Competitive Bidding Oxygen Cap PMD

Competitive Bidding – Oxygen Cap – PMD – SCHIP – Doc-Fix ITS NOW OR NEVER John Gallagher The VGM Group 21 February 2008

Before we begin… A MOMENT OF SILENCE GO IRISH 2008 IS A New YEAR!

Four Horsemen of the Apocalypse Pestilence – War – Famine & Death

With CMS We FACE # 5 NCB – Cap on O 2 – Complex Rehab & Provider Elimination

THREATS TO THE DME INDUSTRY Long Term vs. Short Term • National Competitive Bidding Answer = HR 1845 (Tanner / Hobson) S. 1428 (Hatch / Conrad) • Oxygen Cap @ 36 months Answer = HR 621 (Price) S. 1484 (Roberts) • Medicare Reform Legislation (“DOC-FIX”) June 30 - 2008 w/ O 2 cap @ 18 mon. & PMD Answer = NO ADDITIONAL CUTS TO DME Contact your Congressman & Senator today!!

President Releases FY 2009 Budget: OXYGEN & Power Wheelchairs Targeted On February 4, the President released his budget for Fiscal Year 2009. The legislative proposals for the Medicare program called for in the President’s budget would save $12. 2 billion in its first year and $178. 0 billion over five years, far more than the President proposed in last year’s budget. Once again, the President’s budget would eliminate the first month purchase option for power wheelchairs for a one year savings of $80 million and a five year savings of $720 million. In other DME, the budget proposal would reduce the rental period for most oxygen equipment from 36 months to 13 months for a one year savings of $210 million and five year savings of $3. 0 billion. The budget seeks $47. 5 million to establish the administrative structure to support the DME competitive bidding program, which is projected to yield savings totaling $5. 3 billion over the next five years. The budget is now referred to the Senate and House budget committees, where the committees will establish their own budget resolutions. Given the Democratic majorities in both the House and the Senate, the President’s cuts to the Medicare programs are considered to be “dead on arrival”. Medicare legislation of some fashion is expected before July 1, when a 10 percent reduction in payments to physicians under the Medicare program kicks in.

Clinton and Obama Trade Victories N. Y. Senator Withstands Push By Surging Rival in Key Battlegrounds Mc. Cain Dominates Big States Huckabee, Romney Stay Alive As They Score Wins in the South and West Sen. Hillary Rodham Clinton won victories over Sen. Barack Obama in California, Massachusetts, New Jersey and New York last night, giving her presidential campaign a crucial boost. But Obama countered by winning of a string of states, including the general election battleground of Missouri, in the seesaw race for the Democratic nomination. Mc. Cain easily captured New York, New Jersey and Connecticut, after being endorsed by former New York mayor Rudolph W. Giuliani, a defeated rival. Mc. Cain also won Missouri, Arizona, Illinois, Oklahoma and Delaware. His victory in California appeared to be by a large margin, though Romney will probably collect a sizable share of the state's delegates because they are apportioned by congressional district. Washington Post 02/06

Develop Triple Track Approach to Combating: National Competitive Bidding – Oxygen Cap – PMD Reimbursements - Legislative – Develop a “champion” for the industry Grass-Roots – Coordinate Grass-Roots activity at Provider Level – BECOME THE “PROVIDER LOBBYIST” Legal – Develop legal effort to delay, impede and or defeat NCB

LCPC LEGAL ACTION IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS – DALLAS DIVISION HEWITT v. LEAVITT IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO – EASTERN DIV. SHINKLE, ZILLMAN & PREMIER MEDICAL SUPPLY v. LEAVITT

Surety Bonds CMS Analysis; Added cost of Surety Bonds will result in reduction in the number of DMEPOS suppliers • In 2005 there were roughly 16, 000 suppliers who billed the Medicare program less than $1, 000 • In 2005 there were 13, 000 suppliers who billed between $1, 000 and $4, 999. • CMS predicts that as many as 30, 000 suppliers currently enrolled in Medicare would stop serving Medicare beneficiaries – 22% would come from rural areas.

Senators Introduce Medicare Fraud Legislation S. 2603 - Medicare Fraud Prevention Act of 2008 Late last week, Sen. Mel Martinez (R-Fla. ) has introduced the Medicare Fraud Prevention Act of 2008, S. 2603. Five Senators joined Martinez in introducing the legislation: Sen. John Cornyn (R-Texas), Sen. Norm Coleman (R-Minn. ), Sen. Lamar Alexandar (R-Tenn. ), Sen. David Vitter (R-La. ), and Sen. Jim De. Mint (R-S. C. ). The bill would amend the Social Security Act “to provide increased civil and criminal penalties for acts involving fraud and abuse under the Medicare program and to increase the amount of the surety bond required for suppliers of durable medical equipment. ” Specifically, the legislation would: • Double the civil fines for Medicare fraud and abuse. • Quadruple the maximum criminal fines for felony convictions from $25, 000 to $100, 000. • Double the maximum criminal fines for misdemeanor convictions. • Increase the maximum criminal sentence from five years to a ten-year maximum. • Increase the surety bond requirement for DME suppliers from the $50, 000 (proposed by CMS in 1998) to $500, 000. I discussed this with Dan Smith who is working on the bond for opur VGM Insurance office. He advises that our pricing will run between 2 -4% of the surety bond depending on the size of the company and the company’s credit history. This would mean that the pricing would be between $10, 000 and $20, 000 for a $500, 000 bond.

