Friday, November 2, 2012

Hurricane Sandy Highlights "Competitive" Bidding's Danger to Patients

An E oxygen tank isn’t very big and doesn’t weigh very much, so delivering a couple of them to a patient should be fairly easy under normal conditions, but what about during or after a major storm like Hurricane Sandy?

What if the delivery van can’t get anywhere near the patient’s home because the streets are blocked by downed trees? What if the patient lives on the 41st floor of a building that doesn’t have power?

HME providers along a large swath of the East Coast have faced these and other daunting obstacles in caring for their patients this week. Many providers have the additional difficulty of working out of offices that are themselves flooded, wind damaged, or lacking electricity and phone service.

In general, adversity tends to bring out the best in all of us. HME providers are no exception. They will work to the point of exhaustion taking care not only of their own patients, but also of each other. They’ll coordinate with competitors to make sure that everyone who needs help gets it. As first responders, they are a safety net for people who need medical equipment and supplies at home.

So what big lesson has Sandy taught us? We already knew that preparation is key and that having a back-up plan is essential. What we didn’t know was just how fragile the safety net that we built for our patients is becoming.

And the situation will only get worse if Medicare’s bidding program is allowed to take full effect across the country next year. When businesses are arbitrarily blocked from serving patients, the result is widespread tears in that safety net.

The net, though tattered, is holding together for now. Eventually, however, there will be enough holes that someone will fall through.

Even if Congress is able to ignore the job losses and the increased hospitalization and nursing home costs caused by the bidding program, can they ignore the danger to patients? Does someone actually have to die to get their attention?

If you haven’t yet, call or email your member of Congress today. Ask them to cosponsor H.R. 6490, the Medicare DMEPOS Market Pricing Program Act of 2012. This is a sustainable alternative to the current bidding program: it saves the same money, but without eroding access to cost-effective home-based equipment and care. 

Take just five minutes out of your day and use the AAHomecare Take Action Center. If you have questions, helpful resources explaining the bill and the Market Pricing Program can be found here.

Wednesday, October 10, 2012

Alan Landauer and Van G. Miller Receive the 2012 Homecare Champion Award

The American Association for Homecare announced today that it will give its annual Homecare Champion Award to Alan Landauer, chairman of Landauer Metropolitan, Inc., and to Van G. Miller, founder and president of the VGM Group.

The Homecare Champion Award recognizes AAHomecare members who have made exceptional contributions to the homecare community throughout their careers. A Homecare Champion embodies the spirit of service and caring that are hallmarks of successful leaders in our community.

In a letter to Landauer, AAHomecare President Tyler Wilson and Chairman Joel Marx wrote, “Your steadfast commitment to the homecare sector, evidenced by your service as president of the New York Medical Equipment Providers Association and as chairman of the American Association for Homecare, are just a few of the significant contributions you have made.” They noted that one of Landauer’s lasting legacies during his tenure at AAHomecare is a stronger revenue base for the Association, which benefits the entire homecare community.

In a letter to Van Miller, Wilson and Marx stated, “Your remarkable entrepreneurial achievements in the HME sector going back to the founding of Miller Medical Supply in 1976, your leadership of two companies that were recognized by Inc. Magazine as among the fastest growing in the U.S., and your founding of VGM Group, which now employs more than 500 people, are just a few of the many qualities that make you a Homecare Champion.”

AAHomecare will present the awards to Landauer and Miller at the Stand Up for Homecare reception at Medtrade next week, which will be held on Tuesday evening, October 16, at Ventanas Rooftop, 275 Baker Street, Atlanta, Ga. 30313.

Please join us for the award ceremony at Medtrade. Register now.

Tuesday, September 11, 2012

Medicare "Competitive" Bidding Program Designed to Eliminate Competitors

This morning, the House Small Business Subcommittee on Healthcare and technology held a hearing to find out how Medicare's bidding program was impacting small businesses. Tammy Zelenko, CEO of AdvaCare Home Services represented AAHomecare. Here is her oral statement:

"Good morning Chairman Ellmers, Ranking Member Richmond, and members of the Subcommittee. My name is Tammy Zelenko. I am president and CEO of Advacare Home Services, a small business in the Pittsburgh area. We serve about 2,000 patients, with a staff of 49 employees in four locations.

Advacare specializes in respiratory care. We serve patients with COPD or other lung diseases, along with a variety of frail seniors who need help in order to live safely in their own homes. You may know us as providers of durable medical equipment and services, or DME.

 DME is an essential and extremely cost-effective component of our nation’s continuum of care. For a few dollars per day, homecare providers like me enable patients to be discharged from hospitals to home. We help control the nation’s healthcare costs:  DME equipment and services allow Medicare to reap savings by preventing hospital and ER visits and reducing expensive institutional care.

DME represents expenditures of just 1.4 percent of the annual Medicare budget. Falling payment rates and sharply rising regulatory burdens make it extremely hard to continue providing quality services without compromising care. 

As a member of the American Association for Homecare and the Pennsylvania Association of Medical Suppliers, I am very grateful to you for holding this hearing. The poorly designed bidding program has needlessly harmed hundreds of small providers like me and has eliminated 85 percent of providers from participating in the program in the nine areas included in Round One. 

How can we have a truly competitive program if the program is designed to eliminate competitors?

As the bidding program now expands to another 91 areas throughout the United States, small providers face severe cuts and arbitrary exclusion from participating in Medicare. There is no doubt thousands of good providers will be driven out of business as a result of this expansion. With 10,000 baby boomers turning 65 every day, need for cost-effective homecare is rapidly growing. Unfortunately, this bidding program is destroying the infrastructure to help meet that demand. 

In spite of the rhetoric from Medicare about set-asides for small providers, let’s be clear:  This bidding program is anti-small business.  It is a business and job killer.

We do not oppose market-based pricing or a well thought-out auction system. In fact, we endorse an alternative system developed by auction experts who design bidding systems for a living. 

We are often the eyes and ears of the elderly people living in their homes. We create a customized care plan based on physician orders and patient-specific goals and we communicate critical information to the physician.  This is what enables patients with acute care or chronic needs to remain in their homessafe and independent.

