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SPONSOR MESSAGE Companies Seek to Maximize Profits and Become Lower Cost Providers In today's uncertain economic environment HME/IV providers are turning to consulting companies to assist with finding ways to reduce their bad debt and operating costs and increase their cash flow. Through their A/R and Operational Audits, employee training and workflow reengineering, AnCor Healthcare Consulting is fast becoming recognized as the industry leader in this area. For more information, call (954) 757-3121 or visit us online at www.ancorconsulting.com. For more industry news, featured articles and highlights from our latest issue, please visit our website at www.homecaremag.com

Week of May 13, 2024

HEADLINE NEWS CMS to DMERCs: CMNs Enough to Support Power Mobility Claims BALTIMORE--The Centers for Medicare and Medicaid Services issued a program memorandum last week to its four durable medical equipment regional carriers calling for a "cessation of certain DMERC activities," in particular the common DMERC practice of requiring additional documentation to support reimbursement claims submitted for power mobility equipment. "The DMERCs that are still enforcing any [additional] documentation requirements must immediately cease that activity," CMS stated in the memorandum. "We are pleased the CMS has issued this memorandum," said Steve Azia, counsel to the Washington-based Power Mobility Coalition, which has for more than a year been working with CMS on this and other power mobility issues. "It's a positive step toward clarity and consistency within the Medicare program. We've long advocated that the [certificate of medical necessity] is--and should be--the document of record. "And it's not the intention of the PMC to do away with additional documentation altogether," Azia continued. "In fact, we feel there are several instances when additional documentation is needed. We simply want to make sure that the rules set forth for providers aren't arbitrary and random, so providers know exactly what the rules are before submitting claims--instead of finding out after the fact [through a claim denial]." The only exception to the rule, according to the memorandum, occurs during an audit, investigation or when the DMERCs develop individual claims on either a pre- or post-payment basis. In these cases, the DMERCs still can ask for additional supporting documentation. To download a copy of the Program Memorandum, go to http://www.hcfa.gov/pubforms/transmit/b02031.pdf on the Internet. Sterile Rule for Respiratory Drugs to Take Effect This Month WASHINGTON--At the end of this month, a federal rule requiring the "sterile" manufacture of certain inhalable respiratory drugs goes into effect, prompting some in the respiratory industry to ask, "Are drug manufacturers ready?" The sterile rule--which the U.S. Food and Drug Administration published nearly two years ago in response to reports of adverse drug reactions from contaminated inhalation drugs--says that all aqueous-based inhalation solutions must be manufactured free from microbiological organisms by May 27, 2002. To comply with the rule, affected manufacturers, including compounding pharmacists, must submit a "supplemental abbreviated new drug application" to the FDA establishing the sterility of the manufacturers' drug-making processes. After May 27, the FDA will consider drugs not proven to be sterile "adulterated" and subject to regulatory action. Additionally, "the agency will refuse to approve a new or abbreviated application for a drug product that fails to comply with this rule," according to the FDA's Web site. An FDA spokesman told HomeCare that the agency does not yet know what percentage of respiratory drug manufacturers have complied with the rule, but he asserted that the FDA does not expect the sterile requirements to cause any drug shortages in the respiratory market. Soon, the FDA will begin inspecting manufacturers' respiratory drug-making procedures to determine whether the manufacturers are compliant, the spokesman added. At that time, the agency will track the number of manufacturers who remain in the market. Ronald Asinari, a spokesman for Kenilworth, N.J.-based Schering Plough--whose subsidiary, Warrick, manufactures the market's leading generic albuterol product--says that his company will comply with the sterile rule. "For this product," he explained, "we plan to meet the FDA requirements and time frame by outsourcing production to a third-party sterile manufacturer." Most legitimate drug compounders follow FDA directives and are responsive to FDA suggestions, according to Michael DeCarlo, an attorney with the Washington-based law firm Dickstein Shapiro Morin & Oshinsky. However, home medical equipment providers who are concerned about the pharmacy to which they refer respiratory clients "should inquire as to what the pharmacy has done to come into compliance with the rule," DeCarlo said. "And, if there has been an FDA investigation, [the HME providers] should inquire as to what the outcomes were." AAHomecare and State Associations Push Grassroots Lobbying ALEXANDRIA, Va. and SACRAMENTO, Calif.--As U.S. House Republicans hammer-out a Medicare reform package sure to include language on competitive bidding, home care associations are rallying the voices that most attract lawmakers' attention: the voices of constituents. "We have been urging all of our members to call or write to their members of Congress--or come to Washington in June to meet with their representatives--and put a home town face on what home care is all about," said Tom Connaughton, president of the Alexandria, Va.