House Passes Medicare Bill, Coalition Forms in Protest
Thomas Connaughton

Opponents of competitive bidding for Medicare HME lost their fight to have it excluded from the House Medicare bill sent to the Senate.

At 2:30 am on June 28, the US House of Representatives passed the Medicare Modernization and Prescription Drug Act of 2002 (HR 4954), which includes the provisions for competitive bidding in the earlier versions approved by the Ways and Means Committee and the Energy and Commerce Committee. However, House Republicans did scrap the proposed home health co-pay stipulations in the earlier versions—an issue industry advocates had also lobbied against.

The competitive bidding plan outlined in the bill allows the Secretary of the Department of Health and Human Services (HHS) to create and institute programs to establish competitive acquisition areas for HME, orthotics, and supplies throughout the United States. The areas may vary for certain products and services, and the programs would be implemented within 3 years. The Secretary would also be able to exempt areas with low population density or items that may not produce substantial savings.

Concerned industry members, including the American Association for Homecare (AAHomecare), argue that such broad expansion is premature and that until sufficient information regarding the outcomes of the current competitive bidding demonstrations is available, no decisions should be made.

AAHomecare urged its members to now turn their attention toward the Senate. In the association’s member update immediately following the House decision, Thomas Connaughton, president and CEO of AAHomecare, asked members to proceed with efforts to lobby their own elected representatives. Scheduling meetings during the July recess, writing letters, and telephone contact with individual Senators will be vital to achieving success, he said.

Furthermore, on July 11, AAHomecare announced that a new coalition has been formed to assist in the campaign to eliminate the nationwide competitive bidding program. The Coalition for Access to Medical Services, Equipment, and Technology (CAMSET) is currently comprised of 19 consumer advocacy organizations and trade associations.

“We believe the formation of this coalition is an important event, and will put Congress on notice that competitive bidding is extremely controversial and opposed by a wide array of consumers, providers, and manufacturers,” says Connaughton, who is also chairman of CAMSET.

The coalition has begun active lobbying to express its concerns that competitive bidding will undermine quality of care, limit patients’ choice of service providers, discourage development of new technology, and bankrupt small businesses. On the day of its formation, CAMSET distributed a personalized letter and position paper to each Senator and health legislative assistant. In addition, on July 17 it released a report demonstrating how expensive it would be for the government to administer competitive bidding nationally. According to the CAMSET report, CMS would need to hire 1,626 additional full-time employees to manage the competitive bidding program. Its current workforce is approximately 4,630.

Besides national competitive bidding, HR 4954 also cancels the 15% cut to Medicare’s home health coverage that was slated to take place October 1, extends the 10% home health rural add-on through December 31, 2004, and eliminates the mandatory OASIS collection for non-Medicare and non-Medicaid patients.

Finally, the bill includes home health market basket reductions through 2005. This provision would change the implementation updates to home health prospective payment system (PPS) rates from the onset of the fiscal year to the beginning of the calendar year. Payments would be increased by 2% in January 2003 and 1% in 2004, and then reduced by .8% in 2005.

Florida Bidding Project On Hold
Opponents of Florida’s competitive bidding project have achieved success, although perhaps temporary, in their attempts to delay the proposed plan to determine oxygen equipment and hospital bed providers for the state.

The Medicaid administrator in Florida, the Agency for Health Care Administration (AHCA), has announced that the date scheduled for the project to begin has been pushed back. “The original target date of June 28 to have contracts in place is no longer realistic. However, we want to move this process along since we estimate the contracts have the potential to save us about $4 million a year,” wrote Connie Ruggles, senior management analyst for the deputy secretary for Medicaid in a June 19 AHCA memo to Medicaid field office managers.

The agency and the Florida Association of Medical Equipment Services battled in court in June, and a judge’s decision is still pending. Also, in early July, providers filed complaints in protest of seven of the 11 bids that AHCA had awarded.

AHCA has indicated that the program probably will not be under way until January 2003, and it is likely that the ball will really get rolling at the end of June 2003.

