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Bob Dylan probably didn’t have durable medical equipment (DME) in mind when he sang “The times they are a-Changin.” But that memorable refrain could easily apply to Medicare’s DME competitive bidding program (CBP), which will implement a brand new process for bidding this June.
With big changes to the competitive bidding program fast approaching, it is vital for medical equipment providers and suppliers to understand how the new process works so they can prepare to place bids that promote both maximum patient access and industry sustainability.
What’s changed

It is well known that the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) requires Medicare to replace the current fee schedule payment methodology for selected DMEPOS items with a competitive bid process. In early March, the CMS announced plans to consolidate the competitive bidding areas (CBAs) included in the Round 2 Re-compete and Round 1 2017 DMEPOS CBP into a single round of competition named “Round 2021.”
Key changes include:

  • Use of the “clearing price” to set rates: The single payment amount (SPA) for a lead item will be equal to the maximum bid submitted for that item by bidders whose lead item bids for the product category are equal to or below the pivotal bid for that product category in a CBA.
  • Lead-item pricing: To allow for the use of what is essentially a “clearing price” methodology, suppliers will submit a single bid for a lead item in the product category. The SPA will be calculated for that lead item in the CBA based on the highest amount bid within the winning bids. The SPAs for non-lead items will be based on the relative difference in the fee schedule amounts for the lead and non-lead items.
  • Bid surety bonds: Bidders must obtain a $50,000 bid surety bond for each CBA for which they submit a bid.
  • Use of SPAs to set rates in non-CBAs: CMS also uses the SPAs to set the rates in non-CBAs that are not rural but will set the rural non-CBA rates at what is essentially the SPA plus 10% in rural areas. This means the bids for CBAs will have a direct impact on the rates in non-CBAs.


To help providers get up to speed, a group of industry leaders collaborated to launch an online educational resource: The website—the product of a collaboration between the American Association for Homecare, the Council for Quality Respiratory Care, the Healthcare Nutrition Council and the VGM Group—serves as a complementary resource to the Competitive Bidding Implementation Contractor (CBIC) website.
Suppliers and prospective bidders nationwide can use the website’s powerful calculators to estimate how lead item pricing may impact costs and compare them to an approximation of how the SPAs compare to the current 2019 Medicare rates. The calculator will also show how a bid would affect the rates in non-CBAs if it became the SPA. Moreover, the website will also serve as a platform for webinars and events intended to educate prospective bidders about the CBP in the lead-up to the bidding round.
Since bidding is no longer business as usual, all providers who plan to compete should visit and the CBIC website to learn more about how these changes will impact them. And with the bidding period set to launch in June, time is of the essence.
So, DME providers, get ready. As Bob Dylan famously sang, “If your time to you / Is worth savin' / Then you better start swimmin' […] for the times, they are a-changin’.”
Cara Bachenheimer is Head of the Government Affairs Practice at Brown & Fortunato and General Counsel for the American Association for Homecare. Mark J. Higley is Vice President of Regulatory Affairs for VGM Group, Inc. Robert Rankin is Executive Director of the Healthcare Nutrition Council. Dan Starck is Chair of the Council for Quality Respiratory Care.

Several million Americans rely on Medicare as their main source of health insurance coverage, particularly those over the age of 65. Through Medicare, several options are available for how medical bills for things like prescriptions, exams, tests and medical equipment are paid for by the federal government or the individual insured under the plan. When it comes to durable medical equipment, such as blood sugar monitors, canes, wheelchairs and nebulizers, individuals covered under a Medicare plan often work with special suppliers to get the items they need to remain healthy.

Individuals or companies that work as durable medical equipment suppliers must meet specific requirements to comply with Medicare laws and regulations. One of these requirements, a durable medical equipment surety bond, relates to the prevention of fraud against patients. Here’s what you need to know as a durable medical equipment supplier and your surety bond requirements.

What is a durable medical equipment surety bond?

A durable medical equipment surety bond is a federal surety bond required under CMS. Any supplier of durable medical equipment, including orthotics, supplies, and prosthetics, must have a bond for each location in which they utilize Medicare billing. The purpose of this surety bond is to reduce fraudulent billing of Medicare, protecting the system as well as its patients.

When a supplier has a durable medical equipment surety bond, a claim against a billing practice is submitted to the bond or surety company to help cover financial losses or other damages. The bond helps create a foundation of legitimacy for suppliers while safeguarding the Medicare system from erroneous charges or billing over time.

How much is required?

The surety bond requirement for durable medical equipment suppliers went into effect on a federal level in 2009, as published in the Federal Register. The amount of the bond is no less than $50,000 per location where billing to Medicare takes place. Each supplier is required to have this amount of a surety bond to ensure it complies with the law.

Some medical equipment suppliers are exempt from the surety bond requirement, however. Those that are government-owned, state-licensed personnel operating private practices with custom orders, and some physicians and non-physician providers are not required to have the same federal surety bond.