However, there are costs to providing this level of care. These are not simple “commodities” we are providing.

As a small business owner, I have been able to compete against the local, regional, and national providers within my market. Each year I gained market share, grew my business, and received recognition due to the outstanding service that my company provided.

But all of that changed overnight when the bidding program went into effect. The bidding program, for me and thousands of providers like me, has created the biggest barrier to my company’s survival.

The government should not ration benefits or otherwise bar qualified providers from serving Medicare beneficiaries.

As I prepared for the bidding program, I made my business as lean and efficient as possible. I invested in electronic medical records, purchased GPS tracking devices, and invested in a new billing system.  I believed these changes would prepare us. I was wrong.

This is the first year that I did not grow my company. The first time that I had to pass all of the healthcare premiums increases on to my employees. And the first time I had to limit reimbursement for continuing education.

Before the bidding program began, my company competed based on the level of service we provided through education, clinical assessment, and follow up. But now, because of severe design flaws, this bidding system has eliminated my opportunity to compete in my communities where I have invested in physical locations, inventory, vehicles, and highly trained staff.

In closing, more than 200 economists and auction experts have warned CMS that the current bidding program will fail if significant modifications are not made. These experts designed an alternative called the Market Pricing Program. It achieves sustainable, market-based pricing. It preserves access to quality care. AND it gives small providers like me a fighting chance for survival.  

Please give us that chance by enacting the Market Pricing Program.  

Thank you."

Wednesday, July 18, 2012

Does the Left Hand Know What the Right Hand is Doing?

According to the Census Bureau, the number of Americans aged 65 and older grew by 900,000 between 2009 and 2010. For the same year, the American Health Care Association reported that the number of nursing facilities in the United States dropped by nine. Granted, nine isn’t a very big number, but why is the number falling at all when our population of older people is rising so dramatically?

A recent article in the New York Times explains that this odd discrepancy is in part a result of financial pressure on facilities that care for residents who receive Medicare and Medicaid. The other part is a growing consensus among health care professionals that the 24-hour care provided by nursing homes is more than many older patients need.

So where are these patients getting the care they do need?

Some combination of community- and home-based care seems to be the answer. As Jason A. Helgerson, the Medicaid director for New York State says, “If a person can get a service like home health care or Meals on Wheels, they can stay in an apartment and thrive in that environment, and it’s a lower cost to taxpayers.”

Examples of federal government support for this shift are the Community First Choice Option for Medicaid and the Independence at Home Demonstration Program for Medicare.

States that participate in the Community First Choice Option receive a six percent increase in federal Medicaid matching funds for providing community-based attendant services and supports to beneficiaries who would otherwise be confined to a nursing home or other institution. The Independence at Home Demonstration Program encourages primary care practices to provide home-based care to chronically ill Medicare patients.

If all of this is true, then the question of the day is, “Why is the federal government gutting the home medical equipment (HME) sector?”

People who are chronically ill or who have mobility issues need more than care to remain independent and safe at home. They also need medical equipment like oxygen concentrators, wheelchairs, and infusion pumps.

According to information gathered by the American Association for Homecare, VGM, and other groups in the HME sector, more than 450 HME providers have closed locations, been sold to other companies or gone out of business entirely since the Centers for Medicare and Medicaid Services (CMS) implemented its bidding program in 2011.

Ostensibly designed to cut costs, the program has in fact made a mockery of market-based capitalism. A forced contraction in a sector that is experiencing increased demand defies logic. Add to that CMS’ claim that patients aren’t experiencing any negative effects, like reduced access to equipment and service, and your average reasonable person has to start wondering what the true goal of the bidding program really is.

However, before we subscribe to any sort of conspiracy theory, it might be worthwhile to keep in mind an adage that goes back at least as far as the 1700’s: Never ascribe to malice that which is adequately explained by incompetence. Or, in other words, does the left hand know what the right hand is doing?

Wednesday, June 13, 2012

AAHomecare Independent Consultant Network: Meet Health Care Reimbursement Solutions, Inc.

Mary Ellen Spradlin grew up in a family business and always knew she would own a business herself someday. Opening a business means doing what you know and by the time she founded Health Care Reimbursement Solutions, Inc. in August 1995, she had been billing HME for 14 years.

The client list grew quickly and now, 17 years later, HCRS has clients in eight states ranging from small pharmacies to multi-location companies. HCRS works with their clients to be the back room without really being in their back room.

Keeping her staff and clients up-to-date on changing rules and regulations is a high priority for Mary Ellen. She’s active on the Region B council and in several state associations. She also sends her staff to trainings for Medicare, Medicaid, BCBS and others. HCRS offers training for its clients, too. Frequent client communication is one of the benefits of working with HCRS.

“I get a real thrill from assisting new clients who are just getting started in the business,” says Mary Ellen. Helping them with accreditation and Medicare enrollment is particularly satisfying, but she also enjoys watching them grow as they provide equipment and care to seniors and people with disabilities in the community.

Several of HCRS’ first clients signed on as a result of its AAHomecare membership. In fact, one of them from 1998 is still a client today. Mary Ellen likes to work with AAHomecare members because they’re knowledgeable and have integrity. Integrity is something that HCRS prides itself on. The goal is to make sure clients have everything needed not only to get paid but to KEEP their money.

Health Care Reimbursement Solutions, Inc. is a member of the AAHomecare Independent Consultant Network.

Friday, May 18, 2012

Medicare Bidding Program Puts Patients Last

Doctors don’t provide the medical equipment their patients use at home. Doctors and patients alike rely on home medical equipment companies to not only provide the right equipment, but also to provide numerous essential, required services and to teach patients how to use the equipment properly.

Now imagine a scenario in which equipment companies are paid the lowest possible price for the equipment and nothing at all for the teaching and the service. What happens to patients in such a scenario?

Actually, you don’t have to imagine it because that is the precise situation that doctors and patients in nine metropolitan areas across the country were forced into by Medicare last year through its bidding program. Another 91 areas will soon face the same troubling circumstances.

