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Elizabeth Hogue

CMS has selected five new recovery audit contractors (RACs) and established new rules. RAC audits will undoubtedly resume soon. Performant and Cotiviti were awarded contracts, along with HMS Federal Solutions. A previous RAC auditor, CGI Group, did not bid in the latest round of contracts for RACs. Performant will focus on auditing home medical equipment (HME), home health agency (HHA) and hospice claims.
CMS will continue to pay RAC auditors a contingency fee when overpayments are identified. Providers frequently point out that RACs are incentivized to find erroneous overpayments and these errors have resulted in a multi-year backlog of claims pending appeal, especially before administrative law judges (ALJs). Nonetheless, CMS announced that RAC auditors have recouped $8 billion for the federal government since the audits began in 2009.
Under previous rules, RACs received payments for overpayments they identified in less than 45 days. Under new rules, RACs will now receive payments for overpayments they identify only after providers have an opportunity to appeal through the second level of an appeal process that provides five stages of appeals. As a result of this change, contingency rates for payments to RACs will likely increase substantially, from the current 9.5% to 12%.
Also under previous rules, RACs could review claims that were up to three years old. Under new rules, claims reviewed by RACs cannot be more than six months old.
Audits by RACs have been on "pause" while new rules were developed and disputes about the contracting process resolved. When RAC audits resume, providers can expect more of the same, i.e., a focus on vague eligibility criteria, such as home bound status and terminal illness, which are open to broad interpretation.
RAC auditors are also likely to continue their focus on whether care that was provided was reasonable and necessary. Unfortunately, RAC reviewers often seem to evaluate this issue very differently than providers who are "on the ground," so to speak. It seems reasonable to require RACs to cite national standards of care to support their conclusions that care provided was not reasonable and necessary. Without such support, what constitutes reasonable and necessary care seems to be "in the eye of the beholder," which makes such determinations extremely difficult for providers to address on appeal.
CMS's initial meeting with new RACs is in November. Audits will begin soon thereafter.
As always, the "name of the game" for providers with regard to all types of audits, including RAC audits, is documentation, documentation and more documentation! Although it is an age-old "story" and most clinicians certainly know how to provide appropriate documentation, consistently excellent documentation appears to remain elusive.


After serving our community for the past 170 years, Gulick’s Illiana Medical Equipment and Supply will be closing its doors for good by Nov. 1.

That’s correct, we’ve been serving our community since 1846! My great grandfather owned three drug stores in the Depression. To see the full history on our company, please visit

Our decision to close was not an easy one for us to make. We have been taking care of families in our community for a long time. Some families we have been taking care of for several generations.

The decision to close was pretty much made for us in these last rounds of cuts made by Medicare—24% in January and another 24% in July. We did not think we could provide a quality service or provide quality equipment at these payment rates. There was no way we could survive delivering hospital beds for $75 a month, oxygen concentrators at $90 a month, just to name a few examples. And once Medicare establishes these payment rates, the private insurers are right behind them cutting their reimbursement by more than 48%. At those rates, we could not pay our staff, the workers’ compensation, the liability insurance, the fuel, the vehicle insurance, let alone the power bill!

Our patients are very confused and frightened about where and how they are going to get the same kind of quality service and quality of equipment somewhere else. These patients have come to depend on us for advice when they become ill and advice on where to get other services they may need. I am asked on a daily basis, “What am I going to do when you are closed?” I really don’t have answer for them.

Personally, I have been in the HME business for 38 years and this is the worst that I have seen it. Our Medicare system for HME is very confusing and burdensome for us to navigate, let alone an 84-year-old patient or caretaker or case manager at the hospital. Providers are not sure if we have enough information that supports the medical need, the doctors aren’t sure what to dictate into their notes for equipment—Medicare has made the guidelines too hard to understand, let alone actually get the information in the right format to support the medical need for the equipment. Take the oxygen guidelines, which require copies of the test signed and dated, chart notes with the test results signed and dated, the initial order with the right information signed and dated! Trying to get all this information on a Sunday afternoon is impossible.

