No Competitive Bidding, for Now
Anti-competitive bidding for HME forces could breathe a sigh of relief as the November lame duck session of the 107th Congress drew to a close without passing either a Medicare provider “give back” bill that included competitive bidding or a large omnibus bill with a competitive bidding provision tacked on.

However, the American Association for Homecare (AAHomecare) and independent industry lobbyists caution that the fight is far from over.

“Unless the industry is able to launch an unprecedented lobbying campaign, the battle is going to be tougher next year than it was this year,” says Cara C. Bachenheimer, JD, a partner with the law firm of Epstein, Becker & Green, PC, Washington, DC, and an industry lobbyist.

Asela Cuervo Cara Bachenheimer David Williams

Look for Congress to pick up the competitive bidding debate again early next year, say Bachenheimer and Thomas Connaughton, president and CEO of AAHomecare. And with the Republicans gaining the majority in the Senate and expanding their majority in the House, competitive bidding may be all but inevitable, contends David T. Williams, government relations director for Invacare, Elyria, Ohio.

However, that does not mean the industry should let up on its anti-competitive bidding lobbying and propose an alternative reimbursement cut just yet, say Bachenheimer and Asela Cuervo, JD, vice president and general counsel for AAHomecare. It is a very delicate political situation and if the industry proposes an alternative to competitive bidding too early, there is a risk Congress could adopt both the alternative and competitive bidding. “You need to be very careful about what gets proposed,” Cuervo says.

However, if competitive bidding does become inevitable, the industry must ensure it plays an active role in how it is implemented, Williams says. “We should approach both houses of Congress and look at the legislative language and at the very least demand that the Centers for Medicare & Medicaid Services (CMS) be required to have industry representation at the table as they develop implementation plans, rules, and proper procedures for competitive bidding.”

The important thing to remember is that even if competitive bidding passes next year, the battle is not over, adds Bachenheimer. “Passing legislation is step one,” she says. “There is no question in my mind that it would take the Administration and/or CMS a significant period of time to actually implement it no matter what deadlines Congress puts on.... The current legislation has competitive bidding starting in 2003. There is no way that anyone in CMS can logistically pull that off, and they would tell you that.”

Considering that it took CMS 3 years just to organize the first competitive bidding demonstration in Polk County, Florida, Bachenheimer thinks it will take at least several years before CMS could get national competitive bidding off the ground. And during that time there will be a lot of potential for the industry to influence what form competitive bidding ultimately takes. “There certainly will be the opportunity for the industry to make the best of a bad thing,” she says.

Could the frustration of implementing competitive bidding make CMS give up on the idea all together? Not likely, but anything is possible, says Bachenheimer. “It could self-destruct. CMS could at some point throw its hands up. I am not sure I would give that a very high possibility. But it certainly is possible.”

A more likely scenario is that if a competitive bidding proposal is passed in 2003 that resembles the current version—which excludes metropolitan statistical areas with populations under 500,000—it could face some court cases. Legally, Medicare benefits must be equal in all parts of the country, but that would be difficult to ensure with two different payment methodologies. “When you look at the legislation that has been proposed, it essentially allows for completely different levels of products and services across the country, resulting in a two-tiered system,” Bachenheimer says. “[Legally] that is highly problematic.”

Apria’s Carter to be Rotech CEO
Philip L. Carter, former CEO of Apria Healthcare Group, Lake Forest, Calif, will be chief executive officer, president, and a member of Rotech Healthcare’s board of directors as of December 9. Carter takes over for Guy Sansone, who has served as interim president and co-CEO since August. Wallace Abbott, who remains chairman of Rotech’s board of directors, will resign his position as co-CEO.

Carter served as Apria’s CEO since 1998, and while there, his operational and financial endeavors increased the company’s market capitalization from about $200 million to $1.4 billion. Before joining Apria, Carter was president and CEO of a Los Angeles-based retail company called MacFrugal’s Bargains-Closeouts.

Air Products Continues Acquisition Spree
European industrial gas and home care giant Air Products and Chemicals Inc, Lehigh Valley, Pa, made a big entry in the US market in October when it purchased American Homecare Supply, one of the 10 largest US home care providers, and it is not done yet. On November 5, its new subsidiary, American Homecare Supply, Conshohocken, Pa, purchased Home Health Care Services Inc, Charleston, WVa, the largest independent home care provider in West Virginia.

Air Products says it paid $165 million for American Homecare Supply, and with these acquisitions it now serves more than 280,000 patients in 14 countries from more than 200 locations.

“The acquisition of Home Health Care Services is consistent with our growth strategy and capitalizes on the strong regional home care platform we gained through our purchase of American Homecare Supply,” says Karel Schroder, vice president and general manager of Air Products’ global health care.

For the HME industry, this indicates that the current trend of mergers and acquisitions is set to continue.

Joel Marx, president and CEO of Medical Service Companies, Oakwood Village, Ohio, a major HME company in the Cleveland area, has watched Air Products’ progress closely but is unconcerned. “They probably take more business away from the nationals than they do from strong regional companies,” Marx says. “I am more concerned about a strong local or regional competitor than I am about a national.”

NCFE Missed Payments Bankrupt Tender Loving Care
For many home health agency workers, it was a grim November as their paychecks either did not arrive or bounced when cashed because the financing company that supported their employers was experiencing a fiscal crisis.

National Century Financial Enterprises (NCFE), the home care industry’s largest funding source, had not paid its home health agency, nursing home, hospital, and medical group clients for more than a month at press time. Furthermore, the Wall Street Journal reported in its November 4 issue that NCFE had missed $30 million in weekly payments to 60 providers.

