Unmanageable Medicare Cuts Put Another HME Out of Business

As reported recently in HME News, Northern Rehab Equipment & Respiratory closed after 19 years serving the community. AAHomecare reached out to Stephanie Schwartz PT, ATP, CAPS, to understand the full story and to share her experience. She said the following:

“Yes, the reimbursement rates and policies had a huge effect on my business and is why I closed.  Just to summarize the recent events for you: I am a very proactive owner and I like to make business decisions in advance of changes of sales and circumstance if possible. I owned three stores in the area at one period of time.  Downsized to decrease cost since it is more expensive to provide products and services over the distances rural providers have to go.

At my Redding store, when we saw the cuts coming we made models to predict if we could stay with our current overhead and staffing and make ends meet.  We could not, according to the models, so we began to change. I have been in business almost 20 years here in Redding and I was well aware that any poor decision could affect my retirement as I am 62 years old. So, we sold some areas of business that were getting too difficult to manage due to so many rules for documentation, qualification and constant changes in reimbursement and constant audits.

We sold our Rehab Division to National Seating and Mobility. Five of my employees went with them, so I felt good about retaining those jobs for them with a good new employer.  We then had the first round of cuts in January, surprisingly we did okay and we were still profitable and doing a lot of business. We were adding more retail sales due to the fact in our town many providers had stopped providing beds due to the severe audits and strict, arduous qualifications. 

Physicians were not willing to rewrite notes three and four times to get the documentation right so providers just stopped providing beds through insurance.  We picked up more retail sales that seemed to help balance out the initial 20% cut. 

When it appeared that there was to be no reprieve from the next 25% cuts in July, we again did models and reassessed our profit on individual items to see which ones would be profitable to sale.  WOW those were huge, unmanageable cuts that Medicare made in July. The cuts ranged from 25%-45% off the 20% cuts made in January.

I made the decision then to do a soft close of my business because so few items were going to show a profit and the delivery costs for a rural provider are so much more.  We added an Accessible Living Division a few months before the July cuts, selling ramps, lifts and bathroom inserts and remodels and were hoping to survive on mostly cash and retail sales and this new division. We cut staff again, as the cuts in July began and decided to sell off our respiratory division. We managed to stay in business almost 12 months after closing the respiratory division by getting some VA accounts for our ramps and lifts. But ultimately, I knew we could not survive, so we closed in August 2017. 

I did go not bankrupt, I paid all my bills and said good bye to some faithful customers, managed to find jobs for almost all the staff.  I always followed the Medicare rules and guidelines but the new qualification rules, audits, documentation, reimbursements are not made to be sustained by small businesses. Unable to purchase products at the reduced bulk cost of a larger business, our gross profit was always less than a larger business. This along with the effect the reimbursement cuts had and the cost of accreditation and audits was the reason we could ultimately not continue.”

Stephanie went further to say that she would like to own a small business again, clarifying, “one where there is a more equal playing field, one where I do not have to fight the government and prove every day I am not a fraud, a thief, a criminal or prove that I provide a worthy service to others. My new business will add value to my community. My new business will provide an excellent service or/and product.  I will not be a whipping boy of Medicare ever again. I am not angry or sorry for myself, I am simply a small business owner who used simple math to figure out the reimbursement schedule, weighed against the costs of doing business with Medicare was not sustainable for my business.”

Concerns Continue for Access to Durable Goods at State Level

Access Press published a piece on the plight of homecare providers in Minnesota and a current law requiring Minnesota to bid out incontinence products:

The Midwest Association of Medical Equipment Suppliers (MAMES), its members and other advocates are asking to overturn a law requiring Minnesota to bid out incontinence products. The law was tucked into the 2017 health and human service omnibus bill in the final hours of the legislative session. Bill Amberg, who is MAMES’ lobbyist, said member medical supply dealers are frustrated that the bill addition came without debate or discussing. “There wasn’t even a conversation with stakeholders.”

MAMES and its allies are working to overturn the bid requirement before it takes effect next year. That could happen during the 2018 legislative session.