Many patients are getting discharged from the hospital with no equipment because the HME provider is being up front with the patient telling them, “I can’t guarantee you that your oxygen or your hospital bed will get paid for.” The patients can’t afford the rental so they go home without the equipment and then 10 days later they are back in the hospital for the same reason they went in. But now the hospital can’t get paid for the re-admit because the patient hasn’t been out for 30 days. So now everyone is losing—the patient is still sick not getting better, the HME provider isn’t getting paid   because there is not enough medical documentation to support the need, and the hospital is not getting paid, either.

As we move forward, the case managers will be calling not one but several HME providers trying to find out which one provides which services and which ones will actually take Medicare as a payment source.

Service will be a thing of the past and quality equipment will also be a thing of the past. Walkers will be falling apart not long after they are issued, beds will start breaking just months into rental, and wheelchairs will have arms breaking and tires falling apart.

We are not the only HME provider closing its doors. Small providers all over the country are closing. These small providers are the backbone of the industry and provide quality care and quality equipment, but soon we will be a thing of the past.

As we close our doors, it truly is the end of an era.

Steve Gulick is the owner of Gulick’s Illiana Medical Equipment and Supply. He has been working in the HME industry for 38 years. You can reach him at

Andrea Stark
reimbursement consultant, MiraVista

Editor's note: In the wake of new market pressures, upgrades, non-assigned claims and cash sales are taking center stage, says industry consultant Andrea Stark. The market has changed and your business should contemplate the suitability of these options, but they are not appropriate in all cases, she says. This is the second in a series of mini-articles that break down the top myths of filing non-assigned claims and leveraging upgrades and cash sales.

Myth #3:  Every claim can be filed as non-assigned.

This is FALSE.

The most significant roadblock to filing non-assigned is a supplier’s participation status with Medicare. You must be non-participating to file a non-assigned claim. Your participation status with Medicare can be verified at using the “find a supplier” tool. Select a product you sell for a zip code located in your service area. If there is an “M” icon next to your company name, then you are a designated participating supplier and you must accept assignment on all your claims through the end of the year. This status can only be changed by sending a letter to the NSC in December that you no longer wish to participate. Participation status is governed at the tax ID level. If you multiple lines of business (hospital, home health, etc.), and any line participates, all lines must participate.

Another obstacle pertains to patients that are dual-eligible (meaning they have Medicare and Medicaid coverage). Medicare mandates assignment for these claims if you choose to service this group of beneficiaries. You do, however, have the right to refuse service.

Another barrier to filing non-assigned applies to pharmacies. Medicare mandates that all covered drugs be filed on an assignment basis. There are very few covered medications under Medicare Part B, but aerosol medications used with nebulizers, immunosuppressive medications for organ transplant patients, oral anti-emetic drugs for chemotherapy patients, and select medications infused through a pump are some of the medications subject to mandatory assignment.

If your company can clear the three hurdles listed above, filing non-assigned may help you cross the finish line.

Andrea Stark
reimbursement consultant, MiraVista

Editor's note: In the wake of new market pressures, upgrades, non-assigned claims and cash sales are taking center stage, says industry consultant Andrea Stark. The market has changed and your business should contemplate the suitability of these options, but they are not appropriate in all cases, she says. This is the first in a series of mini-articles that break down the top myths of filing non-assigned claims and leveraging upgrades and cash sales.

Myth #1:  If an item is not coded, it does not have to be billed.

This is FALSE.

First, every “potentially covered” item has to be billed as a result of federal guidelines in the Social Security Act. If Medicare ever pays for the item, then you have to file the claim, even if you do not expect it to be covered for a specific beneficiary. This is often referred to as mandatory submission of claims: “The Social Security Act (Section 1848(g)(4)) requires that claims be submitted for all Medicare patients for services rendered on or after September 1, 1990. This requirement applies to all physicians and suppliers who provide covered services to Medicare beneficiaries, and the requirement to submit Medicare claims does not mean physicians or suppliers must accept assignment.”