-based American Association for Homecare. According to Connaughton, "If you're a [congressional] staff member and you field four or five calls on an issue, you let your boss know. Members of Congress listen to what their constituents are saying, and, in many ways, that's more important than what we can tell them." To encourage state and regional associations to spread the grassroots word, Connaughton recently has attended association meetings nationwide. AAHomecare also has issued alert notices to its members and has provided "talking points" designed to guide individuals through a conversation with legislators. "People often are a little intimidated about making contact with a member of Congress, but it's not a difficult thing," Connaughton said. "We try to help them do it." In a letter to its members, the California Association of Medical Product Suppliers last week urged California-based providers to call their federal representatives "to request that [the lawmakers] oppose competitive bidding for durable medical equipment because competitive bidding restricts beneficiary access and choice, results in a loss of quality and service, is anti-competitive, irreparably harms small businesses and will require an enormous bureaucracy to administer. Although the impending Medicare reform bills are taking shape in the House Ways and Means Committee, and in the House Energy and Commerce Committee, lawmakers on these committees are not the only ones who can affect change, CAMPS said. "If your representative is not either on the House Ways and Means Committee or the House Energy and Commerce Committee, ask you member to call the chairmen of those committees to express their opposition to legislation that includes a national competitive bidding program for DME." Preparing for its annual Washington Legislative Conference, set to take place June 5 through June 7, AAHomecare is encouraging another little-heard constituency to speak on Capitol Hill: the beneficiaries who use home care products. By donating to the American Association for People with Disabilities, HME providers can earn a scholarship for a consumer to attend the conference at no charge, AAHomecare said. While Connaughton is not optimistic that lawmakers will remove competitive bidding provisions from the bills that they currently are drafting, he says that grassroots lobbying will help to ensure that such provisions do not become the law in the final analysis. To learn more about the consumer scholarship, contact Mary Lacey Reuther, executive director of AAHomecare's Rehab and Assistive Technology Council, at [email protected]. For more information on grassroots lobbying, go to http://www.aahomecare.org/govrelations/gr-tools.htm. GAO: Medicare Spends Too Much for Home Health Services WASHINGTON--The U.S. General Accounting Office last week reported that Medicare overpaid, by 35 percent, for home health care services rendered during the first six months of 2001. Based on this conclusion, the GAO recommended that a 15-percent cut in Medicare's payments to home health agencies--scheduled to take place in October 2002--should go ahead as planned. The GAO also recommended that the Baltimore-based Centers for Medicare and Medicaid Services implement a "risk sharing" agreement, whereby neither the home health agencies nor Medicare would experience significant financial losses or gains. Rejecting both recommendations as flawed, CMS explained that the GAO used insufficient data to draw the above conclusions. The data necessary to make cost-based year-end adjustments will not be available until 18 months after the end of the cost-reporting year, CMS said. Additionally, CMS noted that the GAO's recommendations would increase regulatory burdens on providers and thus would contradict the Bush Administration's Medicare-reform efforts. Taking these arguments further, the Alexandria, Va.-based American Association for Homecare said in a press release that the GAO report uses 1997 cost data that does not reflect the significant impact of the 1997 Balanced Budget Act. "The recommendations are particularly disappointing since the GAO failed to mention the effect of the IPS system on home health after the BBA'97--they completely ignored it," said AAHomecare's chairman, David Savitsky. Nonetheless, the GAO said in response to the report's critics, "the magnitude of the disparity between payments and estimated costs demonstrates that the reduction would not harm the industry." To read the GAO's report, go to http://www.gao.gov, click on the heading "Reports and Testimony" and search for the May 7, 2024 report, entitled "Medicare Home Health Care: Payments to Home Health Agencies Are Considerably Higher than Costs." McKesson Affiliates Settle Overpayment Case for $6.1M MINNEAPOLIS--The United States Attorney's Office has settled a civil lawsuit for $6.1 million against Red Line Health Care, a subsidiary of San Francisco-based McKesson Corp., and several of Red Line's affiliates, for several issues related to claims for durable medical equipment--particularly parenteral and external nutrition products and supplies--between 1988 and 1997. The allegations covered in the settlement, according to the attorney's office, include Red Line's submission of claims lacking certificates of medical necessity; its routine waiver of the beneficiary's portion of the cost of certain goods; its acceptance and knowing retention of payments in excess of what Medicare should pay for certain supplies; and its knowing submission claims for urological supplies to the wrong Medicare contractor, resulting in overpayment.

