NPRM: Questions Persist as June 30 Comment Deadline Nears
CMS’ 203-page Notice of Proposed Rule Making (NPRM) for competitive bidding of DME was a lot to digest, but the June 30 comment deadline makes understanding the proposal imperative. What are industry insiders saying about the NPRM, and what should you do next?

Bidding and Payment
“They seem to be focusing on the lowest bid and the least number of suppliers getting contracts. The parts that were problematical to me were the parts that indicated that they would select the lowest bid, which would be how the bids would be evaluated. They are going to array them, and then they are going to count up from the bottom, so they are not going to take the median of all of the bids, but they are going to count up from the lowest bid and they are going to determine how many suppliers they need…. Also in the regulations, they have a proposal for redoing the way they are going to do gap filling, which is coming up with prices for new HCPCS codes. This is problematical because it is not clear exactly how they are going to do it. One of the problems is, when they develop new

codes, if the code is priced too low, access to the product will not be there depending on how they price it when they come up with new HCPCS codes.”

“The reality is some DME items have already been set by the government at a price below what the market would set. If a provider cannot bid above a mandated below-market fee ceiling, how does that accomplish the wonders that CMS advertises, which is to ‘harness marketplace dynamics to create incentives for suppliers to provide quality items’? The touted cost savings and ‘market-driven’ benefits of this restrictive contracting program are unrealistic.”
—Tom Ryan, AAHomecare Chair and CEO of Homecare Concepts, according to an AAHomecare statement

“Why go through all of this if you are going to set the bid? Under a pivotal bid, they are basically predetermining the cost they want to achieve.… The provision that sticks out to a lot of people where they would say, ‘Oh, great,’ is the grandfathering for the small provider, which in first light is not a bad thing. In the long term, I do not think it helps the industry, and it gives CMS and Congress an out to say, ‘We are taking care of small businesses or we are taking care of those providers.’ People think they will be able to continue to play. Yes, with existing patients, but they will get no additional patients and those patients will continue to dwindle off. What it sets up is large providers or nationals to buy up those who don’t get the bid and pick up their patient population…. The other [concern] is the network capability, where a provider could (A) choose to join a network or (B) bid. The concern is if you opt to bid on your own, and you lose the bid, can you come back into a network on the back end? That is not clear in the proposed rule.”
—John Gallagher, vice president, government relations, VGM Group

“I think there is a litany of problems within the NPRM. The most troubling may be how bids are going to be evaluated in regard to pricing. The fact that supplier qualifications may not be scrutinized prior to awarding of bids is simply bad policy. Unscrupulous bidders could bid exorbitantly low, drive the pivotal bids low, thereby driving the mean bids even lower, and receive an offer to participate. But they may be unable to support the bid and opt out, or go out of business. Meanwhile, well-managed companies may bid at fair prices but be unable to participate due to the skewed pricing, or simply may not be selected because the formula for that MSA calls for only three suppliers being selected. The quality company, while meeting the median price, was sixth up the list.”
—Tim Pontius RRT, president of Young Medical and Toledo IV Care, Toledo, Ohio, and past chairman of AAHomecare.

Lack of Identified MSAs
“Although they provide the criterion they are going to use, they say, ‘We are not going to use the data we are currently showing you, we are going to use 2005, not 2003.’ If you’ve got that formula already laid out, identify where you are going to go.”
—John Gallagher

Item Selection
“What they are going to do is bid on product category, and they have not decided the product categories. Those will be in the request for bids. That’s one of the problems; we just don’t know what the product categories will be.”
—Sharon Hildebrandt

Accreditation
“Also not addressed here are the standards and the accreditation process. Who will be the accrediting bodies? The providers of the 10 MSAs—will they have time to get accredited? Will that be a strike against them if they are not accredited?”
—John Gallagher

“The other big problem is that the Program Advisory and Oversight Committee is simply not being heard by CMS. Specific recommendations from past meetings are not being addressed, and the delay in publishing the quality standards is also of great concern to me. CMS is starting to treat the advisory panel like a rubber stamp committee, and the clinical aspects of how the care will be affected are simply not being addressed. And this is still all in the guise of projected savings that have not been fairly rescored since the cuts the industry has taken over the past 2 years.”
—Tim Pontius

What Should Providers Do?
“Providers have got to digest this information. AAHomecare is doing an excellent job providing a synopsis. What providers have got to do is go through the sections, pull out the information that is detrimental not only to the industry and the beneficiary, and really hammer that in comments.”
—John Gallagher

