Annual Big Ten

Setting the Stage for HME in 2020

As the HME industry rolls into a new year and a new decade, several industry trends make it look like we’re in for a roaring 2020. What developments have made it onto this year’s annual HMEB Big Ten list?

empty stage with spotlightThe HME industry settles into its seats. The house lights dim. A hush washes over the theater. The orchestra pit plays the opening notes of the overture. The curtains part. The floodlights are shining upward. A new year for providers takes center stage. What do the next 12 months have in place for HME businesses? Our annual Big Ten list will try to offer a playbill so you can stay on top of the show.

Each January, we assemble the HME Business Big Ten to review the trends, challenges and opportunities that will define the next year. Suffice it to say that this year’s storyline isn’t short on show-stopping moments. A variety of regulatory and marketplace factors are influencing how HME owners and operators run their businesses, but we’ve landed on 10 key items that we are positive will help define 2020. They are:

  1. Round 2021 fee and contract announcements
  2. The expansion of six-year lookback audits
  3. The need for diversified payers relations
  4. Medicare and Medicaid managed care 
  5. Strategic Software advancements
  6. RPM for oxygen
  7. Wearable health
  8. e-Prescription
  9. The expansion of resupply
  10. CBD

With the Round 2021 announcements alone, this year should be full of headline-making moments (whether or not they receive rave reviews), so let’s get the show on the road and dive into the 2020 Big Ten: 

Round 2021 Fee and Contract Announcements

This year will be the year that Round 2021 of competitive bidding comes into focus. We’ve had the run-up to Round 2021, and providers have already registered and submitted their bids for competitive bidding. The bid window closed, and, at the time of this writing, the Competitive Bidding Implementation Contractor had just released its preliminary bid evaluations and providers have responded to any deficiencies identified by CBIC.

So, what next? This summer, CMS will announce the single payment amounts for Round 2021 and will begin its contracting process. Then in fall, CMS will announces the Round 2021 contract suppliers, and on Jan. 1 2021 we will see the Implementation of Round 2021 contracts and prices.

Now, I know it’s easy to get blasé about competitive bidding given that the industry has been dealing with this since the first bid of Round One. But let’s not forget what Round 2021 is all about — HME providers will see some significant changes to the program. I feel pretty confident in saying that the two most major ones are:

  • It uses lead item pricing, which means the single payment amount (SPA) for the lead item in each product category is based on the maximum or highest amount bid for the item by suppliers in the winning range. The SPAs for all other items in that category are then based on a percentage of that maximum winning lead item bid.
  • Round 2021 now covers 16 product categories, including off-the-shelf (OTS) back braces, OTS knee braces, and — most alarmingly —non-invasive ventilators. And when it comes to non-invasive ventilators, at press time, legislative efforts to protect them are still in process.

While Round 2021 doesn’t happen until next year, this year, we will finally get a chance to look under the hood when it comes to lead item pricing and see how it will impact reimbursement. Furthermore, hopefully, we will find some legislative fix this year to protect the vulnerable patient groups that depend on non-invasive ventilators. 

The Expansion of Six-Year Lookback Audits

In October 2019, the HHS OIG announced it would once again expand its audit workplan to include PAP supplies. What does that mean? More six-year lookback audits.

HMEB readers might recall that HHS OIG did this before in June 2018. Back then, CMS examined a sample of 110 claims that Medicare paid in 2014 and 2015, and found that only 24 complied with Medicare requirements, while 86 claims with payments totaling $13,414 did not. CMS took those figures and estimated that it had made overpayments of almost $631.3 million at that time. 

So, the OIG recommended that CMS to contact the 82 providers that had submitted those 86 claims and identify and return any overpayments per the Affordable Care Act’s 60-day rule. A key part of that rule is that it has a lookback period of six years. That means the provider must review all its claims for that six-year period and payback any overpaid claims. 

That six-year lookback is a massive undertaking. The endeavor requires expert legal and consulting help as well as enlisting specialists such as statisticians. At the time, industry audit expert Wayne van Halem, CFE, AHFI, the president of audit consulting firm The van Halem Group LLC (Atlanta, Ga; a business unit of VGM Group), underscored the stakes by noting that if the government decides that a provider didn’t engage in enough due diligence, they could unwittingly run afoul of the False Claims Act (FCA) and those violations can entail significant penalties and can see the government revoke a provider’s billing privileges or Medicare participation. 

Well, now, HHS OIG has once again expanded its audit workplan to include PAP supplies. Furthermore, the UPIC contractors are sending letters that include similar language to the OIG reports, which could portend even more audits. Providers must work to understanding the true impact of a six-year lookback, and how they can prepare their businesses and work with the right experts to mitigate this audit trend for 2020.

The Need for Diversified Payers Relations

Many providers still derive a significant portion of their revenues from funding sources. During 2019, it finally became clear to providers that they must diversify their revenue sources beyond the Medicare-plus-some-retail approach that has become prevalent in the industry, and really start specializing in managing relations with multiple payers and revenue sources. They must learn how to work with a mix of Medicare/Medicaid managed care organizations, private payer insurance carriers, facilities-based care providers such as skilled nursing facilities, and health plans.