PROVIDER NEWS The Phoenix Group Acquires Homecare Dimensions DALLAS--The Phoenix Group has acquired Homecare Dimensions, a home health services provider with clients in central and south Texas, according to The Phoenix Group. Based in San Antonio, Homecare Dimensions also offers durable medical equipment and pharmacy services. "The ability to offer one-stop shopping to doctors and administrators could increase our referrals as well as increase the amount of revenue earned per patient," said Ron Lusk, chairman of The Phoenix Group. The companies did not disclose the terms of the acquisition. Matria Agrees to Acquire Quality Oncology MARIETTA, Ga.--As part of a strategy to address the nation's five most costly diseases, Matria Healthcare has agreed to acquire Fort Lauderdale, Fla.-based Quality Oncology--a company that provides cancer management programs--for $3 million in cash and $17 million in common stock, Matria said. "The implementation of this strategic growth initiative will not only provide revenues and future earnings in this expanded disease state, but the synergies and cross-selling opportunities of this transaction should also accelerate the future revenue and earnings growth of our other disease management services," said Parker Petit, Matria's chairman, president and chief executive officer. Matria expects to complete the acquisition, which is subject to federal antitrust review and other regulatory filings, this summer. In the same press release, Matria announced the launch of its disease management program for patients with cardiovascular disorders. Option Care Reports Q1 Earnings, Announces Acquisition BANNOCKBURN, Ill.--For the first quarter of 2002 ended March 31, 2002, Option Care reported a net income of $3.5 million, or 16 cents per diluted share, compared to $2.1 million, or 14 cents per diluted share, for the same period in 2001. Revenue for the quarter increased 58 percent, compared to the first quarter of 2001, from $45.9 million to $72.7 million. The company also announced its acquisition of Houston-based specialty pharmacy Infusion Specialties. Under the terms of the acquisition, Option Care paid $2 million in cash for 60 percent of Infusion Specialties' stock and agreed to acquire the remaining 40 percent of the stock in one year. "This acquisition gives us access to the Hemophilia markets in the states of Texas, Arkansas, Illinois and Tennessee, with a base to expand nationally," said Option Care's president and chief executive officer, Raj Rai. MANUFACTURER NEWS 3M Recalls Inhaler ST. PAUL, Minn.--3M has recalled its Maxair Inhaler asthma device voluntarily, because of the "remote possibility" that the prescription aerosol inhaler may stick intermittently, causing patients not to receive the expected puff of medication, according to a 3M press release. The recall involves approximately 700,000 units in the U.S. with the following lot numbers: 000644, 000756, 000947, 001009, 001110, 001111, 010025, 010195, 010283, 010414, 010482, 010580, 010708, 010709 and 011210. Therasense Reports First Quarter Results ALAMEDA, Calif.--For the first quarter of 2002 ended March 31, 2002, Thersense reported a net loss of $10.99 million, or a loss of 28 cents per diluted share, compared to a loss of $12.18 million, or $7.62 per diluted share for the same period in 2001. Revenue for the quarter was $33.28 million, compared to $7.68 million for the same period in 2001. Mentor Acquires Portex SANTA BARBARA, Calif.--Mentor has acquired urology product manufacturer Portex--formerly a subsidiary of the United Kingdom-based Smiths Group--for $10.5 million in cash, according to a Mentor press release. Now named Mentor Medical, the acquired business manufactures incontinence and ostomy products designed for home use. "We believe that the product lines are complementary with Mentor's other health care products, and the combination will strengthen our market position in the United Kingdom and throughout Europe," said Christopher Conway, Mentor's president.