Second, manufacturer product coding is generally voluntary unless mandated by the DME MAC. When coding is voluntary, the onus is on the supplier to make the best coding decision using existing codes and product characteristics. If it looks like a standard walker, acts like a standard walker and functions like a standard walker…then the claim should be filed using a standard walker HCPCS code (even if the vendor has not submitted the item for coding). However, a few items are subject to mandatory coding. Refer to the LCD for instructions and requirements for billing scenarios where mandatory coding is required by the MAC, but has not been secured by the manufacturer. Only in the event that the LCD provides for a statutory exclusion does claim filing become voluntary.

Andrea Stark
reimbursement consultant, MiraVista

Editor's note: In the wake of new market pressures, upgrades, non-assigned claims and cash sales are taking center stage, says industry consultant Andrea Stark. The market has changed and your business should contemplate the suitability of these options, but they are not appropriate in all cases, she says. This is the second in a series of mini-articles that break down the top myths of filing non-assigned claims and leveraging upgrades and cash sales.

Myth #2:  DME suppliers are bound by a “limiting charge” when billing non-assigned, and beneficiaries cannot be charged more than a certain percentage over the Medicare fee schedule allowable.

This is FALSE.

The “limiting charge” concept applies to Part B services like physician visits, but does not apply to durable medical equipment. The limiting charge restricts physician collections to a maximum of 115% of the Medicare fee schedule when they file non-assigned. Physicians are further subject to a participation penalty when they do accept assignment (non-participating physicians receive a maximum of 95% of fee schedule amounts when they do accept assignment). Neither the participation penalty nor the limiting charge apply to durable medical equipment. The CMS publication titled “Medicare Coverage of Durable Medical Equipment and Other Devices” states, “If a DME supplier doesn’t accept assignment, there’s no limit to what they can charge you.”

Wayne Merdinger
executive vice president & general manager, MK Battery

It is a sport played in 27 countries. Thousands of uniquely gifted athletes of all ages compete. Scores of spectators are amazed. It touches hearts and changes lives. Power Soccer, known internationally asPowerchair Football, enables power wheelchair users to pursue their dreams.

MK Battery showcased this exciting sport of skill at Medtrade 2014, where it was wholeheartedly embraced. The United States Power Soccer Association (USPSA), the not-for-profit governing body of the sport in the U.S., needs the help of the HME industry. MK Battery, now in its third year as the primary national sponsor of the organization, provides much-needed funding, public relations and other promotional support, but the USPSA has now taken on its greatest challenge yet as it prepares to host the largest scale international tournament ever.

The USPSA, in partnership with the Federation Internationale De Powerchair Football Association (FIPFA), which Invacare has been sponsoring for many years, is proud to bring the FIPFA World Cup of Power Soccer to the United States for the first time. The tournament, which will be streamed live over the Internet, will be held July 5-9, 2017, in Kissimmee, Fla., and will bring the 10 top-ranked teams from around the world to the largest stage they’ve ever competed on. In 2007, seven countries converged on Tokyo to compete in the first-ever World Cup of Power Soccer. Team USA was victorious and then, in 2011, they won their second consecutive World Cup, this time in Paris. The 2017 team has been training since October 2014 and is eager to defend its title on home turf.

There are approximately 60 organized teams competing in the U.S. at various skill levels. Athletes' disabilities include spinal cord injury, quadriplegia, multiple sclerosis, muscular dystrophy, cerebral palsy, and many others. Disabled military veterans are quite active in the sport, as well.

The look on a player’s face after a brilliant victory, or the emotional response of a parent watching a child compete, never fails to inspire and captivate all who witness the sport. Power Soccer affords those confined to power wheelchairs the opportunity to live their dreams of participating in a team sport, while enjoying the camaraderie and spirit of competition that had previously eluded them. The entire MK Battery organization has embraced our close association and sponsorship of the USPSA and Team USA as a truly inspirational and rewarding endeavor that we are extremely proud to be a part of. 

The World Cup will take a tremendous funding effort so I urge manufacturers and providers to step up and get involved at whatever sponsorship level makes sense for their business. I can assure you that the emotional reward and positive exposure for your company are well worth the investment. For the USPSA, grass roots engagement is also sought. For instance, providers can get involved by forming local teams or by providing “pit stop” facilities to charge batteries and make minor equipment repairs at local tournaments. No matter how you choose to participate, I can assure you that it will be a most meaningful experience for your organization.

