HME Then & Now

Industry veterans and experts share their insights on where the industry has been, and where it's headed.

HME Then & NowTyler Wilson, president of the American Association for Homecare

The homecare community is seeing unprecedented change on many fronts. The industry is facing parallel threats of a dysfunctional competitive bidding system and a regulatory onslaught in the form of audits and significant new policy requirements, such as PECOS and the face-to-face-exam requirements.

It is in times of turmoil that trade associations like AAHomecare become even more important. Providers need to know about and understand the shifting landscape and they need to have questions answered quickly so that they can adjust their business strategies.

The Medicare program is under increasing financial pressure and legislators want to reduce expenditures. Home medical equipment companies will benefit in the long run by the need for Medicare to save money because homecare is cost effective, but the industry must get through the near-term challenges.

Thomas Ryan, president and CEO, Homecare Concepts Inc.

I have worked in this Industry for over 30 years and have seen it evolve. My first exposure was as a Respiratory Therapist doing IPPB/ Intermittent Positive Pressure Breathing treatment follow-ups part time while attending school for Health Administration. Soon after, I started my business, and today I am a 25-year business owner of Homecare Concepts Inc.

The progression of the industry hit its stride in the 1980s as the “Golden Commode Age” soon brought government oversight and the industry accepting that change had to happen worked diligently together to present an alternative in the Industry’s Six-Point Plan. Industry consolidation with the merger and acquisition fury ensued. The BBA 1997 further reduced reimbursement and increased regulatory oversight and decreased reimbursement and the cuts continued with each passing budget crisis.

Today, as we are faced with the biggest challenge of our life with a flawed government program that is about to threaten my company’s 25-year longevity, cost thousands of jobs and decimate an industry, the industry has a viable solution: Much like the collaborative work on the Six-Point Plan, our legislators and CMS should listen to the MPP solution. We must stop this train wreck, save this industry, and see a market-based solution.

Cara Bachenheimer, senior vice president of Government Relations, Invacare Corp.

Take almost any year, and we can identify at least one, often more, significant legislative or regulatory change that happened that year. Twenty years ago, Congress passed the Omnibus Budget Reconciliation Act (remember all those OBRAs?) of 1993.

That law amended OBRA 1987 and the so-called Six-Point Plan which defined in law six classes of DME and their Medicare payment rules. OBRA 1993 also deleted nebulizers and aspirators from the statutory list of items that require frequent and substantial servicing, and reduced TENS payments by 45 percent, among other things. In 1993, CMS’ predecessor HCFA was issuing its final rule implementing the Six Point Plan.

While the targets may have changed, the tune remains the same. The government continues to scrutinize our industry, lower payment levels, and impose increased regulatory burdens. There’s no better reason to make sure that your Senators and Representatives know you, your company, and the important products and services you provide in your community.

Ron Bendell, president, VGM & Associates Ltd.

The one thing that has been consistent in this industry is change. When I first started in this industry in 1985, it was a rental marketplace. That changed to a purchase market, then back to rental. Now we have the 36-month cap and NCB.

The market has been and will continue toward lower reimbursements. Competitive bidding and consolidation of insurance carriers will continue to put pressure on reimbursement. That sounds very negative. The bright side is there will be many more people who will require our services. The providers need to supply a lot more customers a lot more cost effectively.

I spent a number of years with Invacare in the late ’80s and ’90s. Pricing pressures were already occurring. Manufacturers have spent a great deal of resources lowering their costs to meet the pricing pressure. In my opinion, they’re pretty much near the end of significant cost reductions if we have an expectation of reasonable quality product that is available when we need it from someone who can back it up.

We’re at the beginning of the “new HME provider.” I mentioned becoming more efficient, and that is already evident in a great percentage of the VGM membership. As we move forward, diversification is the key. Non-reimbursed, cash sale products are finally catching on. The industry has talked about this for years, and finally the trend is here.

Georgie Blackburn, vice president of Government Relations and Legislative Affairs, BLACKBURN’S

I’ve been with BLACKBURN’S since 1978, and can honestly say I’ve never felt like I was “going to work,” regardless of my post in Rehab, Compliance, or Government Relations.