SOURCES SAY WASHINGTON--Expanding the "homebound" definition to allow Medicare home health beneficiaries to attend adult day care will not affect the government's health care budget significantly, according to a recent report from the U.S. General Accounting Office. In December 2000, when Congress first authorized the definition change, some officials were concerned that the ranks of home health beneficiaries would swell and expenses would rise. However, according to the GAO, the reverse will occur. "Clarifying the Medicare definition of homebound to allow home health beneficiaries to participate in adult day care will likely have little effect on overall program costs or access to services because the number of affected individuals is probably small," the GAO said. Additionally, "officials from advocacy groups and associations suggested that the homebound clarification was more likely to increase the use of adult day care than the use of Medicare home health services. These findings are encouraging, according to W.B. Mick, director of the national rehab network for The MED Group, based in Lubbock, Texas. Any expansion of the homebound definition bodes well for beneficiaries who now qualify for limited--and limiting--home medical equipment designed for use only in the home. ALEXANDRIA, Va.--Reporting on a massive Federal Bureau of Investigation operation designed to expose kickback schemes among medical suppliers and clinical laboratories in California, the American Association for Homecare warned its members to obey the law. "AAHomecare members should be sensitive to the fact that, while certain types of business promotional activities are permissible, the payment of kickbacks in exchange for the referral of business is a criminal felony offense punishable by imprisonment and monetary fines. Furthermore, association members should also be aware of the fact that it is reasonable to assume that undercover operations similar to Durascam in California are underway in different parts of the country at the present time."

INDUSTRY BRIEFS Cardinal Health, Dublin, Ohio, has appointed David Raisbeck, Jean Spaulding and Matthew Walter to its board of directors. Raisbeck is vice chairman of Cargill, an international distributor agricultural, food, financial and industrial products and services. Spaulding is a trustee of The Duke Endowment and maintains a private practice in psychiatry for children, adolescents and adults. Walter is chief executive officer of Bound Tree Medical, a provider of medical equipment and supplies to the emergency medical market. Lubbock, Texas-based The MED Group has hired Richard Fuller as its director of technical services. Fuller has 18 years' experience in sales, marketing and technical services and has worked for Everest & Jennings/Graham-Field and Mulholland Positioning Systems. And, Christy Barnhill has joined The MED Group as coordinator of special services. Barnhill will be responsible for administrative and customer service tasks related to The MED Group's Certified Repair Center program. She also will provide support services for the MED's National Rehab and Respiratory networks. Barnhill is a former branch manager and corporate trainer for American HomePatient. Fred Schuster has been appointed as the Department of Health and Human Services regional representative for Region VII. Based in St. Louis, Mo., Schuster will be responsible for official HHS dealings with state, local and tribal organizations in Iowa, Kansas, Missouri and Nebraska. Strongsville, Ohio-based Roscoe Medical has hired Bonnie McKenney as a customer service representative. IN OTHER NEWS The Christopher and Dana Reeve Paralysis Resource Center opened May 3 in Short Hills, N.J. The PRC, a cooperative effort of the Christopher Reeve Paralysis Foundation and the Centers for Disease Control, provides information services