To request a sponsorship package, please visit, or contact MK Battery for more information.

I look forward to seeing you at World Cup 2017!

Todd Bryant
president and founder, Bryant Surety Bonds

On March 1, 2016, CMS published a proposed rule that seeks to address a growing number of abuses of the federal healthcare program by certain Medicare providers. The rule* titled “Medicare, Medicaid, and Children’s Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process” includes a number of provisions that directly concern providers and suppliers of Medicare.

These include an increase in requirements for disclosure of affiliations by providers, greater CMS authority to deny Medicare enrollment, and changes to reenrollment and reapplication bars, as well as greater CMS authority in relation to approving or rejecting the Medicare surety bond of a provider.

Requirement to disclose affiliations and events

Under the new rule, providers who seek to enroll for Medicare or revalidate their enrollment will be required to disclose former or current affiliations with individuals who have or have had a "disclosable event". An affiliation is considered:

·      direct or indirect ownership interest of 5% or more in another organization

·      partnership interest in an organization;

·      role as officer or director in a corporation

·      any form of managerial or operational authority at another organization

·      a reassigned relationship as defined under 42 CFR § 424.80 (Code of Federal Regulations).

Events that prompt the need for providers to disclose affiliations with such individuals include:

·      individuals' uncollected debt to Medicaid, Medicare or the Children's Health Insurance Program (CHIP)

·      individuals' denial of participation in Medicare, Medicaid, or CHIP

·      cases of payment suspension under any federal health program at any time

·      revocation or termination of such indviduals' enrollment to any of the above programs.

Increased CMS authority over Medicare enrollment

The rule also provides for greater CMS authority when determining who should be allowed to enroll as a provider of these services. It lists a number of criteria that CMS will utilize in assessing enrollments and deciding whether something constitutes a serious risk.

If a provider does not disclose all such events and affiliations in their entirety, for example, CMS may deny them their enrollment or even revoke it. CMS may further do so if it considers that any of the affiliations or events pose a substantial risk to the integrity of federal health programs. A number of other instances in which CMS may deny, revoke or terminate an enrollment are also listed.

Changes to reenrollment and reapplication bars

As a further measure against system abuses, the rule also proposes a number of significant changes to Medicare reenrollment bars. One of them would be to increase the maximum amount of years of reenrollment bars from three to 10. CMS has said, though, that the maximum "would be reserved for egregious cases of fraudulent, dishonest or abusive behavior."

Under the rule an additional reenrollment bar of a further three years (even when exceeding the maximum) would be placed on those individuals who attempt to circumvent an already existing reenrollment bar that they are subject to.

Finally, a 20-year reenrollment bar is envisioned for those providers who have their enrollment revoked for a second time.

CMS also proposes an increase in reapplication bars to a maximum of three years in instances where applications include false or misleading information or provide information selectively.

Increased CMS authority to reject DMEPOS bonds

One of the important provisions of the rule is that it provides for greater CMS authority in rejecting providers' Medicare surety bonds. This would apply to instances in which a provider's surety has failed to submit a payment to the CMS as part of the surety bond requirement.

According to the proposal, in these instances the supplier would have to obtain a new DMEPOS bond by a different surety to keep their enrollment or to be able to apply for one.

Under the rule, CMS could also reject all bonds by a surety, even those supplied by an unrelated provider, if the surety fails to fulfill its obligations. A caveat to this rule does include that CMS may investigate the circumstances and the reason for failure to pay before rejecting a particular bond or all bonds issued by that surety.

Welcome amendments?

As a Medicare provider, what do you think of the proposed rule? Do you see it as a way to counter abuses to the program or do you think it places too heavy burdens on providers? Let us know in the comments, we'd love to hear your thoughts.