How to get it and cost

Securing a durable medical equipment surety bond for your supplier business is not a difficult task. However, it does require you to work with a reputable surety agency that understands the requirements set forth for suppliers that bill through Medicare. Each surety agency will have its own process for getting a surety bond, but they all begin with an application that includes details about the business, the amount of the bond, the state in which the business operates, and your credit history.

Surety agencies look into your financial track record because the bond itself is a form of extended credit. If you have less than ideal credit, you can still get a durable medical equipment bond, but the cost of that bond may be higher. Regardless of your financial history, a durable medical equipment surety bond is priced as a percentage of the total bond amount, so the expense is often minimal to suppliers.

Getting a surety bond for your durable medical equipment supplier business is a crucial component of operating legally. The process is simple, but it is necessary to understand this requirement before working with Medicare patients to meet their medical equipment needs.

Eric Weisbrot is the chief marketing officer of JW Surety Bonds.

Imagine you are having a problem with your car. You need it looked at, so you take your car to an expert to get it checked out at and diagnosed. You know you have problems with your car, but you want someone else to assess your car’s problems.

The mechanic looks at your car and he is immediately puzzled. There are so many oddball problems with your car. The expert wants to know how this car came about. You tell him: “At one time this car ran great, but over the years, so many changes have been made to this vehicle, it now has a lot of peculiar issues. The vehicle just doesn’t do what it used to do.” You reveal to the expert that you got this car at CMS Auto. “Ah, yes!” the expert says. “I know this vehicle very well.” The expert grabs the published service bulletins and begins to read them to you.

First of all, there’s a bulletin about the tires. It says here, “Even though all four of the vehicle’s tires appear to be flat, they are only flat on one side. Most all the tires appear to be mostly round. There is no need to replace the tires.”

The next bulletin is about a loud noise coming from the motor. It says, “In the event a loud noise is heard coming from the motor, the recommended fix is to turn up the radio; once the radio is turned up, the engine noise goes away.” There is no need to repair the engine.

Another bulletin addresses multiple warning lights illuminated on the dashboard. It recommends “disconnecting the lights or covering the lights with electrical tape so drivers will not see the warning lights.” No need for repair.

As funny as this story sounds, it is not far from fiction in regard to CMS’s response to the DME competitive bidding program and the woes providers have faced for a few years now and in the newly released ESRD Final Rule. As providers, we keep saying this vehicle (competitive bidding and the rates that are applied to most of the country) is broken down and needs major repair. CMS continues to say nothing is wrong—after all, the tires are only flat on one side.

Auction theory expert Peter Cramton said it was “a never before seen” bidding process. It makes little sense and creates several adverse incentives that, ultimately, impose unnecessary costs on patients, Medicare and DME providers. Are we really saving money?

The Medicare bidding process is hurting patients, according to a new study from the Pacific Research Institute, a public policy think tank based in California.

“The current Medicare bidding process, while well-intentioned, hurts patients by denying them access to medically-necessary supplies and equipment,” Wayne Winegarden, MD, senior fellow in business and economics at Pacific Research Institute and author of the study, said in a statement. “The process has led to diabetes patients not receiving testing supplies and COPD patients not receiving home oxygen when needed.” This is from an outside expert.

In the markets where CMS implemented the CBP, the NMQF study found that there were 42 additional deaths and twice as many hospitalizations as in unaffected markets. Clearly, the NMQF study found that CMS’s report (the one that said everything was fine) was incorrect. CMS wants us to cover these warning lights with duct tape, but it’s not going to work!
Even with all this research that showed the CBP was harmful to beneficiaries with diabetes, CMS implemented the program nationally for mail-order supplies and supplies obtained from retail channels. This move eliminated more than 98% of suppliers that provide mail-order diabetes supplies. Do we want more small businesses to close? DME companies are closing all over the country.

Information obtained through the Freedom of Information Act retrieved by DME industry advocates from shows the estimated number of DME suppliers and locations have dropped by nearly 38% nationwide. As I have stated before, I believe that number to be much higher due to the number of suppliers who chose to sell out to larger companies.

CMS clearly admits there are problems with the current CBA and current reimbursement rates, when they issued a final rule that updates payment policies and rates under the ESRD Prospective Payment System (PPS). The rule also included changes in the current CBP. These changes do not address the immediate need for a rate increase.

AAHomecare President and CEO Tom Ryan deemed the Final Rule a net positive that reforms future rounds of the bid program and offers relief to rural providers. He also noted that it reflects recognition on CMS’s part that the bid program has problems and a willingness to work with the HME industry to fix it. However, the work isn’t done, he said.

The final rule does not contain two provisions that both HME stakeholders and many members of Congress supported and urged CMS to add to the final rule: The broader application of the 50-50 blended rate relief to all non-bid areas and retroactively applying Consumer Price Index (CPI) adjustments in CBAs based on the increase in the CPI from 2013 through 2018. How does CMS ignore Congress?

The current CBP contracts will end on Dec. 31st, after which any Medicare credentialed DME provider may provide DME for Medicare beneficiaries. The idea of contracts means that contracted providers would have potentially more patients to provide for, thus improving their margins. On Jan. 1, 2019, the potential pool of Medicare beneficiaries will have to be spread among many providers at razor thin or even negative margins.

