HME Issues Scorecard

Today, most sectors of the home medical equipment industry already are, or soon will be, experiencing major changes. The regulatory pot began to simmer more than a year ago when the government uncovered massive power wheelchair fraud schemes in Houston and CMS implemented its Operation Wheeler Dealer 10-point plan. And the legislative pot boiled over as soon as President Bush signed his name on the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (dubbed for short the Medicare Modernization Act, or MMA) last December.

“We are in a very unusual situation at the end of this year,” says Asela Ceurvo of Washington, D.C.-based Law Offices of Asela Ceurvo. Not since the Balanced Budget Act of 1997 has the industry seen such legislative and regulatory attention, and even the BBA “was a little more targeted” toward particular HME sectors, particularly oxygen suppliers, she points out.

To help keep track, the following “scorecard” of major legislative and regulatory HME issues may paint a clearer picture of where your business stands — and provide a roadmap for the future.

• 2005 DME reimbursement cuts The Medicare Modernization Act mandates cuts for power and manual wheelchairs, beds and air mattresses, diabetic lancets and test strips, nebulizers and oxygen to take effect in January. The law requires CMS to base those cuts on median DME pricing from Federal Employee Health Benefits Plans (FEHBP), as mentioned in two HHS Office of Inspector General reports. In September, CMS officials said the payment cuts could, on average, range from 2 percent to 14 percent. Industry advocates have been fighting hard against the cuts, both on the legislative and regulatory sides. In Congress, Reps. David Hobson, R-Ohio, and Harold Ford, D-Tenn., have drafted H.R. 4491, legislation that would repeal the DME cuts. On the regulatory side, industry representatives have met with OIG and CMS officials, emphasizing that, among other things, caring for younger individuals covered by federal health benefit plans differs greatly from providing service for the elderly or disabled Medicare population.
• Inhalation drug reimbursement cuts For this year, the MMA cut reimbursement for inhalation drugs up to 20 percent below the average wholesale price. In 2005, the law requires Medicare to reimburse inhalation drugs using a new formula: Average Sales Price (ASP) plus 6 percent. In an August Notice of Proposed Rule Making (NPRM), CMS proposed pricing for two staple drugs of the respiratory industry — ipratropium bromide and albuterol sulfate — at 89 percent below current levels. But in that same rule, CMS said it would consider an “appropriate” dispensing fee for the respiratory medications. In an October letter to the General Accountability Office, CMS Administrator Mark McClellan stated that service fee could be between $55 and $64 per month. A final rule was expected Nov. 1, with an effective date of Jan. 1.
• Face-to-face examination In the same NPRM, CMS proposed that a face-to-face examination with the prescribing physician, therapist or other practitioner be required for all durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), effective Jan. 1.
• Wheelchair coverage policy The government’s Interagency Wheelchair Work Group has said it would like to finalize new Medicare coverage policy for wheelchairs by the end of 2004. A central issue has been what defines a “nonambulatory” beneficiary. Last year the DMERCs released a Medicare wheelchair policy clarification, since rescinded, that defined a “nonambulatory” beneficiary as one who “can only bear weight to transfer from a bed to a chair or wheelchair.” Industry and consumer advocates have fought to broaden wheelchair policy to include beneficiaries who require wheelchairs to complete acts of daily living. CMS is also considering a revamped wheelchair CMN.
• Power wheelchair codes A coding task force at CMS is attempting to split the broad power chair “K” codes into various “E” codes. CMS’ latest proposal has 33 HCPCS codes describing a range of products, from pediatric wheelchairs — for use by Medicaid programs and others — to heavy-duty and bariatric chairs. The agency hopes to have codes finalized by April, then assign pricing and implement the new codes by summer 2005.
• Scooter/POV coverage policy At press time, CMS said it was preparing to release draft regulations removing the “specialty requirement” for scooter/power-operated vehicle (POV) coverage.
• DME competitive bidding After months of political wrangling, it happened: MMA, now the law of the land, mandates DME competitive bidding to be phased in within 10 of the country’s largest metropolitan statistical areas (MSAs) in 2007 and expanded to 80 top MSAs in 2009. After that, the government has the authority to implement competitive bidding nationwide. Helping Uncle Sam implement this massive undertaking is North Carolina-based Research Triangle Institute (RTI), the same contractor CMS used to implement bidding demonstration projects in Polk County, Fla., and San Antonio, Texas, between 1999 and 2002. CMS has also formed the Program Advisory and Oversight Committee (PAOC), consisting of a broad array of stakeholders who will advise the agency on implementation of the bidding program through the end of 2009. The committee held its first meeting in October, and is scheduled to meet again Dec. 6-7.
• Mandatory accreditation Also mandated under MMA, DME suppliers must be accredited to participate in the Medicare program. Although quality standards are not bound by CMS’ timeline for competitive bidding, the agency has said it plans to implement quality standards along with the bidding program. MMA states that HHS must designate one or more independent accrediting bodies within one year of the date quality standards are determined.
• NSC guidance on the 21 Supplier Standards According to both government officials and industry stakeholders, certain Medicare supplier standards are partly to blame for DME fraud and supplier-number difficulties. So earlier this year, CMS and the National Supplier Clearinghouse gave members of the NSC Advisory Committee (NSCAC) draft clarifications of the 21 Supplier Standards, which stated, among other specifics, square footage and inventory requirements. Committee members and others submitted detailed comments that are now under review at CMS and the NSC.
• HIPAA Transactions and Code Sets (TCS) and Security rules In July 2004, CMS slowed the processing of non-TCS-compliant claims, paying them no earlier than 27 days after receipt. The government has yet to name a new deadline for when all claims must be TCS-compliant. The next HIPAA compliance hurdle kicks in April 21, 2005, when the Security Rule will require providers to implement, through software and other methods, measures to stop unauthorized access to patients’ protected health information.
• Is the CMN enough? That old industry question stepped center stage in June when an independent California provider, Maximum Comfort, received a preliminary district court decision stating that a properly completed Certificate of Medical Necessity was enough for supplier reimbursement and that the government could not ask the supplier for additional medical documentation.