Amberg said that if the change goes into effect next year, it would be yet another blow to Minnesota’s medical supply and durable medical equipment providers. More than half a dozen companies have closed during the past year including longtime Twin Cities firm Key Medical Supply. Key had waged a long and ultimately unsuccessful legal battle over the Centers for Medicare and Medicaid Services’ (CMS) competitive bidding program as it related to enteral nutrition supplies or feeding tubes.

It will also inconvenience many people who need the incontinence supplies for daily living. “It just gets tougher for people with disabilities and senior citizens,” Amberg said. “They can’t find caregivers, they can’t have reliable supplies and medical equipment for their daily lives. It’s hard to talk about people staying in their home communities on one hand and forcing them out on the other.”

The full article can be found here.

Stemming the Tide Through Payer Relations

As reported in Wednesday in Washington, AAHomecare remains focused on legislative and regulatory strategies to move the industry forward. But our investment in payer relations has also produced impressive returns for HME providers in our first year focusing on this area.

“With increasing pressure to save money on state budgets, it’s critical that we have a strong capability to help respond to proposed Medicaid rate cuts and rally providers and state associations to advocate for fair reimbursement policies,” explains Tom Ryan, AAHomecare’s president and CEO.

In just one year, AAHomecare has been successful in stemming the tide and in some cases reversing further cuts with the help of state associations, utilizing a multi-pronged approach. Here are just a few results:

1. With the aid of AAHomecare’s Dobson DaVanzo Study which analyzes the full operational costs plus cost of goods against the current Medicare reimbursement environment, the industry has effectively negotiated pricing agreements for DMEPOS providers with state and national payers. 
2. The Association consulted with legal staff on how the CURES Bill impacted TRICARE, Medicare Advantage, and Managed Care payers. AAHomecare provided a reference for the industry to use in discussions with payers on getting July-December 2016 claims reprocessed. The Association also worked with Brown & Fortunato to obtain legal opinion on the rights and responsibilities of the states in implementing CURES language.
3. Over the course of the year, AAHomecare has built relationships with many private payers that directly impact the health of our industry and future reimbursement decisions. On the national level, payers included Anthem, TRICARE, the Defense Health Agency, AIM Sleep Management, and Carecentrix. We believe these relationships will build to greater impact on policy and operational changes for HME providers.
4. At the state level, AAHomecare has worked with regional associations to secure wins in several states who were following suit with Medicare reimbursement. These include working with NEMEP to secure a freeze of current rates until further notice with the New York Medicaid Incontinence Program. AAHomecare also joined Big Sky Association of Medical Equipment Suppliers to evaluate strategy and create a white paper for presentation to BCBS Montana regarding reimbursement cuts to the 2017 fee schedule. Further, in conjunction with the Maryland-National Capital Homecare Association, AAHomecare worked to establish a strategy for fighting pricing cuts with DC Medicaid. We have received notice the Agency is evaluating the information given and analyzing the budget before finalizing decisions, but expect changes to be made.

Williard Elevated to Vice President Role

These efforts on behalf of AAHomecare have been led by AAHomecare’s Laura Williard, who the Association has just promoted to Vice President of Payer Relations. “Laura Williard has brought significant expertise and energy to her role as leader of our payer relations efforts,” said Ryan. “She has gained a great deal of credibility with HME providers and has established solid relationships with state healthcare stakeholders and other major payer organizations.”

You can read a more extensive review on payer relations efforts and the work of Laura Williard here.

Laura can be reached at LauraW@aahomecare.org – and follow her on Twitter: @WilliardLaura.

CMS Announces Long-Term Relief on CRT Accessories

Policy Change Marks an Important Win for CRT Providers and Patients Who Depend on Highly Specialized Mobility Products

The Centers for Medicare & Medicaid Services announced that accessories for group 3 power Complex Rehab Technology (CRT) mobility products will continue to remain exempt from the application of competitive bidding derived pricing for Medicare beneficiaries.  Congress has twice passed legislation delaying the application of bidding derived pricing, including a six-month delay as part of last December’s CURES bill that was set to expire on June 30.  This policy change, announced here by CMS, essentially extends the CURES provisions indefinitely.  From CMS’ announcement:

CMS is issuing a new policy on how adjustments to the fee schedule based on information from competitive bidding programs apply to wheelchair accessories and back and seat cushions used with group 3 complex rehabilitative power wheelchairs.  Section 16005 of the 21st Century Cures Act currently allows higher payments for these items but is set to expire after June 30, 2017. By continuing these higher payments, this new action will help to protect access to complex rehabilitative power wheelchair accessories on which people with significant disabilities depend.