On one hand, CMS admits there are problems with the CBP; on the other hand, CMS failed to address the immediate problems with the current rates that are unsustainable per many industry experts and Congress. I believe many DME companies are hanging on by a thread, hoping the changes the industry was looking for would be contained in the ESRD Final Rule. The final rule leaves me scratching my head wondering why CMS is allowing pricing generated under this clearly flawed program to stay in effect. Congress clearly sees the issue with the current system and has requested rates for DME to be increased. I fear many more DME companies will close their doors if relief is not provided now.

The question prevalent on the minds of many DME providers is this: Industry experts, outside experts, DME providers and even Congress agree the current rates are unsustainable; why is CMS taking so long to address obvious problems? Currently, CMS’s plan is to take the next two years to fix the CBP issues that may or may not address the current rates? Our industry clearly needs to get the attention of Congress to pass legislation that force changes. Asking and suggesting is not enough.

The DME industry, Congress and industry experts agree this vehicle (competitive bidding) is broken down and needs major repairs. CMS continues to say nothing is wrong; after all, the tires are only flat on one side.

Jonathan Temple is the owner of OxyMed in Birmingham, Ala.

By Andrea Stark
reimbursement consultant, MiraVista, LLC

In the recent ESRD Proposed Rule, CMS conveyed their intent to freeze reimbursement in Competitive Bid Areas (CBAs) using the single payment amounts (SPAs) when the program ends on Dec. 31/2018.* CBAs encompass the most populous areas of the country and have the greatest impact on Medicare spend dollars.** In recent conversations with industry legal experts, MiraVista put forth three central questions:

  • Does CMS have the authority to freeze SPAs without contracts?
  • If not SPAs, then what is the reimbursement rate?
  • Is the CMS proposal good or bad for suppliers?

Does CMS have the authority to freeze SPAs without contracts?

CMS sets SPAs by ranking bonafide bids, determining a minimum number of suppliers to meet capacity for an area, and identifying the median bid price from this narrowed list. After CMS calculates the SPA, they offer contracts to suppliers. Upon receipt of the contract, suppliers have the right to accept or refuse the contracts, which become binding to both parties upon acceptance.

Per existing regulations, if CMS allows these contracts to expire, then no supplier can furnish competitive bid products. 42 CFR 414.408 establishes payment rules for competitive bid programs. §414.408(e)(1) states “Except as provided in paragraph (e)(2) of this section, all items that are included in a competitive bidding program must be furnished by a contract supplier for that program.” The four exceptions in (e)(2) relate to grandfathering, Medicare as a secondary payer, beneficiaries outside a CBA, and physician/hospital type exemptions, which do not apply to CMS’s proposal. Furthermore, §414.408(e)(3)(i) states unless an approved exception applies, “Medicare will not make payment for an item furnished in violation of paragraph (e)(1) of this section.” Together, these two citations put CMS in violation of the regulation if they make payment to non-contracted suppliers.

The regulations do not have a specific section dedicated to routine contract expiration. 42 CFR 414.423, however, addresses the appeals process for breach of a DMEPOS competitive bidding program contract, and it contains an applicable section “effect of contract termination.” If contracts expire, we believe the provisions of the termination clause apply in §414.423(l)(2)(i), “All locations included in the contract can no longer furnish competitive bid items to beneficiaries within a CBA and the supplier cannot be reimbursed by Medicare for these items after the effective date of the termination.”

Based on the above regulations, if a competitive bidding program cannot be administered without contracts, then CMS has two choices:

  • Extend contracts, or
  • Acknowledge the competitive bidding program is no longer in effect.

CMS did not even suggest contract extensions in the proposed rule. Without contracts, however, the regulations do not permit CMS to make payments to any supplier for competitively bid products in a competitive bidding area.

If CMS chooses to negotiate an extension with contracted suppliers, they could maintain compliance with the regulations.

Alternatively, if CMS acknowledges a lapse in the competitive bid programs in these areas, then CMS cannot use the payment rules for competitive bid programs located at 42 CFR 414.408. 42 CFR 414.408(b) states, “The single payment amount calculated for each item under each competitive bidding program is paid for the duration of the competitive bidding program and will not be adjusted by any update factor.” §414.408 only governs payment rules under a competitive bidding program.

If not SPAs, then what is the reimbursement rate?

§414.408 does not apply if the competitive bid program is not in effect. Instead, the general payment rules (using traditional fee schedules for rural and non-rural areas) at 42 CFR 414.210 must govern. There is already precedent for reinstatement of general payment rules during gaps between competitive bid programs. In July 2008, CMS awarded Round 1 contracts and then terminated them two weeks later. The CBIC website summarizes the timeline as follows:

“The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) required the competition for the first phase of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program to occur in 10 areas in 2007. Round 1 of the program was implemented in 2008 for two weeks until the contracts were terminated by subsequent law. The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) temporarily delayed the original Round program, terminated the contracts that were in effect, and made other limited changes. As required by MIPPA, the Centers for Medicare & Medicaid Services (CMS) conducted the supplier competition again in 2009, referring to it as the Round 1 Rebid.”