The entire world depends upon creative leadership in all walks of life, from the creative arts to better living. The world of health care is certainly no exception. Where would we be without the medical and scientific brilliance to save lives, prevent illness and find solutions to epidemics? However, those that thrive on creation, innovation and problem solving are often not the ones reaping the rewards of their endeavors. In this world of human beings, sometimes emotions like greed, jealousy, or just plain envy can drive us into unintended consequences.

Each of us is the sum of our environment, those who came before us, our teachers, our associates, and all those accumulated life experiences. It will serve us well to always remember that whatever we create, invent or innovate, it came from all those before and a healthy dose of gratitude can help carry us through frustrations.

My goal herein is to share experience, and in doing so, pay it forward to the future leaders and entrepreneurs who are so vital to our human evolution. So, before you begin the journey of solving the world’s problems by presenting the next great business idea, product innovation or marketing breakthrough, beware! Beware of the scavengers of the creative, the ingenious, and the inventive. These may be companies, brands or just individuals with more resources than those held by the original innovators.

It saddens me to share, but market channels are full of low integrity firms and individuals that prey on bold entrepreneurs. Quality and function, to these scavengers of ideas, are often a low priority. Is it legal, maybe, but stealing an idea and making something cheaper or selling at a lower price usually does not best serve the consumer/patient or the HME channel.

No amount of intellectual property will guarantee protection from those waiting in the shadows. Of course, patents, trademarks, copyrights are all critical issues, but these can be small hurdles for companies who make a living off selling less functional look-a-likes. Unfortunately, many patients are not discerning enough to know they have been duped.

My first experience, as a young, naïve start-up entrepreneur/inventor, was in the business of diabetic care. My business partner, Dr. Douglas Richie, Jr., and I conceived the idea of making socks designed with more protective features for those with at-risk feet, specifically diabetics. Armed with research and considerable credentials, we began the process of convincing the diabetic health community that typical socks were dangerous to those with diabetes. Today the diabetic sock market is approximately $500M. More than 75% of these socks are made with inferior features that provide little or no protection to a diabetic and often even the reverse.

The advent of the Internet’s multi-product shopping sites allow and even invite scavengers to confuse the best deal for the best value. In reality, it is often the mass retailers that play out this unscrupulous strategy, or at least support the laggards who live off the new ideas of others.

The home health markets have stood as a barrier to design copiers, knock-off artists and the like. The HME retail channel has historically stood for offering the best or latest technology in products. I sincerely hope that this continues, even in the face of competitive challenges from the web or mass merchants.

To entrepreneurial creators, I say arm yourself! Arm yourself with knowledge, clear expectations, and a fearless drive to serve your end consumer. Arm yourself with all the intellectual property you can afford but remember that sometimes it is simply best to know how to keep a secret. Don't be afraid to make promises you can keep. The knock-off artists are afraid of knowledge and bold promises. Your new idea will be copied and most likely by much more powerful competitors. Plan your story of differentiation from the start.

To quality-focused health providers/retailers, I say stay true to the companies who innovate and create anew. Expand your knowledge: Know your products, conditions and categories better than anyone else and build into it your business strategy. Health products most often need associated service and education. This is not the strength of mass pharmacy or Amazon.

Making money is great and profit, after all, is the life-blood of creative success. But, long-term success comes from commitment to our consumer/patients and our shared vision.

Be fearless, but be aware! Get ready...then launch that next idea!

Dave Higgins has been in the technical textiles field for more than 35 years, educated in his home state of North Carolina as an undergrad and then at Stanford as a post-graduate. He has served as a top executive for many corporations in the field of health and sports products. Mr. Higgins has consulted with large vendors in product design, development and sourcing. He is known as the creator of the diabetic sock market. Most recently, he is the creator and CEO of a health and sports medicine products business with his patented innovations under the OrthoSleeve brand now widely distributed in the home health markets.

All of us at ResMed are excited about the Brightree acquisition. It supports our long-standing commitment to our home medical equipment customers with whom we have worked for 26-plus years to change the lives of millions of patients with serious respiratory conditions. Brightree’s expertise as a software provider in the post-acute care setting, when paired with ResMed’s therapy solutions and cloud-based infrastructure for respiratory care management, will mean greater efficiencies for our HME customers and improved experiences for the patients we serve together.

