Les DeFelice

Congress handed home care providers a welcome gift in time for Christmas by approving Medicare legislation without cuts to oxygen (and power mobility devices). Alas, it is not an enduring gift, but, rather, a mere 6-month reprieve: the Medicare, Medicaid, and SCHIP Extension Act of 2007 leaves things as is only until this coming June 30. After that, all bets are off.

Still, the reprieve stands as a victory for industry activists. How did it happen? "We succeeded at making cuts in the oxygen rental cap a controversial matter," reports Walter J. Gorski, vice president of government affairs for the American Association for Homecare (AAHomecare) in Arlington, Va. "We made them controversial by bringing to the table solid, persuasive facts that convinced enough lawmakers that cutting oxygen would have an adverse impact on Medicare beneficiaries. Our industry's message resonated in the hearts and minds of congressional members and their staffs."

PLEA FOR STEADFASTNESS

Cynics might counter that the industry's message has resonated seemingly forever around Capitol Hill, certainly long before December's vote, and yet many lawmakers remain resolute in their determination to impose oxygen cuts. Gorski explains the disconnect this way: "The reputation of the HME industry is tarnished by unscrupulous individuals who are intent on defrauding the Medicare program. That drives lawmakers to craft policies aimed at rooting out these bad guys. Unfortunately, the policies too often end up being blunt instruments—for example, payments are cut.

Misty Forgacs, RRT, (left) and Paul McGee, operations manager, develop strategies to better serve patients in DeFeliceCare's three locations. Forgacs, director of clinical services, is one of four RRTs on staff.

"And it doesn't help that HME is viewed by lawmakers as a commodity, with the service aspects overlooked."

Still, it is the persistence of the congressional impulse to cut reimbursement despite abundant evidence arguing against it that prompts many HME providers to throw up their hands in frustration and conclude it is pointless to keep slogging away. To those who harbor such despair, Gorski pleads for steadfastness. "If we don't fight for our interests, no one else will; united we stand, divided we fall," he says. "Failure to keep fighting means we will lose ground to the other interests who are fighting for themselves—because, after all, the Medicare pie is only so big. If we were not every year reaching out to our lawmakers and trying to educate them on the issues, things would be far worse in the home care field."

Indeed, what happened in Congress at the end of 2007 was not by Gorski's calculus a gift, but merely another demonstration of the value of hard work. "I continue to be amazed at the resiliency of home care providers," he says. "Each year, they face a new set of challenges and, like clockwork, a large number of them not only manage to continue providing their services but take the extra step of becoming engaged in the political and policymaking process.

"I think we can do more," he continues. "If right now 10% or 15% of the players are engaged in the process, then we must strive to have 20% or 25% engaged."

FROM WEALTH TO HEALTH

Kathy Shanks, pharmacy technician, helps a respiratory patient. DeFeliceCare derives 72% of its revenue from home oxygen therapy.

When he speaks of engaged players, Gorski has in mind people like Les DeFelice. "The attitude we in home care need to have is, like Sir Winston Churchill said, ‘Never give in—never, never,'" DeFelice offers. "We must be determined to stand up for our interests and make sure we're heard."

DeFelice is the CEO and president of DeFeliceCare, a Wheeling, WVa-based provider that derives 72% of its revenues from home oxygen therapy, with about 40% of that coming from Medicare reimbursements. DeFelice is a member of AAHomecare and serves on its board of directors. He also is a past chairman of the HME/RT Advisory Council. In the last 14 months, he has participated in no fewer than five small-group meetings with key members of Congress. And he looks forward to attending the AAHomecare Washington Legislative Conference, to be held on March 4-6, 2008, in the District of Columbia. "It's a must that as many home care providers as possible attend the Washington Legislative Conference to give us the loudest, strongest voice possible," DeFelice contends. "That's important because the conference is a primary avenue for communicating to lawmakers and regulators our message about what needs to be done to solve the problems besetting the industry. Just as important, first-time attendees learn how to address their member of Congress and properly convey the plight patients face as a result of cost-cutting."

Jaimee Dripcheck, operations assistant, checks a liquid oxygen reservoir at DeFeliceCare in Wheeling, WVa.