This is especially true now that managed care is playing a much larger role in the industry than before. This is ushering in even more private payer players that providers must learn to work with. Considering that working with every funding source can feel like learning a whole new ballgame, providers will have their work cut out for them.

They must learn how to better negotiate with those various payers; they will need to learn how to interact with patients and referral partners more effectively; they will need to learn new business management techniques; and they will need to learn more about the resources that will be around to help them do this.

Industry resources such as the American Association for Homecare have been working to help providers tackle this challenge. With the addition of Laura Williard to head up the association’s payer relations back in 2016, it was clear that managing various payer relations was a challenge AAHomecare knew providers would have to address. More recently, the association formed its Payer Relations Council to focus on non-Medicare payer relations, such as Medicare Advantage, Medicaid, Medicaid Managed Care Organizations and commercial plans, and that council just had its aforementioned meeting. 

Providers will have to tap into resources such as these as the sources of funded revenue become a wider spectrum during 2020 and beyond.

Medicare and Medicaid Managed Care 

When it comes to dealing with diversified payers, one trend that sort of snuck up on the HME industry is the growth of Medicare Advantage plans and Medicaid Managed Care plans. 

Managed Care is quickly becoming part of everyday business for HME providers. Approximately 35 percent of Medicare beneficiaries are signed up with Medicare Advantage Plans, while roughly 70 percent of Medicaid beneficiaries are signed up with Medicaid Managed Care Plans. Moreover, these percentages are increasing.

So, providers must learn how to deal with third-party payers, and especially the commercial insurance companies that sponsor Medicare Advantage plans and Medicaid Managed Care plans. 

That’s not always easy. As industry legal expert Jeff Baird, Esq., chairman of the Health Care Group at law firm Brown & Fortunato, pointed out in a recent HME Business webinar, the challenge of obtaining, negotiating, working with these insurance companies is foreign to most of DME suppliers, because it has not been in the DME space until just recently. That means providers don’t have much experience in terms of working with these third-party payors. 

However, once a provider does the work and jumps through the right hoops to get on a panel and has signed a contract with a third-party payer, then it is a lot easier working with that third-party payer than it is working with traditional Medicare or traditional Medicaid, he noted. 

So the hard work that providers do in 2020 to better understand work with these plans will pay dividends in the coming year and beyond.

Strategic Software Advancements

Software has grown to be a pivotal business asset for many providers. Rather than just carry out billing, software orchestrates just about every workflow within an HME business Now providers’ software tools are helping them operate at a much more strategic level when it comes to managing their businesses.

This is certainly the case for the revenue cycle management (RCM) tools that are finding their way into HME software. Several years ago, entities such as hospitals and health plans started defining and refining the practice known as revenue cycle management, and it helped them optimize their businesses’ incomes.

Not be confused with billing (which is a part of RCM), RCM optimizes functions such as how claims denial is handled, how patient co-pays are collected, and how much staff time is expended on claims. RCM tracks the revenues and costs related to a patient’s interaction with a healthcare provider from the beginning and end of the process. RCM is the umbrella under which all revenues are managed and maximized.

The goal: automation. The more that providers can implement RCM solutions that automate the revenue cycle and align it with existing workflow, the more that they will create a system of “no touch” claims. In that scenario, most of the data entry takes place at the outset, when a patient and claim are entered into the system. If done right, for the majority of claims there will be no edits or revisions, the documentation will be solid, and the claim will be funded and any co-pays will be collected. This leaves most of the remaining hands-on work in the system to deal with the exceptions to this workflow

Now HME software companies are integrating RCM tools into their systems and it will be providers’ job in 2020 to work on integrating them into their businesses. That said, much needs to be done in terms of outlining RCM workflows in the HME industry. 

RPM for Oxygen

Remote patient monitoring (RPM) has been an undeniable trend in post-acute healthcare, starting in sleep. For years now, PAP devices have been monitoring patient performance and feeding that data back to care management systems that physicians can use to see unique health events and tweak care. Those devices can also connect with personal apps that patients use to better manage their care.

Use of remote patient monitoring in sleep has exploded and is poised for more growth. In 2015 market research firm Berg Insight reported the global number of remotely monitored patients grew by 51 percent to 4.9 million. In 2019, ResMed reported that it alone has 10 million users of its cloud-connected devices and it had a database of 4.5 billion nights monitored.

Now remote patient monitoring is starting to find its way into diabetes, and in some respects, oxygen. The first forays into remote POC monitoring came with devices that were largely founded on the concept of fleet management: providers would remotely monitor POCs to ensure they were being used and that they were functioning properly. Moreover, depending on the situation, providers could remotely diagnose problems.

That soon gave way to the notion of monitoring usage data and clinical data. HME providers could become champions to both their referral partners and patients, and would benefit from an ever-growing reputation for effectiveness and forward-thinking care that produces results in an outcomes-oriented care environment. That’s a hard value proposition to ignore.