VGM meeting with Dr. Mark Pilley, MD

VIRGINIA Congressional Districts

Richmond, VA MSA Congressional Districts 1, 3, 4, 5 & 7 * Rep. Jo Ann Davis (D-1 st) Armed Services* Rep. Bobby Scott (D-3 rd) Budget Rep. Randy Forbes (R-4 th) Armed Services *@ Rep. Virgil Goode (R-5 th) Appropriations *@ Rep. Eric Cantor (R-7 th) WAYS & MEANS One Co-sponsor HR 1845 & Two Co-sponsor HR 621

Virginia CO-SPONSORS Virginia (3 out of 11 = 27%) **Rep Jo Ann Davis (R-1 st Dist) Armed Services – Co Sponsor HR 621** DISTRICT OFFICE IN: Yorktown, Fredericksburg, Tappahanock

Virginia CO-SPONSORS Virginia (3 out of 11 = 27%) Rep. Bobby Scott (D-3 rd Dist) Education & Workforce DISTRICT OFFICE IN: Newport News & Richmond

Virginia CO-SPONSORS Virginia (3 out of 11 = 27%) Rep. Randy Forbes (R-4 th Dist) ARMED SERVICES DISTRICT OFFICE IN: Chesapeake, Emporia, Colonial Heights

Virginia CO-SPONSORS Virginia (3 out of 11 = 27%) **Rep. Virgil Goode (R-5 th Dist) Appropriations - CO-Sponsor HR 1845 & HR 621** DISTRICT OFFICE IN: Charlottesville, Danville, Farmville, Rocky Mount

Virginia CO-SPONSORS Virginia (3 out of 11 = 27%) Rep. Eric Cantor (R-7 th Dist) WAYS & MEANS – Deputy Whip DISTRICT OFFICE IN: Glen Allen, Culpeper

VIRGINIA BEACH - NORFOLK MSA Congressional Districts 1, 2, 3 & 4 * Rep. Jo Ann Davis (D-1 st) Armed Services* Rep. Edward Schrock (R-2 nd) SMALL BUSINESS Rep. Bobby Scott (D-3 rd) Budget Rep. Randy Forbes (R-4 th) Armed Services Rep. Walter Jones (R-3 rd – NC) Armed Services Zero Co-Sponsors HR 1845 & One Co-Sponsor HR 621

Virginia CO-SPONSORS Virginia (3 out of 11 = 27%) **Rep Jo Ann Davis (R-1 st Dist) Armed Services – Co Sponsor HR 621** DISTRICT OFFICE IN: Yorktown, Fredericksburg, Tappahanock

Virginia CO-SPONSORS Virginia (3 out of 11 = 27%) Rep. Thelma Drake (R-2 nd Dist) Armed Services DISTRICT OFFICE IN: Virginia Beach, Accomac

Virginia CO-SPONSORS Virginia (3 out of 11 = 27%) Rep. Bobby Scott (D-3 rd Dist) Education & Workforce DISTRICT OFFICE IN: Newport News & Richmond

Virginia CO-SPONSORS Virginia (3 out of 11 = 27%) Rep. Randy Forbes (R-4 th Dist) ARMED SERVICES DISTRICT OFFICE IN: Chesapeake, Emporia, Colonial Heights

KEY MEMBERS OF VIRGINIA CONGRESSIONAL DELEGATION HOUSE: Rep. Jo Ann Davis @ (R-1 st Dist) Armed Services Rep. Thelma Drake (R-2 nd Dist) Armed Services Rep. rd Dist) BUDGET Bobby Scott (D-3 Rep. th Dist) Armed Services Randy Forbes (R-4 Rep. Virgil Goode *@ (R-5 th Dist) Appropriations *@ Rep. Bob Goodlatte * (R-6 th Dist) Agriculture – RMember* Rep. Eric Cantor (R-7 th Dist) WAYS & MEANS Rep. James Moran (D-8 th Dist) Appropriations Rep. Rick Boucher *@ (D-9 th Dist) Energy & Comm *@ Rep. Frank Wolf * (R-10 th Dist) Appropriations * Rep. Thomas Davis (R-11 th Dist) Gov Reform – Ranking Member * = HR 1845 (4) @ = HR 621 (3)

VIRGINIA SENATORS • SENATOR JOHN WARNER (R) 5 th Term – Armed Services Retiring • SENATOR JIM WEBB (D) 1 st Term – Armed Services, Veteran Affairs

IT’S NOW OR NEVER TO GET INVOLVED DO WE CHOOSE TO FIGHT?