to paralyzed individuals, their families and caregivers, and other interested individuals. Information specialists are available to answer paralysis-related questions in English and Spanish via telephone at (800) 539-7309; e-mail at [email protected]; or in person. The PRC also maintains a Web site, http://www.paralysis.org, that contains a clearinghouse library of paralysis-related publications. The Department of Health and Human Services has launched a "Take Time to Care About Diabetes" campaign to raise women's awareness about diabetes. Sponsored by HHS' Food and Drug Administration, the American Diabetes Association, and the National Association of Chain Drug Stores, the campaign will include diabetes-related brochures, wallet-sized calendars and cards with recipes for nutritious meals to be distributed in grocery stores and pharmacies in 10 major U.S. cities. HHS estimates 9 million women have diabetes, including 3 million women who are unaware they have the disease. Additional information about the "Take Time to Care" campaign is available at http://www.fda.gov/womens/taketimetocare/diabetes. Home health care consultant Lisa Thomas-Payne of Albuquerque, N.M.-based Medical Reimbursement Systems, is offering 90-minute, telephone-based seminars for home health companies. Seminar topics and dates are "Capped Rental . . . Simplified," June 6; "A/R Liquidation Techniques That Work," July 11; "Know Your Assignment Rules or Else," Aug. 8; and "Structuring the Entire Revenue Cycle," Sept. 12. Registration is required for all seminars. For more information, call MRS at (505) 255-0004, or visit Thomas-Payne's Web site at http://www.lisathomaspayne.com. Dj Orthopedics, Vista, Calif., has formed a wholly-owned subsidiary, dj Ortho, Canada, to provide sales, marketing ad distribution services to its Canada market. The distribution of dj orthopedics products previously was handled by Smith & Nephew. Correction: In the "In Other News" section of the May 6 edition of HomeCare Monday, it was reported that Melville, N.Y.-based Gentiva Health Services had gained FDA 510k clearance for vacuum assisted closure therapy units for non-healing wounds. The units actually are manufactured by San Antonio-based Kinetic Concepts. Gentiva simply is making V.A.C. therapy available as a treatment option to the company's wound care patients and is not the manufacturer of the units.

STOCKS Company High Low PE Ratio 5/3/02 5/10/02 Change Abbott Laboratories 58.00 46.35 30.69 53.43 51.25 (2.18) Allied Healthcare (AHPI) 5.30 3.00 124.0 5.00 5.13 0.13 American HomePatient (AHOM.OB) 1.70 0.268 N/A 0.60 0.53 (0.07) AmerisourceBergen (ABC) 79.70 50.00 30.48 75.86 75.42 (0.44) Apria Healthcare (AHG) 29.85 19.50 17.25 26.10 24.73 (1.37) Cardinal Health (CAH) 77.32 60.30 28.97 70.94 67.55 (3.39) CareCentric (CURA) 3.00 0.40 N/A 0.55 0.45 (0.10) Chad Therapeutics (CTU) 4.35 1.00 N/A 3.00 3.34 0.34 Coram Healthcare (CRHEQ.OB) 0.76 0.13 N/A 0.48 0.42 (0.06) Gentiva Health Services (GTIV) 27.55 15.60 30.60 26.83 25.83 (1.00) Invacare (IVC) 41.25 28.50 33.48 39.42 37.59 (1.83) Johnson and Johnson (JNJ) 65.89 48.18 31.80 63.43 61.85 (1.58) Lincare Holdings (LNCR) 34.39 22.25 22.48 31.02 31.08 0.06 Matria Healthcare (MATR) 40.00 12.90 25.40 20.55 20.02 (0.53) McKesson (MCK) 42.09 30.40 26.99 41.20 37.82 (3.38) National Home Healthcare (NHHC) 18.90 5.81 17.50 15.75 15.95 0.20 Option Care (OPTN) 17.72 8.76 25.23 14.55 14.91 0.36 Pediatric Services of America (PSAI) 14.10 4.70 11.78 8.60 8.45 (0.15) Praxair (PX) 61.11 36.50 22.66 59.27 58.70 (0.57) ResMed (RMD) 62.20 28.10 27.82 30.99 29.28 (1.71) Respironics (RESP) 37.88 23.79 26.21 32.85 32.50 (0.35) Transworld Healthcare (TWH) 5.00 2.21 N/A 4.00 5.00 1.00 Tyco (TYC) 60.09 15.25 6.94 21.65 18.40 (3.25) Walgreen (WAG) 42.88 28.70 41.53 38.20 37.71 (0.49)

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