“If they are rehab technology companies, they should be supporting HR 4994, which is legislation that was introduced by Congressman Ron Lewis (R-Ky) that carves out complex rehab and assistive technology from the national competitive bidding program. They should be supporting that carve-out as a way to protect their companies and to assure access to their clients.”
—Sharon Hildebrandt

Environmental Regulations to Force Leading Inhalers off the Market
Decision Resources Inc, Waltham, Mass, a research and advisory firm, says a clean air treaty by the US Food and Drug Administration will force leading metered-dose inhalers containing ozone-depleting propellants off the US asthma treatment market by the end of 2008. According to the report, conformity to guidelines of the Montreal Protocol (an international clean air treaty) will result in a reverse-generic-erosion phenomenon for all albuterol asthma inhalers in 2008, including GlaxoSmithKline’s Ventolin and Schering-Plough’s Proventil. By 2014, this event will lead to increased demand in the United States, Western Europe, and Japan for compliant formulations of Ventolin and Proventil. The report also finds that more physicians will turn to levalbuterol as an alternative to albuterol, generating $1.1 billion in sales in the seven major markets for Sepracor’s Xopenex (levalbuterol) in 2014. “Because all current generic versions of inhaled albuterol contain ozone-depleting chlorofluorocarbon (CFC) propellants, all generics will be removed from the US market in 2008, leaving only higher-priced branded albuterol propelled with hydrofluoroalkane,” said Vickie Lai, analyst at Decision Resources. “As a result, the albuterol market in the United States will become branded only, leading to $1 billion in major market sales for Ventolin and Proventil in 2014—more than doubling their sales totals from 2004.”

Hobson-Tanner Bill: 109 Cosponsors and Counting
HR 3559, the Hobson-Tanner Bill, has reached triple digits with the recent addition of the representatives pictured below. The industry goal is to have 200 cosponsors. The Medicare Durable Medical Equipment Access Act of 2005, introduced by Reps David L. Hobson (R-Ohio) and John S. Tanner (D-Tenn), would remedy many competitive bidding provisions.

Draft Nebulizer LCD Draws Criticism from AAHomecare
AAHomecare recently took issue with CMS’ nebulizer draft local coverage determination (LCD) and outlined the following concerns:

• The decision to pay no more for Xopenex and noncompounded combined albuterol and ipratropium bromide than the Medicare payment amount for different, but cheaper generic drugs inappropriately introduces economic factors into a coverage determination.
• The review of literature presented by the Program Safeguard Contractors (PSCs) is limited and presents a slanted view of two of the primary drugs used for several years to treat chronic obstructive pulmonary disease.
• If implemented as currently written, the draft nebulizer LCD will essentially eliminate the physician’s ability to effectively prescribe medically necessary drugs that they believe will serve the Medicare beneficiary’s health.
• The absence of published science with regard to the drugs proposed to be eliminated from Medicare coverage does not equate to an absence of medical necessity on the patient’s part.
• The number of beneficiaries currently requiring either DuoNeb or Xopenex represents a significant impact and disruption of care to a large number of beneficiaries.
• AAHomecare proposes that the LCD should be withdrawn until conclusive medical evidence does exist to support the proposed changes.

For a more detailed analysis of this LCD, visit www.hhcdealer.com to view the Midweek Analysis article by Lisa Smith, JD, of Brown & Fortunato, Amarillo, Tex.

Medicare Trustees Release Annual Report
The May 1 report from the Medicare Trustees painted a picture of a financially unhealthy Medicare system in need of solutions. “Medicare presents us with the great dilemma of health care—the things that are priceless are not price free,” HHS Secretary Mike Leavitt said. “We are making progress toward addressing long-term solvency while providing better care and sustainable coverage. We need to build on those steps by taking further actions like accelerating the adoption of health information technology, increasing the focus on prevention, and creating more transparency in the program. These steps will improve Medicare for current and future generations.” The estimate showed that Medicare’s Hospital Insurance Trust Fund is projected to be exhausted in 2018, 2 years earlier than last year’s estimate. Leavitt said HHS must quickly and efficiently build on the reforms provided by the MMA to strengthen and improve Medicare, and enact steps proposed in the President’s budget to address Medicare’s future fiscal health.

In Brief
Strategic Dynamics Inc, Scottsdale, Ariz, recently added Robert L. Chatburn, BS, RRT-NPS, FAARC, to its consulting network. Chatburn has authored 11 medical textbooks, 27 book chapters, and over 200 publications in peer-reviewed medical journals. He will be conducting clincial studies and bench testing of respiratory products out of the firm’s Cleveland office. His title will be vice president of research and clinical services.