Legislative/Regulatory News

CMS Issues New Diabetic Testing Supply Guidelines
On June 7, the Centers for Medicare & Medicaid Services (CMS) published a program memorandum (PM) with new guidelines for diabetic testing supply claims. The PM outlines general requirements and also includes information about claims HME providers will submit to their Durable Medical Equipment Regional Carriers (DMERCs). Justification of a billed quantity, order renewal, and maximum supply limitations are among the topics addressed. The PM can be accessed at http://www.hcfa.gov/pubforms/transmit/B02037.pdf  

CMS Releases HIPAA Transaction Standards
The Centers for Medicare & Medicaid Services (CMS) offers a video presentation that explains how to prepare for the Health Insurance Portability and Accountability Act transaction and code set standards. The presentation, released on June 18, is available at http://cms.livewebcasts.com. It features a CMS official outlining the transactions-and-codes extension and guides viewers along the process of applying online at www.cms.hhs.gov/hipaa/hipaa2/ascaform.asp. Requests for a 1-year-long extension are due by October 16. The video stresses that covered entities need to work on HIPAA compliance immediately, especially since Medicare contractors will not pay paper claims after October 15, 2003.

Federal Judge Dismisses HIPAA Challenge
A federal district court judge in Houston dismissed a suit filed by Representative Ron Paul (R-Tex) and the Association of American Physicians and Surgeons, Tucson, Ariz, that sought to challenge federal medical privacy regulations. The suit was filed against the Department of Health and Human Services and claimed that the privacy regulations surpassed what is outlined by the Health Insurance Portability and Accountability Act (HIPAA) on both statutory and constitutional grounds. US District Judge Sim Lake determined that the plaintiffs had not demonstrated actual or imminent harm by enforcement of privacy regulations in health care.

Region B DMERC Clarifies O2 Billing Claims
Providers submitting oxygen claims to AdminiStar Federal should use caution with dates of service. The Region B Durable Medical Equipment Regional Carrier (DMERC) has announced a new system to alter billing dates for oxygen patients whose blood-gas testing was finished following the initial date of the Certificate of Medical Necessity (CMN).

Under the change, the Region B DMERC will not accept claims dated before the most recent oxygen recertification date. If the test date on the original CMN is after the original date, the DMERC will revise the CMN to reflect coinciding original and test dates.

The change will be applied each month when oxygen is billed. For example, if the CMN is initially dated July 3, but the test date is July 8, the next billing date will be August 8. The DMERC also says that claims with delivery dates before the test date will receive medical necessity denials.

Washington State Creates Single Home Care License
In-home service providers, including home health, hospice, and home care agencies, in Washington state may soon practice under a single license. The Department of Health issued this proposed rule on June 19 after legislation requiring this move was passed in March of 2000. The decision also established hospice care centers as a new category of in-home service providers. The rule is intended to combine existing requirements for home health, hospice, and home care agencies and incorporate new ones for hospice care centers.

Corrections
The article “Taking on the Tax Man” in the June 2002 issue stated that Nevada has exempted sales tax on any medical device obtained with a prescription. This applies only to items sold to a government agency. Rentals and items sold to non-governmental agencies are still taxed.

The news item included in the conclusion of the “Legal Counsel” column “Stay In Touch, Or Else...” was not part of the original article.

News in Brief

Billing Companies Merge to Offer Electronic Service
Jane W. Bunch, CEO of Jane’s Billing & Consultation Services Inc, Marietta, Ga, has joined forces with Bruce and Debbie Brothis of Centralized Billing & Intake Ltd, Parker, Colo, to provide nationwide online billing and consultation services. The newly established B&B Online HME Services Inc will enable clients to enter patient and order information online and provide access to account details.

O2 Science Partners with Nevada Respiratory
O2 Science, Tempe, Ariz, has joined with Nevada Respiratory, Las Vegas. The companies will work together to deliver respiratory care to patients in Las Vegas and Pahrump.