Beyond Competitive Bidding: Providers Face Troubling Issues at Home, Too

ATLANTA–While most home medical equipment providers have been
consumed this year with such national issues as competitive bidding
and accreditation, there have been plenty of problems percolating
at the state level.

A HomeCare Monday poll of state associations shows
providers grappling with everything from budget cuts and
slow-as-molasses payments to sales tax on HME. Here is a roundup of
issues from responding associations around the country:

Arizona–Arizona providers’ frustration levels have risen
over the reluctance of the Arizona Healthcare Cost Containment
System, Arizona’s Medicaid, to allow managed care plans to contract
with more durable medical equipment providers, according to the
Arizona Medical Equipment Suppliers Association.

“We are constantly hearing about customers that are
waiting three to six months for new or serviced equipment, but yet
the plans are reluctant to sign contracts with any more DME
vendors,” said Mark Farmer of Southwest Mobility in Mesa,
Ariz., and association president. “They say that their needs
are currently taken care of. Yet the customers are the ones
suffering from lack of service.

“We feel and many in the state association feel that the
AHCCCS program needs to better serve their beneficiaries by
allowing more providers to participate in their programs,”
Farmer added.

California–With no state budget for the fiscal year that
started July 1, a 10 percent cut in Medi-Cal reimbursement and a
host of other issues involving the state Medicaid program,
California HME providers are feeling pretty beleaguered these days,
according to Bob Achermann, executive director of the California
Association of Medical Product Suppliers.

Last week, California’s legislature was still at an impasse over
the budget, and the fund that feeds Medicaid was drying up. The
state is already in trouble with a $17 billion budget shortfall;
legislators earlier decreed a 10 percent-across-the-board cut that
took effect July 1.

So providers are waiting for their Medi-Cal money, and less of
it. The only bright spot showed up last week when a U.S. District
Court judge in Los Angeles ruled against implementation of the 10
percent Medi-Cal cut, saying it would compromise the quality of
medical care.

“We don’t know if it will be retroactive … but it is
very helpful,” said Achermann. He said he is confident the
cut will eventually be eliminated. However, that may not happen
before damage is done to both providers and beneficiaries.

“Whatever happens, I think the state’s fiscal budget is
going to be pretty gloomy for awhile,” he said.

Just at press deadline, Gov. Arnold Schwarznegger’s office
announced that he planned to appeal the ruling.

Colorado–The Colorado Association of Medical Equipment
Services is largely concentrating on national issues, according to
Jody R. Wright, president, Rocky Mountain Medical Equipment,
Sheridan, Colo., and chairman of the Colorado Medicaid DME Advisory
board.

Wright said those issues are: “What to do about the 9.5
percent cut coming in January; what is CMS going to do about oxygen
in January; and, of course, competitive bidding.”

Florida–Heather Allan, executive director of the Florida
Association of Medical Equipment Services, said the Agency for
Healthcare Administration, which is the parent agency for the
Florida Medicaid program, issued a proposed rule last week allowing
Medicaid to do a single-source provider competitive bid for
unspecified equipment. At this time, Allan said FAMES is unable to
determine what equipment Medicaid is targeting with the rule, but
“we are keeping an eye on it.”

Georgia–Speaking for the Georgia Association of Medical
Equipment Services, provider Scott Lloyd of Extrakare in Norcross,
Ga., said the industry celebrated a victory earlier this year when
the state legislature voted to exempt all prescription DMEPOS from
sales tax. While equipment that was paid for with federal funds was
already exempt, now all items of DME as defined in the Social
Security Act are exempt even for payments made by a third party,
such as private insurance plans. ”The advantage to
beneficiaries is that they will not be personally responsible for
sales tax on items reimbursed by private insurance,” Lloyd
said.

There was another victory when Georgia Medicaid, which had
established a mandatory accreditation deadline prior to Medicare’s
mandatory accreditation deadline of Sept. 30, 2009, was postponed
to coincide with the Medicare deadline.

