding could save the U.S. government as much as $7.7 billion during the next 10 years. But the Alexandria, Va.-based American Association for Homecare described the CBO's report as hasty, and said that extrapolating savings estimates from a competitive bidding proposal that does not specify what items or what regions would be included is "sheer speculation." "It truly is beyond comprehension how any intelligent revenue estimates can currently be made on this competitive bidding proposal," said Tom Connaughton, AAHomecare's president. Connaughton expects the House to pass a combined version of the two committees' bills sometime this week, but he says the Senate is unlikely to take up the combined House bill. "We believe what will happen is the Senate will pick up a prescription drug bill that will not deal with provider provisions," he explained. "Then it would be unlikely that the Senate would reach agreement with the House [before the end of the session], and probably the Senate bill would die, too." Despite this slight reprieve, however, Connaughton expects the Senate and the House to meet in September to discuss a Medicare reform bill that would address providers. "In September, we're back in a new ballgame in dealing with provider issues," he said. "I think we've got an even chance of defeating competitive bidding if we do all of our work and contact [lawmakers] and educate them, but if we sit back and watch, [competitive bidding] will go through." Meanwhile, AAHomecare is mobilizing state DME associations nationwide. In a conference call last Friday with state association leaders, AAHomecare outlined a plan for a grassroots lobbying campaign to fight competitive bidding. Region B DMERC Clarifies Oxygen Billing Requirements INDIANAPOLIS--Providers submitting oxygen claims to AdminaStar Federal should be careful when affixing dates of service, the Region B durable medical equipment regional carrier said last week. Effective immediately, the DMERC will deny claims with dates of service that occur before the date of the most recent oxygen re-certification test date. For example, if the certificate of medical necessity has an initial date of July 1, but the patient does not receive an oxygen re-certification test until July 5, then, for claims purposes, the initial date should be July 5. For all subsequent claims, the appropriate service date will be the fifth day of each month. "Suppliers will receive medical necessity denials on initial oxygen claims that are billed with a date of delivery that is prior to the test date," the DMERC explained. However, after receiving such a denial, "suppliers are advised to resubmit these claims using the test date as the initial date of service.

PROVIDER NEWS Billing Experts Form Internet-Focused Joint Venture MARIETTA, Ga.--To meet the shifting technological demands of home medical equipment providers, Jane Bunch, chief executive officer of Jane's Billing & Consultation Services, and Bruce and Debbie Brothis of Centralized Billing & Intake, have formed B&B; Online HME Services, a joint venture that will be based in Marietta, Ga., Bunch announced last week. In addition to traditional billing services, B&B; will offer clients the ability to enter on-line billing and accounts receivable information 24 hours per day, 7 days per week, Bunch explained. For more information about this joint venture, contact Bunch at (678) 445-1221 or Brothis at (720) 851-0795. Region B Announces Billing Modifier Change INDIANAPOLIS--Providers that submit Medicare claims to the Region B durable medical equipment regional carrier, AdminaStar, soon must use a KX modifier to denote that "specific required documentation is on file," the DMERC announced. Effective for all dates of service on or after July 1, 2002, the KX modifier will replace the ZX modifier that providers currently use, the DMERC explained. However, the DMERC will honor a standard grace period by accepting the ZX modifier on claims with dates of service on or after July 1 that arrive on or before Sept. 30, 2002. Allina Sells Home Care Businesses MINNEAPOLIS--Allina Hospitals & Clinics has sold its Home Health Services and Health & Caring Services businesses to Intrepid USA Healthcare Services, a national, privately held home care company based in Edina, Minn., Allina announced last week. "While it was a difficult decision to sell these businesses because of our history together, Allina has made a strategic decision to focus on its hospitals and clinics," said Marvin Dehne, Allina's executive officer, office of the chief executive officer. "We are pleased that Intrepid is committed to operating both these businesses as usual, which means patients will continue to receive the same high-quality care and services on the same schedule and from the same staff." The Minneapolis Star Tribune reported last week that Allina also is looking to sell its Twin Cities Oxygen, Infusion Therapy/Pharmacy and Home Oxygen & Medical Equipment businesses. MANUFACTURER NEWS Sunrise to Consolidate Manufacturing Locations LONGMONT, Colo.--Sunrise Medical has announced plans move the manufacturing functions of its seating-and-positioning business from Longmont, Colo., to Tijuana, Mexico, and Fresno, Calif. The move will allow the company to combine the manufacture of its seating-and-positioning products with the manufacture of its mobility products, and "will permit us to handle Jay Fit System orders in conjunction with Zippie and Quickie chair orders, allowing [all these products] to be shipped to our customers in a single, complete package," Sunrise said. Specifically, the company will manufacture the Jay Fit System and the Jay Conventional Seating System at its Fresno facility; and the company will manufacture all Jay Standard-Seating, including Jay Cushions and Jay Backs, in Tijuana. Sunrise also said that by shipping its Tijuana-manufactured products to distribution centers throughout the United States, the company would reduce the average shipping time. Cardinal and Product Pros Form Distribution Partnership DUBLIN and COLUMBUS, Ohio--To expand its custom mobility product offerings, Cardinal Home Healthcare has formed a distribution partnership with Product Pros, the companies announced last week. Under the terms of the partnership--which the two companies are launching under the name Rehab Plus+--Cardinal customers can purchase certain custom mobility products from Product Pros without receiving two separate invoices. Additionally, "Cardinal customers are automatically eligible for special pricing and don't need to apply for credit or open a new account," the companies said. "Cardinal felt that Product Pros was the perfect partner to join them in expanding their home care offering, and the two companies have worked hard to create a program that is easy to use and provides pharmacy and HME customers with an entirely new profit center," said Mark Jenkins, Product Pro's team leader. Tyco Troubles Not Affecting Health Care Division MANSFIELD, Mass.--Despite Tyco's highly publicized troubles--which escalated last week when the company filed suit against its top lawyer, Mark Belnick--Tyco Healthcare Group has remained untouched by the upheaval of recent months, a company spokeswoman told HomeCare. "For our operations, it has been business as usual," she said. Alternately, with a lawsuit against its former legal counsel pending in federal court, and a Securities and Exchange Commission investigation underway, Tyco International in Pembroke Bermuda may not be able to report "usual" operations anytime soon.

