Providers Plead Competitive Bidding Case to Ohio Senator
After listening to home health care providers and beneficiaries make the case against competitive bidding for HME, Senator George Voinovich (R-Ohio) made clear his opposition to competitive bidding so forcefully that at one point, Mal Mixon, president and CEO of Invacare Corp, Elyria, Ohio, couldn’t help but reach over and kiss the Senator on the cheek.
“The fact of the matter is that [competitive bidding] hasn’t been proven,” Senator George Voinovich (above left) told Invacare President Mal Mixon (above right), as well as HME providers, the press, and consumer advocate Damian J. Robbers (center, below).
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“The fact of the matter is that it hasn’t been proven. In fact, the examples you’ve got down in [Polk County] and [San Antonio] haven’t been proven yet,” Voinovich said. “So, before we go jump off the cliff and say, ‘We’re going to save money,’ let’s find out whether or not there’s money to be saved at all.”
Voinovich’s statements came at a December 23 gathering at Invacare’s headquarters that included more than 45 HME suppliers and consumer advocates from across Ohio, as well as the press. Through personal stories, nine of the attendees explained to Voinovich the importance of shooting down competitive bidding to preserve competition and quality of service in the HME marketplace.
Voinovich called himself a “big, big booster” of home health care and said he had seen no hard evidence that competitive bidding would work.
He also questioned the quality of care beneficiaries would receive if competitive bidding passed. Yet, he emphasized that with the government borrowing $320 billion to run the country this year, money needed to come from somewhere.
While as of press time the federal fiscal year 2003 spending bill did not contain competitive bidding for HME, it was still of concern to industry advocates, such as the American Association for Homecare (AAHomecare), since Congress is likely to pick up competitive bidding again if money is needed to fund Medicare provider givebacks and a Medicare prescription drug benefit later this year.
Regulators Calm HIPAA Fears
HME providers concerned about being prosecuted for mistakes in their initial Health Insurance Portability and Accountability Act (HIPAA) compliance plan may be worrying needlessly, says Alex Azar, general counsel of the US Department of Health and Human Services (HHS). “We are not going to have auditors sweeping down on hospitals and health care groups. It will be entirely a complaint-driven process,” he told an audience of more than 300 health care professionals at a HIPAA Implementation Forum in San Diego on December 10. “As an organization, we have limited resources, too. We will prioritize the enforcement. Complaints have to be well founded.”When asked about civil monetary penalties, Azar added, “This won’t be a game of ‘gotcha!’ The providers who will have to worry are the ones with their heads in the sand on HIPAA, the ones that haven’t read the rule.” In addition, Azar said that HHS intends to defer to states’ authority as much as possible and that the HHS Secretary has the authority to waive or reduce penalties. Ira Pollock, JD, regional manager for the Office of Civil Rights, HHS, San Francisco—which will be in charge of enforcing HIPAA regulations—seconded Azar’s remarks. “Historically, most complaints to our organization have been informally resolved,” he said. “We really stress voluntary compliance.” However, while Azar and Pollock say the government is not out for major HIPAA damages, that does not mean providers can skip creating a compliance plan. The following Web sites contain comprehensive HIPAA information that can help: |
Region B ICD-9 Slipup Costs Industry $500,000
When an accidental computer program edit at AdminaStar Federal, the Region B DME Regional Carrier (DMERC), turned on the ICD-9 diagnosis code changes scheduled to go into effect on April 1 three months early, the HME industry lost at least a half million dollars in cash flow over 9 days, estimates Bently C. Goodwin, CEO of RemitDATA Inc, Memphis, Tenn, a company that tracks claim denials.
Claims filed between January 1 and January 9 came back with the CO16/M76 (incomplete/invalid patient diagnosis and condition) denial code and no other guidance to help providers figure out what had happened.
“It was a little slipup that was fairly easily corrected, but it created a big cost for dealers,” Goodwin says.
Tim Pontius, president of Young Medical, Toledo, was among the first to notice the problem. “The DMERCS need to understand that we are a business as well,” he says.
Region B providers who suspect the error caused some claim denials should resubmit those claims for payment, wrote David Barnett, AdminaStar Federal’s DMERC external affairs manager, in a letter to Pontius.
For details on the April ICD-9 code changes, see program memorandum B 02-045.
Leadership Conference Expands Focus
American Association for Homecare (AAHomecare) members who gather in St Petersburg, Fla, on February 25–28 for their annual leadership conference will find a greatly expanded program this year, says the association. Not only has the conference added an Information Technology (IT) Summit to discuss how the rapid development of IT will impact the future of home care, but the conference will also feature representatives from the National Federation of Independent Businesses (NFIB) and the Health Insurance Association of America (HIAA).