Dr. Dennis Rosen laid out the simple arithmetic and its complex consequences in a May 16 New York Times op-ed. He wrote, “This extra care takes time, and time costs money. But sicker patients and unnecessary hospital visits cost far more. And competitive bidding doesn’t take these subsequent costs into account. If competitive bidding is predicated on supplying equipment at the lowest possible price, something has to give. And more likely than not, that something will be patient care.”

“Using CPAP [continuous positive airway pressure], or any medical device, is complicated, and the machines work only if you know how to use them properly. If the CPAP mask doesn’t fit snugly, it can be uncomfortable and cause skin abrasion or even scarring…. If used incorrectly, CPAP will not do what it is supposed to. The obstructive sleep apnea will remain untreated...”

Rosen, a pulmonologist, concludes: “On the face of it, competitive bidding sounds like a very good idea… But as a doctor working with patients on the ground, I have doubts about that quality-of-care measure, and I worry that those savings obscure a potentially serious problem.”

Is this truly what we as a society want for our neighbors, or for ourselves? There is no denying that the need to control healthcare spending is forcing hard decisions upon us, but let’s consider just two questions for now: 1) Is an hour of service time to teach a patient how to use equipment more or less expensive than even one night in a hospital, and 2) Are we willing to let the most vulnerable among us suffer because we can’t do the math in 1)?

Wednesday, April 18, 2012

American Association for Homecare Calls for Market-Based Alternative to Medicare’s Flawed Competitive Bidding Program

While myths about Medicare’s deeply flawed bidding program for durable medical equipment (DME) persist, the American Association for Homecare is urging Congress to adopt the alternative Market Pricing Program (MPP) to replace the controversial bidding program. The current, badly designed bid program is opposed by hundreds of economists and dozens of consumer groups.

The Centers for Medicare and Medicaid Services (CMS) implemented the bidding program in nine test areas a year ago – Charlotte, Cincinnati, Cleveland, Dallas, Kansas City, Miami, Orlando, Pittsburgh and Riverside, California.


Consumer advocates, auction experts, DME providers, and economists are concerned that seniors and people living with disabilities are not receiving critical medical equipment and services. Since the program was implemented in 2011, the American Association for Homecare has received reports from hundreds of Medicare patients about difficulty finding local equipment and service providers, delays in obtaining medically required DME, and fewer choices when selecting equipment and providers.

Medical oxygen, walkers, respiratory devices, hospital beds, wheelchairs, and other medical equipment and supplies prescribed for Medicare beneficiaries reduce spending by preventing treatment in higher-cost settings. Data from CMS shows that when Medicare patients don’t use prescribed home medical equipment and services, their use of emergency room and hospital services increases. So while the current bidding program may further reduce spending on DME (which represents 1.4 percent of Medicare spending and is falling), taxpayers will see spending increase dramatically in hospitals and ERs as patients’ options for home-based care continue to shut down.


Lined up in opposition to the current Medicare bidding program are 244 economists, 30 consumer and disability groups such as United Spinal and the ALS Association, and 171 members of Congress.

CMS is now expanding the bidding program to 91 additional metropolitan areas throughout the U.S. However, economists have warned that expanding the deeply flawed program is a mistake. University of Maryland economist Peter Cramton, Ph.D. stated, “Now is not the time to scale up a program that everyone agrees is fatally flawed. The Market Pricing Program steps in and fixes each of the flaws with direct and understandable solutions.”

Kennesaw State economics professor Brett Katzman, Ph.D. said, “I am a proponent of competitive bidding. What you have now is not competitive bidding.”

The current bidding program prevents several thousand qualified DME providers from serving Medicare beneficiaries. “The existing system reduces choice, access, and quality of care for seniors and people with disabilities who require home medical equipment and services,” said Tyler J. Wilson, president of the American Association for Homecare.


In calling on Congress to enact the Market Pricing Program, Wilson explained that the current system, which allows non-binding bids, encourages irresponsible bids and creates unsustainable prices while doing nothing to ensure that winning bidders are qualified to provide the products and services to Medicare beneficiaries.

The Market Pricing Program is based on recommendations by economists and auction experts who have studied the current program. MPP features an auction system to establish market-based prices around the country and would require Medicare to make fundamental changes to ensure the long-term viability of the pricing program. Key components include:
  • The Market Pricing Program is designed to achieve an accurate market price.
  • Bids are binding for the bidders and cash deposits are required to ensure that only serious homecare providers participate.
  • The bid price is based on the clearing price, not the median price of winners.
  • The program includes the same equipment and services as the current bidding system and would be implemented across the country during the same timeframe.
  • Two product categories per market area would be bid. Eight additional product categories in that same area would have prices reduced based on auctions conducted simultaneously in comparable geographic areas.
“The market-based system would ensure that Medicare beneficiaries receive the services and equipment that they need and ensure that the government pays fair, competitive prices for the equipment and services provided,” Wilson said. “That makes it a win-win for taxpayers and beneficiaries.”


Proponents of the bidding system have conveyed misleading information that exaggerates the benefits and ignores the severe shortcomings of the program.

MYTH #1: Medicare overpays for home medical equipment and services, and the bidding system improves the method for setting reimbursement rates for that equipment and service.

REALITY: Proponents of the bidding system use out-of-date reimbursement rates and false comparisons of retail costs versus Medicare costs to argue their case. For many years, CMS has set reimbursement rates for home medical equipment through a fee schedule. Over the past decade, those reimbursement rates have dropped nearly 50 percent because of cuts mandated by Congress or imposed by CMS.

The costs of delivering, setting up, maintaining, and servicing medically required equipment in the home are obviously greater than the cost of merely acquiring the equipment. But Medicare does not recognize the costs of these services. So comparing the cost of the equipment to the larger cost of furnishing the full array of required equipment, supplies, and services is misleading.

Moreover, experts, including two Nobel laureates and numerous economics professors from leading universities, have warned Congress that this bidding system will fail. The experts, who do not otherwise oppose competitive bidding to set Medicare prices, point out that the system has four fatal flaws:
  • The bidders are not bound by their bids, which undermines the credibility of the process.
  • Pricing rules encourage “low-ball bids” that will not allow for a sustainable process or a healthy pool of equipment suppliers.
  • The bid design provides “strong incentives to distort bids away from costs.”
  • There is a lack of transparency in the bid program that is “unacceptable in a government auction and is in sharp contrast to well-run government auctions.”
These concerns have been shared with CMS, which designed the bidding system. But the agency has dismissed the concerns.