The full release and AAHomecare president Tom Ryan's remarks on this issue can be found in the Association's press release.

DMEPOS RAC to Look at Potential Underpayments for Group 3 Wheelchair Options & Accessories

The industry is pleased to see that Performant Recovery, the DMEPOS RAC, has been approved to add an audit that will look at the underpayment of Group 3 power wheelchair options.  All wheelchair accessories (including seating systems) and seat and back cushions furnished in connection with Group 3 complex rehabilitative power wheelchairs will be reviewed regardless of modifiers.  This issue recovers the incorrect reductions owed to suppliers for claims for these items for DOS 1/1/2016 - 6/30/2016.

This is a very positive development as it is the first time an underpayment for our industry has been audited!

Industry Advocate Kucka To Receive Award at #AAHWLC17

AAHomecare is pleased to announce George Kucka will be the recipient of this year’s AAHomecare/Mal Mixon Legislative Advocate Award at our upcoming Washington Legislative Conference on May 24-25, 2017 in Washington, DC.

The Legislative Advocate Award was established in 2012 to recognize and honor AAHomecare members who have significantly advanced the homecare community’s legislative goals and who have, by their example, inspired and motivated others to join the fight for better federal policy for the home medical equipment sector. Last year the Association honored Thad Connally, president of First Choice Medical.

George Kucka, president of Fairmeadows Home Health Center, Inc. in Schererville, Indiana, has dedicated his career to serving others. As a member of the AAHomecare Board of Directors, chair of the HME/RT Council, and active member of several of the Association's Councils and Work Groups, he has been deeply involved in the decisions that are building a better future for HME.

Kucka has faithfully championed the benefits of membership in both national and state associations and served as a catalyst for action in the industry, including serving as a driver behind the efforts to develop a definition that more fully encompasses the value of HME that will have wide effects and applications in our field. His knowledge of industry processes and protocol have helped identify opportunities to pursue better systems for providers to serve patients and their communities.

The 2017 AAHomecare/Mal Mixon Legislative Advocate Award will be presented to Kucka during the Legislative Conference on Wednesday, May 24, in the Grand Ballroom at the Washington Court Hotel in Washington, DC. Register today for the conference and be there to support a colleague and strong advocate for this industry.

Call for Action: Help Stop "Double Dip" Cuts for Stationary Oxygen by Reaching Out to Capitol Hill

Rural and non-bid area oxygen suppliers need relief from “double dip” cuts in the 2017 Medicare fee schedule for stationary oxygen, which result in rates for rural and other non-bid area suppliers that are lower than the competitive bidding rates for this product category in many CBAs.  These new rates stem from the application of a 2006 budget neutrality offset balancing increased utilization for oxygen generating portable equipment with lower reimbursement for stationary equipment.

AAHomecare has raised concerns about the issue in a letter to the outgoing CMS General Counsel and is now engaging new leadership at HHS and CMS on the issue.  We would like to reinforce these efforts by generating Congressional interest and support on the issue as well.

If these additional cuts are impacting your company’s bottom line and your ability to serve patients, please let your Senators and Representative know your concerns, and ask them to contact CMS on your behalf.  You can use these points as a guideline for your discussions with CMS:

1. Medicare improperly reduced payments for E1390 concentrators by applying a regulation introduced in 2006 that only should be applied to unadjusted fee schedules called the budget neutrality offset. 
2. CMS’ inappropriate application of the budget neutrality offset has resulted in rural and non-bid area rates being lower than CBA rates in many cases.
3. The 2017 adjusted fee schedule payments for stationary oxygen equipment must be consistent with those based on regional average SPAs from CBAs.
4. How these cuts affect your business and patients.

If you need assistance crafting your message or contact information for healthcare legislative assistants in House & Senate offices, please contact Gordon Barnes at gordonb@aahomecare.org. Please also see our comparison of the rural and non-bid area rates to selected bid area rates for more perspective.

