Private Party

Are private payors’ short-sighted ‘velvet rope’ strategies shapes of HME to come?

The private payor insurance industry often takes its cue from the Centers for Medicare & Medicaid’s policies, but the latest news to come from that arena of healthcare funding is shocking indeed. Humana has entered into an agreement with Apria that will see the national provider become its exclusive DME supplier in Kentucky. Providers can still serve Humana patients, but as out-of-network providers, so their patients would face sizable co-pays.

Worse yet, as this news has come in just as we go to print, it appears the deal is not limited to Kentucky. We have heard from readers that HMEs in other states, including Minnesota, Texas, Virginia, West Virginia, Florida and Tennessee have received notification letters from Humana.

And HMEB readers might remember that this isn’t the first exclusive provider deal to recently crop up in the private payor sector. Back in early June, Blue Cross and Blue Shield of Florida tapped health benefits management provider CareCentrix Inc. as its exclusive provider of home health services, including DME, for its nearly 4 million members. At the time, the Florida Alliance of Homecare Service reported that BCBSF had notified its member providers that their care contracts would be canceled come Sept. 1.

Right off the bat, the obvious concern is coverage. Does Apria have the resources and locations in position to support these patients? Already one provider has reported to us that the nearest Apria location to its patients is 75 miles away. Not exactly an ideal arrangement.

Bearing that in mind, what about the transition? I don’t think it’s a stretch to conclude that there are going to be gaps in Apria’s ability to serve all these new Humana patients. So what’s the plan? Is Humana assuming that providers that were once its partners will be willing to continue providing services to Humana beneficiaries while Apria sorts out how it is going to support those patients?

That kind of presumptuousness would be particularly galling, but then it wouldn’t necessarily be surprising, either. Just look at how CMS has handled the hand-off between Round One contract holders and patients’ original providers that didn’t win their bids. (The word “inelegant” comes to mind.)

If anything, arrangements such as those between Humana and Apria, and BCBSF and CareCentrix point to the difficulties facing patients. Sure, exclusive deals with large insurers are attractive for the nationals and saves the insurers money, but at what cost? Obviously there will be lack of choice for the patient, but large, national providers don’t provide all the services that patients need. For instance, the Humana-Apria deal is for exclusive services for Apria’s full range. In other words, whatever Apria offers in DME, they are the sole provider to Apria for those DME products and services. And what Apria doesn’t offer? Well, other providers can offer that. But who says those providers will even be in business? Can the same be said for the entire geography of Humana’s patients in Kentucky? What about the other states we’re hearing about? I certainly doubt it.

If private payors such as Humana and BCBSF do watch CMS for strategic cues, they should have watched Round One much more carefully, because they would have seen that culling providers has done nothing but result in patient access horror stories, and tens of thousands of “inquires” to Medicare (let’s be honest, CMS, they’re complaints). That’s the kind of bad service that gets policy holders to switch insurers.

Obviously, this situation is still coming into focus, but as providers are looking to expand their range of revenue sources, the last thing we need to hear are stories about exclusive provider deals in the private payor space. HMEB will take a much deeper look at the situation to see if there’s any chance for HMEs to salvage it.

This article originally appeared in the August 2011 issue of HME Business.

About the Author

David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on LinkedIn at and on Twitter at @postacutenews.

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