Invacare Applauds Latest Move by the Center for Medicare Services: Approval of ABN Process Extends Consumer Choice to Millions of Americans.

Business Editors

ELYRIA, Ohio--(BUSINESS WIRE)--July 13, 2001

Medicare beneficiaries scored a major victory recently with the Office of Management and Budget's approval of the new Advance Beneficiary Notice (ABN) form. The Advance Beneficiary Form Notice, developed by the Center for Medical Services (CMS) and effective immediately, empowers consumers with more choices in the durable medical equipment (DME) and home health care supplies they obtain through Medicare.

Medicare coverage typically provides for home medical equipment and supplies, deemed "medically necessary." Frequently, this means beneficiaries receive the most basic products and minimal quantities of supplies. Beneficiaries can now receive upgrades to a wider range of products that have better features and technology without having to pay the full cost of the product up-front or having to wait for Medicare to reimburse the allowed amount. This action also makes it possible for durable medical equipment providers to accept assignment under Medicare for the allowable reimbursement amount and then work with the consumer to upgrade to product that best meet their lifestyle needs.

"This is a significant achievement on behalf of millions of Americans who now have more input and choices in selecting their medical equipment and supplies," said A. Malachi Mixon, III, chairman and chief executive officer of Invacare Corporation. "It took a lot of hard work, but it was well worth the effort because now beneficiaries have access to more advanced, wide ranging products, features and technology."

CMS' action allows beneficiaries the option to upgrade within product categories. For example, a beneficiary can upgrade from a standard manual wheelchair to one that is lighter, easier to propel and lift into or out of a car; a family can select a full-electric bed over a manual one, making care chores easier and safer; or, a senior citizen can upgrade from a standard walker to a more maneuverable rollator. All this can be done without the beneficiary having to bear the entire cost upfront and then waiting for Medicare to reimburse them the allowed amount.

Invacare has been a strong advocate for the Consumer Choice initiative since 1990. Invacare began its effort to encourage Medicare to offer recipients the same option offered by most private insurance companies by working with Congress and Medicare personnel to change the rules that prevented consumers from upgrading assigned Medicare claims. The company succeeded in getting language included in the Balanced Budget Act of 1997, authorizing the Secretary of Health and Human Services to promulgate an upgrade rule. David T. Williams, Invacare's director of government relations has been working with CMS' staff over two months to iron out the details and resolve several process issues associated with using the ABN process to facilitate consumer choice in DME transaction.

The ABN process is an improvement to the draft that was developed under the 1997 statute because it only requires providers to fill out and get the beneficiary's signature on a simple, one-page form (CMS R-131-G) and is applicable for all categories of durable medical equipment and supplies. It is also significant that the policies and procedures that HME companies will use on upgrades are the same as those that apply to all Medicare Part B providers - including physicians.

CMS (formerly HCFA) staff is working on a Program Memorandum to be distributed to carriers such as the durable medical equipment regional carriers (DMERC) in January 2002. However, the DME providers can begin using the ABN process for equipment upgrades immediately.

"Invacare would like to acknowledge the hard work of the Chronic Care Policy Group of CMS as well as its commitment to make this work for beneficiaries and providers," said David T. Williams, director of government relations for Invacare. "The company also wants to acknowledge the new CMS administrator, Tom Scully, who made resolving this matter a top priority and deserves a lot of credit

Invacare Corporation (NYSE:IVC) is the global leader in the manufacture and distribution of innovative home medical products which promote recovery and active lifestyles through more than 25,000 providers. The company, which had 2000 revenues of $1.01 billion, goes to market in the following channels of distribution; home care, mass retail and institutional. Within these channels of distribution, Invacare participates in the following product segments: Home Care, which includes rehab products, respiratory products, manual wheelchairs, home care beds, therapeutic support surfaces and personal care products marketed by Invacare's Home Care Group; Soft Goods and Supplies, which includes ostomy, incontinence, wound care and diabetic supplies marketed by Invacare Supply Group; and Institutional, which includes nursing home beds, patient lifts and slings, nursing home furniture and bathing systems marketed by Invacare Continuing Care Group. The company's headquarters are in Elyria, Ohio, and the firm has manufacturing plants in the United States, Australia, Canada, Denmark, Germany, France, Mexico, New Zealand, Portugal, Sweden, Switzerland and the United Kingdom. For more information about the company, visit Invacare's website at www.invacare.com.

Consumer Choice Initiative Q&A's

What is the latest development in the Consumer Choice initiative?

The Office of Management and Budget approved the new Advanced Beneficiary Notice form, developed by the Center for Medical Services (CSM; formerly HCFA). The Program Memorandum will be published later this year by the Center for Medical Services.

When will the new ABN form take effect?

Immediately. The form/provision was finalized on June 25th. The Program Memorandum will be published later this year, but consumers can take advantage of the benefits of this action now.

What does it mean for consumers/beneficiaries?

They will have more choices, with less out-of-pocket costs and fewer hassles. Medicare beneficiaries can now choose equipment and supplies that fit their medical and lifestyle needs while experiencing less of a financial burden and less paperwork.

Until this recent development, Medicare policy stated that certain DME products with additional features and benefits were not deemed medically necessary. For example, a full electric homecare bed, with motorized feet, head and floor-to-bed surface adjustment, is not deemed medically necessary for a patient requiring a homecare bed. Under Medicare policy, a semi-electric bed, without adjustable floor-to-bed surface adjustment, would be the most functional homecare bed covered by Medicare.

However, a beneficiary's primary caregiver who is an older spouse and is short in stature could greatly benefit from varying the bed height in transfers, bathing and other care-giving tasks. Under the old system, the beneficiary would have to pay the entire cost up-front if they wanted to select the full-electric homecare bed. They would also have to wait many months for Medicare to reimburse them the 80-percent of the allowable charge.

What does it mean for DME providers?

They will be able to provide consumers with more options, while providing them the education necessary to make appropriate choices. DME providers may now present the beneficiary the allowed product and then offer the option of reviewing additional products providing more features and advanced technology. Essentially, DME providers will be able to fully utilize their training and expertise to provide consumers with superior service.

What products are covered?

All durable medical equipment and supplies covered by Medicare are included. Beneficiaries can now make unlimited upgrades within each product category by simply paying the difference between the Medicare allowed amount and the total purchase price, not the entire up-front cost.