Now we’re seeing this happen. Last November, ResMed has upgraded its AirView for Respiratory system to include interactive reporting options for HME providers and physicians. New features include a “management by exception” function that lets clinicians identify which patients are experiencing ventilation issues or disease progression. Also, providers and physicians will have interactive reporting functions, to help them analyze granular clinical data and trends over time. 

Anyone doubting that RPM with clinical data would find its way into oxygen care needs to know that the gates are now open. How this plays out in other oxygen products, such as portable oxygen concentrators, will happen this year and onward.

Wearable Health

Wearable health has been a revolution for fitness-minded individuals. We track our steps, our sleep, our calorie, how many glasses of water we drink and just about any metric you can think of — at least when it comes to prevention.

But now wearable health is entering the realm of post-acute care. In fact, it’s already here. Already, we’ve seen wearable health items for diabetes patients, such as continuous glucose monitors that pair with smartphones and smartwatches to help patients manage their conditions. 

Another great example would be incontinence solutions company Triple W’s DFree, a device that focuses on the urge management side of incontinence. It’s a device that acts as an early warning system that employs ultrasound and Bluetooth to help patients realize that their bladder might need emptying.

The DFree system uses a small ultrasound device a little bigger than a quarter, which is secured to the patient’s lower abdomen using medical tape. A transmitter that measures roughly three inches in diameter is connected to the sensor is hooked to the patient’s belt or clothes, and it sends information to the user’s phone using Bluetooth.

That’s a game-changer for incontinence patients. Now other wearable health solutions are starting to emerge for other patient groups. Providers will need to keep a sharp lookout for these tools in 2020, because their patients certainly will be.


E-prescription has been a regular component of U.S. healthcare IT systems for years — except when it comes to the HME industry. Physicians can send prescriptions electronically to pharmacies, for example, but prescribing a portable oxygen concentrator electronically is a no go. That’s not necessarily all that surprising given the complexity of HME prescriptions (and the documentation, claims and billing procedures entailed).

However, e-prescription is coming to the world of HME. The amount of back-and-forth between referral sources and providers is staggering in comparison to the simplicity of prescribing drugs. Now, imagine a system employing electronic forms that make sure all the pertinent data is collected and entered and won’t let the process move forward until the proper boxes have been checked. 

And that workflow includes documentation. Given that 64.1 percent of improper payments resulted from poor documentation in 2017, and that DMEPOS had a 46 percent error rate that year, according to CMS, a system that helps to reduce that is a great development.

And software companies are pushing to release e-prescription tools for providers. HME professionals should continue to monitor this trend. Early adopters will be those that want to mitigate audit issues while delivering as turnkey a service experience as they can for their referral partners and patients.  

The Expansion of Resupply

For sleep providers, optimizing resupply has been the name of the game both in terms of care and the bottom line. An effective resupply program ensures that patients’ equipment is performing as it should and giving patients as sound and comfortable a night’s sleep as possible. This ensure that they stick with their therapy and enjoy better outcomes.

That’s music to the ears of referral partners who need to demonstrate positive outcomes and therapy compliance to funding sources. So if a provider can help make that happen, it will cement rock-solid relationships with its referral sources and ensure many resupply orders in the future.

To make that happen, sleep providers have implemented a combination of workflows and technology tools that help them track each patient’s equipment usage, determine when they need a resupply item, and then make that resupply process as simple and easy as possible. 

Now providers of other categories that entail resupply items, such as incontinence, diabetic supply and incontinence, are starting to take notice of the gains that sleep providers have made with resupply, and looking for ways to implement more automated resupply procedures into their workflows. This year will likely see increased activity among those providers in terms of implementing such solutions. Who knows? They might inspire even more categories to follow suit.  


It’s tempting to write CBD off as a gimmick — don’t give into it. Providers have a chance to establish themselves in a product category serving an undeniably large market. CBD use has grown so widespread according to market researchers the Brightfield Group, the global CBD market could expand to $22 billion by 2022. Another study from Cowen and Company projects the CBD market to hit roughly $16 billion by 2025. Low or high, take your pick, those estimates speak to considerable market demand.

And why do all those people want CDB? To help them deal with aches, pains and sleeplessness. Why CBD? CBD is one of the compounds called cannabinoids produced by the cannabis plant. The first cannabinoid most everyone has heard of is THC, the psychoactive component in recreational marijuana. CBD, also known as cannabidiol, is the cannabinoid often used in managing chronic pain, insomnia and anxiety.

Now, think about the patient groups you serve. Many of your patients are in pain — real, honest-to-goodness pain. If they’re coming into your HME business for a knee brace, there’s a good chance they’re in pain. If they’re coming in for orthopedic footwear, they’re likely feeling some pain. If they’re coming in for a TENS unit, you know they’re in pain. In fact, for some providers, pain management represents a healthy percentage of their revenues.

So, providers have a large group of patients seeking non-drug solutions to manage their pain. CBD is an increasingly popular non-drug solution that represents a massive retail opportunity. HME patients consider HME providers experts on solutions to their health issues. Providers need to connect these very obvious dots and add CBD to their product line-ups in 2020.

This article originally appeared in the Jan/Feb 2020 issue of HME Business.

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