TANNER – HOBSON HR 1845 - 110 th Congress • Medicare must conduct an impact analysis on beneficiary access to quality products/services after first round (10 MSAs) - And Would prohibit HHS from applying NCB to the rest of MSAs (e. g. next 70) or applying comp bid rates to non-MSAs unless specifically authorized by Congress. • Applicable to all providers – including large ones this time (SBA > $6 Million Revenue). . . BUT…the provider must still submit a bid…just must be under current Medicare allowable and then will be paid the “winning” bid price. – still must bid, not an automatic “any one in good standing can play” --

The Bills also include provisions that: • Would restore judicial or administrative review of a number off CMS decisions related to competitive bidding. • Would require the quality standards to be in place before competitive bidding is implemented. . • Would exempt small rural (populations under 500, 000) MSAs. • Would exempt items and services unless a 10% savings could be demonstrated. . • Would subject the Program Advisory and Oversight Committee (PAOC) to the Federal Advisory Committee Act which requires public access to meetings and proceedings.

Senators Hatch and Conrad Introduce Bill, S. 1428, to Address Competitive Bidding Problems Homecare providers and stakeholders should ask their U. S. Senators to cosponsor a bill introduced yesterday by Senators Orin Hatch (R-Utah) and Kent Conrad (D-N. D. ). Their legislation, S. 1428, would address some of the most onerous problems with the competitive bidding program that is beginning in Medicare for home medical equipment. • • • Their bill is the same as the legislation they jointly introduced in the 109 th Congress, which was a companion to last year’s Hobson-Tanner measure. S. 1428 would: Exempt smaller, rural areas (metropolitan statistical areas with populations under 500, 000); Allow small providers that do not receive a contract to continue to provide home medical equipment in Medicare at the competitive bid rate; Restore the rights of participating providers to administrative and judicial review; Exempt items and services unless savings of at least 10 percent can be demonstrated.

SEC. 3. SMALL SUPPLIER PROTECTIONS. (a) Qualified Supplier Participation- Section 1847(b) of the Social Security Act (42 U. S. C. 1395 w-3(b)) is amended-(1) in paragraph (4)(A), by striking `The Secretary may limit' and inserting `Subject to paragraph (6)(D), the Secretary may limit'; and (2) in paragraph (6)(D), by adding at the end the following: `Such appropriate steps shall include permitting suppliers that are classified as small businesses under the Small Business Act to continue to participate as suppliers at the single payment amount so long as they submit bids at less than the fee schedule amount otherwise applicable to the items and they otherwise comply with applicable program requirements. '.

Georgia Congressman Tom Price, M. D Reintroduces O 2 Legislation - H. R. 621: Home Oxygen Patient Protection Act • "To amend part B of title XVIII of the Social Security Act to restore the Medicare treatment of ownership of oxygen equipment to that in effect before enactment of the Deficit Reduction Act of 2005. " • In the 109 th Congress, the list of co-sponsors to H. R. 5513 grew to 84

H. R. 621 would repeal: (1) the limitation of Medicare payment to the supplier for such equipment (including portable oxygen equipment) to 36 months of continuous use; and (2) the requirement that the equipment supplier transfer title to the individual at the end of such period, with payments continuing at specified monthly rates.

Lobby effort is working BUT IS THERE BURN OUT?

WAYS & MEANS COMMITTEE CHARLES B. RANGEL (NY) - Chairman

ENERGY & COMMERCE COMMITTEE John D. Dingell (MI), Chairman Ratio: 31 -26

ACTION STEPS NEEDED TODAY • ACTION STEPS NEEDED by each state/regional medical equipment association and by HME providers (regardless of CBA area or location).

VGM HOST GRASSLEY FUNDRAISER • Raised $70, 000 • 50 + in attendance Next – Fundraiser for Chairman Baucus (D-MT) 24 March 2008 Helena, MT

The plan was and is built around these LCPC activities: • It is conducting a public information campaign in selected congressional districts through a multi-media effort designed to educate the electorate about their legislators’ support of selective contracting for HME. LCPC wants Medicare beneficiaries to understand how their freedom to choose providers and equipment are adversely affected by selective contracting. • LCPC filed a federal lawsuit seeking to strike the selective contracting sections within the MMA on constitutional and other grounds. The lawsuit will include Medicare beneficiary patients who are suggested by local providers in areas selected for the first bidding and who volunteer to assist in this cause.

• LCPC will partner with other organizations likely to be the next targets of selective contracting and those beneficiary groups likely to be adversely affected if the scheme is implemented. • LCPC is conducting an increased informational campaign for members of Congress to explain why selective contracting is bad public policy because it will create a two-tier health-care system in the U. S Educate Members of Congress & Beneficiaries About 1. Impact of MMA & NCB 2. The 36 month DRA oxygen cap (& potential 13 month reduction) http: //www. lastchanceforpatients. org

THREATS TO THE DME INDUSTRY • National Competitive Bidding Answer = HR 1845 (Tanner / Hobson) S. 1428 (Hatch / Conrad) • Oxygen Cap @ 36 months Answer = HR 621 (Price) S. 1484 (Roberts) • Medicare Reform Legislation (“DOC-FIX”) June 30, 2008 w/ O 2 cap @ 18 mon. & PMD Answer = NO ADDITIONAL CUTS TO DME Contact your Congressman & Senator today!!

202. 224. 3121