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Week of September 9, 2024

HEADLINE NEWS Fate of Competitive Bidding No Longer Tied to Prescription Drug Issue, Baucus Says WASHINGTON--Although Senate Majority Leader Tom Daschle, D-S.D., this week expressed skepticism that lawmakers will be able to compromise on a Medicare prescription drug package, the fate of competitive bidding still is in question, according to a spokesman for Senate Finance Committee Chairman Max Baucus, D-Mont. "It's not an either-or proposition," the spokesman said. "The larger point is that there are Medicare issues that do not necessarily have to be linked to a prescription drug benefit." That means lawmakers could reach a decision on Medicare provider issues--including competitive bidding for durable medical equipment--before the end of September, said Tom Connaughton, president of the Alexandria, Va.-based American Association for Homecare. "Although there are many Senators who oppose competitive bidding, it still appears that others, such as Sen. Bob Graham [D-Fla.], are working very hard to include competitive bidding in any provider bill that may be developed this session," he explained. As the leader of a coalition that opposes competitive bidding, AAHomecare will continue to "pull out every stop" to inform lawmakers about the system's pitfalls, the association said. While leaving the door open to the political demise of competitive bidding, a new report from The Weeks Group, a Melbourne, Fla.-based small-business consultant, discuses what might happen to DME providers if competitive bidding were implemented. After compiling information from "hundreds of pages of testimony, opinions, statistics, legislation and policy statements," the report concluded that national competitive bidding for DME would: --eliminate more than half of the DME providers from the Medicare program; --cause unsuccessful bidders who rely on Medicare for more than 15 percent of sales to become unprofitable; and --cause successful bidders to lose as much as 80 percent of their operating margin. In light of these findings, The Weeks Group recommended that the DME industry lobby to remove operating costs imposed by government regulations and to "unbundle" pricing so that providers could charge for services. Invacare Refutes Allegations of Inaction on Recall ELYRIA, Ohio--One month after Invacare settled the third in a series of product-liability lawsuits related to defects in the company's power wheelchairs, the Cleveland Plain Dealer Sept. 1 published an article that questioned whether Invacare had acted quickly or decisively enough to resolve the problems that prompted the lawsuits. Responding to the article, Invacare's chairman and chief executive officer, Malachi Mixon, defended the company's actions and described in detail the steps Invacare took to address electrical problems with its 1985-model through 2000-model power wheelchairs. Since January 1999, when Invacare first learned of two deaths related to defective charging circuits in its power wheelchairs, the company has done everything in its power to investigate and address the problem, Mixon said. "We commenced a wide-ranging recall of the affected wheelchairs, directly communicating in writing nine times to date with our almost 6,000 power wheelchair dealers, since they are the ones who provided those wheelchairs to the individuals who use them," he explained. Invacare also purchased mailing lists from three prominent magazines written for people with disabilities--Paraplegia News, Exceptional Parent and New Mobility--and mailed more than 136,000 post cards to individuals who might be affected by the recall, Mixon continued. Nonetheless, the Plain Dealer article suggested that Invacare as early as 1994 should have reported and acted on suspicious complaints the company received. "According to Invacare's complaint files, no reports were made to the [U.S. Food and Drug Administration] for at least 18 of the incidents related to battery-wiring harnesses that it tracked, including the wheelchair fire that killed John Rothermel in 1994 and another fire that killed Arthur Wilbur in Florida in July 1995," the article said. Even though Invacare determined that these deaths were not related to the company's wheelchairs, federal law requires medical-device manufacturers to report any serious incidents involving company products where harm or death occurred, the Plain Dealer continued. "The reports that manufacturers make go into an FDA database that consumers can search," the article said, adding that the FDA's records show Invacare only began reporting power-wheelchair mishaps in the late 1990s. An attorney from the law firm that settled last month's case on behalf of an Arizona woman told the Plain Dealer that Invacare's recall did not go far enough. He said that Invacare should have advertised the recall on national television. But Simon Margolis, president of the Rehabilitation Engineering and Assistive Technology Society of North America defended Invacare's recall actions. "I think the things they did were as effective as anything they could have done," he said, explaining that a national media campaign may have served only to cause panic without targeting the exact customers who needed to know about the recall. "It seems like a large number of people [were affected by the recall], but it is a very small percentage of the general population," Margolis continued. "It's possible to panic people. You're talking about a product that people rely on for their mobility. Any manufacturer has to be aware of that." Margolis went on to say that Invacare always