A New York Times’ “Freakonomics” article addresses the bidding issue. Yale University economist Ian Ayres and University of Maryland economist Peter Cramton, conclude: “The mystery is why the government has failed over a period of more than ten years to engage auction experts in the design and testing of the Medicare auctions…. We suspect the problem is that CMS initially did not realize that auction expertise was required, and once they spent millions of dollars developing the failed approach, they stuck with it rather than admit that mistakes were made.”

MYTH #2: The bidding program will make healthcare more cost-effective.

REALITY: The home is already a highly cost-effective setting for post-acute and long-term care. For many years, home medical equipment providers competed in Medicare on the basis of quality and service to facilitate the hospital discharge process and enable patients to receive cost-effective, high-quality care at home. As more people receive quality equipment and services at home, patients and taxpayers will spend less for hospital stays, emergency room visits, and nursing homes. Home medical equipment is an important part of the solution to the nation’s healthcare funding crisis. Home medical equipment represents 1.4 percent of total Medicare spending. So while this bidding program would make even more severe cuts to reimbursement rates for home medical equipment, that will ultimately result in much higher spending in Medicare and Medicaid for hospital and nursing home stays and for physician and emergency treatments.

MYTH #3: The bidding program will eliminate fraud.

REALITY: CMS continues to describe the bidding program as an anti-fraud tool. In reality, it is a price-setting mechanism that has nothing to do with fraud prevention. In fact, the exact opposite is true, according to the market experts who warned Congress that the CMS bidding program “will lead to a ‘race to the bottom’ fostering fraud and corruption.”

The real solution to keeping criminals out of Medicare is better screening, real-time claims audits, and better enforcement mechanisms for Medicare. Two years ago, the American Association for Homecare proposed to Congress an aggressive, 13-point legislative action plan to combat fraud, and most of those provisions have been included in regulations or congressional legislation. Moreover, two important anti-fraud requirements for home medical equipment providers – accreditation and surety bonds – took effect more than two years ago, in September 2009.

MYTH #4: Only the home medical equipment sector opposes the bidding system.

REALITY: In addition to the economists and bidding experts who have expressed grave concerns about the bidding program, 30 consumer and patient advocacy organizations have called for a halt to the bidding system. Those groups include the ALS Association, the Brain Injury Association of America, the Christopher and Dana Reeve Foundation, the International Ventilator Users Network, the Muscular Dystrophy Association, National Emphysema and COPD Association, the National Council on Independent Living, the National Spinal Cord Injury Association, and United Spinal Association, among others.

These consumer groups support H.R. 1041, a bill in the U.S. House of Representatives that would eliminate the bidding program. The bipartisan bill has 171 cosponsors so far, including roughly equal proportions of Republicans and Democrats.

MYTH #5: The bidding system is good for Medicare beneficiaries.

REALITY: In January 2011, round one of the bid program was implemented in nine metropolitan areas. Since then, more than 600 patients, clinicians, and homecare providers have reported:
  • Difficulty finding a local equipment or service provider;
  • Delays in obtaining medically required equipment and services;
  • Longer than necessary hospital stays due to trouble discharging patients to home-based care;
  • Far fewer choices for patients when selecting equipment or providers;
  • Reduced quality; and
  • Confusing or incorrect information provided by Medicare.
The American Association for Homecare represents durable medical equipment providers, manufacturers, and others in the homecare community that serve the medical needs of millions of Americans who require oxygen systems, wheelchairs, medical supplies, inhalation drug therapy, and other medical equipment and services in their homes. Members operate more than 3,000 homecare locations in all 50 states. Visit

Thursday, April 5, 2012

American Association for Homecare Applauds Efforts to Eliminate Fraud in Medicare

WASHINGTON, DC ----- The American Association for Homecare reports that most of its 13-point anti-fraud plan that it proposed to Congress early in 2009 has been adopted by Medicare or incorporated into legislation. The Association continues to urge Congress and the Centers for Medicare and Medicaid Services (CMS) to take effective steps to root out waste, fraud, and abuse in Medicare and preserve patient access to cost-effective care, including home medical equipment and services (HME), or durable medical equipment.

Medicare spending for home medical equipment and services represents 1.4 percent of total Medicare spending and is growing less than one percent annually, according to CMS.

“As we have stated for many years, the home medical equipment and service sector has zero tolerance for illegal activity,” said Tyler J. Wilson, president of the American Association for Homecare. “This is why we proposed to Congress early in 2009 an aggressive, comprehensive 13-point anti-fraud plan. Most provisions of that plan have been incorporated into legislation and Medicare policy, and the reduction of fraud related to home medical equipment in recent years is a tangible demonstration of our commitment to stopping fraud and abuse in Medicare.”

“We were pleased that the HHS Office of Inspector General testified before Congress in June 2010 that criminals have shifted away from the durable medical equipment sector. We can be thankful that improved Medicare policies, better enforcement of existing laws, and support from our sector have had a positive impact.”

Specific Anti-Fraud Measures Proposed by American Association for Homecare, and Status:

The American Association for Homecare proposed the following 13 specific recommendations:
  1. Mandate Site Inspections for All New HME Providers. A July 2008 GAO report underscored the need for CMS to ensure that its contractors are conducting effective site inspections for all new applicants for a Medicare supplier number.

    Status: Under its final rule implementing provider screening requirements in Section 6401 of the Patient Protection and Affordable Care Act (ACA), CMS requires that the National Supplier Clearinghouse (NSC) conduct a site visit for all newly enrolling HME providers.

  2. Require Site Inspections for All HME Provider Renewals. All renewal applications should require an in-person visit by the National Supplier Clearinghouse.

    Status: Under its final rule for Section 6401 of ACA, CMS requires that NSC conduct a site visit for all HME providers upon revalidation of enrollment, which occurs every three years.

  3. Improve Validation of New Homecare Providers. Additional validation of new providers should be included in a comprehensive and effective application process for obtaining a Medicare supplier number.