Share Your Expertise at Medtrade

AAHomecare members have a great deal of knowledge in sales and marketing, strategic planning, executive leadership, retail, business operations, competitive bidding and so much more. Have you considered sharing your expertise with others? Consider working with a colleague to submit a proposal to present at Medtrade. Priority for this year’s program is given to town hall/panel format presentations with two or more presenters. And sessions with a provider participating will be given top consideration in the proposal process! Presentations are 1 hour or 1.5 hours in length with time for Q&A.

The show will take place October 23-26, 2017 in Atlanta, Ga. This is a great opportunity to help build the knowledge of your peers and create a stronger HME business community. The proposal deadline is Thursday, April 27. You can submit online, or email Toni Ward, conference manager with questions at antoinette.ward@emeraldexpo.com.

#AAHWLC2017 

Legislation Introduced for CRT Accessories Has Strong Bipartisan Support

Legislation to prevent the application of bidding-derived pricing for CRT accessories was introduced in the Senate and House last week.  The legislation is needed due to CMS' attempt to apply competitive bid program pricing to CRT accessories effective January 1, 2016.  Congress has twice passed legislation to delay this measure, most recently through provisions in the CURES bill that hold off bidding-derived rates until July 1, 2017.

The Senate bill, S. 486, introduced by lead sponsors Sens. Rob Portman (R-Ohio) and Bob Casey (D-Pa.), and its House companion, H.R. 1361, introduced by Reps. Lee Zeldin (R-N.Y.) and John Larson (D-Conn.) both show strong bipartisan support from initial co-sponsors.

“CRT providers need a permanent fix that will ensure that they can continue to support individuals with serious disabilities that depend on this specialized equipment,” said Tom Ryan, president and CEO of AAHomecare.  “If bidding-derived pricing is allowed to slash reimbursement rates, these companies simply can’t provide the level of clinical care associated with CRT products and accessories, including patient evaluation, as well as configuration, fitting, and adjustments for the equipment.”

“After two timely delays, rehab providers are finally at a critical juncture where the ill-conceived proposed cuts to 171 CRT accessory codes can be put to rest," said Georgie Blackburn, vice president of government relations and legislative affairs for BLACKBURN’S. “Plain and simple, MIPPA 2008 exempted CRT power chairs and accessories from the bid program."

“I’m thrilled to see that we have congressional leadership recognizing this, resulting in S.486 and H.R. 1361, and that we now have Secretary Tom Price leading HHS,” added Blackburn, who also serves as a member of AAHomecare’s Complex Rehab & Mobility Council (CRMC).  “I have never felt so optimistic that logic will prevail when it comes to public policy for CRT!”

“Without adequate funding, suppliers won’t be able to provide these very specialized products that  are essential to allow patients to stay in their homes, which is both their preferred outcome as well the cost-effective place for them to be,” said Jody Wright, president of Rocky Mountain Medical Supply and CRMC member.  “I hope that companies in the CRT space will reach out to their Senators and Representative and ask for their support for this much-needed legislation.”

In addition to showing bipartisan support, the committees of jurisdiction covering healthcare-related legislation are well-represented by current co-sponsors:

S. 486 – 5 Republican co-sponsors, 4 Democrat co-sponsors – 4 cosponsors are members of the Senate Finance Committee

H.R. 1361 – 12 Democrat co-sponsors, 10 Republican co-sponsors – 8 co-sponsors are members of the House Ways & Means Committee and 4 co-sponsors are members of the Energy & Commerce Committee.

Learn more with AAHomecare's issue brief on CRT accessories legislation.

Reimbursement Cuts to NY Medicaid Incontinence Supplies

One Month Delay in Effect While Further Review Takes Place

Last June, The New York State Department of Health (NYS DOH) announced an ‘Incontinence Supply Management Program’ for all Medicaid beneficiaries that would implement minimum quality standards for incontinence products to take effect on September 1, 2016.  In addition to the quality standards, NY DOH also awarded a preferred vendor contract to TwinMed, LLC for incontinence products to be purchased by Medicaid providers.  Medicaid providers who purchase incontinence supplies from TwinMed, LLC were to receive competitive pricing and an approved formulary by the Department as meeting the new minimum quality standards.