has been a "strong proponent" of the voluntary standards that RESNA sets. Since the Plain Dealer article appeared, many Invacare customers have called to support the company, said Susan Elder, Invacare's director of marketing communications. "We've gotten some very supportive feedback from our customers this past week," she said. "They were first-hand aware of our efforts in this recall. Many felt the article misconstrued the company's efforts." Although Invacare does not agree with many of the article's allegations, Mixon said he is glad the article brought this issue to the public's attention. "If there is a benefit coming from this story," he said, "it is that it will help us in our continuing efforts to reach people who may still have one of the products that should be repaired." Coloplast to Discuss Proposed Kaiser Contract with Women's Health Providers SAN RAMON, Calif.--Today, representatives from Marietta, Ga.-based Coloplast will sit down at the table with a group of women's health providers who are working to block a proposed contract between Coloplast and Oakland, Calif.-based Kaiser Foundation Health Plan, a provider close to the issue told HomeCare. The proposed contract would require northern California's women's health providers to sell only Coloplast products to Kaiser beneficiaries, according to an Aug. 18 letter that 17 concerned providers sent to Jens Stovgaard, Coloplast's president. But instead of receiving a reimbursement check from Kaiser, the providers would receive a Coloplast credit. For small women's health providers whose customer base consists primarily of Kaiser beneficiaries, this arrangement could be devastating, the letter explained. "We are most concerned about how this relationship jeopardizes independent business owners and service providers' cash flow," the letter continued. "It is not reasonable to expect a business of this nature to operate primarily on an exchange of goods such as you have proposed." Although the providers are hopeful that today's meeting will yield an acceptable compromise, one provider admitted that a resolution is far from assured. "[Coloplast representatives] are very careful about their words," the provider said. "They try not to say anything negative or positive." JCAHO Urges Action to Avoid Bed-Rail-Related Deaths OAKBROOK TERRACE, Ill.--The Joint Commission on Accreditation of Healthcare Organizations Sept. 6 issued an alert about bed-rail-related deaths. After studying five of the seven reports of bed-rail-related deaths and injuries that the organization has received since 1995, JCAHO determined the incidents resulted from a breakdown in communication among health care staff, incorrect use of equipment and inadequate assessment of patients' needs. While the cases implicated no particular bed-rail configuration, none of the cases involved the use of lower rails exclusively, JCAHO said. Only one of the incidents involved a patient receiving home care services. To avoid the risks associated with bed rails, JCAHO recommended that health care providers: --train staff about entrapment dangers; --assess each patient's entrapment risk; --re-evaluate beds for entrapment potential by taking "gap" measurements and ensuring the mattress fits the bed frame; --alter the beds of patients at risk for entrapment, using retrofitting kits, bed-rail netting, clear padding, and Velcro or anti-skid mats; --observe patients at risk for entrapment more frequently; and --educate patients' families about the potential dangers of bed rails. Both the U.S. Food and Drug Administration and the U.S. Department of Veterans Affairs have issued guidelines for addressing bed-rail entrapment, JCAHO noted. More information about JCAHO's alert is available at http://www.jcaho.org/about+us/news+letters/sentinel+event+alert/sea_27.htm. Small Gifts to Beneficiaries OK, OIG Says WASHINGTON--Although federal law prohibits Medicare and Medicaid providers from using gifts to solicit beneficiaries' business, a recent advisory bulletin from the U.S. Department of Health and Human Services' Office of Inspector General said that certain small gifts do not count as bribes. "Given the broad language of the prohibition and the number of marketing practices potentially affected, this bulletin is intended to alert the health care industry as to the scope of acceptable practices," the OIG explained. To that end, the bulletin offered the following guidelines for Medicare and Medicaid providers: --Inexpensive gifts or services with a retail value of less than $10 each are not improper unless the total annual value of the gifts exceeds $50. --Five exceptions to the aforementioned annual gift limit are: cost-sharing waivers based on financial need, properly disclosed co-payment differentials in health plans, incentives to promote preventive-care services, any practice permitted under the federal anti-kickback statute and waivers of hospital outpatient co-payments in excess of the minimum co-payment amounts. Admitting that there could be further exceptions to the gift-giving rule, OIG said it may solicit public comments on additional exceptions involving complimentary local transportation and free goods offered in connection with certain clinical studies. The OIG also promised to entertain requests for advisory opinions related to the gift-giving rule. However, "unless a provider's practices fit within an exception (as implemented by regulations) or are the subject of a favorable advisory opinion covering a provider's own activity, any gifts or free services to beneficiaries should not exceed the $10 per item and $50 annual limits," the bulletin concluded.

