Home Health & Hospice Week

If you're in one of 10 DME bidding areas starting this summer, you'll no longer be able to furnish certain items.

Even if you're a home health agency or hospice, Medicare's competitive bidding program for durable medical equipment still could change your life as early as this summer.

HHAs and hospices won't be able to furnish or bill for DME bidding items in competitive bidding areas once the program takes effect, the Centers for Medicare & Medicaid Services reminds providers in Transmittal No. 1431 (CR 5868) updated Feb. 1. And providers will have to partner with bid winners for contracted DME subject to bidding.

Bidding will launch in 10 areas in July and spread to 70 areas next summer. (For a list of the 70 areas, see Eli's HCW, Vol. XVII, No. 2).

"HHAs that furnish DME and are located in an area where DME items are subject to a competitive bidding program, must either be awarded a contract to furnish the items in this area or use a contract supplier in the community to furnish these items," CMS explains in instructions added to the transmittal. "The competitive bidding items are identified by HCPCS codes and the competitive bidding areas are identified based on ZIP Codes where beneficiaries receiving these items maintain their permanent residence."

Intermediaries that receive claims with bid items on them will return the claims to the provider. An agency then will have to delete the DME items and submit the separate DME claims to the DME MAC if the provider has a bid contract.

The transmittal is online at www.cms.hhs.gov/transmittals/downloads/R1431CP.pdf.

• Even if you haven't had any National Provider Identifier-related problems yet, you should still double-check your National Plan and Provider Enumeration System information. That's because NPPES will establish a "verification process" with the Internal Revenue Service to check providers' legal names and employee identification numbers (EINs) against its files, CMS says in a message to providers. And if your NPI on your claims isn't backed up by correct NPPES records, the system will deny them.

• HHAs and hospices served by the Associated Hospital Service component of National Government Services will see some payment disruption as the intermediary switches to the HIGLAS ac-counting system.

NGS announced last summer that it would switch to HIGLAS in August and now it's completing another transition, says a message to providers posted on AHS' Web site at www.ahsmedicare.com/files/documents/021408_HIGLAS.pdf.

The change, which affects the financial accounting system and not the claims system, will add time to request for anticipated payment (RAP) processing and could introduce a host of other payment-related confusions. HHAs had trouble with new withholding rules, among other items, when regional home health intermediary Palmetto GBA switched to HIGLAS in 2005 (see Eli's HCW, Vol. XIV, No. 20).

Warning: Overpayment demand letters will also now go to the master physical address instead of the contact furnished by the provider, AHS/NGS says.

Because AHS/NGS will waive the payment floor and pay claims early before the claims payment system goes dark from March 6 to March 11, payment for the rest of the month may seem lower than normal, the intermediary warns.

• Turn to this scholarly journal on economics for ammunition in the fight against Medicare's competitive bidding program for home medical equipment. The article in the January 2008 issue of Southern Economic Journal calls the CMS competitive bidding process "inefficient." Furthermore, the process will "lead to price increases and may cause decreases in the quality of services," say researchers Brett Katzman of Kennesaw State University and Kerry Ann McGeary of Drexel University.

"While we applaud CMS' attempts to reduce medical expenditures and its initiative of implementing competitive bidding as a means to this end, we strongly urge a restructuring of the bidding process," write the researchers.

For more information, go online to www.utc.edu/Outreach/SouthernEconomicAssociation/southern-economic-journal.html.

• Regional chain Amedisys Inc. is becoming a national chain with its purchase of TLC Health Care Services Inc. from investment firm Arcapita Inc. based in Atlanta. Baton Rouge, LA-based Amedisys will pay $395 million for the Lake Success, NY-based provider with 92 HHAs and 11 hospice locations in 22 states and the District of Columbia, Arcapita says in a release. "After the transaction closes, Amedisys will have over 480 agencies in 35 states, Puerto Rico and the District of Columbia," Amedisys adds in its release.

"This transaction will expand the Amedisys care delivery network by over 100 agencies while providing entry into five new states and the District of Columbia," says Amedisys CEO William Borne in the release.

Arcapita, formerly known as Crescent Capital Investments, paid about $188.5 million for TLC at auction in 2004 (see Eli's HCW, Vol. XIII, No. 13). Arcapita bought the company from bankrupt Med Diversified. TLC made a number of purchases since its acquisition, including 35-agency chain AccuMed Home Health in 2005 (see Eli's HCW, Vol. XIV, No. 37).

