Industry Roundtable

Go Time for HME

HMEB's Editorial Advisory Board sets the agenda for handling key trends and challenges facing providers.

HME Provider trends and challengesEach year HME Business asks various members of its Editorial Advisory Board to comment on issues facing the HME industry, but perhaps no edition of this roundtable has been as pivotal as this one. While providers are contending with many serious industry threats, such as competitive bidding and audits, they also have perhaps their best opportunities so far for beating those challenges.

Moreover, some current and future trends impacting the HME industry might actually turn into opportunities for providers to not on preserve their businesses, but grow them, as well. The key to that growth lies in providers diving in and contending with those issues now, rather than later.

Let’s take a look at what insights our experts from the Board (a full list of the members can be found on page 6) had to share:

The Binding Bids Bill

Tom Ryan, president and CEO of the American Association for Homecare
Competitive bidding has wreaked havoc on the HME industry. That’s why Reps. Pat Tiberi (R-Ohio) and John Larson (D-Conn.) launched H.R. 4920, known as the Binding Bids Bill. The Binding Bids Bill would make all bids binding by requiring providers to obtain special surety bonds before bidding. Those bonds would require them to stick to their bid amount, thus eliminating suicide bidding.

“We’re trying to get a smaller bite at this rotten apple that is competitive bidding,” Ryan says.

The key is to act fast. The bill has until the end of the 113th congress before it lapses, and CMS is gearing up to start the re-compete of Round Two in winter of 2015, neither of which gives the industry much time to advance the bills.

This actually should be an easier task than other legislative efforts, because unlike larger efforts, such as H.R. 1717, the bill that would replace competitive bidding with the industry’s market pricing program, the Binding Bids Bill is complete non-controversial and doesn’t require a pay-for. It simply changes a process.

“We’re getting enough support in the committees of jurisdiction – Ways and Means and Energy and Commerce — and working with the Speaker’s Office,” Ryan says. “We’re hoping to get this on the suspension calendar. … this could be a very easy vote. If we do it with this incremental approach, we should be able to cross-walk most of those co-sponsors.”

Getting the bill on the suspension calendar means that the bill would be put on a list of bills that are such slam-dunks that Congress suspends various rules on and votes on a whole slate of them en masse. The key, Ryan explains, is for providers to lobby heavily on behalf of the bill in order to get enough co-sponsors.

“We have to get continued co-sponsors in large enough number in order to impress the Speaker, so that when the members of the committees of jurisdiction ask to put this on the suspension calendar, we can potentially get it done,” he explains.

A key way to make that happen is to get H.R. 1717’s 180 co-sponsors to back H.R. 4920, seeing as how the Binding Bids Bill is essentially a component of H.R. 1717. Ryan urged providers to take advantage of the October recess, in which lawmakers and staff will be in their districts to send emails, make phone calls and set up meetings to get those lawmakers to sign on to H.R. 4920.

“This will be a perfect opportunity when they are out there in their districts trying to get elected,” he says. “It will be our opportunity to let them know what we have an ask: we need to get this into law before then; before the end of this session. That’s where the momentum is. We have to get it done before the end of the year.”

Audit Reform Legislation

Georgie Blackburn, vice president of government relations and legislative affairs for BLACKBURN’S
H.R. 5083, known as the Audit Improvement and Reform Act (aka, the AIR Act), was unveiled in July by Reps. Renee Ellmers (R-N.C.) and John Barrow (D-Ga.). The bill aims to address key problems with Medicare’s unchecked audit system by boosting transparency within the program; providing better education and outreach; and rewarding suppliers that have low error rates on audited claims.

The bill was launched in order to rein in a “perfect storm” of audits that Blackburn says are often questionable and produce questionable results.

“I have no problem with audits,” she says. “My problem is understanding what auditors want of us; making sure that all the auditors are auditing in the same way; making sure that they’re following the same guidelines; that they’re apprising providers of their rights at the front end. Instead this system created a huge expense for all providers and the outcome is finally resonating through H.R. 5083. We have something to work with now.