SPOTLIGHT OIG's Red Book Encourages Reimbursement Cuts WASHINGTON-- Medicare could save as much as $3.48 billion during the next five years by heeding the Inspector General's reimbursement recommendations for durable medical equipment, according to a recent report from the Health and Human Services Department's Office of Inspector General. The Red Book--which is an annual compendium of all of OIG's as yet un-implemented recommendations for regulatory and administrative changes within HHS--summarizes cost-saving suggestions dating back to the early 90s. Following is an explanation of several of OIG's recommendations for DME: During the past several years, OIG has recommended outright reimbursement cuts for hospital beds, parenteral nutrition and enteral nutrition, to the tune of $148 million per year. Additional reimbursement savings would come from improved oversight and the subsequent avoidance of improper payments, The Red Book explained. For example, OIG said that the Baltimore-based Centers for Medicare and Medicaid Services could save as much as $264 million per year by carefully reviewing oxygen equipment claims and identifying incomplete certificates of medical necessity. CMS could save an additional $140 million per year by scrutinizing more closely the documentation accompanying claims for orthotics, therapeutic footwear, blood glucose test strips and pressure support surfaces, the report said. In November 2001, OIG said that CMS should develop systems to identify claims bearing invalid or inactive physician identification numbers. In reviewing 1999 claims, OIG found that Medicare paid $32 million for claims bearing invalid PINs and another $59 million for claims bearing inactive PINs. Based on these findings, OIG estimated that Medicare could save approximately $91 million per year, during the next five years, by denying claims with invalid or inactive PINs. After determining that CMS sometimes pays for services under Medicare Part B that should be reimbursed under Medicare Part A, OIG recommended in July 2001 that CMS work with the durable medical equipment regional carriers to prevent inappropriate payments to beneficiaries who are residents of skilled nursing facilities. By preventing such inappropriate payments, CMS could save as much as $11.7 million per year during the next five years, OIG concluded. To read more of OIG's recommendations for DME reimbursement, go to http://oig.hhs.gov/new.htm, click on "publications" and download a copy of the 2002 version of The Red Book.

SOURCES SAY WASHINGTON--The financial shortfall facing Social Security is more complicated than it seems on the surface, according to a recent report from the U.S. General Accounting Office, entitled "Social Security: Long-Term Financing Shortfall Drives Need for Reform." Unless the U.S. government wants to choose from among escalating deficits, significant tax increases and dramatic budget cuts, health care spending reforms are imperative, the GAO insisted. "Trust fund solvency is an important concept, but it is not the only perspective we need to have on Social Security's long-term financing. In fact, focusing on trust fund solvency alone is inappropriate and can lead to a false sense of security about the overall condition of the Social Security program," the report said. "Under GAO's long-term simulations, it continues to be the case that [Medicare and Medicaid] increasingly constrain federal budgetary flexibility over the next few decades." SAN ANTONIO--The market for moist wound dressings will continue to outpace all other wound-therapy markets, according to a June 18 report from the market research firm Frost and Sullivan. "[Moist wound dressings] generated revenues totaling $288.5 million in 2001," the report said. "Already the largest segment of the total wound dressing market, [moist wound dressings are] expected to continue steady growth in the foreseeable future. Demand for alginate, hydrocolloid, transparent film, foam and hydrogel dressings could boost total market revenues to $523 million in 2008." One of the factors driving this growth, Frost explained, is a push toward product innovation. SAN FRANCISCO--For diabetes patients who must work vigilantly to control their disease, the structure of the health care organization that encourages these efforts is extremely important, according to Richard Rubin, a professor of medicine and pediatrics at Johns Hopkins University School of Medicine and a member of the International DAWN Advisory Panel. "Our findings show that, among many factors--including patients' age, sex and beliefs about diabetes, [as well as] the type and duration of the diabetes--it is the health care system's organization and accessibility that are the most powerful predictors of successful management," Rubin explained recently at the American Diabetes Association's 62nd annual meeting.