    Status: Under its final rule for Section 6401 of ACA, CMS set up three risk categories for providers. Newly enrolling HME providers are in the “high risk” category, which requires that they undergo additional screening, including fingerprinting and background checks.

  4. Require Two Additional Random, Unannounced Site Visits for All New Providers. Two unannounced site visits should be conducted by the NSC during the first year of operation for new HME providers.

    Status: Currently, the NSC must conduct at least one site visit. Agencies that accredit HME providers serving Medicare beneficiaries also must conduct a site visit as a part of accreditation.

  5. Require a Six-Month Trial Period for New Providers. The NSC should issue a provisional, non-permanent supplier number to new HME providers for a six-month trial period. After six months of demonstrated compliance, the provider would receive a “regular” supplier number.

    Status: H.R. 4872, the reconciliation bill passed along with ACA, contains a requirement in Sec. 1305 for a 90-day period of enhanced oversight for initial claims of HME providers. It requires a 90-day period to withhold payment and conduct enhanced oversight in cases where the HHS Secretary identifies a significant risk of fraud.

  6. Establish an Anti-Fraud Office at Medicare. CMS should establish an office with the sole mandate of coordinating detection and deterrence of fraud and improper payments across the Medicare and Medicaid programs.

    Status: In 2010, CMS created a new Center for Program Integrity, which serves as the focal point for fraud and abuse activities for national and state-level Medicare, Medicaid, and CHIP program integrity activities.

  7. Ensure Proper Federal Funding for Fraud Prevention. Increase federal funding to ensure that the NSC completes site inspection and other anti-fraud measures.

    Status: Anti-fraud efforts by Medicare and the Department of Justice have dramatically expanded and accelerated. Congress has granted increased funding for CMS program integrity activities many times over the past three years.

  8. Require Post-Payment Audit Reviews for All New Providers. Medicare’s program safeguard contractors should conduct post-payment sample reviews for six months’ worth of claims submitted to Medicare by new providers.

    Status: The Durable Medical Equipment Medicare Administrative Contractors (DME MACs) now conduct post-payment audits.

  9. Conduct Real-Time Claims Analysis and a Refocus on Audit Resources. Medicare must analyze billings of new and existing providers in real time to identify aberrant billing patterns more quickly.

    Status: The Small Business Jobs Act of 2010, H.R. 5297, required CMS to implement a predictive modeling system similar to those used by credit card companies to track unusual billing patterns for Medicare claims. The CMS predictive modeling system went live on June 30, 2011, for all Medicare Part A and Part B claims.

  10. Ensure All Providers Are Qualified to Offer the Services They Bill. A cross-check system within Medicare databases should ensure that homecare providers are qualified and accredited for the specific equipment and services for which they are billing. Status: CMS now has the ability to identify claims if the provider submitting the claim is not on file as qualified or accredited to provide the specific item or service.

  11. Establish Due Process Procedures for Suppliers. CMS should develop written due process procedures for the Medicare supplier number process, including issuance, denial and revocation of the Medicare supplier number. The procedures must include, for example, an administrative appeals process and timelines.

  12. Increase Penalties and Fines for Fraud. Congress should establish more severe penalties for instances of buying or stealing beneficiaries’ Medicare numbers or physicians’ provider numbers that may be used to defraud the government.

    Status: Sections 6402 and 6408 of ACA include additional penalties for fraud.

  13. Establish More Rigorous Quality Standards. Ensure that all accrediting bodies are applying the same set of rigorous standards and degree of inspection to their clients.

    Status: AAHomecare has proposed specific quality standards for negative pressure wound therapy items provided under Medicare.
In recent years, the American Association for Homecare has endorsed anti-fraud legislation such as the Prevent Health Care Fraud Act of 2009 (S. 2128), and its companion bill in the House, H.R. 4222, which contained a number of key recommendations from AAHomecare’s anti-fraud proposals including implementation of real-time data monitoring technologies to detect fraudulent claims, increasing site inspections to ensure that Medicare allows only legitimate providers to file claims, and a dedicated office at the federal government level to combat Medicare fraud.

In 2011, the Association endorsed H.R. 3399, the Medicare and Medicaid Fighting Fraud and Abuse to Save Taxpayers' Dollars Act (FAST Act), which would establish a workable prior-authorization program for power wheelchairs. The American Association for Homecare represents providers of home medical or durable medical equipment and services who serve the needs of millions of Americans who require prescribed oxygen therapy, wheelchairs, enteral feeding, and other medical equipment, services, and supplies at home. Visit

Medicare’s Competitive Bidding Problems in Pennsylvania Are Harbingers of Negative Impact on Beneficiaries in More than 40 States

PITTSBURGH ----- The Medicare bidding program for home medical equipment and services (HME) is forcing those providers in the Pittsburgh area to revise operating models, lay off workers, or leave the profession. Medicare beneficiaries are also affected, since many out-of-state providers, with no connection to the community or patients, are assigned to provide critical equipment and services.

Pittsburgh was one of nine locations across the country where the flawed competitive bidding program was tested last year. From all indications, the impact in the Pittsburgh area for providers and beneficiaries is similar to what has occurred in the other eight locations – Charlotte, Cincinnati, Cleveland, Dallas, Kansas City, Miami, Orlando, and Riverside, Calif. Now Medicare is on the verge of expanding this program to 91 more metropolitan areas nationwide, including Philadelphia, Allentown/Bethlehem, and Scranton/Wilkes-Barre.

While the Centers for Medicare and Medicaid Services (CMS) touts an average 32 percent reduction in HME reimbursements in those locations, providers say there is another side of the story not being told – details of how businesses have been ruined, bonds broken with elderly and disabled patients, and a dismantling of the care network.

Essentially, CMS has used the bidding process to cut prices to unsustainable levels, while significantly reducing the number of providers allowed to care for Medicare patients. Some winning bidders either never sign contracts to provide the equipment to Medicare beneficiaries or are forced to lay-off workers because the low prices could not sustain their actual costs.

Furthermore, 58 percent of the winning bids went to companies with no footprint in the Pittsburgh area.

“The effects of the bidding program, from a provider perspective, are worse than we ever expected…and we expected it to be challenging,” said Georgie Blackburn, Vice President of Government Relations and Legislative Affairs at Blackburn’s, which has provided home medical equipment in the Pittsburgh area for more than 75 years.