While providers are not mandated to purchase these products from TwinMed, LLC, if they purchase from other vendors, they are required to obtain independent laboratory testing results certifying that the products dispensed meet the minimum quality standards. These results must be maintained by the provider for each product and kept on file for a 6-year period in the event of a pre- and/or post-pay audit.

Both AAHomecare and Northeast Medical Equipment Providers Association (NEMEP) applaud the initiative to provide high quality incontinence products to the NY Medicaid beneficiaries. However, along with these developments, the NYS DOH published fee schedule changes for these products that decreased reimbursement by approximately 30% to go into effect on February 15, 2017.

Laura Williard, AAHomecare senior director of payer relations, developed and performed a mini cost analysis study that evaluated providers’ cost of goods along with operational costs to providing these products.  This aggregate, de-identified information was presented to the Department along with comparisons of current and proposed rates with the average Medicaid allowables across the country and also with the 5 surrounding states.

Kim Voelker, NEMEP executive director, was informed that the implementation of rate reductions would be postponed until March 15, 2017 while further review takes place. Going forward, Voelker and Williard will be meeting with the Department to review the study more fully and to advocate on behalf of providers regarding the sustainability of the cuts.  Voelker comments: “Our collaboration with Laura and AAH enabled NEMEP to provide the Department with solid data illustrating providers’ true costs in supplying these products. We look forward to a continued dialogue and re-evaluation of the reimbursement model."

CMS Double Dips on Oxygen Payments

“Today rural America oxygen payments are lower than urban competitive bid payments - that’s egregious,” president and CEO of AAHomecare, Tom Ryan, said during his interview with DC’s News Channel8.

“CMS has used an old payment methodology and applied it to the new payment methodology, and essentially double dipped.” Ryan stressed the need to fix CMS’ misguided new cuts for oxygen concentrators in rural areas and HME’s important role in protecting patients and lessening costlier clinical interventions.

The HME industry is a service industry and very often when patients who have difficulty getting in and out of their home receive a visit from their oxygen technician or their respiratory therapist, it’s a life line for them. “That’s the ability for that provider to go in, provide the service, and give them the needed medical equipment. And very often [patients] look forward to their oxygen delivery. They like that interaction with the delivery tech when they come in their door.” This interaction and in home visit is an important part of the healthcare safety net that is now becoming more difficult to provide.

Ryan described the need for rational conversations with CMS with good data and a conversation on where homecare can help save Medicare dollars and still provide better care. “Service is the key here and we too often look at things in DC, and particularly at CMS, in silos. We’ve got to break the silos down and not just look at what does it cost you here but what does it cost you across the whole continuum of care.”

View the full interview: http://wjla.com/news/news-talk/the-affordable-care-act-medicare

Our Fight for HME in Washington Takes Many Shapes

A strong voice in Washington is necessary to combat the continued regulatory and legislative battles for homecare – as well as new issues which crop up like the changes from CMS to the 2017 fee schedule for stationary oxygen. AAHomecare is your champion in the halls of Congress and the offices at CMS. We are leading the charge on policy and advocacy in a variety of ways, and one of those is through the use of strong media placements. In 2016, more than seven million people were reached with the positive message of homecare and the detrimental effects of the bidding program.

While the association will do everything in our power to be a strong voice on these issues, having the opportunity to continue working with the media to share provider’s stories helps support the work of industry lobbyist and builds on the education we are providing lawmakers.

These are just a few examples from October alone, of providers and professional healthcare reporters who understand this issue and are reaching out to lawmakers through the power of print:

• 10/3- Real Clear Health: Competitive Bidding Is Killing Medicare Beneficiaries by Chris Parkin  

• 10/5- The Hill: Congress must roll back cuts in reimbursement rates to medical equipment providers by Kelly Buckland 

• 10/17- Inside Sources Posted to Politics: As Homecare Industry Confronts Medicare Cuts, Upton May Be Roadblock to Fix by Shawn McCoy 

• 10/19- Valdosta Daily Times: Medicare reimbursement cuts affect business by Ed Cockman

• 11/15- Washington Examiner: How long will Congress wait to help Medicare seniors? By Tom Ryan 

In addition, our media outreach efforts led to positive editorials in the Las Vegas Review-Journal and the Janesville Gazette (Wisc.), Speaker Paul Ryan’s hometown paper.