MIPPA created a gap between competitions from July 15, 2008, until January 1, 2011, when the Round 1 Rebid SPAs took effect. During the two-and-a-half-year period, the general payment rules and prevailing DME fee schedule reasserted itself over the briefly contracted SPAs. If CMS does not perpetuate the contracting process beyond Dec. 31, 2018, contract expiration should invoke another gap.

Based on our preliminary research, current regulations do not permit CMS to administer competitions without contracted suppliers. If the programs end and the general payment rules take precedent, CMS will have to recalculate rates for the traditional fee schedule because of the lapse in competitions.

The Patient Protection and Affordable Care Act incorporated new pricing methodology to 42 CFR 414.210 that averages SPAs across eight geographical regions. This methodology is referred to as national pricing. Specifically, §414.210(g)(4) requires payment adjustments for items and services included in competitive bidding programs that are no longer in effect:

“In the case where adjustments to fee schedule amounts are made using any of the methodologies described, if the adjustments are based solely on single payment amounts from competitive bidding programs that are no longer in effect, the single payment amounts are updated before being used to adjust the fee schedule amounts. The single payment amounts are updated based on the percentage change in the Consumer Price Index for all Urban Consumers (CPI-U) from the mid-point of the last year the single payment amounts were in effect to the month ending 6 months prior to the date the initial fee schedule reductions go into effect. Following the initial adjustments to the fee schedule amounts, if the adjustments continue to be based solely on single payment amounts from competitive bidding programs that are no longer in effect, the single payment amounts used to reduce the fee schedule amounts are updated every 12 months using the percentage change in the CPI-U for the 12-month period ending 6 months prior to the date the updated payment adjustments would go into effect.”

The above provision requires CMS to periodically readjust and increase the national fee schedule after adding in a CPI increase to historical SPAs. This process continues until a new competition takes effect.

National pricing created a bifurcated DMEPOS fee schedule with one set of rates for rural and non-contiguous areas, and another set of rates for urban (aka non-rural) areas. The national rates in rural and non-contiguous areas are presently enjoying a 50/50 blended rate increase through Dec. 31, 2018, due to the Interim Final Rule (CMS-1687-IFC) advanced by CMS. The ESRD Proposed Rule suggested a 24-month extension of this reprieve through Dec. 31, 2020.

The ESRD Proposed Rule is also soliciting comments on whether CMS should extend similar rate reprieve to urban areas. CMS’s proposal to create a new SPA-based fee schedule for former bid areas would exclude these areas from potential rate adjustments.

Is the CMS proposal good or bad for suppliers?

This is a great question with no easy answer.

On the surface, many beleaguered suppliers are simply relieved at the prospect of CMS advancing much needed reform. Nonetheless, freezing the SPAs not only ignores existing regulations but also the mounting effects of a flawed bidding program.

Proceeding without contracts is likely to exacerbate access problems in bid areas. The industry warned CMS of an excessive number of contracted offers to companies without a local presence. When contracts expire, so does the obligation to service bid areas under penalty of contract breach. If rates do not support profitable service in these most populous areas, CMS will unwittingly escalate access deterioration. There will be nothing to hold non-contracted suppliers, or draw new suppliers, to these dense and unprofitable markets.

On the other hand, if CMS temporarily ends the bid program and engages the general payment rules it will be a mixed bag for many suppliers. There are 130 bid areas and thousands of HCPCS-SPA combinations impacted by this alternative. National pricing averages these thousands of individual SPAs across 8 regional geographic areas. This process results in both net increases and decreases to individual SPAs. SPAs for stationary oxygen, however, are most negatively impacted due the budget neutrality reductions (aka double-dip cuts) imposed after the regional averages are calculated. In all but two bid areas (Honolulu, HI and Chester, SC), suppliers would see a rate decrease for stationary oxygen pricing compared to current SPAs.***

We expect CMS to publish a final ESRD rule in the coming weeks, but at the time of print, CMS had not posted the document. With the final rule, we expect CMS to finalize significant contracting reform that will apply pivotal bids over median bids. This single change should deliver sustainable rates in future competitions and to the national fee schedule. Until these changes take effect, current reimbursement rates remain flawed and unsustainable.

Andrea Stark is a reimbursement consultant for MiraVista. Reach her at

Article Footnotes:
* CMS also suggested an immaterial, single-year consumer price index (CPI) increase for inflation in these bid areas. To put the CPI increase into perspective, the 2018 inflation factor increased fees by about 1.1%. This is a very small increase. As such, at each reference to the CMS proposal to freeze the SPAs, we do not specifically call out the CPI increase proposal due to the immateriality of the increase.
** CBAs cover the 110 largest metropolitan statistical areas within the country. According to census data, approximately two-thirds of the US population reside in these areas. MiraVista requested specific Medicare beneficiary and utilization data from the Competitive Bidding and Implementation Contractor, but was advised this data is not publicly available without a Freedom of Information Act (FOIA) request.
*** E1390 SPA averaged $76 across all CBAs with a low of $70 and high of $90. National Pricing averages $70 across the same geographic areas with a low of $65 and high of $121.