In reality, some of the 32 percent cut in walkers, wheelchairs, oxygen therapy, diabetic supplies, and other products, will result in higher Medicare costs for emergency room visits, longer hospitals stays, and confinement in nursing homes. Moreover, the bidding procurement system is causing hardships for beneficiaries, as well as providers, many of whom are small or family-owned businesses.

“It’s terrible,” says John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers. “The bidding program is impacting everyone. Patients incur delays in receiving medical equipment and often complain it isn’t what was ordered. Companies are selling their businesses, laying off workers, and going out of business. One company let go 10 percent of their workforce after they won bids. Some who received contracts refuse to be called bid ‘winners.’ There are no winners in this badly flawed process.”

With Medicare, he says, each division operates in its own silo. “So if cutting HME saves $100 in one category, there is absolutely no consideration that it may cost another category $1,000. This happens when a patient in respiratory distress is forced into more-expensive hospital care because emergency home care is no longer immediately available. Or when a patient with mobility needs is forced into a care facility because they can’t sustain themselves independently in their home. In either case, an unintended consequence of the bidding program moves patients from a Medicare category costing dollars a day to categories costing hundreds or thousands of dollars a day.”

Shirvinsky says the broad problem is one frequently aimed at Washington: “The bureaucrats making these policies and regulations have no idea of the actual impact on the ground. They brag about the savings from the bidding program, but ignore the fact that Medicare and taxpayers are picking up much higher costs in other program areas.”

Citing another example, Shirvinsky notes an ongoing issue with repairs for home medical equipment. Bid winners are not required to repair equipment for Medicare beneficiaries after initial warranties run out. This puts a financial burden on non-bid winners, who are frequently asked to perform repairs that Medicare doesn’t fully reimburse. Medicare only pays for up to three units of labor time, which amounts to a limit of 45 minutes. The allotted time doesn’t include travel to the patient, and rarely does 45 minutes cover the actual labor time for repairs.

Moreover, Shirvinsky says companies have smaller inventories of parts and equipment because they can no longer afford to stock them. “For Medicare patients,” he says, “this means a longer time before their equipment can be repaired or delivered. Patients can be confined to bed for days or weeks creating painful skin disorders that can be difficult and costly to treat.”

Even respected national firms are impacted by the bidding program. Omnicare, Inc., a publically traded company headquartered in Covington, Ky. had operated a facility in Philadelphia and a satellite office in Pittsburgh that were associated with their HME business in the region. But competitive bidding was one of the factors that persuaded them to sell the facilities.

While the provider sector feared the bidding program would present certain perils, it has had many unexpected consequences for businesses.

At Blackburn’s, for instance, the company had provided equipment and supplies to a wide-range of customers, including hospitals, nursing homes, physicians, and businesses. But with the bidding program, many of these customers streamlined their ordering processes. When Blackburn’s didn’t win bids for certain Medicare-covered products, customers began purchasing other supplies and equipment – orders that had previously gone to Blackburn’s – from the companies that were now providing the Medicare products.

“It made things easier for the discharge planners to limit the places they called since they were precluded from calling providers of their choice,” says Blackburn. “But it was lost revenue for our company and something we had not anticipated.”

Blackburn says it is particularly “galling” when out of state providers win bids for services and equipment in the Pittsburgh area, but don’t have the skills or capacity to provide the service or products for Medicare beneficiaries. What happens? These bid winners contact Pittsburgh area providers offering subcontracting deals to supply the same equipment to patients who had previously been serviced by the locals. But now the local providers are asked to perform the services and products, sometimes to former customers, at drastically lower prices.

“We were contacted to become a subcontractor by several companies, but it did not make sense to us to support the bid program through subcontracting,” says Blackburn. “We had fought the program since 2007 and worked closely with our congressmen to stop it. We continue to push for an alternative, market-based pricing system, while trying to move our company forward under the current program.”

It has been a challenge.

“We decided that we wouldn’t lay off people or sacrifice patient service,” Blackburn says. “Last year, we reduced the percentage of contribution made to 401K accounts and shareholders recently reduced quarterly dividends. But other companies in the state actually reduced staff when they won multiple contracts in the bidding process.”

By contrast, Klingensmith HealthCare located 40 miles north of Pittsburgh has had a difference experience with the bidding program, one that some might call bittersweet.

The company, whose main business is oxygen therapy, won five categories of bidding, and in the prominent category it didn’t win, it is serving as a subcontractor for the winner. Andrew Stuart, the company’s compliance director, says their Medicare business has increased 23 percent, but acknowledges the company receives less revenue per patient.

“Reality is allowables are down, but volume is up. I wish I could say that they balanced, but they don’t,” Stuart says. “But we have maintained year over year revenues. More patients served, same revenues, less revenue per patient…for us it has not been a negative. We are alive and breathing.”

The key, he says, is that the company was pro-active and did early planning for the bidding program that has allowed it to be successful. “We laid-off 14 people before the bidding program started and have invested hundreds of thousands of dollars in technology and infrastructure,” Stuart says. “We have also started a home health agency on the respiratory side that has been very successful and won a prestigious award.”

Still, while not openly attacking the bidding program, it’s clear that Stuart has recognized downsides.

“We lost 20 competitors who are not doing Medicare business anymore,” he says. “They either didn’t bid or weren’t awarded bids. In their place are a bunch of interlopers from out of town and out of state. In 15 months, none of them have established any bricks or mortar participation in the market place. Quality competitors have been erased and replaced with these interlopers. We’ve been able to take advantage of this. But it is not satisfying. I know my competitors. I’ve been doing this for 32 years. These are good people and I feel sorry for them.”

Meanwhile, Shirvinsky hopes that in an election year, Congress pays attention to the health threats to Medicare beneficiaries and the impact of jobs losses on local economies. He wants Congress to pass an alternative approach to HME procurement, citing a Market Pricing Program endorsed by the HME sector, economists and auction experts that would establish market-based prices without jeopardizing access to cost-effective care for seniors and people living with disabilities.