Amedisys' largest competitor, Gentiva Health Services Inc. based in Melville, NY, has 350 locations in 36 states, Gentiva says on its Web site.

• Your opportunities to work with quality improvement organizations (QIOs) in their next contract phase may depend on what state you are in.

The QIOs' next statement of work (SoW) is set to begin in August 2008, and a new structure for the contracts has the industry wondering about home health agencies' involvement (see Eli's HCW, Vol. XVII, No. 6, p. 46 and Vol. XVII, No. 7).

"The next SoW does not direct every QIO to work with HHAs," David Schulke, executive vice president of the American Health Quality Association tells Eli. But he adds, "It may be that QIOs in several states will seek HHA partners for their efforts to reduce hospitalizations by improving the transitions of care between hospital and ambulatory care."

Time will tell: It's too early to know which QIOs will apply for funding to do that work, says Schul-ke, let alone who is going to be approved and funded.

• Hospices served by RHHI Cahaba GBA may be seeing trouble with their claims' revenue codes for levels of care. Hospice claims are returning to provider (RTP'ing) with reason code 34927 in error, Cahaba reports on its Web site.

The reason code is supposed to indicate when "the line item date of service for revenue code 055X, 056X, or 057X is not on or after the line item date of service for the associated level of care revenue code (0651, 0652, 0655 or 0656) and prior to the next level of care revenue code," Cahaba explains. But it isn't editing correctly and claims are getting hung up by mistake.

Do this: Until the problem is resolved, "do not report revenue codes 055X, 056X, or 057X," Cahaba instructs providers.

• New York HHAs aren't only worried about federal budget cuts, they are also facing Medicaid budget slashes. Gov. Eliot Spitzer (R) already had proposed payment reductions for Medicaid in 2009, press reports note. On Feb. 10, Spitzer further reduced revenue projections for the year and proposed even more cuts to make up for the shortfall.

Spitzer's administration proposes reducing the increase in Medicaid reimbursement rates for hospitals, nursing homes and home care organizations by 35 percent, according to the New York Post. That's 10 percent more than previously proposed.

"As if the Governor's original cuts didn't pack enough of a blow to home health care, this second swipe undermines efforts, including the Governor's own, to shift the focus from institutional to community-based care," notes Home Care Association of New York State President Joanne Cunningham in a release.

The cuts would strip $108 million from HHA payments in the year, Cunningham points out.

• Gentiva Health Services Inc. reported increasing earnings for the quarter ended Dec. 30. The Melville, NY-based national chain saw an $8.8 million net income on $313.4 million in revenues for the quarter, compared to a $5.5 million profit on $293.1 million in revenues for the same period in 2006.

Medicare revenues in the company's home health segment were up 12 percent over the prior year, Gentiva CEO Ron Malone says in a release.

Gentiva also has extended its contract as CIGNA's home care coordinator. Gentiva's Care-Centrix unit will now furnish home care coordination and delivery to CIGNA Healthcare patients nationwide until 2011, the company notes. Gentiva's former CIGNA contract was set to expire in 2009. Gentiva derives nearly 20 percent of its revenues from the contract.

• Odyssey Healthcare Inc.'s acquisition of VistaCare Inc. has hit a roadblock. An investor that owns 10 percent of Scottsdale, AZ-based VistaCare is urging the company's Board of Directors and shareholders to reject Odyssey's offer as "wholly inadequate." Dallas-based Odyssey has offered $8.60 per share for the company.

The investor, Accipiter Capital Management, alleges that VistaCare management have inconsistencies between internal analysis of the company's restructuring and the information it disclosed to investors, according to a release.

In its earlier first-quarter earnings statement, VistaCare addressed Accipiter's concerns. VistaCare's Board "took into consideration all matters it deemed relevant, including the Company's progress in executing its restructuring plan," the company said in the release. The plan was behind schedule and "it will take further significant time, effort and capital expenditures to achieve a satisfactory level of profitability."

Additionally, "there are substantial execution and market risks associated with the continued implementation of its restructuring plan and continued operation as a standalone business," the release maintains. So VistaCare's Board reaffirmed its recommendation to accept Odyssey's offer.

VistaCare reported net income of $1.5 million on revenues of $60.7 million for the most recent quarter. Odyssey recorded a $1.2 million profit on revenues of $103.7 million for the quarter ended Dec. 31.