Our industry is comprised of tremendously gifted and caring people who are fulfilled by helping others to achieve their health potential. Whether it’s facilitating a little one from a stroller to captaining his own power chair, finding the right respiratory device to enhance endurance and independence, anatomically positioning a person in a wheelchair to aid poor digestion and respiration or fighting for insurance coverage for a device, ours is the perfect intersection of product innovation and provision.

Over the years, we’ve staunchly marched through HCPC coding changes, policy requirements, audits challenges, Round One of Medicare competitive bidding, and prevailed. We’re tough, tenacious and know how to succeed in business. Securing hearings to illuminate Round Two’s illogical outcomes must be our top priority. This program has the capacity to destroy our industry of the past. If ever there was a time to dedicate time, energy and finances to expose the brewing situation to Congress, it is now.

We can’t accept policy that disintegrates what we’ve built and everyone we’ve helped over the years.

Seth Johnson, vice president of Government Affairs, Pride Mobility Products Corp.

The complex rehab and mobility industry have seen a complete overhaul of the coding, coverage, and payment policies over the last eight years. Based on these changes, manufacturers needed to become more innovative with product development to increase efficiencies, performance and quality while maintaining value.

To a large degree, the industry is still evolving due to increased regulatory pressure at the federal and state level. However the demographics alone, 10,000 baby boomers turning 65 a day, will provide for a strong market over the next 10 years. This will lead to an opportunity for more retail related product and focus. While the near term challenges with Round Two Competitive Bidding and changes to Medicaid are significant, we are confident that the industry will continue to persevere and emerge stronger.

Ron Resnick, president and CEO of Blue Chip Medical Products

We’ve all struggled through the good times and the bad times. These are the changing times. What once was, is no longer. I live in New York City, where 9/11 happened. Our city got bombed; we had never seen that before, but we all stuck together. That was a very dark time for our country — who had ever bombed the United States? It’s not the same any longer. The same can be said for HME. Things have changed, and we have to change with them — even though some of those changes are not good.

We can learn a lot from the patients we serve. Say someone has been in a car accident and becomes a paraplegic, or someone has been diagnosed with a long-term disability, they can say, “Oh poor old me,” or they can belly up to the bar and say, “I have to deal with this, and I have to be as optimistic as I can.” Likewise, for the dealers that don’t want to deal with issues like competitive bidding, they need to get out and make way for the dealers that really do want to do a good job.

This is still a great business. There are still going to be patients. There are still going to be people who require our services (the big question is who is going to pay for it), but the fact remains that we are an aging society that is still going to need HME services. And it’s not going to be the least expensive product, because there are going to be a lot of private-pay people, and they’re going to want quality.

Mike Mallaro, CFO, VGM Group Inc.

What’s the value of a year or two, or six? It’s priceless when you consider our limited time on Earth. Over the past 20 years, home medical equipment technology – oxygen, wheelchairs, scooters, walkers – has extended the quality of life of 60 million Americans.

A quality life is one lived at home, seeing grandkids, playing cards with friends, going to church and comforting loved ones. It’s made possible through the tireless, often thankless, effort put forth by HME companies and their employees and the extraordinary advances created by HME manufacturers investing in development of new products and technology.

My mother, Pat Mallaro, lived for six years with the assistance of home oxygen. The doctors at one of the nation’s elite hospitals failed to stem the advance of her disease, despite several hundred thousand dollars of procedures. But a seemingly simple oxygen concentrator, lots of portable tanks diligently refilled and delivered to her home and an extraordinary, small town HME provider, extended her quality of life. Such is the history of HME,
and the future.

Dave Cormack, president and CEO, Brightree LLC

The industry is at a turning point as it faces the perfect storm of audits and competitive bidding. Despite the difficulties that lie ahead for many providers, I think the cup is half-full if we get it right.

When I talk to providers, I often think back to 2004, when I first invested in Brightree. I looked at this new venture differently than others — I was very hopeful and confident we could create something. Back then, the business was new, it was losing money. The founders who preceded me did not have the right team together. But I brought in new people, we took a fresh look at things, and we turned it around at a time when others thought it was impossible.

Competitive Bidding is a different situation, but the same lesson. Often, you have to take a dramatically different approach to find what works. Now is that time for most HME providers. Some will look to new business models, others to technology and process, but I believe many will find ways to be profitable and deliver excellent patient care.

