Moving the HME Industry Forward


Providers Testify at Small Business Administration Hearing

June 30, 2014

WASHINGTON, DC – Last week, a group of advocates (pictured) testified before the Small Business Administration (SBA) on the impacts of the Medicare competitive bidding program on the HME industry. Along with eight other speakers, Tom Ryan, president and CEO of AAHomecare, spoke about the disastrous effects the program has had on hundreds of businesses across the country, as well as patients who are now unable to receive the medical supplies they need.

 The SBA heard testimony from:
Danyelle Carroll of Mobility Medical in Mississippi;
Bill Griffin of Griffin Home Health in North Carolina;
Gary Sheehan of Cape Medical Supply in New England;
Jeff Knight of Premier Home Care in Kentucky;
Kristi Sanders of Northern Pharmacy and Medical Equipment in Maryland;
Regina Gillispie or Best Home Medical in West Virginia;
Tyler Riddle of MRS Homecare Inc in Georgia; and
• VGM’s Peggy Walker.

Gary Sheehan (pictured above) of Cape Medical Supply told Medtrade Monday: “The message [to the SBA] was well received. The SBA seemed genuinely alarmed with the way CMS is treating the industry. Audit processes and bidding design were repeatedly stressed and made a clear impact on the SBA reps.”

“We are becoming lobbyists by necessity, not by choice,” said Regina Gillispie, RRT, owner of Best Home Medical, Barboursville, WV. “I think the SBA was very receptive, and I feel they will try to help. John Gallagher and the VGM team did an amazing job pulling this together on such short notice. I hope everyone will get re-energized and call their representatives.

“The SBA heard from the providers who testified with a common theme,” continued Gillispie. “Audits and bidding are destroying small businesses, and more importantly the access to care for our seniors. The SBA members I felt were shocked at the stories they were hearing about the audit process. I hope everyone will send examples to VGM and their Congressional Health LAs about the unfair denials. I think we have a light at the end of the tunnel after this meeting if everyone helps fight the fight.”

Testimony of Gary Sheehan
Delivered to the United States Small Business Administration
National Regulatory Fairness Hearing
June 25, 2014
9:30am – 1:00pm
Environmental Protection Agency
William Jefferson Clinton East Building
1201 Constitution Avenue, NW, Room 1153
Washington DC, 20460

Good morning and thank you for your time and for the invitation to speak with you about the very serious issues concerning the Medicare program.

My name is Gary Sheehan, I am the President and Chief Executive Officer of Cape Medical Supply. We are a durable medical equipment supplier headquartered in Massachusetts, operating and actively providing services to patients and healthcare professionals in Massachusetts, Rhode Island, New Hampshire and Maine.

We employ 70 professionals across the New England region.
Because of our unique geographic location, we were forced to bid in three separate Medicare Competitive Bidding Areas (CBA’s) during Round Two of Medicare’s Competitive Bidding Program. We have seen first-hand how this program is reshaping the service landscape, compromising quality, marginalizing service, and costing small businesses’ employees’ jobs and owners their livelihoods.
It is my belief that CMS selected the DME industry for this bold new bidding experiment because of who the industry is made up of, rather than a real need to manage costs, which have been well contained for over a decade.

Our industry is made up of small suppliers across the United States. In short, an industry that is full of what so many in government seek to celebrate – small businesses – is being irrationally targeted by a federal agency primarily because of their own failures to appropriately regulate the program.

Medicare’s “competitive bidding” program is anti-competitive. Time and again experts in auction theory, many with deep backgrounds in organizing and managing government auctions, have warned that the program would lead to unsustainably low pricing and that the simple construct of the program would be its undoing.

When a program is so poorly designed from the outset, void of true expertise in the subject matter at hand, there are few outcomes other than full market breakdown that can be expected. This is playing out across the U.S. right now, dragging down hundreds of small businesses with it.

It is against this backdrop that the CMS program has instituted an aggressive and often times illogical audit program. We understand that CMS’ has a mandate to protect public funds and remain fully supportive of any and all efforts to curb fraud and abuse. In point of fact the most effective way to ensure we have a program free of fraud and abuse is to do a better job policing the participating providers within that program; unfortunately CMS has failed woefully in their efforts to exclude criminal conduct from the program. That failure, that inability to succeed at their most basic mission – creating a pool of skilled, qualified and honest providers – has caused them to turn their sights on the provider population at large, punishing the many for the sins of the few.

Issues and delays at the Administrative Law Judge review stage have been well documented but deserve additional discussion here today. Our organization has had claims sitting in ALJ review for years on end. Many of these claims are for patients who we continue to provide equipment and services for, with no payment stretching back years; in one case an oxygen patient who we have been providing equipment and services to since March of 2012, and have received no reimbursement for. In that case the ALJ ruled in our favor on February 19, 2014, after years of appealing and fighting. Though we received favorable ruling over four months ago, we have yet to receive any payment.

We continue to work diligently to respond to audits as we receive them, at a rate of nearly one per business day. We respond within the 45 day period required, with all the paperwork requested of us. We then receive second denials for claims, many times for missing documentation which was present when we submitted our original response. Frequently the agency will admit to oversight during the initial claim review; however we are still required to submit a redetermination to the agency and wait an additional 60 days for them to correct their error and process the claim for payment.

The staff of the ALJ’s are clearly overwhelmed, the backlogs have been well documented, the system for appeals is crumbling under tremendous volume…yet the audits are accelerating. If there exists no mechanism to effectively appeal audit findings, the majority of which are overturned, there exists no due process for small businesses to receive reimbursement for the products and services they rendered, all of which meet medical policy, delivery guidelines and fit the needs of a patient who relies on these products to live safely in the community.

The audit process no longer seems to be about identifying bad actors, rather it seems to be primarily rooted in adding an unnecessary layer of administrative expense to an already challenging claims process. If the agency lacks the appropriate personnel to review the mistakes its own auditors are routinely making, they must design a plan and a process to stem the tide of new audits and ensure we prioritize issues of program integrity rather than wrangle with providers who have consistently proven to be operating well within the regulations and guidelines that govern our services and activities.

I want to thank you for your time and attention. As my comments, and those of my colleagues, make clear; our industry is crumbling under the weight of CMS’ questionable policies. It is my sincere hope we can work with you, and with CMS, to craft sustainable solutions to the issues around payment policy and an appropriate level of audit volumes, along with an acceptable level of audit response.

Your interest is appreciated and I thank you for your continued advocacy on behalf of America’s small businesses.