It was not necessary for DeFelice to be schooled about the harm an unforgiving regulatory environment can cause. He knew that from first-hand experience, having worked a number of years for two major investment brokerage firms handling government bonds transactions on behalf of institutional clients. DeFelice entered the field of HME in 1991 after realizing he could do more good by helping people with their need for health instead of their desire for wealth. "My first role in home care was as an assistive technology supplier with Liken Home Medical in West Virginia, my home state," he says.

In 1994, Liken Home Medical decided to divest its mobility business. That prompted DeFelice in 1995 to start a mobility company of his own, which he named DeFelice Mobility. Respiratory became part of the mix 4 years later with the introduction of home oxygen therapy and sleep therapy. In 2000, the company added respiratory pharmacy operations.

DeFelice discontinued the mobility piece soon thereafter to emphasize respiratory, now the company's strong suit. Today, DeFeliceCare employs a staff of 42, four of whom are registered respiratory therapists. They are spread among three locations—the headquarters in Wheeling, a branch in Weirton, WVa, and another in Uniontown, Pa.

FAST TRANSITION SOUGHT

Regardless of what emerges from Congress in the months ahead, DeFelice expresses confidence that 2008 will be a banner year for his company. "More than ever, we expect to fulfill our core values and continue to focus on quality service to patients while, wherever possible, reducing our costs," he says. "Our goal is to get better at executing our long-term model. In 1999, when we entered respiratory, the decade-long goal was all about getting established in the marketplace, assembling the best management team possible, and controlling our costs properly so we would be ready to accommodate the spike in Medicare beneficiaries resulting from the Baby Boomers reaching retirement age.

"Specifically, we want to move away from the delivery of portable oxygen, given what the trends in reimbursement are," continues DeFelice. "Instead, we want to maximize our offerings of nondelivery technology—chiefly, portable concentrators and independent filling systems for oxygen cylinders. The key to all this will be in making this transition quickly. The faster, the better."

DeFelice says he expects the Baby Boom generation's use of Medicare services to actually be advantageous for the health care system, not a detriment. "Boomers are well known for taking better care of themselves than did their parents and grandparents," he says. "They're proactive. They obtain diagnosis of health problems at earlier stages, rather than waiting until those problems are far advanced and more costly to treat.

"It's hard to predict whether health system utilizations will hold steady or decline as a result of Boomers being more wellness-oriented. But it seems clear that if payors take a cue from the Boomers and encourage education, prevention, and earlier diagnosis, they're bound to save themselves some dollars on health care expenditures in the long term."

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One reason it may be hard to predict the effect of Boomer attitudes and habits on the Medicare system is, as Gorski explains, that Congress "keeps moving the goalposts, giving us a very unstable environment in which to do business."

DANGER AHEAD

The goalposts are in danger of being moved again, Gorski warns. "At the beginning of 2008, we're picking up exactly where we left off in 2007—facing dangerous proposals," he says. Already introduced in the House of Representatives is a bill that seeks to cut the oxygen rental cap to 18 months (although it would offer an exemption for new technology). Over in the Senate, a bill being cobbled together will leave the number of oxygen rental payment months intact at the current number—36—but will simultaneously reduce by a significant amount the payment rate for oxygen therapy, Gorski divulges.

Yet another measure in the works affects power mobility devices. "It eliminates the first-month purchase option and will require home care suppliers to serve as the government's banking arm," says Gorski. "Rather than being paid up-front for the huge capital expenditure embodied by a PMD, suppliers will have to finance the purchase and then receive Medicare reimbursement in installments over 13 months."

This being an election year, lawmakers are expected to devote more time to the campaign than to conducting business in the House and the Senate. Even so, the legislative challenges will be no less daunting for home care providers than was the case in 2007, Gorski promises. As such, "We need to continue working as hard as ever at educating the members of Congress," he urges.

Gorski points to a successfully used practice among AAHomecare members in which congressional representatives are invited to tour HME provider facilities. "In this way, we're able to both show and tell about the industry's value to the system," he says. "It's a very labor-intensive process, yes. But it's also highly effective, and any home care provider who is serious about having an impact on policy can, and should, do it."

Rich Smith is a contributing writer for  HME Today.