The American Association for Homecare represents durable medical equipment providers, manufacturers, and others in the homecare community that serve the medical needs of millions of Americans who require oxygen systems, wheelchairs, medical supplies, inhalation drug therapy, and other medical equipment and services in their homes. Members operate more than 3,000 homecare locations in all 50 states. Visit

Tuesday, February 28, 2012

Senate Staff Should Bring Tough Questions to CMS Briefing on Bidding Program March 14

The Centers for Medicare & Medicaid Services (CMS) will give U.S. Senate staff an update on Rounds One and Two of the dangerously flawed HME “competitive” bidding program on Wednesday, March 14 at 2:00 p.m. The briefing will be held the Dirksen Senate Office Building, Room SD-430.

We are urging HME providers to alert their Senators about the importance of this briefing. This is our opportunity to explain the negative consequences of Round One in terms of patients’ reduced access to homecare, the harm to HME providers, and alarm about the spread of the bidding program to 91 additional areas in Round Two.

Please ask that your Senators’ health legislative assistants 1) attend the briefing, 2) ask CMS tough questions about the program, and 3) request that CMS release additional information about bidding program.

If you would like more information about the briefing, please contact Jay Witter at, 703-535-1884.

Tuesday, February 7, 2012

MPP: 'It's time to be all in'

HME News outlined the importance of attending the AAHomecare Washington Legislative Conference:

In a make or break effort to bring home medical equipment providers to the Hill next week to stump for an alternative to competitive bidding, AAHomecare is making its Washington Legislative Conference virtually free.

"It's time to be all in," said Joel Marx, chairman of AAHomecare and president of Cleveland-based Medical Service Co. "If we don't get it done now, we're not going to get it done."

HME Business also quoted AAHomecare chairman: “We’re at a critical juncture when it comes to Congress giving full consideration to the Market Pricing Program as a credible alternative to the current bidding program,” said AAHomecare Chairman Joel Marx, who is also Chairman of Cleveland-based Medical Service Company. “The homecare community needs to have a strong turnout on Capitol Hill in mid-February. If HME companies fail to make the case, we’re going to have a difficult time stopping the bidding program from moving forward with full force into Round Two.”

Wall Street Journal Bashes the Bidding System

Today’s lead editorial in The Wall Street Journal describes the design of the current Medicare bidding program as “idiotic and designed for failure.” The scathing critique praises the concept of competitive bidding but notes that Round One (what it calls the “pilots”) was a disaster. “Medicare cooked up an auction process that defies all economic sense.”

“The current nationwide rollout has no substantive revisions from the failed pilots, despite the objections of 244 economists and auction scientists led by the University of Maryland’s Peter Cramton. The consensus of basically everyone who knows anything about auctions is that the no-risk bids and median pricing are idiotic and designed for failure.”

The link to the text and online comments is here.

Friday, February 3, 2012

CMS Will Abandon Pre-Pay Phase of Power Mobility Demonstration

In response to comments from AAHomecare and other stakeholders, the Centers for Medicare and Medicaid Services (CMS) today announced two key changes to the prior authorization demonstration for power mobility devices (PMD). The key modifications are:
  • CMS has removed the prepayment review phase (phase 1) of the demonstration and will go straight to the prior authorization phase.
  • The PMD provider will be allowed to submit the prior authorization request to CMS on behalf of the physician.
CMS expects the PMD prior authorization demonstration to begin on or after June 1, 2012, in the seven states impacted in the demonstration (California, Florida, Illinois, Michigan, New York, North Carolina, and Texas).

Tyler Wilson, AAHomecare president, stated, “We appreciate that after our numerous conversations with CMS, the Agency has responded to many of the concerns expressed by the HME sector. We look forward to working with CMS to ensure that the prior authorization demonstration is implemented in a way that is effective without negatively affecting beneficiaries and HME providers.”

CMS PMD demo page

Summary of the modifications

Text from the announcement follows, excerpted:
Prior Authorization of Power Mobility Devices (PMD) Demonstration

CMS received many comments/suggestions on the Prior Authorization of Power Mobility Devices (PMDs) demonstration. The CMS has considered these comments carefully.

In response to comments received from stakeholders, the CMS has made a number of modifications to the Prior Authorization of PMD demonstrations.
  • The CMS has completed a separate Paperwork Reduction Act (PRA) notification for this demonstration and the Recovery Audit Prepayment Review demonstration.
  • The CMS has removed the 100% Pre-Payment review phase (formerly Phase 1). All modifications that had previously been made to Phase 1, are no longer necessary or applicable as a result of the removal this phase.
  • The CMS will allow suppliers to perform the administrative function of submitting the prior authorization request on behalf of the physician/ treating practitioner.
  • This demonstration will begin only after an OMB PRA control number is obtained. The CMS anticipates the start of this demonstration will be on or after June 1, 2012.
To submit questions regarding the demonstration contact:

Friday, January 27, 2012

Washington Legislative Conference Comes at a Critical Time – It’s Now or (Maybe) Never

With an urgent need to show force on Capitol Hill, conference fees now free for AAHomecare members, $100 for non-members.

Believing that the homecare community must demonstrate a strong showing on Capitol Hill February 15 and 16, AAHomecare has today offered to pay the full registration fee for all attendees from member companies at the 2012 Washington Legislative Conference. The Association will completely underwrite the registration cost (which covers food, hotel meeting space, and other Conference expenses) for all members thereby eliminating the registration fee – a per-person savings of $245.

In other words, the new registration fee for AAHomecare members is $0 from now through the date of the Conference.

At the same time, the Association will subsidize the costs for non-member companies to attend. Using a contribution from its reserve account, AAHomecare is able to reduce the registration fee by 72 percent bringing it down to $100 per attendee.

All 2012 attendees who already registered will be eligible for a refund for the difference between the amount already paid and the new registration fee. To receive your refund, complete the refund request form.

Note: All refunds will be processed after the completion of the Washington Legislative Conference.

Find complete conference information & registration forms here. Please note: even though registration is now free for AAHomecare members, we still need you to fill out the registration form if you are planning to attend.