PROVIDER NEWS Med Diversified Discloses Lawsuit Against Company President ANDOVER, Mass.--Med Diversified Sept. 6 announced that a personal lawsuit has been filed in Western Tennessee's U.S. District Court against John Collura, the company's president and chief operating officer. Alleging that Collura breached a contractual non-competition obligation when he took his current position at Med Diversified, the suit seeks injunctive relief and damages. Grand Jury Indicts Indiana Medical Supply Company in Fraud Case HAMMOND, Ind.--A grand jury has indicted three officers of Gary, Ind.-based First Choice Home Supply for over-billing Indiana's Medicaid Program in excess of $400,000, according to the U.S. Attorney for the Northern District of Indiana. The indictment alleges that, from January 1998 through December 1999, Valerie and Kelenka Brown over-billed for bandages, liquid skin barriers and syringes, and that, from January 1998 through December 1999, Valerie and George Brown conspired to defraud the government of funds by withholding FICA taxes from their employees' wages and diverting the money for personal use. In two weeks, the defendants will appear before a U.S. district court magistrate judge, the attorney said. MANUFACTURER NEWS Fisher & Paykel Denies ResMed's Patent-Infringement Charges SAN DIEGO--In response to allegations that it copied proprietary mask technology from ResMed, Fisher & Paykel Healthcare Aug. 29 refuted the charges and promised to defend itself "vigorously" against a lawsuit that ResMed filed Aug. 26 in San Diego's federal district court. "We believe that ResMed's claim against Fisher & Paykel Healthcare is without merit," the Auckland, New Zealand-based company said. Explaining the charges, Peter Farrell, ResMed's chairman and chief executive officer, said, "ResMed has invested heavily in the development of its mask technology and today has taken the appropriate steps to protect that intellectual property. We are prepared to protect our investment." The lawsuit alleges that Fisher & Paykel's Aclaim and Aclaim2 masks infringe on ResMed's patents. DJ Orthopedics to Move Manufacturing, Lay Off Employees VISTA, Calif.--DJ Orthopedics Sept. 4 announced plans to relocate its line of bracing products from Vista to Tijuana, Mexico. The money-saving move will result in the elimination of 250 U.S. jobs and the addition of approximately the same number of Mexican jobs, the company said.

SOURCES SAY PALM BEACH GARDENS, Fla.--While most sectors of the U.S. economy began to suffer from a painful malaise in 2001, health insurers experienced rapid growth, according to a Sept. 3 report from Weiss Ratings. "The nation's HMOs and health insurers reported a 25 percent increase in profits for 2001, earning $4.1 billion for the year, compared to $3.3 billion in 2000," the report said. "In analyzing the industry's profitability, Weiss found that BlueCross BlueShield plans as a group produced a $2.9 billion profit, or 70 percent of the industry's $4.1 billion aggregate net earnings." Melissa Gannon, vice president of Weiss, attributes this growth to rate increases implemented during the past several years. WASHINGTON--A bill now on the floor in the Senate would expand Medicaid coverage for disabled children who are ineligible for Supplemental Security Income because their parents do not meet SSI's income or asset requirements. In July, the Senate Finance Committee asked the Congressional Budget Office to estimate the bill's 10-year costs, and the CBO in August came up with some sobering figures. "In total, CBO estimates that enacting S. 321 would increase mandatory spending (primarily for expanded Medicaid assistance) by $37 million in 2003 and by $5.8 billion over the 2003 through 2012 period," the cost estimate said. "Total state spending for Medicaid would increase by $4.9 billion over the 2003 through 2012 period, and state spending for the State Children's Health Insurance Program would decrease by $280 million over the same period." WASHINGTON--To jumpstart Medicare's lagging managed-care program, the Bush administration in August announced a demonstration project that will offer "preferred provider organization" coverage to beneficiaries in 23 states. "This program gives seniors new options for their Medicare coverage, similar to that available in the private insurance market," said Tommy Thompson, secretary of the Health and Human Services Department. "Greater access and more choices in health care are key goals of the Bush Administration's plan to improve and strengthen Medicare." The new PPO option will be available to approximately 33 percent of Medicare beneficiaries in Alabama, Arizona, California, Florida, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Missouri, North Carolina, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Virginia, West Virginia and Washington. BARBOURVILLE, Ky.--A former Rite Aid pharmacist last week told the Lexington Herald-Leader that Rite Aid ships certain medications in non-climate-controlled trucks, thus damaging the medications and equipment such as asthma inhalers. However, when the pharmacist began to complain about the damaged medications, the company did not want to listen, he said. "I started talking to upper management. They tried to shut me up." Earlier this year, the pharmacist, Keith Saylor, filed a lawsuit against the company for allegedly discriminating against him because of certain health problems. In July, Rite Aid fired Saylor. In response to Saylor's allegations, a spokeswoman for the company told the Herald-Leader, "We ship our drugs according to all federal and state regulations. Keep in mind that this lawsuit was filed by a disgruntled employee." Nonetheless, the spokeswoman said Rite Aid is testing refrigerated containers for drugs that require refrigeration.