Peggy Walker, RN Billing & Reimbursement Advisor, VGM/US Rehab

The audit contractors are definitely the greatest threat to our industry today. The face-to-face rule in July just does not make sense and will cause many beneficiaries harm, PECOS denials, coding changes and frequent revisions of LCDs that are being retroactive is a great concern as well.

Providers are looking at moving away from Medicare billing in all jurisdictions and again this is going to cost the beneficiary. Suppliers have to learn to say no and not keep giving equipment away, increased education of referral sources and trying to get them involved in the issues.

So many issues across the board — we have to get more suppliers to join the advisory committees and POE teams so they have a voice. Putting issues in writing — follow up and document specific concerns, Join groups and speak out with the media. We have suppliers that are doing radio shows and contacting media in their areas.

John Shirvinsky, executive director of the Pennsylvania Association for Medical Equipment Suppliers

We’re an industry that’s under assault — certainly by CMS. We’re also under assault by state Medicaid programs. There are congressional allies, and there are congressional opponents, as well.

So, this is a time when folks involved in our industry really have to do a “gut check,” and have to determine exactly where they want to be in the future. We’re not talking long-range planning; we’re talking where they want to be a year from now, two years from now. Because reimbursement rates are changing that dramatically; the relationship with the auditors and the regulators is changing that dramatically; the ability to meet payroll and provide adequate care is changing that dramatically. Everything is under assault in our industry, so it is critical for everyone to pull together.

I don’t know if any industry has ever undergone anything like this. We have to say, “enough,” and we have to say it loud, we have to mean it, and we have to gather together. That means we have to belong to our state associations; we have to belong to our national associations; we need to talk to every decision-maker; we need to talk to the media; and we need to talk to our employees, our family, our friends, and our patients. We need everyone engaged.

Brad Heath, vice president of Operations and Marketing, Family Medical Supply

I wake up early, stretch out good and grab my morning joe. Not much sleep, but time waits for no one, and neither does this show.

Boston and has its marathon and there is always an “Iron Man” to race, But those are mere sprints compared to the daily “Medicare Chase.”

There are sales calls to make, doctors to see and moving rules to be kept to date, Orders to fill, genuine deliveries of love, with enough paperwork to fill an estate.

Compliance is checked, the billing released and now the real fun’s belayed, Running down denials, hurdling audits and needing a judge to get paid.

The profit is lost, but the patient is served and we avoided every pitfall. What’s that you say? An order by the FDA? We must do it again as a recall?

Ryan Bennett, president and CEO of Providacare Medical Supply

The medical equipment industry has been an industry that has been focused on taking care of the patients with local customer service experts. The biggest change is the amount of audits and government oversight that has been implemented by CMS.

That said, the are several opportunities in which the medical equipment industry can participate in the continuum of care. Payers, physician groups, and health care systems are looking for partners that can help with the preventative care initiatives that are being focused on in the health and wellness space.

The industry should prioritize providing all stakeholders in the continuum of care with data that supports the value of the products and services. It will no longer be good enough to say “we take care of the patient”. If so the payer wants to see the clinical and financial data that proves a better outcome, so they will pay for the product and/or service. To get there, providers need to have a strategy in place with the structure, talent, and capital to execute.

Sandra Canally, RN, president of The Compliance Team

Despite all of the changes that providers are facing today, I know one thing for certain: the HME/DMEPOS industry is comprised of smart visionary entrepreneurs who are passionate about how they can best serve their patients and community.

A provider who remains passionate will find a way to get around the barriers that they face. That’s true for providers from Ocala, Fla. to Olalla, Wash., and everywhere in between.

Much like the HME/ DMEPOS providers The Compliance Team accredits, we are faced with challenges from much larger organizations that have far deeper pockets than us. As a nurse entrepreneur business owner I know first-hand that the fight is far from over.

What keeps us going is our passion and commitment to improve on what we consider the best accreditation experience available for the money. I’m confident that a similar passion and commitment is what will help HME/DMEPOS providers survive these uncertain times.

Spencer Kay, president and CEO of Fastrack Healthcare Systems Inc.

As HME providers continue to provide an incredibly valuable service the roadblocks they constantly face makes obtaining a fair compensation for their service harder and harder.