“We’re at a critical juncture when it comes to Congress giving full consideration to the Market Pricing Program as a credible alternative to the current bidding program,” stated AAHomecare Chairman Joel Marx, who is Chairman of Medical Service Company in Cleveland. “The homecare community needs to have a strong turnout on Capitol Hill in mid-February. If HME companies fail to make the case, we’re going to have a difficult time stopping the bidding program from moving forward with full force into Round Two.”

In addition to fighting to replace the bidding program, Conference participants will be armed with information and position papers on audits, power mobility, and other key policy areas for the HME sector. The Association staff will schedule your visit with congressional offices and provide talking points and leave-behind materials.

The Wednesday, February 15 schedule will feature remarks by Congressmen Bruce Braley (D-Iowa), Phil Gingrey (R-Ga.), and Glenn Thompson (R-Pa.) and a panel discussion on competitive bidding with University of Maryland economics professor Peter Cramton, Ph.D. and Brett Katzman, Ph.D., professor in the Department of Economics, Finance, and Quantitative Analysis at Kennesaw State University. There will also be time devoted to preparation for the following day's lobbying sessions.

“It’s important for the homecare community to remember that the Washington Legislative Conference is not about AAHomecare,” said Marx. “It’s about voicing the concerns of HME providers and manufacturers on Capitol Hill and getting Congress to help us. The AAHomecare lobbyists who are in Washington full time can only do so much. At least once a year (and ideally more often), everyone who works in homecare must come to Washington and help us push the message of homecare. If people aren’t willing to lend that support and step up to fight for what their businesses need, then homecare is going to have a difficult time competing with all the other health care sectors that are fighting for a shrinking reimbursement pool from Medicare.”

”While we don’t make a profit on the Legislative Conference and are always lucky to break even, we didn’t want registration fees to stand in the way of people coming to Washington D.C. in February,” said Tyler Wilson, AAHomecare president and CEO. “The registration fee covers the cost for the Association to rent hotel meeting space and rooms for Capitol Hill events, as well as for meals, receptions, and related expenses. The registration fee, the sponsorship support and the revenues from exhibitors all go toward covering the cost of the two-day event in Washington. It’s common to underestimate the cost of conducting a Washington event. AAHomecare tries to run the Legislative Conference as economically as possible.”

“The Association decided it was the right time to pull funds from the organization’s reserve account to help subsidize the cost for everyone to attend the Conference," continued Wilson. "We’re glad we’re able to completely underwrite the cost for AAHomecare members and heavily subsidize the registration fee for non-members.”

"This is an opportunity for the HME sector to demonstrate the importance of preserving access to home medical equipment and services. We look forward to big participation in Washington on February 15-16.”

Special thanks to our event sponsors and sector partners (see a complete list of sponsors and exhibitors). Their generous support for the Legislative Conference allows us to hold down registration costs and helps more HME advocates to participate each year.

And special thanks to our newest sponsor, Wright & Filippis, who is hosting the Conference Welcome Reception on February 15.

Wednesday, January 11, 2012

HMEs: Ask Lawmakers to Enact Market Pricing Program

Congress is in recess until late January but is still working on important issues. While lawmakers are back in their home states, it’s important for HME providers to ask their Representatives and Senators to support the Market Pricing Program (MPP) and convey that support to their respective Republican or Democratic leadership in the House and Senate.

Ask your Representatives and Senators to contact their party’s leadership and ask that the MPP proposal be included in the final “doc fix” bill that is sent to the President. The short “patch” to the doc fix as well as the extension of payroll tax cuts expire at the end of February 2012, so time is short.

A House-Senate conference committee for the doc fix and payroll tax break legislation has been appointed to reconcile differences between the two parties and the two chambers of Congress. Members of this conference committee will be especially influential in what is included or excluded from the doc fix legislation.

While the House and Senate are in recess, please contact your Senators and Representative in their state or district offices to convey your concerns or schedule a meeting during the January congressional recess period.

If you have any questions or feedback from House or Senate staff, please contact Jay Witter at

Talking Points for Senators, Representatives and Staff

Members of Congress need to contact House leadership and House-Senate conference committee members and ask that MPP be included in the final “doc fix” bill that is sent to the President.

The following are key components of MPP:
  • The current competitive bidding system has failed and needs to be replaced at the earliest legislative opportunity;
  • MPP is a sustainable market pricing system for HME;
  • MPP includes the same HME items as the current bidding program and is implemented across the country in the same time frame;
  • Two product categories are bid per geographic area. Eight additional product categories in that same area would have prices reduced based on auctions conducted simultaneously in comparable geographic areas;
  • Bid areas are smaller than metropolitan statistical areas (MSAs) and more homogeneous;
  • Bids are binding and cash deposits are required to ensure only serious bidders participate; The bid price is based on the clearing price, not the median price of winners;
  • The same areas that are exempted under the current bidding program will be exempted in this Act.
Background documents regarding the market pricing program listed individually below are also collected on our website.

Wednesday, January 4, 2012

House-Senate Conference Committee Appointed to Negotiate Payroll Tax/SGR

A House-Senate conference committee for the doc fix and payroll tax break legislation has been appointed to reconcile differences between the two parties and the two chambers of Congress. Members of this conference committee will be especially influential in what is included or exclude from the doc fix legislation.

Please ask your Representatives and Senators to contact their party’s leadership and ask that the MPP proposal be included in the final “doc fix” bill that is sent to the President. The short “patch” to the doc fix as well as the extension of payroll tax cut expires at the end of February 2012, so time is short.

The conference committee list includes:

House Republicans
Dave Camp (Mich.)
Fred Upton (Mich.)
Kevin Brady (Texas)
Renee Ellmers (N.C.)
Nan Hayworth (N.Y.)
Tom Reed (N.Y.)
Tom Price (Ga.)
Greg Walden (Ore.)

House Democrats
Chris Van Hollen (Md.)
Sander Levin (Mich.)
Xavier Becerra (Calif.)
Allyson Schwartz (Pa.)
Henry Waxman (Calif.)

Senate Democrats
Max Baucus (Mt.)
Ben Cardin (Md.)
Jack Reed (R.I.)
Bob Casey (Pa.)

Senate Republicans
Jon Kyl (Ariz.)
Sen. Mike Crapo (Idaho)
John Barrasso (Wy.)