“So when you bring this perfect storm, which involves the care of our beneficiaries, to Congress members, it resonates,” she continues. “They don’t want patients within their district stuck in a quagmire of CMS inefficiency.”

And the program’s inefficiency and questionable nature met harsh criticism from a recent Government Accountability Office investigation that determined that CMS provided insufficient oversight to auditing contractors Medicare reimbursement claims that resulted din the two-year-plus delay for assignment Administrative Law Judges to audit appeals.

“I think what we have right now is a perfect storm of unclean audits — audits that do not produce real outcomes; audits that, when they go to ALJ, are overturned.

“So many of the problems we had going on were because of the auditors,” she explains. “We had denials right and left, with many of us across the nation going to ALJ, which formed a backlog for ALJ.

“It took the GAO investigation to unearth the problems and to put it out there for CMS’s embarrassment (to tell you the truth) and force CMS to reply,” Blackburn continues. “But in the end, I don’t know how many people trust CMS to fix this on its own. That’s why H.R. 5083 is so important.”

That said, the timing is tight; the industry hopes to get the bill passed by the end of the year, before it lapses with the start of the next Congress, Blackburn says. This means providers must advocate and lobby on behalf of H.R. 5083 now.

CMS’s Continued Audit Expansion

Wayne van Halem, president and founder of The van Halem Group LLC, now a division of the VGM Group Inc.
Think that with the ALJ delay and the ensuing GAO report that essentially castigated CMS for its lax oversight of the audit program has slowed down the clearly out-of-control program? Think again. While the industry is fighting to reform audits with H.R. 5083, audits still pose a clear and present danger to the industry — and one that is growing.

For starters, while the RAC program right now is pretty slow because of a transition to a new contract, van Halem warns that providers can’t get complacent because that program is coming back and getting expanded.

“My thoughts are since they went back to the previous RACs and told them they can re-start their automated reviews in DME, that perhaps it’s going to take a little bit longer than they anticipated, but certainly the RAC program is being expanded.”

Moreover, CMS is even stepping up its audit program through the use of supplemental medical review contractors, such as Strategic Health Solutions, which is supplementing work that is already being done, and getting awarded contracts to review claims on diabetic claims.

“They’re getting awarded contracts to do one-off audits. They’re doing audits on 100 claims on diabetic supplies from 2011 — it seems like for nearly every provider, and they all got a 100-claim audit.”

There is also an increased risk of managed care audits, according to van Halem. CMS is approaching managed care organizations that serve its beneficiaries to ensure that Medicare and Medicaid funds are being appropriated accordingly, and so these managed care plans are being forced to audit their providers.

“I think historically a lot of [providers] have treated their managed care patients a little differently, but they should be treated the same, and there’s increased risk there now,” he notes. “We’ve even some managed care plans doing extrapolated overpayments.”

And that adds a whole new layer of complexity and frustration because those organizations are completely unfamiliar with the process.

“We’re working with one where the managed care plan isn’t even familiar with the appeal process,” van Halem says. “So they’re trying to make us settle with them on an extrapolated overpayment when we haven’t even gone through the appeal process, yet.”

And, when it comes to face-to-face, while enforcement has been delayed, the written order prior to delivery component is already being audited, according to van Halem, and it is still a requirement that is on the books.

“It’s federal law that patients must undergo a face-to-face with in six months prior to delivery of the item, and that has to be documented, and they’re certainly at risk for audits in there,” he says. “Certainly [CMS] isn’t enforcing it now, but that doesn’t mean it’s not the law. So they can come back and say, ‘we’re not going to audit the content of a face-to-face evaluation, but we want evidence of it.’ And if providers don’t have it, that’s a statutory denial. … CMS hasn’t made it very clear that it’s delayed enforcement of it, but not delayed the requirement of it. ”


Peggy Walker, RN, billing and reimbursement advisor for the US Rehab division of the VGM Group.
Face-to-face represents one of the more surreal aspects of dealing with CMS. As most providers know, CMS implemented a requirement that a face-to-face evaluation with a physician must happen within six months prior to ordering frequently ordered DME items. However, while the requirement was implemented, CMS has kept delaying the enforcement.