Kelly Turner
director, People for Quality Care

Advocacy efforts are on the rise, as we near the Washington Legislative Conference on May 23-24 and the industry pushes for relief for non‐bid areas, structural reforms to the competitive bidding program, and a critical exemption of CRT accessories from bidding‐derived pricing. This May, the HME industry will take The Hill by storm with hundreds of congressional office visits and a meaningful plea for elected officials to take a stand for homecare patients and those who serve them.

One thing is clear: this is not a payment issue—this is a people issue. Millions of Americans rely on the HME benefit each year to meet their medical needs and safely maintain their independence at home.

However, faulty government policies are thwarting access and causing irreparable harm to this vulnerable patient population.

It is critical that our legislators understand the dire situation across the HME landscape, and one of the most powerful tools we have in the process is the voice of the consumers—their constituents—who are suffering as result of their inaction.

Consumer advocacy group People for Quality Care (PFQC) has been a cornerstone in having more than 5,000 end users, family caregivers, and clinicians reach out to Congress about HME issues over the past few years alone. Armed with personal stories, they have left an indelible impression within the halls of Congress. Now, stakeholders are asked to “double down” on industry efforts by expanding the reach of PFQC—which is fearlessly telling it like it is and providing irrefutable personal evidence of the damaging effects of these poor government policies on their daily lives. 

Providers need to empower their patients and community to get involved and join the fight and share PFQC’s website,, where they can learn about the issues and take action.

Turnkey educational resources are also available on the website for HME companies to print and share with their customers, written in everyday language geared toward the public. Industry stakeholders can also share PFQC’s social media posts across their preferred networking platforms to reach their customer base in the digital space.

By connecting customers to these resources, we can double down our collective advocacy efforts and make a difference. Together, we can. Together, we will!

Kelly Turner is the director of People for Quality Care, a division of VGM Group, Inc.

I recently wrote an article entitled "Court Says No Recoupment Until After ALJ Hearings."  This article was about a court decision in which the judge said that recoupment of an extrapolated overpayment as a result of a ZPIC audit could not begin until after ALJ hearings were held. This article is reprinted below in italics.
Now comes potentially additional good news!
As you may recall, the American Hospital Association (AHA) and others sued the U.S. Department of Health and Human Services (HHS) in December 2016. American Hospital Association v. Alex M. Azar, Civil Action No. 14-CV-851-JEB, (U.S. District Court for the District of Columbia.) As a result, a federal judge ordered HHS to clear pending appeals before Administrative Law Judges (ALJs) incrementally by the end of 2020.
HHS asked the U.S. District Court for the District of Columbia to reconsider this order but the request was denied in January 2017.
HHS appealed the decision. The U.S. Appeals Court for the District of Columbia overturned the order in August 2017. This means that the lower district court could decide whether, as HHS claimed, it would be impossible to comply with the order's timetable for reducing the backlog.
In February 2018, AHA asked the district court to reinstate the deadline for clearing the appeals backlog. AHA argued that HHS "has not shown it is impossible to clear the backlog-minus, perhaps, some claims with serious program-integrity concerns-within five years."
Now the judge is getting impatient!
The judge in the district court has asked AHA to "elaborate and expand upon the recommendations it has made over the course of litigation for clearing the backlog by June 22."
What are AHA's recommendations?
AHA's recommendations are laid out in a "Reply Memorandum of Law in Support of Plaintiffs' Cross-Motion for Summary Judgment" dated February 15, 2018.
First, AHA points out that the Court has already ordered HHS to clear the backlog. When HHS argues that it is "impossible" to clear the backlog, it really means "prefer not to."
AHA suggests the following ways HHS can resolve the backlog:

  • Further curtail the RAC Program;
  • Do more to settle outstanding cases;
  • Delay repayment of denied claims; and
  • Toll interest accrual of backlogged appeals for all periods for which  beyond the statutory maximum of 90 days.

The deadline for HHS to respond to AHA's suggestions is in July.
Stay tuned! Providers need relief and HHS currently has no incentives to provide it! It's past time to fix it!

