HST and a 'Broke' Medicare

HST and new strategies are key for provider survival.

Jeffrey S. Baird, Esq., Chairman of the Health Care Group of Brown & Fortunato, P.C., shares why HST and other outside-the-box tactics are important for DME suppliers’ survival:

“These are unique times,” he says. “Medicare went broke serving 23 million of the Greatest Generation and an additional 20 million of the Korean War generation. Medicare is now facing a tsunami of 78 million Baby Boomers (those born between 1946 and 1964). Boomers are retiring at a rate of10,000 per day; they will live to be 85 years old; and their bodies will break down when they turn 70.

“In short, the demand for what DME suppliers have to off er is increasing exponentially,” he continues. “I call this the ‘irresistible force’ (78 million Baby Boomers) meeting the ‘immovableobject’ (a broke Medicare).”

Baird says that at the same time, DME suppliers are being subjected to a “perfect storm” ofchallenges:

  • competitive bidding;
  • post-payment audits;
  • prepayment reviews;
  • reimbursement cuts;
  • increasingly stringent documentation requirements;
  • aggressive investigations by Medicare contractors (e.g., ZPICs and the NSC).

“In order to be successful, the DME supplier needs to think outside the box. It needs to push itself out of its comfort zone,” he says. “This means that the supplier must lessen its dependenceon Medicare fee-for-service.”

There are a number of ways for the supplier to accomplish this, Baird says, starting with HST:

  • Knowing that approximately 75 percent of OSA patients are not Medicare beneficiaries gives an opportunity to the innovative DME supplier. The supplier can aggressively market for commercial OSA patients. The supplier can off er face-to-face OSA education seminars; the supplier can do the same thing with webinars. The supplier can market to physicians, RTs, pharmacists, and other healthcare providers. Understanding the “razor/razor blade” model, the innovative DME supplier can focus on establishing an ever-growing patient base of commercial CPAP patients who need masks, filters and tubing on a continuous basis.
  • The supplier can aggressively move into the retail (cash) market. In doing so, the supplier can sell Medicare-covered items for cash at a discount off the Medicare allowable, so long as certain guidelines are met.
  • The supplier can focus on selling (and installing) non-Medicare covered items that allow patients to stay in their homes. For example, the supplier can install a patient lift that transports a patient from one room to another. Another example is bathroom remodeling that transforms the bathroom into one that is safer and more user friendly.
  • The supplier can seek out managed care and commercial insurance contracts.
  • The supplier can seek out VA and TRICARE contracts.
  • The supplier can move aggressively into the workers compensation market.
  • The supplier can seek out and become part of Accountable Care Organizations (ACOs) that are created by the Affordable Care Act (Obamacare).
  • The supplier can enter into joint ventures with hospitals.
  • The supplier can place employee liaisons in hospitals and other facilities.
  • The supplier can set up loan closet (stock and bill) arrangements with hospitals and other facilities.

This article originally appeared in the Respiratory & Sleep Management March 2013 issue of HME Business.

About the Author

Joseph Duffy is a freelance writer and marketing consultant, and a regular contributor to HME Business and DME Pharmacy. He can be reached via e-mail at

HME Business Podcast