In late 2013, CMS delayed enforcement of the face-to-face requirement until “sometime” in 2014, but recently CMS delayed enforcement indefinitely. That open-ended delay happened in part because the volume of conflicting information and instruction from CMS and other sources resulted in pushback from other healthcare professionals.

“There is so much conflicting information,” Walker says. “The oxygen concentrator doesn’t have a written order prior to delivery, but the portable concentrator does. So how are they supposed to allow the patient to get from the hospital to the home?”

She cites pressure from nurse practitioners as an example. Nurse practitioners resisted the face-to-face requirement, because it flew in the face of preexisting Medicare policy that governed their ability to order durable medical equipment items, such as wheelchairs and oxygen equipment as long as they have their own NPI.

Walker explains: “Nurse practitioners said, ‘we can’t do this. According to Medicare rules, we can do our own face-to-face. We don’t need a doctor to sign off.’

“A lot of nurse practitioners are in stand-alone clinics,” she continues. “So if I have a patient that needs a nebulizer, and they need treatment today, and I can’t give them the nebulizer until the physician that overviews my work every 90 days signs it and dates it? … You have rural clinics all over the united states that have nurse practitioners standing alone.”

So is this a delay of the inevitable, and is CMS going to find a way to enforce face-to-face, or is CMS realizing what many healthcare organizations have been saying all along: the requirement is untenable. True, the Affordable Care Act requires CMS to pursue the face-to-face requirement, but implementing requirement is not only unfeasible, but flies in the face of law that governs nurse practitioners.

“I think it’s a reality [CMS] can’t get around,” she says. “… And now you have the American Medical Association — people who are big lobbyists — fighting it.

So for now, face-to-face represents a problem with no solution beyond a legislative fix, such as H.R. 5083. Reform or repeal is really only the solution.

Systems Interoperability

Special Guest: Chris Watson, chief operating officer of Brightree LLC.
Note to the reader: While Brightree president and CEO Dave Cormack sits on HMEB’s editorial advisory board, he tapped COO Chris Watson to comment on this topic, as he felt readers would benefit from her particular expertise on this subject.

The most recent technology effort for the HME industry has been ensuring their systems are ICD-10 compliant, but that issue has essentially been handled at this point, and now industry IT experts are turning their attention to a new development: systems interoperability.

Watson has closely watched the work being done in healthcare IT to integrate the systems between all the different professionals involved in the healthcare continuum is a real challenge.

“The number one trend that is forcing providers to look at their software solutions and how they’re going to exchange data with other care providers is the move toward outcomes,” she says, adding that when that interoperability is put within the larger context of the increasing trend toward outcomes, the need for this integration is urgent.

Payment reform not just Medicare but private payor is going from fee for service to pay for performance where the provider needs to demonstrate its role and relevance in the patient’s condition. That outcomes-based reimbursement is becoming more and more real, and in order for providers to prove that relevance they need to share information. For example, a provider of sleep apnea therapy solutions will need to demonstrate that a patient was compliant with therapy within the allotted period of time.

“So, we are seeing providers appreciate and understand how having the right software with access with the right data can reflect on them as a provider to all of the different payors in their world — whether that’s an ACO, health system, traditional payor, or Medicare or Medicaid,” Watson explains. “If you can’t share data, you will be a significant disadvantage in the new payment models that are emerging

That said, the “number one challenge” when it comes to this data sharing is the lack of a common standard, according to Watson, but she adds that is changing. There are multiple initiatives to build a common language for healthcare IT. Watson says one of the key standards is the CommonWell Health Alliance (in fact, Brightree became a voting member of this standards initiative in July).

“A common way to share data that provides necessary visibility into what brought that patient to you, other than the information on a physician’s order, is absolutely critical to improving outcome for that patient and ensure that patient doesn’t get readmitted to a hospital.”

Watson advise that with 80 percent of physicians and more than 90 percent of hospitals implementing electronic health records, data interoperability is going to happen sooner rather than later.