Court Says No Recoupment Until After ALJ Hearings
The U.S. Court of Appeals for the 5th Circuit issued an opinion on March 27, 2018, in Family Rehabilitation, Inc. v. Azar, No. 17-11337 (5th Cir. Mar. 27, 2018) that says that monies cannot be recouped from a home health agency until after hearings have been conducted by an administrative law judge (ALJ).
Family Rehabilitation received a notice of overpayment from the Medicare Program in the amount of $7.6 million. It appealed under what the Court described as "Medicare's Byzantine four-stage administrative appeals process" and "the harrowing labyrinth of Medicare appeals." After requests for reconsideration were denied, the agency was subject to recoupment. The agency filed timely requests for hearings before an ALJ.
The notice of overpayment was based on a ZPIC audit conducted in 2016 of 43 claims. An extrapolation resulted in the $7.6 million overpayment.
ALJ's are required by statute to hear cases and issue a decision within 90 days. "Yet," said the Court "an ALJ hearing is not forthcoming-not within 90 days, and not within 900 days." In fact, it will likely be at least another three to five years before an ALJ hears the agency's appeals.
Based on the above, the agency sued for a temporary restraining order and an injunction to prevent the Medicare Administrative Contractor (MAC) from recouping overpayments until administrative appeals are concluded. The agency says that it will be forced to shut down due to insufficient revenues long before the appeals process is complete. The agency claims that the delay (1) violates its rights to procedural due process, (2) infringes its substantive due-process rights, (3) established an "ultra vires" cause of action and (4) entitles it to a "preservation of rights" injunction under the Administrative Procedure Act, 5 U.S.C Section 704-05.
The lower federal district court said that it lacked jurisdiction because the Agency had not exhausted administrative remedies. The Agency appealed to the appellate Court.
Ordinarily, providers may file suit in the district court only after either (1) satisfying all four stages of administrative appeal or (2) after providers have escalated claims to the Appeals Council after ALJ hearings and the council acts or fails to act within 180 days.
In considering the agency's request, the court first noted that full relief in this case cannot be obtained at a post-deprivation hearing because the agency will be closed long before ALJ hearings are held if recoupment occurs. The court found that the agency may suffer irreparable harm in the form of going out of business and disruption to Medicare patients. Consequently, the court could decide the case.
The court went on to say that it cannot rule on the substance of the agency's appeals but providers may request that benefits be maintained temporarily until statutory and constitutional procedures have been followed. Since the agency asked for temporary suspension of recoupment until hearings are held as opposed to permanent reinstatement of benefits, the court can rule on the agency's request.
Finally, the court noted "HHS's ostensibly Sisyphean attempts to combat the problem" of a backlog of appeals before the ALJ.
Consequently, the court reversed the decision of the lower court and remanded the case back to the lower court.
This case is definitely one for providers to watch! It now looks possible for providers to avoid recoupment in the face of multi-year wait times for hearings before ALJ's!

Elizabeth Hogue is a private practice healthcare attorney in the Washington, D.C., area. She can be reached at

Laura Williard
vice president of payer relations, AAHomecare

In December 2016, Congress passed wide-ranging healthcare legislation popularly known as the Cures bill that expedited the implementation of a requirement that the federal portion of Medicaid reimbursement to states for HME cannot exceed what Medicare would have allowed for these items, in aggregate, beginning on Jan. 1, 2018.

CMS provided its first update to Medicaid directors via a webinar in December, but it failed to include information needed for states to understand how to implement the new requirements. They released additional information less than a week before the Jan. 1 implementation date that confirmed that these requirements do not apply to medical supplies or O&P products and noted that states do have flexibility in setting rates to ensure access for their patients. The guidance gave states an option of basing Medicaid rates on Medicare’s lowest fee schedule or competitive bid rates for the state (which they described as the “simplest” option), or to conduct a comparison using both rate and unit utilization data to calculate the aggregate reimbursement under Medicare for those same items to show that the state payments are less than the federal allowable.

Many in the DME community (myself included) were taken aback by CMS’s original deadline of Dec. 31 for states to determine their approach, especially given that their guidance was issued on Dec. 27. AAHomecare quickly pushed back on that un-meetable deadline and helped convince CMS to issue an update giving states the time they needed to assess their options. We also encouraged CMS to promptly publish a listing of the codes affected, which has still not occurred. However, AAHomecare received a copy of the list of codes from CMS and provided that to Medicaid directors and the state and regional DME associations for distribution. CMS is still providing this to states as they request it.

Since that time, AAHomecare has been working with leaders at state and regional associations to help convince state Medicaid officials to analyze their spending for the appropriate coding and, if under the aggregate, to not perform any rate reductions. If states are over the aggregate amount, AAHomecare is encouraging them to make sure that cuts are limited to the 244 codes affected. As of this writing (March 8), we’ve received confirmation that 10 states are not changing their rates: Florida, Georgia, Hawaii, Michigan, Minnesota, North Carolina, Pennsylvania, South Carolina, Tennessee, and Texas. Nine states have made the decision to move to Medicare rates but AAHomecare and state associations are hopeful to change the outcome on these, as we are still working with five of those states.

We’re currently working closely with stakeholders in Ohio, Missouri, North Dakota, Colorado, and South Carolina to encourage those still-undecided states to adopt the aggregate pricing approach. In these states, we want to make sure that state officials have a clear understanding of their options. We’ve also shared our recent studies that show that DME suppliers are already operating at razor-thin or even negative margins on many products and illustrating the threat to patient access.