The participation of Jamie Amaral, NFIB’s national director of health care, and Devin Jopp, HIAA’s chief information officer and director of its Business and Technology Initiative, is part of the ongoing strategic relationships AAHomecare has with both organizations, said association Senior Vice President James Jorkasky in a newsletter statement to its members.
For additional information, visit www.aahomecare.com or call (703) 836-6263.
| Legislative/Regulatory News |
CMS Instates Inherent Reasonableness Rule
Under a new interim final regulation, Centers for Medicare & Medicaid Services (CMS) DME Regional Carriers (DMERCs) can now reduce the Medicare reimbursement amount on specific products by as much as 15% in any given year, if they find the current reimbursement to be “inherently unreasonable.”Initially mandated in the Balanced Budget Act of 1997, the rule went into effect February 11. It applies to all Part B services, except those paid under the Medicare Physician Fee Schedule or under a prospective payment system, such as outpatient hospital or home health services. The new rule does carry one important safeguard for HME providers: It requires the DMERCs to submit any proposed inherent reasonableness adjustment to CMS, and the adjustment may not be imposed until CMS informs the DMERC that notification of the proposed adjustment was received. DMERCs To Issue Denied Claims Explanations
Just as the DME Regional Carriers (DMERCs) must give notice to beneficiaries when Medicare claims are denied in part or in whole based on local medical review policies (LMRP), so now will they be required to furnish Medicare providers with similar information. To ensure this, the Centers for Medicare & Medicaid Services (CMS) developed Remittance Advice remark code N115, which will describe the reason for denial and invite providers to view the LMRP policy at the Web site www.lmrp.net. CMS says this procedure will help providers decide whether to appeal a denied claim and show them how to avoid a denial in the future. The new code is scheduled to go into effect October 1. CMS Initiates 2003 Fee Schedule
On January 1, the Centers for Medicare & Medicaid Services (CMS) implemented the 2003 DME Prosthetics and Orthotics (DMEPOS) fee schedule amounts. Although all DME claims from January 1 to December 31, 2003, include a 1.1% update factor—except oxygen, which did not increase—the actual update is 0.5% because the temporary 0.6% increase the industry operated with in 2002 was not carried forward into 2003. OIG Report Finds 2002 Medicare Improper Payments Rate Remained Stable
The rate of improper Medicare payments remained stable at 6.3% for the past 2 years reported the Health and Human Services’ Office of Inspector General (OIG) in January. This year, the OIG determined the improper payment rate by examining the medical records behind 4,985 claims. Payments deemed improper included medically unnecessary services, documentation deficiencies, and miscoding. It did not measure fraud, although the Centers for Medicare & Medicaid Services considers some improper payments to be the result of fraud. The report is available at http://oig.hhs.gov/oas/oas/cms.html. |
Latest Ostomy Code Changes Burden Dealers, Says UOA
The business of supplying ostomy products was challenged once again on January 1 when another wave of code and reimbursement changes hit providers, says Collin Cooke, consultant for the United Ostomy Association (UOA).
The fee schedule for ostomy supplies was originally based on prices from 1986 to 1987. “By 1999, this product group as a whole was very poorly reimbursed,” Cooke says.
The fees remained the same while manufacturers continued to increase their prices. Cooke says that as a result the market saw a drastic reduction in the number of companies that would sell ostomy products. “Those that were willing did not want to accept Medicare,” he says.
Eventually, CMS responded to the pressures applied by the UOA and other concerned parties. “The DMERCs agreed to have add-on codes for features that have been introduced since the fee schedule was set,” Cooke says.
In addition, CMS planned to split some codes in order to accommodate some of the distinctions among products that were still grouped together. CMS approved the changes to be effective on April 1, 2002, and according to Cooke, they changed their minds just a week later. CMS said Congress insisted that codes should not be used to manipulate fees. CMS decided to rescind the newly instated codes effective January 1, 2003.
Although some of the features in question were available 15 years ago when codes were assigned, “they were not as widely used when the fee schedule was first instated,” Cooke says.
CMS contends that improvements that have taken place are accounted for by consumer price index increases. Cooke says that as part of the new changes, CMS will use current retail prices to recalculate the fees.
When the add-on changes were introduced in April, he says suppliers were willing to deal with the disruption since fees were increasing. “The dealers are poorly prepared to handle these changes,” Cooke says. Now dealers face the costs of incorporating yet another code set without a guaranteed benefit to follow.