INDUSTRY BRIEFS Matria of Marietta, Ga., has appointed Stephen Mengert as vice president of finance and chief financial officer, responsible for all financial, accounting and related functions at the company. Formerly a partner with Tatum CFO Partners, Mengert also served as senior vice president of finance and chief financial officer of Pediatric Services of America. Lebanon, Tenn.-based Permobil has hired Darin Lowery as director of customer support, Darren Jernigan as director of government affairs and Dan Parkey as a parts inventory staff member. Most recently corporate human resources manager at Murray, Lowery has 10 years of experience in the service industry, Permobil said. Jernigan has served as a private consultant on the Americans with Disabilities Act, and was a candidate for the Tennessee State House of Representatives. The Alexandria, Va.-based American Association for Homecare has hired Matt Korzan as membership sales manager, in charge of increasing the association's size and ensuring the organization's responsiveness to members' needs. Formerly a banking consultant for The Raven Group in Alexandria, Korzan has more than 10 year of experience in marketing and sales. Buffalo Grove, Ill.-based Option Care has appointed Kenneth Abramowitz to its board of directors. Abramowitz is a managing director of health care at New York-based The Carlyle Group. The Med Group, Lubbock, Texas, has hired Kyla Thomas as marketing coordinator and has promoted Catherine Clinehens to vice president of quality management systems. The company also has hired Sherril Printemps to assist Clinehens with operational tasks. Mike Neubauer has joined A Medical Supply Company (formerly Midwest Medical Supply), Earth City, Mo., as vice president of sales for the physician division, and C.E. Parker has joined the company as vice president of sales for the long-term-care division. San Antonio-based Teftec has appointed Diego Picchetti vice president of sales. Formerly an employee at Graham Field, Picchetti has almost 20 years of experience in the durable medical equipment/wheelchair industry. Lake Forest, Calif.-based Apria has elected Vicente Anido to its board of directors. President and chief executive officer of ISTA Pharmaceuticals, Anido has more than 26 years of general management experience in the health care field. Amy Odom has joined the Lago Vista, Texas-based National Registry of Rehabilitation Technology Suppliers as marketing coordinator. Formerly associate director of marketing for The Med Group, Odom has more than eight years of marketing experience in the durable medical equipment industry. IN OTHER NEWS Nashville, Tenn.-based Cigna Healthcare Medicare Administration--the Region D Durable Medical Equipment Regional Carrier--has released four local medical review policies for providers' comments. The four policies involve proposed national coverage decisions regarding the following DME products: infrared heating pad systems, high-frequency chest wall oscillation devices, mechanical in-exsufflation devices and external cardiac defibrillators. The full text of the policies is available at http://www.cignamedicare.com/dmerc, under the link "Region D LMRP," the DMERC said, noting that all four DMERCs will post the same four LMRPs. To allow for future growth, Jane's Billing and Consultation Services has moved its headquarters from Marietta, Ga., to 225 Chastain Meadows Ct., Suite 100, Kennesaw, Ga. 30144, the company announced Aug. 29. "The new location is a high-security building, meeting all [Health Insurance Portability and Accountability Act] standards," the company explained. Tucson, Ariz.