At press time, Judge Lawrence Karlton of the U.S. District Court for the Eastern District of California had yet to issue a final ruling on the matter. Once he does, the government has 60 days to file an appeal.

For continuing coverage and updates, check HomeCare Monday, the electronic news service of the HME industry.

Dates to Watch

Nov. 16, 2004

• CMS to release 2005 Medicare fee schedule for DME, to include FEHBP-based reimbursements for manual and power wheelchairs, diabetic lancets and test strips, beds and air mattresses, nebulizers and oxygen

December 2004

• Medicare Open Door Forum with Interagency Wheelchair Work Group
• CMS to release power wheelchair code proposal

Dec. 6-7, 2004

• Competitive bidding advisory committee meeting

Dec. 31, 2004

• CMS to release final coverage guidance for wheelchairs

Jan. 1, 2005

• Medicare implements FEHBP-based DME reimbursement cuts
• Inhalation drugs reimbursed at ASP + 6%, plus a service fee
• Medicare requires face-to-face examination for DMEPOS

April 2005

• Medicare power wheelchair codes finalized

April 21, 2005

• HIPAA Security Rule deadline

Spring 2005

• Medicare to release regulatory proposals for competitive bidding

July 2005

• Medicare implements new power wheelchair codes

Summer 2005

• Medicare makes regulatory proposals on DME competitive bidding available for comment

Spring 2006

• Competitive bidding regulations finalized

2007

• DME competitive bidding for Medicare business begins in 10 of the nation’s largest MSAs
• CMS has indicated it plans to implement accreditation and quality standards with the competitive bidding program, though the law dictates no timeframe for the accreditation requirement

2009

• Medicare expands competitive bidding to 80 of the largest MSAs, after which HHS has the authority to implement the bidding program nationwide

*Announced dates as of press time.