AAHomecare Study to Model Provider Costs

Effort will demonstrate the true cost of providing DMEPOS items to Medicare beneficiaries.

In an effort to generate hard numbers on the impact of competitive bidding, the American association for Homecare has commissioned research firm Dobson DaVanzo & Associates LLC to study HME providers’ costs in serving their patients.

While limited cost analyses have been performed in the past, the new survey will be the first to consider providers’ fixed and variable costs across multiple product categories that are under threat by competitive bidding pricing.

Starting the week of July 18, Dobson DaVanzo & Associates will distribute the Cost Study survey, which is free for all providers to participate. The study will focus on selected products from oxygen, sleep, manual wheelchairs, hospital beds, and walkers. All organizational data will be kept confidential and reporting will be in the aggregate only.

“This is our opportunity to provide hard numbers industry wide to Congress and CMS to explain the depth of cuts we are receiving compared to the actual cost of doing business,” said Laura Williard, senior director of payor relations for AAHomecare. “This Cost Study will be one more arrow in the quiver to build support on Capitol Hill. A critical mass of participation will make the difference for this strong lobbying tool.”

The more suppliers who complete the survey, the stronger the report will be, a statement AAHomecare noted, which could help the report become a business benchmarking and management tool for providers, as well. Ultimately, this will be a tool to be shared with members of Congress, but it will also be available for companies to compare their costs of doing business to the average costs of the industry.

“This is going to give the true cost of running an HME business, so people can use this to make decisions on different business segments, and the types of business they are going to stay in,” Willard said. “I think there is going to be a lot of value in this.

“Our goal is to have a template that we can use for future costing analysis, as well,” she added. “So we worked with Dobson DaVanzo to make it that way. For example, if you’re doing managed care negotiations, you could have your true costs for what it really costs to provide that service.”

AAHomecare urged all providers to take part in the survey once it is released in order to help build the data needed to show that competitive bidding rates are unsustainable.

“This is our opportunity to provide hard numbers industry wide to Congress and CMS to explain the depth of cuts we are receiving compared to the actual cost of doing business,” Williard explained. “This Cost Study will be one more arrow in the quiver to build support on Capitol Hill. A critical mass of participation will make the difference for this strong lobbying tool.”

About the Author

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

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