But GAMES has other issues. Lloyd said the state’s recent
decision to replace Blue Cross/Blue Shield with Cigna as the
insurance for Georgia’s State Employee Health Benefit Plans is
causing a stir. According to Lloyd, Cigna has an exclusive with
Apria Healthcare.

”It’s going to reduce the patient’s choice for retirees’
medical equipment if they’re on the Cigna plan,” he said.

Idaho–While the Big Sky Association of Medical Equipment
Suppliers, which covers both Idaho and Montana, has been putting
most of its muscle into deflecting such national mandates as the
oxygen cap set to take effect Jan. 1, it has also managed to ward
off a significant threat in Idaho.

There, the state Medicaid agency sought to implement a system
that would require beneficiaries to go to a single provider for a
variety of HME.

“We got that shot down–and without much difficulty,
honestly,” said Bob Sherman, president of the association and
a respiratory therapist at Valley Medical Supply in Stevensville,
Mont.

Still, he said, the association is wary of what the future might
hold.

“Our Medicaid is pretty much going to follow
Medicare,” he said.

Illinois–If providers don’t have deep pockets in
Illinois, they are likely to be in big trouble, according to Tom
Renk, executive director of the Illinois Association of Medical
Equipment Services.

That’s because Medicaid is stalling when it comes to
reimbursement.

“[Providers] don’t get reimbursed on a timely
basis,” said Renk. He noted that despite the fact that
Illinois has a “Prompt Payment Act,” it still takes
about two months before claims are even submitted to the
controller. It is then another wait before they are paid.

“They have to wait six months, nine months, a year,”
Renk said about providers. “The difficulty for our members is
they are small businesses providing immediate care to elderly and
homebound patients and they have to front the equipment. They have
payrolls to meet, people to pay, and they have to dig into their
own pockets until that check comes.”

It is often a long wait. Renk recalled getting a phone call from
a member who announced, “It’s Christmas in July, Tom.”
He had received a $1.5 million check from Medicaid–but it had
taken a year. Meanwhile, he had used his own funds and gotten loans
to keep his business afloat, Renk said.

That may not work in the future. Renk said that lately, banks
have tightened up and do not want to loan money.

“It’s a vicious, vicious cycle that’s not going to go away
until the government sees fit to reimburse on a regular, fair and
timely basis,” Renk said.

Meanwhile, he can only watch as some providers close down or
sell out. “If they don’t have deep pockets, they can’t
sustain themselves and, ultimately, they might go out of
business,” he said.

Indiana–In Indiana, the state’s Family and Social
Services Administration has awarded a Request for Proposal to three
companies for incontinence, ostomy and urological products through
Medicaid. Executive Director Judy Bunn said the Association of
Indiana Home Medical Equipment Services is “tracking those
complaints and issues” related to the RFP, which the
association has been protesting since its inception in April 2007.
Bunn said AIHMES has received at least 50 complaints. She noted
only one of the three providers selected to participate in the
program is from Indiana. The others are from Michigan.

Among the many complaints on the state’s Medicaid competitive
bid program, AIHMES said “unsatisfactory products and
services” ranks high on the list. Another big problem,
according to Bunn, is that “complaints [about products and
services] are monitored and handled by the contract award winners
and not by the state.“

While the program for incontinence products is already in place,
AIHMES said it is pushing for legislation to prevent expansion of
the program.

Iowa–Even a prescription isn’t enough to keep the state
of Iowa from levying a tax on hospital beds and some other HME
items, according to the Midwest Association for Medical Equipment
Services, which includes Iowa, Kansas, Minnesota, Missouri,
Nebraska, North Dakota and South Dakota.

Iowa providers have been attempting to get that provision
overturned, but without effect, stakeholders said.

Kentucky–The Kentucky Medical Equipment Supplies
Association has been pushing for legislation to exempt prescription
DMEPOS from sales tax, said Executive Director Judy Bunn, but no
such legislation was adopted over the most recent session. Bunn
said the state has been “pushing audits” to “get
tax recoupment.”