“We think that within two years’ time interoperable systems and sharing data across the care continuum will be the norm.”

Providers will need to monitor this trend and ensure their systems comply with the standards that get implemented, because their referral partners will expect them to have that level of interoperability.


Sandra Canally, president of The Compliance Team Inc.
Like the old saying, if there’s one thing that remains constant, it’s change. And certainly the HME space is an industry that is fraught with constant change. In light of the various upheavals of the past few years, Canally says providers need to reexamine their accreditation and determine whether or not it needs revising.

“Because of so many changes to organizations — changes in ownership, decrease in location, decrease in services — across the board everybody is scrambling. … With all these changes, providers are not necessarily associating the connection to the accreditation organization.

“We’re having a lot of difficulty with location issues,” she continues. “We show up and they’ve moved — and didn’t even contact us.”

Even reducing or increasing the number of locations is a factor in maintaining and renewing accreditation, she adds.

Also, competitive bidding continues to make its impact on HME providers accreditation decision making, and they will see that continue as CMS works its way up to re-competing Round Two, which begins in winter 2015, which is not too far away. Whether it’s past change or future change, providers must adapt their accreditation to constantly shifting realities. The question is, are they actually doing that?

Canally noted that CMS has sent out information to providers to ensure they are accredited, warning that the if a provider is going to bid on a category for which it wasn’t accredited, it better contact its AO.

“We say that before, and it’s huge. If they don’t [get accredited], they’re not going to get the contract.”

Moreover, providers trying to bid in new competitive bidding areas in other states, need to ensure that not only their accreditation reflects that location change, but that they are adhering to any special state certification or licensure requirements.

“All these states change with their requirements. So maybe a couple of years ago Alabama and Tennessee didn’t require an in-state residence, but now they do, well that changes things dramatically for the company in Illinois that wants to bid in those CBAs. … Once you get into an out-of-state arena, you really need to check.

Product Quality and Patient Care

Ron Resnick, president of Blue Chip Medical Products Inc.
DME manufacturers and providers are finding themselves sharing a frustration: with reimbursement down, they are trying to figure out how they can continue to provide good quality. Their fates are joined at the hip, according to Resnick, and the solution to their problem is elusive.

“Everybody talks that they promote product quality, but because of compression on reimbursement how can you?” he argues, adding that this is translating to poor care. “A provider can’t offer the same level of service that it used to offer. Even if it tries its hardest and its intent is genuine, the provider can’t even deliver, say, standard items like a folding walker, and make money today. They can bill it, but they can’t deliver it.

“The margin is not there,” he adds. “It has hurt a lot of dealers’ business.”

How is it hurting their business? The ultimate problem, according to Resnick is that low reimbursement is leading providers to pursue lower-priced medical equipment. That, in turn, is leading to a reduction in care for the patient. Patients are not going to have the same sorts of outcomes with lower-end DME they get from better equipment, he argues.

“No one is looking at the outcome anymore,” Resnick says. “And for me, that’s where the problem begins. … The patients are breaking down, and the quality isn’t holding up. We’ve seen this.

“The term DME, ‘durable medical equipment,’ is now ‘disposable medical equipment,’” he adds.

This puts providers in an especially difficult position, because, as Resnick noted, healthcare reimbursement is increasingly hinging on outcomes.

“A lot of dealers have lost business, because the hospital or the referral source, whether it be a social worker, case manager, even from an insurance carrier, while the pricing might be attractive, if the clinical outcome is not there, then the dealer’s not going to get that business,” he says. “And we’ve seen that.”

Resnick says that until audits and competitive bidding — the two prime movers for reimbursement cuts — get fixed, providers are going to have to become more resourceful in how they pursue payors that will pay for quality DME. The manufacturers are continuing to make the “real deal” items for better reimbursement environments and he urges providers to work with their vendors to explore new markets and revenue sources that let them provide high-quality DME and effective care.

“We have providers ask us, ‘Can you teach me how to go on and reinvent myself?,” he says. “They need to learn new skillsets — that’s the name of the game.”

This article originally appeared in the October 2014 issue of HME Business.

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