NCFE was in this predicament because of an interruption in the payment process necessary in order to adhere to Medicare regulations. Payment on the receivables is automatically sent to Bank One, NCFE’s trustee, and then NCFE tells Bank One how much to wire to its customers. And therein lies the problem. Bank One did not release payment to NCFE customers, and the reasoning behind the refusal was unclear.

As a result of the missed payments, NCFE customer Tender Loving Care Health Care Services Inc (TLCS), a subsidiary of Med Diversified Inc, Andover, Mass, filed a voluntary petition for reorganization under Chapter 11 of the US Bankruptcy Code with the US Bankruptcy Court of the Eastern District of New York.

Chapter 11 permits a company to proceed with operations while it plans how to optimize recovery for stakeholders. Med Diversified’s other branches, including Chartwell Diversified Services Inc, will continue to operate as planned.

San Antonio Reps Oppose Competitive Bidding
House of Representatives members Lamar Smith (R-Tex) and Henry Bonilla (R-Tex), who represent the San Antonio area, voiced their opposition to the implementation of a national competitive bidding program in a November 1 letter. Written on behalf of Medicare beneficiaries living in the 21st and 23rd Congressional Districts of Texas—sites of the second competitive bidding demonstration project—the letter cites the October Department of Health and Human Services report that identifies decreasing access, quality, and beneficiary support as results of the demonstration projects in Florida and Texas. Bonilla and Smith expressed concern that long-term outcomes of the demonstration projects are not yet available, thereby implying that the decision to include national competitive bidding in HR 4954, the Medicare bill the House passed in June, was reached too soon.

Region B Council Educates Its DMERC
HME providers in Region B took a major step to improve communication with employees of the Region B Durable Medical Equipment Regional Carrier (DMERC) during an all-day in-service on November 13.

Tim Pontius, RRT, president and CEO of Young Medical, Toledo, Ohio, and chair of the Region B Council, along with the other members of the council, organized an exhibit hall to showcase the products that comprise the HME industry. “The intention is to expose as many of the DMERC employees—from customer service to claims processors to people who work in the review or appeals department, to fraud and abuse investigators—[to HME products],” he says. “We would like anyone involved in our industry to be a little more knowledgeable about the products and services they are making decisions about.”

Organizing the event was no small undertaking. Besides gaining the cooperation of the DMERC— which would incur a large expense by losing its entire staff for a day—Pontius and the other event planners had to find companies to furnish the necessary display equipment. Manufacturers helped to identify local providers even though all company names were removed from the equipment on display. “That is the way it needs to be,” Pontius says. “This is provider- generic and manufacturer-generic.”

The next challenge was to line up industry experts for each of the specialty areas on display. “I’m very thankful that we had a lot of people committed to coming and helping to do this,” Pontius says.

Fortunately, all the pieces came together in time for the 7 am opening of the exhibit hall, and judging from the attendance (210 DMERC employees participated), the event was a success. Groups of DMERC staff proceeded steadily through the hall for almost 10 hours that day.

“When they came into the room, we would break them into groups of 5 or 10 people, and a tour guide would take them from station to station,” Pontius says. “At each station, an industry representative would explain what the equipment was and why we useit. Everything was labeled with HCPCS (Healthcare Common Procedure Coding System) codes and descriptions.”

Each person spent between 75 and 90 minutes on the tour, passing through sections devoted to 14 specialties, including respiratory medications, pressure relief, diabetic supplies, and a patient room complete with walking aids, hospital beds, commodes, and a trapeze.

“The rehabilitation area had virtually every chair with every K code and attachments and accessories,” Pontius says. “We had a section on documentation where we literally flowcharted out the process from the time the phone rings until the time we collect. That was very educational.”

The DMERC attendees ranged from people on the job little more than a week to “grizzled veterans,” Pontius says. “They really would get genuinely interested, and they’d start asking some great questions, and you’d get good dialogue.”

The Region B Council had hosted a similar event 4 years ago that was also very successful, so it is fairly certain it will attempt to do another in-service for the DMERC in the future. The only question is when. With the turnover among DMERC staff, it could even be held annually, Pontius says.

News in Brief

Lewarski Presents at CHEST Meeting Joseph Lewarski, RRT, president of Hytech Homecare, Mentor, Ohio, was an invited faculty speaker and participant at the CHEST Meeting, the annual professional and education conference of the American College of Chest Physicians held in San Diego in early November. Lewarski cochaired an education session with Thomas Petty, MD, entitled “Long Term Oxygen Therapy: What’s New.” Lewarski spoke about current home oxygen devices, new technologies in development, and reimbursement issues. ACHC Releases Rehab Accreditation Manual, Completes Mail Order Program Testing The Accreditation Commission for Health Care Inc (ACHC), Raleigh, NC, has released its Rehabilitation Technology Supplier Services Accreditation manual that differentiates rehab standards from those of HME companies. ACHC has also completed testing of its standards for Mail Order Medical Supply Programs. Test sites include Carolina Diabetic Supply Group in New Bern, NC; UroMed in Alpharetta, Ga; and Liberty Medical Supply in Stuart, Fla. Schroeder Joins Home Care Medical Home Care Medical Inc, New Berlin, Wis, hired Gary Schroeder, RPh, to serve as senior manager, pharmacy services. Schroeder will be responsible for planning, organizing, directing, and controlling the operation and activities of Home Care Medical’s infusion therapy pharmacy. He will prepare intravenous and subcutaneous medications provided to clients. Schroeder brings with him management experience in retail and long-term care pharmacy practice.