Mississippi–Mississippi providers are also fighting a
state sales tax issue. According to the Mississippi Association of
Medical Equipment Suppliers, providers, unable to pass along the
sales tax to Medicare and Medicaid, are being forced to cover the
state’s 7 percent sales tax on DMEPOS. The issue is causing
“quite a stink,” according to the association.

Missouri–The Midwest Associaiton (MAMES) also reported
that Missouri providers are contending with health maintenance
organizations that do not always go along with Medicare guidelines,
thus creating frustrating situations for both providers and
beneficiaries.

One rehab company submitted a prior approval request for a power
mobility device to an HMO for a cancer patient who wanted to
purchase the equipment. The HMO denied the purchase request, even
though Medicare guidelines say providers must offer rent and
purchase options and it is the patient’s choice which to do.

“I was caught in the middle as I asked Secure Horizons if
I was audited who would audit, and they said CMS,” reported
Roni Burns, ATS/CRTS, director of Home Support Rehab in
Springfield, Mo., and a member of MAMES. “I was stuck. The
short story: The patient was fed up with all of conflict and bought
a power mobility device on his own.”

Nevada–Rather than an adversarial relationship with its
Medicaid agency, the Nevada Association of Medical Product
Suppliers has managed to build, over time, what amounts to a team,
according to Rich Pozesky, executive director. A big boon to that
relationship, he said, is the fact that HME providers in Nevada are
licensed. The state deals swiftly with problems. So, he said, there
are no issues with the state and HME.

In fact, Pozesky said, NAMPS worked with Medicaid for a
year-and-a-half to revamp its newly published “Coverage and
Limitation Guidelines for Mobility Assisted Equipment.” A
work group that includes representatives of NAMPS meets with the
state Medicaid agency every other month, and the association is
swift to report fraud and abuse.

It’s teamwork, Pozesky said, and it’s paying off in terms of
fewer issues and a better relationship with the state.

New York–The New York Medical Equipment Providers
Association said the organization has been meeting with the state’s
Department of Health recently to “go through some refinements
in policies” for prior approvals. According to NYMEP, the DOH
is seeking input from state providers about the variables that may
hold up the prior approval process. The end goal is to streamline
the process.

Ohio–The Ohio Association of Medical Equipment Services
is battling a “value purchasing” program–essentially a
Medicaid competitive bidding program for incontinence
supplies–that has been proposed.

Two weeks ago, OAMES Executive Director Kam Yuricich testified
at a public hearing on the matter before the Ohio Department of Job
& Family Services. Yuricich told officials the restrictive
nature of value purchasing would create “inefficiencies and
breakdowns in the continuity of care and the myriad of health care
professionals serving Medicaid customers.”

OAMES reported that after the Aug. 12 hearing, the state agency
changed the Medicaid incontinence supplies rule to ‘To Be Refiled’
status. While this is a positive development, it does not mean the
program has been removed permanently.

South Carolina–Bob Horton, executive director of the
South Carolina Medical Equipment Services Association, reported HME
stakeholders are holding their breath to see whether an earlier
ruling by a state judge on sales tax exemption will be upheld or
overturned. In South Carolina, DMEPOS items are subject to the 6
percent state sales tax, which Horton said providers are forced to
eat. But there is a legal precedent in providers’ favor, he noted,
because prescription drugs are not subject to the tax..

In 2007, an anonymous company filed a lawsuit claiming that, if
prescription drugs were not subject to the tax, then DMEPOS items
including CPAPs and nebulizers should also be exempt. The company
argued that the Department of Revenue had gone “beyond the
interpretation of the law in determining what was and was not
exempt.” The judge agreed, but the case has been appealed and
is currently under consideration by the State Supreme Court.

Horton said SCMESA hopes the original ruling will be upheld–the
court is expected to rule on the case before the end of the
year–and also hopes all DMEPOS items will be deemed
tax-exempt.