“Ostomy is not a huge business for most of the companies that deal with it, but for the beneficiaries, it is absolutely crucial,” Cooke says.
UOA constantly works to make the business of selling ostomy supplies more attractive for dealers. “In a February 2001 survey, 73% of dealers who responded said that ostomy was at the bottom of the list of profitability, and 42% said they might stop selling ostomy if the fees did not increase,” Cooke says.
To learn more about the UOA and its efforts to improve Medicare reimbursement for ostomy supplies, visit its Web site at www.uoa.org and click on “Advocacy.”
| Industry News In Brief |
AAHomecare Hires New Manager of Regulatory Affairs
Replacing Shelagh Foster, who is now a lobbyist with the American Society of Clinical Oncology, Penelope Solis joined AAHomecare, Alexandria, Va, in December 2002 as manager of regulatory affairs. A recent Boston University Law School graduate, Solis was active in developing the university’s Health Legislative Law Clinic, which assisted Senators and public policy groups track health care issues and develop national and local legislation. Essentially Women Puts “Focus on the Future”
Offering exhibits from manufacturers and distributors of women’s health care products, Essentially Women™ Buying Group’s third annual Focus on the Future 2003 educational conference and tradeshow will be held in Nashville, Tenn, on Wednesday, March 26 through Friday, March 28. But products will not be the only things on the agenda. Cara Bachenheimer, JD, will present a Washington update and conference topics will include Health Insurance Portability and Accountability Act of 1996 and privacy notices, competitive bidding, and the Inherent Reasonableness (IR) initiative. Educational programs will offer Board for Orthotist/Prosthetist Certification (BOC) continuing education credits, billing problem solutions, personal and professional development, sales and marketing strategies, and Web site development. VGM Sets Second Heartland Conference for May
The VGM Group, Waterloo, Iowa, invites HME providers to “experience the magic of the Heartland” on May 28-31 at its 2003 Heartland Conference. The event will feature more than 60 seminars in four different tracks and exhibits by more than 90 manufacturers, says the company. The cost is $199 per person. Regisltration may be completed by calling the Heartland Department at (800) 642-6065 or by visitng its Web site www.heartland2003. O2 Science Moves to New San Diego Location
O2 Science, a regional provider of respiratory therapy services and home health care products based in Tempe, Ariz, is moving its San Diego location to a new 3,500-square-foot facility to make room for further growth, says Diane Dunlavey, general manager of the San Diego location. The company currently reaches patients throughout the San Diego area and employees 14. The move will allow the company to expand its respiratory services department to add more therapists. |
| State News |
| CALIFORNIA—To address a $35 billion shortfall, Governor Gray Davis on January 10 proposed a 2003-2004 fiscal year spending plan that reduced provider rates by 5% and eliminated 10 Medi-Cal optional benefits, including prosthetics, orthotics, and DME for adults older than 21. “Nearly every program gets cuts in this budget, while protecting education and health care for children as much as possible,” Davis said in a statement on the Medi-Cal Web site. The elimination of DME coverage would save the state what the California Association of Medical Product Suppliers calls “a paltry $12.5 million or $25 million total in comparison to the damage and humiliation that would be caused to Medi-Cal beneficiaries.” Davis’ plan also would shift funding, including 15% of Medi-Cal’s budget, from the state to counties in an effort to incentivize counties to administer eligibility determination more efficiently. According to a January 17 article in the Los Angeles Times, the sectors that would take the brunt of the shifts would be Medi-Cal long-term care, in-home supportive services, and child care. But California is not the only state facing health care budget cuts. A nationwide survey of Medicaid programs, released January 13, found that 49 states have planned or implemented Medicaid cuts in fiscal year 2003. The Kaiser Commission on Medicaid and the Uninsured, which conducted the study, also discovered that 37 states were reducing or freezing payments to providers, while 25 were reducing benefits. This marks the third consecutive year of nationwide budget problems for not only California, but all states. The California budget is scheduled to be finalized July 1. “We are reducing the size of the government,” Davis said in the statement. “Like any CEO in a recession, I have to make difficult choices. I am making them.” WASHINGTON—A bill being considered by Washington state’s House Committee on Finance may provide relief for HME suppliers who currently must either pay for state sales taxes on medical products out of the Medicare or private-payor reimbursement on the item, or pass the cost of the taxes on to the beneficiary. If the bill (HB 1049) makes it out of the committee and is voted into law, it will eliminate all state taxes on medical equipment, supplies, and devices prescribed by a state-licensed medical practitioner starting on August 1. |
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