-based Oximeter.org Aug. 29 announced the launch of a new Web site dedicated to providing educational and clinical data on the monitoring of patients' oxygenation. The site, http://www.oximeter.org, initially will focus on pulse oximetry and will include information about the method's history, accuracy, limitations, sources of error and new technological developments, the organization said. The Washington-based Health Insurance Association of America's 2002 Forum and Exhibit will take place Oct. 1 through Oct. 4 at the New Orleans Marriott in New Orleans. More information about the Forum is available at http://www.hiaaforum.org. Through an endowment from Ridgefield, Conn.-based Boehringer Ingelheim Pharmaceuticals, the Dallas-based American Respiratory Care Foundation has created the Charles W. Servy COPD Research Fellowship. The organization also announced the following 2002 winners of the ARCF Education Awards: Carol Hickok, for her paper, "Let 'em Run: Educating Children with Asthma about the importance of Exercise"; Emi Taylor, for her paper, "Amyotrophic Lateral Sclerosis and the Respiratory Therapist"; Michael Randy for his paper, "Efficacy of Alternative Treatments for Adult Obstructive Sleep Apnea"; Patti Ann Sawyer, for her paper, "Pulmonary Veno-occulsive Disease"; Joel Harris, who is pursuing a Master of Education degree at Bowling Green State University in Bowling Green, Ohio; and Linda Stone, who is enrolled at Marymount University in Arlington, Va. Redwood City, Calif.-based Cygnus has received pre-market approval from the U.S. Food and Drug Administration for its GlucoWatch Biographer glucose monitor, the company announced Aug. 28. The Washington-based Health Privacy Project has released privacy-statute summaries for seven additional states, including Louisiana, Mississippi, New Mexico, North Dakota, Oregon, Rhode Island and South Dakota. The Project also has updated its Pennsylvania summary to incorporate changes in copying costs for medical records. Bruno Independent Living Aids of Oconomowoc, Wis., has received the 2002 Commercial Award from the Association for Driver Rehabilitation Specialists.

STOCKS Market analyst SG Cowen has downgraded its rating of San Francisco-based McKesson from "strong buy" to "buy." Company High Low PE Ratio 8/30/02 9/6/02 Change Abbott Laboratories 58.00 29.80 21.93 --- 37.50 --- Allied Healthcare International (TWH) 6.80 2.40 N/A --- 4.60 --- Allied Healthcare Products (AHPI) 5.30 3.10 143.33 --- 4.30 --- American HomePatient (AHOM.OB) 1.62 0.17 N/A --- 0.35 --- AmerisourceBergen (ABC) 82.85 53.85 26.34 --- 72.70 --- Apria Healthcare (AHG) 28.50 18.80 15.30 --- 24.32 --- Cardinal Health (CAH) 76.60 46.60 101.08 --- 64.69 --- CareCentric (CURA.OB) --- --- --- --- --- --- Chad Therapeutics (CTU) 4.35 2.26 21.54 --- 2.80 --- Coram Healthcare (CRHEQ.OB) 0.79 0.13 N/A --- 0.49 --- Gentiva Health Services (GTIV) 27.55 7.60 N/A --- 8.26 --- Invacare (IVC) 40.57 28.50 29.76 --- 34.22 --- Johnson and Johnson (JNJ) 65.89 41.40 27.60 --- 54.92 --- Lincare Holdings (LNCR) 35.25 22.25 23.31 --- 33.80 --- Matria Healthcare (MATR) 40.00 5.89 35.16 --- 8.79 --- McKesson (MCK) 42.09 26.50 21.79 --- 31.81 --- National Home Healthcare (NHHC) 18.90 8.48 10.72 --- 9.90 --- Option Care (OPTN) 16.72 8.76 18.34 --- 11.74 --- Pediatric Services of America (PSAI) 14.10 4.62 6.64 --- 5.51 --- Praxair (PX) 61.11 36.50 19.68 --- 54.51 --- ResMed (RMD) 62.20 24.30 28.28 --- 31.11 --- Respironics (RESP) 37.88 23.79 123.85 --- 33.44 --- Tyco (TYC) 60.09 6.98 29.71 --- 15.15 --- Walgreen (WAG) 40.70 28.70 35.97 --- 34.53 --- *Because HomeCare Monday was not published Sept. 2, stock prices are unavailable for Aug. 30.

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