Challenges remain in many other states that are still analyzing their data using tools and guidance provided by CMS. Connecticut Medicaid officials, for example, just announced their intention to adopt Medicare pricing across all DME, O&P and supplies codes, going beyond the scope of the new provisions. The state’s intention to implement drastic cuts of 50% to 60% with just 30 days notice and without any consultation of the DME community is even more troubling. AAHomecare has joined the Home Medical Equipment and Services Association of New England and NCART in asking for a 90-day delay to make sure Connecticut officials have all the information available to make a better-informed decision. Other states have also used this legislation as a platform to evaluate and reduce their entire fee schedules despite efforts by stakeholders to convince them of the access to care issues.
Our state association partners have done terrific work in making sure that Medicaid officials understand their options under the new requirements beyond CMS’s self-described “simplest” approach, as well as giving them a clear picture of the potential impacts. For me, it’s been rewarding to work with dedicated state associations to fight back, and AAHomecare will continue to support their efforts to secure smarter and sustainable Medicaid reimbursement policies wherever we can. hme

Laura Williard is vice president of payer relations for AAHomecare. Reach her at

Home for the holidays takes on many meanings this time of year. Families and friends gather from near and far to celebrate the season with loved ones. Stories shared. Songs sung. Food and festivities are all around. College students return home after working hard all semester. Babies are joyfully introduced at holiday parties. Military personnel come back for holiday leave after serving our country so well.

This is a magical time of year where people unite and commemorate all that was and all that is to be.

Thanks to home care, millions of Americans are able to be home for the holidays and spend this special time with loved ones. Technology advancements enable more people to meet their medical needs from home instead of having to rely on institutional care. Walkers, wheelchairs, home oxygen therapy, diabetic supplies, and so much more all play an important role in empowering people to live safely, comfortably, and independently at home now and throughout the year.
Everyone should have the choice to come home, be home, stay home for the holidays.

That is why People for Quality Care and companies who provide home medical equipment, services, and supplies have been working hard to make sure the ability to live out this choice is not lost.

Adequate insurance and Medicare funding is essential for home care to remain a viable option for seniors and people with disabilities, and acute and chronic conditions. People should have freedom of choice in who they get their medical care and equipment from. Hometown companies should have the opportunity to continue meeting the needs of their communities. And people should have every opportunity to be home for the holidays with the equipment and care they need.

This holiday season, take a moment to ask your member of Congress to support legislation that will help seniors and many more stay home for the holidays.

Call Congress today and ask them to support H.R. 4229, the Protecting HOME Access Act of 2017. The Washington, D.C., switchboard is happy to connect you at 202‐224‐3121. You can also visit People for Quality Care to learn more and to send a letter to Congress about this important issue.

Kelly Turner is director, People for Quality Care, a division of VGM Group, Inc. She can be reached at

Editor’s note: Kelly and Lisa wrote this for end users. As HME providers, this is a great tool that you can use to inform your patients and customers to advocate for themselves and, in turn, your businesses.

Imagine this: your HME company has closed, is no longer taking Medicare patients, is asking you to pay up front because they no longer “take assignment,” or you’re having fewer product options or are waiting longer for deliveries and service. You’ve called Medicare and/or Medicaid and gotten the runaround.

So, what’s your next step?

Why disability and senior advocacy is needed

Many HME companies that once have provided services and equipment to people with disabilities have gone out of business because of changing federal Medicare regulations. Poor policies with inadequate funding for HME have caused more than 40% of these traditional HME companies to go out of business or stop accepting Medicare entirely.

Others have had to significantly change the way they do business, due to the unsustainably low rates Medicare reimburses them. In many cases, these companies can no longer provide the same services and equipment as they did in the past or are having to turn to the individual who needs medical equipment to cover the differences in the cost of the equipment and the low amount that Medicare will pay.

Across the nation, this is causing decreased access for medically necessary equipment and services for people who need them, or forcing the individual to pay out of pocket to get what he or she needs, instead of being able to use their Medicare benefit.

Kelly Turner at People for Quality Care says, “With no other recourse, the individual has to go without or spend more of his or her own money, which they may or may not have, to get what they need. Often the person has to make a decision, ‘Am I going to continue to try and find someone to help me, or am I going to give up and not get the service or equipment I was told I would receive from Medicare?’”

These unintended consequences have a significant impact on overall health care and spending, as home care is a cost-effective and preferred alternative for most individuals.

How you can self-advocate for your health care using videos

The viral power of video is staggering. How many videos have you seen on social media that have opened your eyes about people with disabilities? In this video, produced by Cure Medical, My ThisAbled Life’s Andrew Angulo shares his take on the value of selfie videos, in terms of how your personal story can change lives, laws and perceptions:

Andrew says, "I'm just someone who experienced a life altering accident in June of 2009 and I want to share the experience of my everyday situations through silly shorts of my daily life as a photographer, film maker, action superhero and a regular Joe. In a chair. Doing stuff."

People love what Andrew shares! More than 450,000 people have watched his videos on Youtube, and the number keeps growing every day.

Lights, camera, action! Share your own story

Not sure how to begin? Or what you should say when it comes to talking about your own personal experience?

Don't worry, you don't have to be a pro! Simply use your cell phone to create a quick video that talks about your healthcare concerns and why your friends and family should support you in asking for better access to Medicare benefits for people with disabilities.

Your video doesn't have to be long. It doesn't have to be complicated or professionally produced. It just has to be honest, from your point of view, to capture the hearts and minds of people in your community.