One of the ways we support the media efforts is through our Stand Up for Homecare campaign. As Jeffrey Hall, President and CEO of Reliable Medical Supply explains, “If you’re headed to Medtrade then you should be attending the American Association for Homecare event “Stand up for Homecare.” When you purchase your tickets to this great event you are not only buying an opportunity to meet knowledgeable industry leaders, you’re supporting the AAH continued efforts to fight our battles in Washington. Our organization looks forward to this event every Medtrade.”

Won’t you join Reliable Medical Supply and other leaders at this event and support the continued efforts to fight our battles in Washington? These stories in local and national news are making a difference in our fight for fair reimbursement and against regulatory overreach. Learn more about the Stand Up for Homecare campaign and how AAHomecare fights for you.

To share your story and help AAHomecare explain the effects of regulatory overreach and competitive bidding on HME providers and patients, please contact Tilly Gambill at tillyg@aahomecare.org or fill out the online form. Please be assured that all requests for confidentiality will be maintained, and that we will seek prior approval for using any material in media outreach or editorials.

What's Next? - A Message From AAHomecare's President

As we start the New Year, with a new Congress just getting settled in and a new Presidential Administration beginning in just a couple days, AAHomecare has hit the ground running to ensure we can build on last year’s legislative and regulatory successes and capitalize on potential opportunities for even better public policy outcomes for HME in 2017.  I’d like to give you a quick rundown on what we’ve been focusing on at the start of the year to make that happen.

Rural O2 Payment Policy – As we've recently reported, AAHomecare has asked CMS to reconsider their changes to the 2017 fee schedule for stationary oxygen, resulting from the misguided combination of a 2006 offset balancing rates for portable and stationary oxygen with bidding-derived pricing for rural providers.  While we’ve continued to attempt to engage CMS on this issue, we are now reaching out to Capitol Hill to alert them to this issue and ask them to get involved and are also planning media/PR outreach on the issue if it not quickly resolved.

Competitive Bidding Program – Last year’s success in getting a measure of relief for rural providers for July through December of 2016 will certainly be welcomed by providers when CMS finally announces a refund process (more on that in a moment), but a longer-lasting solution is critically needed.  While our champions on Capitol Hill have expressed their willingness to take up the fight for fairer rural relief policy in the 115th Congress, we’re all too aware of how slowly that process can move.  To that end, we brought in a sub-group of AAHomecare’s Regulatory Council to explore and develop regulatory actions the new administration could take to provide relief for rural providers, especially given that the recent CURES legislation will require HHS to reissue payment regulations to take effect by the start of 2019.  

Reimbursements from Other Payers – We believe that other payers who base their rates on the Medicare fee schedule should provide commensurate retroactive relief for the July 1-Dec. 31 period, where applicable.  We are currently working on our messaging to make this case to TRICARE and Medicare Advantage plans.

Where’s the Refund? –  As I noted above, HME providers in rural and non-bid areas are anxiously awaiting word on the procedures and timing for the relief mandated in the CURES Act – it’s certainly a question that the AAHomecare staff has heard repeatedly from our members and other HME stakeholders.  We’ve pressed CMS to provide guidance as soon as they can, and you can be sure we’ll share that news with you as quickly as we get it.

We’re Just Getting Started – While AAHomecare helped deliver important gains for the HME community in 2016, we recognize that the HME industry still faces a reimbursement and regulatory environment that is causing many well-established companies to change their business models or shutter their operations – leaving patients and communities with less access to essential home medical equipment.  Be assured that the current AAHomecare team enters 2017 with a renewed commitment to improving the business environment for HME through continued advocacy work on Capitol Hill and at CMS, by building relationships with non-Medicare payers, and by exploring new approaches to reimbursement models for value-based approaches and emerging technologies.  I truly believe this will be our most productive and effective year yet, and I look forward to working with the AAHomecare membership and other HME stakeholders to make it happen. 

To learn more about the work of the American Association for Homecare, or to join us, please visit www.aahomecare.org or contact Michael Nicol at michaeln@aahomecare.org.