We understand that some providers may have questions about how this acquisition will affect them. We are happy to address those questions, and appreciate HME News giving us the opportunity to do so.

After the acquisition closes, Brightree will operate as a separate subsidiary, with a plan to develop robust software integrations that can dramatically increase business efficiencies for our customers. The exceptional service our joint customers have come to expect from both Brightree and ResMed will continue.

ResMed will not have access to individual Brightree customers’ patient data or pricing information. This is not a change, as Brightree will continue to respect the data protection provisions in the existing agreements with its customers. Similarly, Brightree’s pricing and promotional agreements will not change; those provisions will also remain in place. Instead, with input and focus from ResMed, our collective hope is that Brightree will be able to offer even more exciting new software products to make our customers more successful.   

Integrity is one of ResMed’s core values, and that’s also true at Brightree. Our customers can continue to rely on Brightree and ResMed to do what we say we’re going to do. ResMed has carefully guarded patient data in our AirView and U-Sleep data systems, and will continue to do so. Brightree has a similar track record of protecting patient and customer information.  And ResMed has a demonstrable track record protecting customer interests after acquiring the Caretouch and Jaysec resupply businesses. We think we’ve earned your trust and we intend to continue to earn it with how Brightree operates.

Regardless of the situation, at ResMed we firmly believe in and are committed to our core values of ethics and integrity, and it will be no different once Brightree joins the ResMed family.     

Of course, we encourage customers to contact us if they continue to have concerns.

Clint Geffert
Clint Geffert is president of VGM & Associates

If you’re anything like my family, making a visit to the local cinema to watch the new Star Wars film was a must-do. My three boys were fascinated with the movie and characters, just as the original Star Wars had captured imaginations a generation ago. Based on the enormous box office numbers, it’s still a great time to be in the Star Wars business, just as it was when the original movie premiered in 1977.

The original Star Wars debut coincided with the beginning of the modern DME business. The Health Care Financing Administration launched a DME demonstration project in 1976 that helped lay the ground work for the evolutions in wheelchairs and home oxygen, among other assistive technology used outside institutional settings. 

The 38 years between Star Wars’ first and most recent editions brought tremendous growth in HME. There are some surprising statistics for this time period regarding demographic changes in the U.S. 

There were 24 million Americans 65 and older in 1977. Today there are 48 million. That’s an increase of 24 million seniors in a span of 38 years. But in the next 15 years, we’re going to add 26 million more seniors. There will be 3 million more people over 85 in 15 years, five times the number than when Star Wars originally debuted. 

In 1977, 13% of America was obese. Today 36% of Americans are obese and by 2030 that will likely reach to nearly half the U.S. population. Fourteen million more Americans have diabetes than in 1977. Sadly, on many measures of health, our society is much worse off today than back in 1977. 

Today, approximately 90% of our population has health insurance coverage of some type. Perhaps surprisingly, that’s about the same level of coverage as there was back in 1977. But in between, the insured rate dropped to less than 80%. There are 16 million more people with a third-party payer, as compared to a few years ago, which is a huge win for healthcare providers of all types. 

It’s also worth noting that seniors still are not asking, “How soon can I move to the nursing home?” There are very few markets with this type of growth built into the next two decades.

Just as Jedis must combat the forces from the dark side, we in HME face daunting challenges. Reimbursement rates continue to decline, payers are narrowing open panels, and restrictive regulatory requirements cut into our business. HME suppliers must make changes in order to thrive. New revenue sources are needed—from capturing more market share of key referral sources, to offering compelling solutions beyond equipment, to adopting new products and technologies, to implementing cash business, to targeting more cost-effective operations. Make no mistake: These required changes will involve more tough decisions and some pain. But there will be a payoff. Investors are actively buying up HME assets and operations; they see the long-term opportunity.

The Star Wars franchise is alive and well, with even more movies to come. Our HME industry is also alive and well. Sure we face immense challenges, but the future is bright for those willing to mimic Luke Skywalker and persevere, adjust and evolve to meet the needs of the rapidly growing market.