Seven months have passed since Mark B. McClellan, MD, PhD, took the reins as Administrator of CMS. Since then, he has had the sizable task of sifting through the Medicare Modernization Act (MMA) of 2003 while fielding requests from a sea of competing medical interests (including HME industry groups). Dealer/Provider recently tracked down McClellan to capture a glimpse of his thoughts on the issues that affect home care.

Dealer/Provider: The recently passed MMA provides that DMERCs may not start offsetting payments to HME companies until after the carrier hearing stage. However, DMERCs continue to offset payments prior to the carrier hearing stage. The DMERCs state that they are aware of the language of the Act, but are awaiting instructions from CMS regarding how to refrain from offsetting until after the carrier hearing stage. When does CMS anticipate providing these instructions to the DMERCs?

McClellan: We issued interim instructions implementing this provision of the MMA on June 3. Under these instructions, DMERCs are to stop any efforts at recovering an overpayment, for which the DMERC has issued a formal demand letter, if two conditions are met: 1) The DMERC must have begun the recovery action after December 8, 2003, the date the MMA was signed into law; 2) The supplier must have filed a request for a first level appeal. For the time being, the first-level of appeal for DME overpayments is a hearing before a carrier hearing officer—if the amount in controversy equals or exceeds $100—or a carrier review if the amount in controversy is less than $100. In other words, the trigger to stop the recovery process is the DMERC’s receipt of a valid request for an appeal; until this occurs, the recovery can continue. A supplier who believes that a DMERC is pursuing recovery of an overpayment in violation of our instructions should contact the appropriate CMS Regional Office.

In the long run, in keeping with the requirement of the MMA, we will be taking the appeals function away from the DMERCs and contracting it to entities that are totally independent of the DMERCs. We are currently working on the contracting process, and we anticipate that we will have four contractors who will be reviewing the supplier’s claim.

Dealer/Provider: The National Supplier Clearinghouse (NSC) has become quite aggressive over the past 12 months in suspending supplier numbers of HME companies when the NSC concludes that the companies are not in compliance with all of the 21 supplier standards. Often, the NSC’s determination is not supported by the facts and it takes a herculean effort for the HME company to undo the suspension. Even when the HME company is successful in having the suspension lifted, the company will have gone several months without payment. Often, this brings the HME company to its knees. Does CMS intend to instruct the NSC to back down from such an aggressive posture?

McClellan: CMS wants its contractors, including the NSC and DMERCs, to treat suppliers and providers fairly. We also have a duty to ensure that those contractors take appropriate action when there are questions about a supplier’s compliance with our standards. If suppliers feel the actions taken against them are not appropriate, they should contact the CMS Regional Office to examine the complaint and determine appropriate action. CMS is working to educate the supplier community about the supplier standards and to instruct our contractor about the importance of taking action only in those instances where they feel that action is warranted to protect the Medicare program.

Dealer/Provider: On June 28, 2004, the US District Court for the Eastern District of California, in Maximum Comfort Inc v Tommy G. Thompson et al ruled that the Region D DMERC cannot require proof of medical necessity over and beyond the certificate of medical necessity (CMN). Do you anticipate that the government will appeal this decision?

McClellan: Because this is pending litigation, I will refrain from commenting.

Dealer/Provider: MMA-mandated reimbursement cuts for inhalation drugs go into effect in January 2005. Inhalation drugs will be reimbursed under the formula of average sales price (ASP) plus 6%. Sen John Ensign (R-Nev) recently sent a letter to CMS encouraging them to add on a “meaningful” dispensing fee to cover costs. Will CMS heed this request and seriously consider input from the industry?

McClellan: Of course, CMS will carefully consider all comments on this issue. We will be addressing it in a final Physician Fee Schedule rule that we expect to be published in November. We are currently in the comment period on this rule, and we hope those who have thoughts will share them with CMS.

Dealer/Provider: Regions in Texas have been rocked by the “Wheeler-Dealer” scandals that exposed fraud and abuse in rehab/mobility billings to CMS. Why did it take so long to uncover this fraud and abuse?

McClellan: We were aware of the billing problems in Texas and the surrounding areas well before Wheeler Dealer was started. The continued prevalence of fraud in that area called for a stronger and more aggressive strategy. CMS is using innovative data analysis to continue to monitor wheelchair billings and ensure this problem does not recur. We take fraud and abuse very seriously.

Dealer/Provider: Is CMS concerned about limiting access to home care services when and if competitive bidding for takes effect on a nationwide scale?

McClellan: CMS is always concerned about access to quality, medically necessary services. The MMA requires us to develop a competitive bidding program for DME. We are in the process of carrying out that requirement, with input from a program oversight advisory committee. We expect to announce the members of the advisory committee soon.

Dealer/Provider: What is your view of the HME/home care industry?

McClellan: Speaking as a physician as well as the head of CMS, I know how vital the DME industry is to the quality of life for Medicare beneficiaries across the country. DME makes it possible for more Medicare beneficiaries to live where they most want to live—at home.

Dealer/Provider: Many professionals in the home care industry believe their voices are not heard in Washington and that groups such as AAHomecare are not consulted enough on major legislative questions that affect home care. Is this a fair allegation?

McClellan: CMS is open to formal and informal input from everyone affected by Medicaid and Medicare. We encourage that input.

Dealer/Provider: What is the most daunting aspect of your job?

McClellan: Every job has challenges but this is truly an exciting time at CMS. We serve 42 million Americans who have the most to gain from our health care system—by administering their health care and helping pay for it. But we have fallen behind, and now we have the best opportunity in four decades not only to catch up, but to create a Medicare program that drives us forward toward even more high-quality health care. The new MMA gives us the tools to provide innovative, medically necessary, and affordable care for American seniors.

Q&A conducted by Greg Thompson, editor of Dealer/Provider.