Take a look at this one, for example, filmed on the fly and on-the-go by the Rollettes, sharing their experience with United Spinal's Roll on Capitol Hill:

How PFQC can help

PFQC believes in the power of one. Each person has a voice, and when those voices come together to educate legislators about their problems accessing HME, the wheels start rolling, and change can take place. Kelly says the first step in evoking change is, “To put the individuals having problems with obtaining the proper medical equipment, supplies and services directly in touch with their legislators in Washington.”

PFQC encourages people to reach out to their legislators not only through emails, but also through phone calls, Twitter, Facebook and all the vehicles available to them to let those they’ve elected know the problems they’re having receiving the products and services that Medicare is supposed to be providing for beneficiaries.

“Our key initiative at PFQC is to make sure that beneficiaries who aren’t having access to home medical equipment and services get connected to their legislators,” Kelly says. “They can explain to those legislators on a personal level what their issues are and ask their legislators to help fight for changes that will protect access to the HME benefit by providing sustainable reimbursement rates and ensuring that there are enough providers to serve the population of Medicare beneficiaries.”

So, if the disability community doesn’t make Congress aware of problems, then the men and women in Washington can’t and won’t address these issues.

Hint, hint: This is why we're encouraging you to share your own story online with a personal video!

Kelly Turner is the executive director of People for Quality Care. She can be reached at

Lisa Wells is the vice president of marketing for Cure Medical. She can be reached at

John Gallagher
vice president of VGM Government Relations

What are the most important things needed to break a nut loose from a rusty bolt? Some WD-40, a few good tools, and an abundance of elbow grease. Much like that rusty bolt, Health and Human Services Secretary Tom Price is working to break the bureaucratic rust loose within the agencies he oversees.

There are plenty of concerned providers who are worried that Secretary Price, a strong advocate for the HME industry during his time in Congress, has forgotten about problems that must be solved. While the urgency of real reforms increases every day and providers continue to struggle to keep the lights on, the industry must recognize the machine that Secretary Price is working against and the steps his department has taken to make incremental improvements already.

Secretary Price has already had an immediate impact on DME

Round 1 2019 of competitive bidding was pulled shortly after its introduction because of Price’s actions prior to being confirmed as Secretary. Something equally as important, the industry is seeing a much different CMS since Secretary Price took over the reins. We are seeing the leadership at CMS, including the new Administrator Verma herself, beginning to be much more willing to respond to inquiries, something that we have never seen from CMS or HHS.

Reduced staff numbers slow down change

Secretary Price, as well as many other agency heads, is working with greatly reduced staff numbers. This is largely due to politics in Congress playing out with confirmations and budgets, but it is having an impact. This translates into battling with career CMS employees who are working to protect their positions and who are married to flawed programs that are harming providers and patients. An encouraging response that we have heard from more than one official within CMS is that senior staff that came with Secretary Price is quickly gaining the respect of the rank-and-file employees.

Where is the magic wand?

Many are wondering why Secretary Price cannot just snap his fingers and solve the problems facing the industry. Unfortunately, there is no magic wand to wave over everything to be solved. While he has overall authority of the direction that these agencies take, there are still rules and statutes in our government that prevent him from having complete unilateral power. There are lawyers and career staff that follow lockstep with the bureaucrats and leadership already in place at CMS, and they aren’t the most friendly when it comes to interpreting the intent of congressional action.

Agencies need a mandate for quick action

For a department or agency to act swiftly, they need to be pressured, or shown the demand for change by Congress. We are seeing an increase in congressional inquiries coming from key committees and leadership that raise red flags with the status quo going on within CMS. This continued concern from Congress is a direct result of the constant outreach from grassroots providers calling into offices, attending meetings, and messaging members of Congress through the VGM Action Center, which sees thousands of individual advocates annually. Providers need to continue demanding change by CMS to keep that pressure on.

A lot of irons in the fire

Even though HME plays an extremely important role in the world of health care, we have to recognize that Secretary Price has countless “irons in the fire,” namely the repeal and replacement of the Affordable Care Act. The unknowns and delays in passing legislation to replace Obamacare have clogged the pipes of legislative and regulatory action. I have no doubts that Secretary Price has not forgotten the problems going on within the DMEPOS industry. The costs, readmissions, and health care problems that are prevented by this industry do not go unnoticed. This is especially true with Secretary Price as he is working to overhaul the health care system to put patients at the center of health care.

Have trust that the nut will break loose

The frustrations that providers hold are not doubted and absolutely understood. Providers have to channel that frustration to the people who will listen most, their members of Congress. It has been just over four months since Price took over as Secretary and he has worked with limited staff and resources at his disposal. It takes time and energy to break a nut loose from a rusty bolt and Secretary Price is doing just that. While the industry would love to sheer that rusty bolt off, Secretary Price doesn’t have that luxury because the agency has to still function and we don’t want CMS to actively work against him, which only makes things worse.

Grassroots HME providers are some of the most hardworking and driven individuals in health care because of high level of care they provide to their patients. The industry has to allow Secretary Price the time to create relationships and drive CMS down the correct road and trust that he is doing so. The industry has concrete changes to show that the nut is breaking loose from a very rusty bolt.

John Gallagher is vice president of VGM Government Relations.