Observation Deck

Counting the Troubling Numbers

Declining provider numbers pose a threat to patients, caregivers & clinicians.

I’ve been following reports of HME providers leaving the Medicare program, closing locations, or going out of business altogether since the competitive bidding program fundamentally changed the operating environment for our industry. Initially, the bidding program impacted providers and patients in cities and metro areas nationwide, and now its effects are being felt by rural communities and other less densely populated areas as bidding-derived pricing expands its reach.

Over the last two years, the American Association for Homecare has tracked dozens of stories of providers struggling to survive in the Medicare reimbursement environment, highlighting them in op-eds and media outreach, and also including them in reports to Capitol Hill on the impact of the bidding program — and especially on its effects on rural providers and communities.

While such stories have provided powerful and relatable evidence on how drastic cuts have affected individual providers and patients, AAHomecare realized that we also needed to get better data on the overall effects of the bidding program on our industry. To that end, we have looked at CMS data to track changes in the total numbers of individual HME providers and locations in all 50 states, plus Washington, D.C.

The numbers are shocking to look at, even for an HME veteran like myself. Our analysis shows the number of individual HME providers participating in the Medicare program falling from 10,456 in July 2013 to 6,086 in July of this year. That’s a decrease of 41 percent over four years, with a seven percent decline over the past year. Total locations, or “rooftops” in common parlance, fell by 40 percent over four years and eight percent since June 2016.

A diverse set of states have seen at least 50 percent of providers drop out of the Medicare program since July 2013: California, Connecticut, Florida, Massachusetts, Maryland, Michigan, New Jersey, New York, and the District of Columbia. Losses of individual locations in those state have suffered similarly.

What do numbers like this mean for a typical state? Let’s consider Virginia, whose 40 percent drop in the number of individual providers tracks closest to the national average. In July 2013, 206 different HME companies served Virginia. Four years later there were 124. In terms of total locations, the drop over four years wasn’t quite as steep at 35 percent (399 to 257), but decrease in locations over just the last year in Virginia is a worrying 12 percent.

The data is derived from tracking changes in the number of companies supplying items in 11 product categories that would be considered traditional, mainline HME products in CMS’s online Medicare Supplier Directory.

As Supplier Numbers Decline, Patient Access Suffers

This rapid contraction of a long-established and proven-effective part of our nation’s healthcare infrastructure should concern everyone with a stake in caring for seniors and other patient populations who utilize HME. These numbers should serve as a catalyst for CMS to look beyond overall utilization figures to determine how patients are being affected by such losses.

In addition to responding to concerns raised by individual providers, as well as HME stakeholder organizations and patient groups, Federal regulators need to give more weight to the increasing outcry from hospital discharge planners who are increasingly delayed in releasing patients because the bidding program has reduced access.

Last year, the country’s largest academic health group, the University of California Health System told CMS that hospitals within the UC System are seeing significant problems obtaining DME under the program and urged the Agency to evaluate the impacts of the program more carefully. Their comments note that many winning bidders have actually dropped out of the program and point out resulting issues such as delays in patient discharges and instances of patients having to purchase items at their own expense which should have been covered by Medicare. One paragraph from their letter particularly drives the point home:

“Hospital personnel note that, prior to the CBP’s implementation, case managers and discharge planners were able to select DME suppliers based on their level of customer service, including their demonstrated dependability and consistency in delivering required items within the necessary time frames,” it reads. “They express frustration that they are no longer able to select DME suppliers based on what is in the patient’s best interest, but must use suppliers that, in their view, provide sub-standard customer service and often cannot meet the patient’s needs-ultimately compromising care outcomes.”

I heard that these sentiments were echoed at a recent CBIC meeting where case managers painted a similar picture, telling CBIC staff that hospitals are bearing the costs of the bidding program through delayed discharges and trouble finding the right provider, both in bidding areas and in rural areas.

Where Do We Go from Here?

Many HME providers have had success building relationships with case managers and discharge planners to improve outcomes for both patients and clinicians, and some have done a great job educating this group on the challenges posed by the bidding program — and that’s a practice that more companies need to adopt. AAHomecare is also working to engage national organizations representing case managers and discharge planners on the need for structural reforms to the bidding program and relief on rural reimbursement cuts.

And finally, HME providers, manufacturers and stakeholder groups must continue to make the case that our industry’s current and future ability to serve a growing population of seniors and other individuals with disabilities and chronic conditions is increasingly threatened by the bidding program and its spread to rural areas, as well as by the domino effects on other payers who follow the national Medicare fee schedule. We’ve made great strides enlisting Congressional support for better HME policies in recent years, and those efforts have paid off in the measure of rural relief in last year’s CURES bill, the win on CRT accessories, and recent Senate and House letters to HHS and CMS endorsing HME policy priorities signed by more than 200 members of Congress.

With new leadership at HHS and CMS that has a greater appreciation for the problems being caused by competitive bidding for HME, we’re better positioned than ever to finally get meaningful reforms to this program. But until we finally secure substantial reforms to the program, we must continue to make our case to legislators when they’re at home during the August Congressional recess, and also keep up the pressure when they are back to work in September and beyond. If we don’t take advantage of the progress we’ve made on Capitol Hill and with the new Administration this year, those sobering provider numbers are going to be even lower in 2018.

This article originally appeared in the August 2017 issue of HME Business.

About the Author

Tom Ryan is the president and CEO of the American Association for Homecare (Washington, D.C.), the industry's national association.


Thu, Apr 19, 2018

Where do we go from here? Congress will not do anything to help us. What you need to do is just file for bankruptcy like I am and have a regional/national buy you. Then move on to something else. If you were an owner of a HME for more than 5 years, you can run any other business easily. The DME industry is over complicated, highly regulated and no profit. All of the things you do NOT want in a business. Besides, HMEs are not in business for themselves, they are contractors for the insurance companies are they are in charge. The sooner you come to realize that the sooner you can get out of that industry and move on.

Fri, Aug 25, 2017 Candace Poe

My business was one of the victims of Obamacare. After being in the DME business since 1997, we were forced to close in 2015. We had moved to a different location, and put signs up with the new address, hours and phone number at the old location. At the new location, we had all of the required signs posted. We applied for a new business license in Illinois, with the new address on it months before we moved, but were not able to get the new license before we moved due to the problems Illinois has been experiencing. Medicare did a surprise inspection at the old location, and we were not there. They did not bother to call the phone number on the door, which had not changed, or read the signs saying we had moved, with the address of the new location. They revoked our supplier number. We appealed. Our congressman, Rodney Davis called on our behalf. He was told "there is so much fraud in the industry". We lost the appeal. I lost my life savings, my business, and was forced to file for bankruptcy. My credit is ruined. My community is now under served.I still get phone calls from my customers who do not have a reputable company to do business with within 35 miles or more of their homes. I served many rural customers.

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