At Fastrack, despite reimbursement cuts and more regulation, we are seeing providers that are very successful in part due to their ability to seek different revenue streams beyond traditional Medicare and Medicaid as well as the utilization of software with innovative integrated technologies. These providers are realizing greater efficiencies leading to increased productivity thereby allowing them to accomplish more with less staff.

Implementing the right technology is clearly a key answer going forward as it has the potential to reduce operating costs. The potential risk for many providers is to respond to reimbursement cuts by failing to invest in technology allowing other providers a significant competitive advantage. Fastrack is extremely optimistic about the industry’s future despite the diffiicult challenges we face as ultimately demographics (aging population and people living longer), and new innovation is on our side.

Ty Bello,RCC, president of Team@Work LLC

To state the obvious, changes in our industry with competitive bidding, accreditations, caps, and the like is not where I want to focus our attention. Let’s look at the way we were with sales and marketing, and where we will need to be for the future.

The sales call used to be full access, any place at any time, now we have Rep Trac’s (and the like), and offices not permitting sales reps. The future will produce continued limited accessibility.

Quality of the sales call used to be heavier on the social side, but we have grown into a full scope sales force which understands, products, services, diagnosis, and medical documentation. This will only increase and the personal sales call will still be a part of the future.

Marketing has had the greatest change. For the most part we could not spell “retail” or “consumer marketing” 10 years ago, and now it is an ever increasing part of our daily marketing strategy. Consumerism has arrived in our industry and will increase in the future.

The way we were, regarding sales and marketing? We are better now — and will be in the future.

Wayne van Halem, president, The van Halem Group LLC

I had a different start in the DME industry than most. It started 17 years ago after graduating college and going to work for Medicare. The next decade was spent as a Fraud Investigator investigating DMEPOS suppliers across the country. At some point, the frustration of being forced to recoup money on legitimate suppliers because a “T” was not crossed led to the creation of The van Halem Group.

Over the past few years, the intensity and irrationality of these audits has increased dramatically. With accreditation, surety bonds, competitive bidding, and now the unreasonable audits, CMS is making it clear they want to limit the number of DME suppliers and will only do business with the most compliant of organizations. The ACA also now mandates a more formal and comprehensive compliance program.

To be successful in this environment of strict regulatory oversight, compliance must be a dedicated constant focus for suppliers in the future, certainly much more so than in the past.

Richard Mehan, president of Noble House

Providers are diversifying and breaking away from Medicare. It feels like Medicare is dissipating, and it’s survival of the fittest right now.

A lot of our clients ask how will Nobel House survive the competitive bidding storm, and my response is that the majority of the clients that we are going to lose, we have actually already lost. They’ve sold, they’ve retired, they’ve merged — whatever the case may be, they’re gone. Come July, with Round Two, there will be another fallout, but it won’t be as bad as what has happened over the past two years.

Meanwhile, our existing base is growing, thriving, they’re expanding, and they’re finding alternative sources of revenue, such as pharmacy, point of sale, retail, and they are breaking away from Medicare and expanding into other avenues.

The biggest concern that I’m hearing now is the private carriers typically follow suit with Medicare a few years down the road. So, if we come back here a five years from now, where are we going to be? Will there be a comparable implementation of competitive bidding in the private sector? The privates have already followed Medicare’s lead, so we’ll see how that plays out in the next five years.

Ron Richard, CEO of the Americas, REKA Health Inc.

The homecare markets continue to experience change and are evolving rapidly based on competitive bidding and the infl ux of Medicare beneficiaries coming into the system. As Einstein once said, “Not everything that counts can be counted, and not everything that can be counted counts.”

It appears with constant and growing pressure on the health care system, specifically reimbursement, want counts and is being counted is primarily focused on economics. This personally concerns me because the homecare industry has struggled with separating the services from the products and this is refl ected in the reimbursement models. Competitive bidding is like seeing who can dive to the bottom of the pool the fastest with little concern about how to return to the surface for air. The prices that are being bid can’t sustain quality services nor consider the key issues of how manufacturers can then deliver the best in class medical devices that produce efficacious results.

My hope as having received the Home Care Person of the Year award in 2004, that the industry remain focused on outcomes and providing the very best patient care in the home environment. I have been in health care for over 30 years and remain committed to the core values that clinicians do the best they can for the patients they care for on daily and personal basis.

This article originally appeared in the April 2012 issue of HME Business.

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