INDUSTRY BRIEFS Invacare, Elyria, Ohio, has named Robert Gudbranson director of investor relations and business development. Previously, Gudbranson served as director of finance for Invacare's European operations in Tours, France. IN OTHER NEWS National Seating and Mobility, based in Franklin, Tenn., will provide repair and adjustment services to children participating in the Muscular Dystrophy Association's weeklong Camp America summer program in Hudson, Ill., the company said. The Washington-based U.S. Food and Drug Administration is requesting nominations for voting members to serve on certain device panels of the Medical Devices Advisory Committee and the Device Good Manufacturing Practice Advisory Committee, both part of the Center for Devices and Radiological Health, the agency announced last week in the Federal Register. Because scheduled vacancies occur throughout the year, there is no cutoff date for the receipt of nominations, the FDA said. For further information, contact Kathleen Walker, Center for Devices and Radiological Health, Food and Drug Administration, 2098 Gaither Rd., Rockville, Md. 20850; Phone: (301) 594-1283; E-mail: [email protected]. San Francisco-based Bayer Diagnostics has announced the launch of its Ascensia global brand identity for its Glucometer diabetes franchise. Under the Ascensia name, Bayer will, during the next few months, develop new products, programs and services targeting diabetes management, the company said. Roche Diagnostics, Indianapolis, has received clearance from the U.S. Food and Drug Administration for the Accu-Chek Pocket Compass diabetes care software, Roche announced last week.

STOCKS Medical device manufacturer HealtheTech, based in Golden, Colo., has withdrawn its initial public offering because of market conditions, Dow Jones Business News reported last week. Company High Low PE Ratio 6/14/02 6/21/02 Change Abbott Laboratories 58.00 35.25 22.56 36.75 36.13 (0.62) Allied Healthcare International (TWH) 6.80 2.40 N/A 5.71 5.50 (0.21) Allied Healthcare Products (AHPI) 5.30 3.00 144.64 4.81 4.35 (0.46) American HomePatient (AHOM.OB) 1.70 0.25 N/A 0.34 0.35 0.01 AmerisourceBergen (ABC) 82.85 52.12 32.27 78.90 79.19 0.29 Apria Healthcare (AHG) 29.85 19.50 15.49 22.03 21.05 (0.98) Cardinal Health (CAH) 77.32 59.45 27.61 61.94 63.60 1.66 CareCentric (CURA) 2.96 0.40 N/A 0.60 0.58 (0.02) Chad Therapeutics (CTU) 4.35 1.90 27.55 2.91 3.10 0.19 Coram Healthcare (CRHEQ.OB) 0.79 0.13 N/A 0.62 0.62 0.00 Gentiva Health Services (GTIV) 27.55 7.90 9.79 25.14 8.92 (16.22) Invacare (IVC) 41.25 28.50 31.16 34.45 34.45 0.00 Johnson and Johnson (JNJ) 65.89 49.13 28.52 56.82 53.00 (3.82) Lincare Holdings (LNCR) 34.39 22.25 22.74 29.86 30.71 0.85 Matria Healthcare (MATR) 40.00 10.15 15.79 12.05 13.05 1.00 McKesson (MCK) 42.09 30.40 25.35 35.50 35.75 0.25 National Home Healthcare (NHHC) 18.90 7.16 14.49 11.23 13.05 1.77 Option Care (OPTN) 17.72 8.76 23.98 13.98 14.40 0.42 Pediatric Services of America (PSAI) 14.10 4.70 10.53 7.90 7.90 0.00 Praxair (PX) 61.11 36.50 20.90 52.81 54.53 1.72 ResMed (RMD) 62.20 24.30 26.65 26.88 28.42 1.54 Respironics (RESP) 37.88 23.79 28.15 35.13 34.09 (1.04) Tyco (TYC) 60.09 8.25 5.66 13.40 13.70 0.30 Walgreen (WAG) 42.40 28.70 42.04 37.12 38.23 1.11

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